HEARTLAND GROUP INC, 485APOS, 1999-02-26

HEARTLAND GROUP INC
485APOS, 1999-02-26

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As filed with the Securities and Exchange Commission on February 26, 1999
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. 38 [X]
-------
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [_]

Amendment No. 40 [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 Executive Offices) (Zip Code)

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

JILAINE HUMMEL BAUER, Vice President and General Counsel
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, Wisconsin 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)
[_] 60 days after filing pursuant to paragraph (a)(1)
[x] on April 30, 1999, 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

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

HEARTLAND GROUP, INC.
FORM N-1A
CROSS-REFERENCE SHEET
TO POST-EFFECTIVE AMENDMENT NO. 38
_________________________________________

HEARTLAND LARGE CAP VALUE FUND
HEARTLAND MID CAP VALUE FUND
HEARTLAND VALUE PLUS FUND
HEARTLAND VALUE FUND
HEARTLAND GOVERNMENT FUND

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

PART A

1. Front and Back Cover Pages ................... Front and Back Cover Pages

2. Risk/Return Summary: Investments, Risks, and
Performance .................................. Fund Highlights

3. Risk/Return Summary: Fee Table ............... Fund Highlights

4. Investment Objectives, Principal Investment
Strategies, and Related Risks ................ Principal Investment
Strategies and Investment
Risks

5. Management's Discussion of Fund Performance .. Not applicable

6. Management, Organization, and Capital
Structure .................................... Management of the Funds

7. Shareholder Information ...................... How to Invest; Shareholder
Information and Reporting

8. Distribution Arrangements .................... Fund Highlights

9. Financial Highlights Information ............. Financial Highlights

</TABLE>

<PAGE>

10. Cover Page and Table of Contents......... Cover Page

11. Fund History............................. Description of Shares

12. Description of the Fund and Its
Investments and Risks.................... Investment Objectives and
Policies of the Funds;
Types of Securities;
Portfolio Management
Strategies Investment
Restrictions

13. Management of the Fund................... Management

14. Control Persons and Principal
Holders of Securities.................... Control Persons and
Principal Holders of
Securities
15. Investment Advisory and
Other Services........................... Investment Advisory and
Other Services

16. Brokerage Allocation and Other Practices. Portfolio Transactions

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

18. Purchase, Redemption and
Pricing of Shares........................ Distribution of Shares;
Purchases and Sales

19. Taxation of the Fund..................... Additional Income Tax
Considerations

20. Underwriters............................. Distribution of Shares

21. Calculation of Performance
Data..................................... Performance Information

22. Financial Statements..................... Financial Statements
</TABLE>
<PAGE>

HEARTLAND LARGE CAP VALUE FUND
HEARTLAND MID CAP VALUE FUND
HEARTLAND VALUE PLUS FUND
HEARTLAND VALUE FUND
HEARTLAND GOVERNMENT FUND

PROSPECTUS
MAY 1, 1999

This Prospectus contains information you should know about the following mutual
fund portfolios of Heartland Group, Inc. (the "Funds") before you invest.
Investments for each of the Funds are selected on a value basis.

. HEARTLAND LARGE CAP VALUE FUND - Its investment objective is long-term
capital appreciation. This Fund seeks to achieve its objective through
investing in stocks of companies with market capitalizations over $1
billion.

. HEARTLAND MID CAP VALUE FUND - Its investment objective is long-term
capital appreciation. This Fund seeks to achieve its objective through
investing in mid cap stocks, those of companies with market capitalizations
between $750 million and $5 billion.

. HEARTLAND VALUE PLUS FUND - Its investment objectives are capital
appreciation and current income. This Fund seeks to achieve its objectives
primarily through investing in income-producing equity securities of
smaller companies. This Fund also seeks to achieve its objectives through
investing in debt securities.

. HEARTLAND VALUE FUND - Its investment objective is long-term capital
appreciation. This Fund seeks to achieve its objective through investing
in small company stocks.

. HEARTLAND GOVERNMENT FUND - Its investment objectives are a high level of
current income, liquidity and safety of principal.

Each Fund (other than the Government Fund) is managed using Heartland Advisors'
Ten-Point Value Investment Grids(TM), a strict investment discipline designed to
identify value. The Government Fund has its own value criteria for selecting
investments. Each Fund offers investors an attractive investment opportunity
combined with active risk management. Each Fund is a no-load fund. Investors
pay no sales fees or charges to purchase, redeem or exchange their shares.

The Securities and Exchange Commission has not approved the shares of these
Funds or any other mutual fund, nor determined whether this or any other
prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.

[Heartland Advisors Logo]
790 Milwaukee Street, Milwaukee, WI 53202
1-800-432-7856 or (414) 289-7000
Website: www.heartlandfunds.com
<PAGE>

TABLE OF CONTENTS

PAGE
----
<S> <C>
FUND HIGHLIGHTS................................................. 3
Value Investing............................................ 3
Investment Returns......................................... 4
Large Cap Value Fund....................................... 5
Mid Cap Value Fund......................................... 7
Value Plus Fund............................................ 10
Value Fund................................................. 13
Government Fund............................................ 16
Fees and Expenses of the Funds............................. 19

MANAGEMENT OF THE FUNDS......................................... 21
Heartland Group............................................ 21
Heartland Advisors......................................... 21

PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT RISKS............ 24
Heartland Advisors' Ten-Point Value Investment Grids(TM)... 24
Other Investments and Investment Strategies................ 27
Risks...................................................... 29

HOW TO INVEST................................................... 31
Purchasing Shares.......................................... 32
Redeeming Shares........................................... 34
Exchanging Shares.......................................... 36
Share Price................................................ 37

SHAREHOLDER INFORMATION AND REPORTING........................... 38
Heartland Value Source..................................... 38
Investment Reports......................................... 38
Dividends and Capital Gain Distributions................... 38
Taxes...................................................... 39

FINANCIAL HIGHLIGHTS............................................ 39
</TABLE>

2
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FUND HIGHLIGHTS

VALUE INVESTING

Heartland Advisors, Inc. ("Heartland Advisors"), America's Value Investor(R),
selects investments for the Funds that it believes are undervalued as measured
by sets of criteria known as Heartland Advisors' Ten-Point Value Investment
Grids(TM). The portfolios of the Heartland Funds are actively managed. Although
no one can predict a Fund's future performance, Heartland Advisors believes that
the "value" style of investing will out perform over extended periods, which may
include bear markets as well as volatile or "sideways moving" markets. The
value style may perform less well in markets that favor faster growing
companies.

Heartland Advisors' Equity Ten-Point Value Investment Grid(TM) is used to
evaluate the relative worth of equity securities in the Funds' portfolios. The
criteria used are:

. Low price/earnings multiple . High insider ownership

. High cash flow . Capable management

. Positive earnings dynamics . Hidden assets

. Discount to book value . Positive technical analysis

. Financial soundness . Catalyst for recognition

Heartland Advisors' Fixed Income Ten-Point Value Investment Grid(TM) is used to
evaluate the relative worth of fixed income securities in the Funds' portfolios.
The criteria used are:

. Economic trends . Financial soundness

. Federal Reserve policy . Market sponsorship

. "Real" interest rates . Positive technical analysis

. Attractive risk premiums . Innovative asset classes

. Sector outlook . Catalyst for recognition

Heartland Advisors typically sells securities in the Funds' portfolios when it
considers them to be overvalued relative to other investments using the above
criteria. It also may sell securities to raise cash in response to business
operating needs or, consistent with a Fund's

3
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investment objective, to reposition the Fund's portfolio to maintain relative
industry or market sector weightings or because of market or economic factors.

INVESTMENT RETURNS

Total return measures the change in the share price of a Fund over a given
period. Because it assumes the reinvestment of all dividend income and capital
gain distributions, total return includes the effect of compounding. Cumulative
total return is a Fund's actual return for a given period, but it does not
indicate how much return has fluctuated during the period. Average annual total
return is always hypothetical, and represents the constant year-by-year return
that would have produced a Fund's cumulative return for a given period. It
should not be confused with actual annual returns, the sum of which over a
particular period produces a Fund's cumulative total return. Yield is
annualized net income of a Fund during a specified period as a percentage of the
Fund's share price. Yield is required to be stated in terms of a 30-day period.
Fee waivers may have been in effect for the Funds during the periods in which
performance information is presented. Without fee waivers, the Funds' returns
and yields would have been lower.

Following the explanation below of each Fund's investment objective and
principal investment strategies and risks is a discussion of past performance,
including a comparison of the Fund's average annual total returns to a broad-
based market index believed to be representative of the Fund's portfolio. In
considering this performance, it is important to remember that an index is not
available for direct investment, and past performance cannot guarantee or
predict future results. In addition, the holdings in an index are not an exact
match to the holdings in a mutual fund portfolio. There are a number of
important characteristics of a mutual fund portfolio that will cause its
performance to differ from that of an index. These characteristics include: the
presence of operating expenses including investment management fees, shareholder
accounting and service fees, custody fees and portfolio transaction expenses;
cash flow activity caused by daily purchases and re demptions; differences in
the number and size of holdings and their relative sector and industry
weightings; and the market capitalization of individual holdings in the index
and fund portfolio and the median capitalization of the index and fund overall.

An investment in a Fund is not a deposit of a bank, nor insured or guaranteed by
the Federal Deposit Insurance Company (FDIC) or any other governmental agency.
No single Fund is designed to be a complete investment program, and while you
may make money, you could also lose money. Each Fund's share price will
fluctuate.

4
<PAGE>

LARGE CAP VALUE FUND

INVESTMENT GOAL. The Large Cap Value Fund seeks long-term capital appreciation
through value investing in large companies.

PRINCIPAL INVESTMENT STRATEGIES. Under normal market conditions, the Large Cap
Value Fund invests at least 65% of its total assets, and generally almost all of
its assets, in common stocks and other equity securities of companies with
market capitalizations in excess of $1 billion selected on a value basis. It
may, however, invest in other securities including, without limitation, equity
securities of smaller companies, debt securities, warrants, convertible
securities and cash equivalents. There are no credit quality limitations on the
convertible or debt securities in which the Fund may invest.

Large companies typically are global in nature and not dependent solely on the
U.S. economy or stock market. They tend to be widely followed by investment
analysts and their securities tend to be broadly owned by institutional and
individual investors. These characteristics cause the securities of these
companies to be normally more liquid and subject to less price volatility than
stocks of smaller companies.

Although not a principal investment strategy, the Fund may utilize other
investments and investment techniques from time to time which may impact Fund
performance, including options, futures and other structured transactions. The
Fund is limited to 5% of net assets for initial margin and premium amounts on
futures positions considered speculative under regulations of the Commodities
Futures Trading Commission ("CFTC").

RISKS. The share price and investment return of the Large Cap Value Fund will
fluctuate. Fluctuations in price and return usually will be less than that of a
mutual fund holding securities of smaller companies or a mutual fund managed
with a more aggressive management style that places less emphasis on the
relative value of a portfolio company's assets. The Fund's risk profile is
expected to be similar, but not identical, to the broad-based equity markets.
It seeks to moderate this risk by investing in equity securities that offer
higher dividend yields than equity securities in general. Because the Large Cap
Value Fund invests in both global companies and securities of foreign issuers,
factors such as foreign exchange rates, foreign political and economic
developments, and domestic and foreign laws concerning investing outside the
United States could affect the Fund.

WHO SHOULD CONSIDER INVESTING IN THE FUND? The Large Cap Value Fund is designed
for investors who seek long-term capital appreciation from a diversified,
actively managed portfolio of large company stocks. It is designed for
investors who can accept the volatility and other investment risks of the broad-
based equity markets, but want an investment strategy that seeks to manage these
risks by investing in companies believed to be undervalued relative to their
intrinsic value.

5
<PAGE>

PAST PERFORMANCE. The tables below show the performance of the Large Cap Value
Fund since its inception. Table I shows how the Fund's total returns have
varied from year to year. Table II shows how the Fund's average annual total
returns compare to those of a broad-based securities market index. Table III
shows the median and weighted average market capitalizations for the companies
whose equity securities are owned by the Fund and for the companies included in
the index as of December 31, 1998. The Fund commenced operations on October 11,
1996. The performance of a newer mutual fund may be adversely affected by such
factors as uneven cash flows and absolute size. These factors may make it more
difficult for a newer fund to establish meaningful portfolio positions as
quickly and as efficiently as a more seasoned fund. Newer funds may also
experience greater portfolio turnover. Past performance cannot predict or
guarantee future results.

TABLE I
LARGE CAP VALUE FUND
YEAR-BY-YEAR TOTAL RETURNS

[BAR CHART APPEARS HERE]

===========================
Best Quarter:

Q2 '97 14.53%

Worst Quarter:

Q3 '98 -15.99%
===========================

________________________

(1) From inception (October 11, 1996) through December 31, 1996. Not
annualized.

TABLE II
LARGE CAP VALUE FUND
AVERAGE ANNUAL TOTAL RETURN
(THROUGH 12/31/98)
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION (10/11/96)
--------- ---------------------------
<S> <C> <C>
Large Cap Value Fund 1.73% 13.04%

S&P 500 Index/(1)/ 28.57% 31.51%
</TABLE>

________________________

6
<PAGE>

(1) The S&P 500 Stock Index is an unmanaged index of 500 stocks representing
major U.S. industries.

TABLE III
MARKET CAPITALIZATION OF COMMON STOCKS IN PORTFOLIO (AS OF 12/31/98)

MEDIAN WEIGHTED AVERAGE
------------ ----------------
Large Cap Value Fund $4.4 billion $8.4 billion

S&P 500 Index/(1)/ $7.8 billion $87.7 billion

________________________

(1) Source: Prudential Securities, Inc.

MID CAP VALUE FUND

INVESTMENT GOAL. The Mid Cap Value Fund seeks long-term capital appreciation
through investing in mid-sized companies.

PRINCIPAL INVESTMENT STRATEGIES. Under normal market conditions, the Mid Cap
Value Fund invests at least 65% of its total assets, and generally almost all of
its assets, in common stocks and other equity securities of mid-sized companies
with market cap italizations between $750 million and $5 billion selected on a
value basis. It may, however, invest in other securities, including, without
limitation, equity securities of larger and smaller companies, debt securities,
warrants, convertible securities and cash equivalents. There are no credit
quality limitations on the convertible or debt securities in which the Fund may
invest.

Mid-sized companies tend to have more experienced management and more
established operating histories than smaller companies. As a result, mid-sized
companies tend to be more widely followed by investment analysts and have
greater financial data and other information readily available than smaller
companies. However, mid-sized companies typically are less well-established and
followed than larger companies, and the securities of mid-sized companies
usually are not as broadly owned. These factors make securities of mid-sized
companies a less efficient market segment, creating potential opportunities for
investors.

7
<PAGE>

RISKS. The share price and investment return of the Mid Cap Value Fund will
fluctuate. Fluctuations in price and return usually will be less than that of a
mutual fund holding securities of smaller companies or a mutual fund managed
with a more aggressive management style that places less emphasis on the
relative value of a portfolio company's assets. Mid cap securities tend to be
more volatile and less liquid than the securities of larger companies, but they
are believed to offer richer investment opportunities along with greater risk.
The Fund seeks to moderate this risk by investing in equity securities that
offer higher dividend yields than equity securities in general.

WHO SHOULD CONSIDER INVESTING IN THE FUND? The Mid Cap Value Fund is designed
for investors who seek long-term capital appreciation from a diversified,
actively managed portfolio of mid-size company stocks. It is designed for
investors who seek greater investment return potential than that which is
normally available from the broad-based equity markets and who can tolerate the
greater investment risk and market volatility associated with mid-sized and
smaller companies. It is designed for investors who want an investment strategy
that seeks to manage these risks by investing in companies believed to be
undervalued relative to their intrinsic value.

PAST PERFORMANCE. The tables below show the performance of the Mid Cap Value
Fund since its inception. Table I shows how the Fund's total returns have
varied from year to year. Table II shows how the Fund's average annual total
returns compare to those of a broad-based securities market index. Table III
shows the median and weighted average market capitalizations for the companies
whose equity securities are owned by the Fund and for the companies included in
the index as of December 31, 1998. The Fund commenced operations on October 11,
1996. The performance of a newer mutual fund may be adversely affected by such
factors as uneven cash flows and absolute size. These factors may make it more
difficult for a newer fund to establish meaningful portfolio positions as
quickly and as efficiently as a more seasoned fund. Newer funds may also
experience greater portfolio turnover. Past performance cannot predict or
guarantee future results.

8
<PAGE>

TABLE I
MID CAP VALUE FUND
YEAR-BY-YEAR TOTAL RETURNS

[BAR CHART APPEARS HERE]

=======================
Best Quarter:

Q1 '98 14.71%

Worst Quarter:

Q3 '98 -20.17%
=======================

_______________________

(1) From inception (October 11, 1996) through December 31, 1996. Not
annualized.

TABLE II
MID CAP VALUE FUND
AVERAGE ANNUAL TOTAL RETURN
(THROUGH 12/31/98)

<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION (10/11/96)
--------- ---------------------------
<S> <C> <C>
Mid Cap Value Fund -7.96% 8.77%

S&P Mid Cap 400 Index/(1)/ 19.11% 25.77%
</TABLE>

________________________

(1) The S&P Mid Cap 400 Index is an unmanaged index of 400 stocks generally
representative of the mid cap market.

9
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TABLE III
MARKET CAPITALIZATION OF COMMON STOCKS IN PORTFOLIO (AS OF 12/31/98)

MEDIAN WEIGHTED AVERAGE
------------ ----------------
Mid Cap Value Fund $1.5 billion $2.0 billion

S&P Mid Cap 400 Index/(1)/ $1.8 billion $8.66 billion

________________________

(1) Source: Prudential Securities, Inc.

VALUE PLUS FUND

INVESTMENT GOAL. The Value Plus Fund seeks capital appreciation and current
income.

PRINCIPAL INVESTMENT STRATEGIES. The Value Plus Fund invests primarily in
income-producing equity securities of smaller companies selected on a value
basis. To further pursue its income objective, the Fund also invests up to 35%
of its total assets in other securities, including, without limitation, debt
securities and cash equivalents. Although it may invest in securities of larger
companies, it generally invests in companies with market capitalizations of less
than $750 million. There are no credit quality limitations on the convertible or
debt securities in which the Fund may invest.

The income-producing equities in which the Fund invests include dividend-paying
common stocks, preferred stocks, warrants, convertible securities and real
estate in vestment trusts (REITs). Debt securities purchased by the Fund may be
either unrated or rated by one or more independent rating organizations that
rate the issuer of a security based on the issuer's financial soundness. Debt
securities purchased by the Fund may be rated in any rating category established
by a rating organization. If a debt security is rated below investment grade or
unrated, Heartland Advisors conducts its own assessment of the creditworthiness
of the issuer.

RISKS. The share price and investment return of the Value Plus Fund will
fluctuate. Because the Fund invests in small companies, fluctuations in price
and return tend to be greater than those of a mutual fund investing in larger
companies, and the Fund's portfolio also may be less liquid. Securities of small
companies may be more sensitive to changes

10
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in economic and business conditions, have less experienced management and
shorter operating histories, and may be less widely followed by investment
analysts and less broadly owned by institutional and retail investors.

Equity securities of small cap companies involve a higher degree of risk than
investments in the broad-based equity markets. In general, the prices of
securities of small cap companies may be more volatile than those of larger
companies, they may have less market liquidity, and they may be more likely to
be adversely affected by poor economic or market conditions.

The Fund also seeks to reduce the risks associated with investing in small
companies through the income component of its portfolio. However, there is no
assurance that the income-producing features of the Fund will reduce these risks
or the Fund's volatility. Further, the value of the income-producing securities
in the Fund's portfolio are affected by interest rate fluctuations and factors
affecting the creditworthiness of issuers of such securities. The non-investment
grade debt securities in which the Fund may invest may be regarded, on balance,
as predominantly speculative with regard to the capacity to pay interest and
repay principal. Non-investment grade securities involve greater risk of default
and loss of principal and greater price volatility than investment grade bonds.

WHO SHOULD CONSIDER INVESTING IN THE FUND? The Value Plus Fund is designed for
investors who seek a combination of capital appreciation from small company
stocks and current dividend income. It is designed for long-term investors who
seek greater investment return potential than that which is normally available
from the broad-based equity markets and who can tolerate the greater investment
risk and market volatility associated with smaller companies. It is designed for
investors who want an investment strategy that seeks to manage these risks by
investing in companies believed to be undervalued relative to their intrinsic
value and who want to moderate these risks with the careful selection of income
producing securities as an integral part of their investment portfolio.

PAST PERFORMANCE. The tables below show the performance of the Value Plus Fund
since its inception. Table I shows how the Fund's total returns have varied from
year to year. Table II shows how the Fund's average annual total returns compare
to those of a broad-based securities market index. Table III shows the median
and weighted average market capitalizations for the companies whose equity
securities are owned by the Fund and for the companies included in the index as
of December 31, 1998. Table IV shows the annualized yield of the Fund and the
index for the 30 days ended December 31, 1998. Past performance cannot predict
or guarantee future results.

11
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TABLE I
VALUE PLUS FUND
YEAR-BY-YEAR TOTAL RETURNS

[BAR CHART APPEARS HERE]

============================
Best Quarter:

Q3 '97 15.47%

Worst Quarter:

Q3 '98 -13.25%
============================

________________________

(1) From inception (October 26, 1993) through December 31, 1993. Not
annualized.

TABLE II
VALUE PLUS FUND
AVERAGE ANNUAL TOTAL RETURN
(THROUGH 12/31/98)

<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR SINCE INCEPTION (10/23/93)
--------- ---------- ---------------------------
<S> <C> <C> <C>
Value Plus Fund -10.78% 13.01% 13.64%

Russell 2000 Index/(1)/ -2.55% 11.86% 11.74%
</TABLE>

________________________

(1) The Russell 2000 Index is an unmanaged index of 2,000 stocks considered
representative of the small cap market.

12
<PAGE>

TABLE III
MARKET CAPITALIZATION OF COMMON STOCKS IN PORTFOLIO (AS OF 12/31/98)

MEDIAN WEIGHTED AVERAGE
------------ ----------------
Value Plus Fund $134 million $543 million

Russell 2000 Index/(1)/ $430 million $880 million

________________________

(1) Source: Prudential Securities, Inc.

TABLE IV
YIELD FOR THE 30 DAYS ENDED 12/31/98 (ANNUALIZED)

Value Plus Fund 4.12%

Russell 2000 Index 1.34%

For current yield information, please call 1-800-432-7856.

VALUE FUND

INVESTMENT GOAL. The Value Fund seeks long-term capital appreciation through
investing in small companies.

PRINCIPAL INVESTMENT STRATEGIES. The Value Fund invests primarily in equity
securities of companies with market capitalizations of less than $750 million
selected on a value basis. It may, however, invest in other securities,
including, without limitation, equity securities of larger companies, debt
securities, warrants, convertible securities and cash equivalents. There are no
credit quality limitations on the convertible or debt securities in which the
Fund may invest.

13
<PAGE>

market liquidity, and they may be more likely to be adversely affected by poor
economic or market conditions.

RISKS. The share price and investment return of the Value Fund will fluctuate.
Because the Fund invests in small companies, fluctuations in price and return
tend to be greater than those of a mutual fund investing in larger companies,
and the Fund's portfolio also may be less liquid. Securities of small companies
may be more sensitive to changes in economic and business conditions, have less
experienced management and shorter operating histories, and may be less widely
followed by investment analysts and less broadly owned by institutional and
retail investors.

WHO SHOULD CONSIDER INVESTING IN THE FUND? The Value Fund is designed for
investors who seek long-term capital appreciation from small company stocks. It
is designed for investors who seek greater investment return potential than that
which is normally available from the broad-based equity markets and who can
tolerate the greater investment risk and market volatility associated with
smaller companies. It is designed for investors who want an investment strategy
that seeks to manage these risks by investing in companies believed to be
undervalued relative to their intrinsic value.

PAST PERFORMANCE. The tables below show the performance of the Value Fund over
the past 10 years. Table I shows how the Fund's total returns have varied from
year to year. Table II shows how the Fund's average annual total returns compare
to those of a broad-based securities market index. Table III shows the median
and weighted average market capitalizations for the companies whose equity
securities are owned by the Fund and for the companies included in the index as
of December 31, 1998. Past performance cannot predict or guarantee future
results.

14
<PAGE>

TABLE I
VALUE FUND
YEAR-BY-YEAR TOTAL RETURNS

[BAR CHART APPEARS HERE]

=============================
Best Quarter:

Q1 '91 29.24%

Worst Quarter:

Q3 '90 -24.39%
=============================

TABLE II
VALUE FUND
AVERAGE ANNUAL TOTAL RETURN (THROUGH 12/31/98)

<TABLE>
<CAPTION>
SINCE INCEPTION
ONE YEAR FIVE YEAR TEN YEAR (12/28/84)
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Value Fund -11.46% 11.74% 14.55% 14.99%

Russell 2000 Index/(1)/ -2.55% 11.86% 12.92% 12.74%
</TABLE>

________________________

(1) The Russell 2000 Index is an unmanaged index of 2,000 stocks considered
representative of the small cap market.

15
<PAGE>

TABLE III
MARKET CAPITALIZATION OF COMMON STOCKS IN PORTFOLIO (AS OF 12/31/98)

MEDIAN WEIGHTED AVERAGE
------------ ----------------
Value Fund $74 million $343 million

Russell 2000 Index/(1)/ $430 million $880 million

________________________

(1) Source: Prudential Securities, Inc.

GOVERNMENT FUND (FORMERLY THE U.S. GOVERNMENT SECURITIES FUND)

INVESTMENT GOAL. The Government Fund seeks a high level of current income,
liquidity and safety of principal.

PRINCIPAL INVESTMENT STRATEGIES. The Government Fund will invest at least 80% of
its total assets in obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, or by other U.S. Government sponsored entities
and repurchase agreements for such securities ("Government securities"). These
securities include, without limitation, U.S. Treasury and agency securities, and
mortgage-backed securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. They differ primarily in terms of interest rates,
length of maturities, the nature of the governmental obligation and issuance
dates.

Mortgage-backed securities may include hybrid and structured mortgage related
instruments, such as collateralized mortgage obligations ("CMOs") and stripped
mortgage-backed securities ("SMBs"). SMBs may be divided into different classes
each of which might receive a different combination of the interest and
principal from the underlying mortgaged loans. In certain cases, a class may
receive either all of the interest ("interest only" or "IO" class) or all of the
principal ("principal only" or "PO" class). The Fund will limit its aggregate
investments in IO and PO classes to 10% of net assets.

The balance of the Fund's assets may be invested in other securities including,
without limitation: pooled debt securities, such as asset-backed and mortgage-
backed securities issued by non-governmental entities; commercial paper and
other debt obligations of foreign governments, domestic and foreign corporations
and other business organizations; certificates of deposit, bankers' acceptances
and time deposits; and convertible securities and preferred stocks. Any
investments in debt securities will, at the time of purchase, be

16
<PAGE>

rated investment grade or, if unrated, be of comparable quality in the opinion
of Heartland Advisors.

Heartland Advisors buys and sells Government securities for the Fund's portfolio
after analyzing economic conditions, liquidity factors and interest rate trends.
It also may use sector rotation, security selection, duration management and
yield-curve positioning strategies.

Although there are no duration restrictions for the Fund or the individual
obligations in its portfolio, under normal market conditions, it is anticipated
that the Fund will maintain an average portfolio duration of three to six years.
Heartland Advisors believes that maintaining a portfolio duration within this
range allows the Fund to seek both high current income and preservation of
capital.

RISKS. The share price and investment return of the Government Fund will
fluctuate. The principal risks associated with the fixed income securities in
which the Fund invests are: interest rate movements; maturity; inflation;
principal prepayment; and the portfolio managers' skill in managing the Fund's
portfolio duration. U.S. Treasury obligations held by the Fund are backed by the
"full faith and credit" of the United States. In the case of U.S. Government
agency obligations, some are backed by the full faith and credit of the United
States, while others are backed only by the right of the issuer to borrow from
the U.S. Government and the credit of the issuing agency. Because there is no
guarantee that the U.S. Government will provide support to such agencies, such
securities may involve risk of loss of principal and interest.

Declining interest rates generally will increase the value of debt securities
held by the Fund, and rising interest rates will generally have the opposite
effect. In addition, debt securities with longer maturities held by the Fund are
more greatly affected by changes in interest rates than securities with shorter
maturities. Prepayment of high interest rate mortgage-backed and asset-backed
securities during times of declining interest rates will tend to lower the
Fund's return and may even result in losses to the Fund if those securities were
acquired at a premium. During periods of rising interest rates, prepayments of
mortgage-backed and asset-backed securities may decline, resulting in the
security becoming less liquid and extending the Fund's duration. As a result,
the Fund's portfolio may experience greater volatility during periods of rising
interest rates than under normal market conditions.

17
<PAGE>

WHO SHOULD CONSIDER INVESTING IN THE FUND? The Government Fund is designed for
investors seeking a higher yield than a money market fund or an insured bank
certificate of deposit with less fluctuation in net asset value than a longer-
term bond fund. Unlike money market funds, however, the Fund does not seek to
maintain a stable net asset value and shares in the Fund are not insured like a
bank deposit account.

PAST PERFORMANCE. The tables below show the performance of the Government Fund
over the past 10 years. Table I shows how the Fund's total returns have varied
from year to year. Table II shows how the Fund's average annual total returns
compare to those of a broad-based securities market index. Table III shows the
yield for the Fund and the index for the 30 days ended December 31, 1998.
Past performance cannot predict or guarantee future results.

TABLE I
GOVERNMENT FUND
YEAR-BY-YEAR TOTAL RETURNS

[BAR CHART APPEARS HERE]

===========================
Best Quarter:

Q3 '91 7.10%

Worst Quarter:

Q3 '94 -4.81%
===========================

18
<PAGE>

<TABLE>
<CAPTION>
TABLE II
GOVERNMENT FUND
AVERAGE ANNUAL TOTAL RETURN
(THROUGH 12/31/98)
SINCE INCEPTION
ONE YEAR FIVE YEAR TEN YEAR (4/9/87)
--------- ---------- --------- ---------------
<S> <C> <C> <C> <C>
Government Fund 8.15% 5.40% 9.22% 8.56%

Lehman Intermediate 8.62% 6.46% 8.34% 7.90%
Treasury Index/(1)/
</TABLE>

________________________

(1) The Lehman Intermediate Treasury Index is an unmanaged index of all
Treasury securities issued by the U.S. Government with maturities of
greater than one year but less than 10 years and at least $100 million in
outstanding issuance.

TABLE III
YIELD FOR THE 30 DAYS ENDED 12/31/98 (ANNUALIZED)

Government Fund 5.5%

Lehman Intermediate Treasury Index 5.0%

For current yield information, please call 1-800-432-7856.

FEES AND EXPENSES OF THE FUNDS

This summary describes the fees and expenses that you would pay if you buy and
hold shares of the Funds.

SHAREHOLDER FEES (fees paid directly from your investment). Because the Funds
are no-load funds, you pay no fees or sales charges when you buy or sell shares.
However, the Transfer Agent charges a fee (currently $12.00) when you have
redemption proceeds paid to you by wire transfer. To defray certain transaction
expenses and facilitate portfolio management, upon 90 days' advance written
notice to its shareholders, each Fund reserves the right to charge you an early
redemption fee of 1% of the proceeds of shares redeemed or exchanged that are
held for less than 90 days.

19
<PAGE>

ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets)/1/.

<TABLE>
<CAPTION>
LARGE CAP MID CAP VALUE PLUS VALUE GOVERNMENT
VALUE FUND VALUE FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
Management and
administrative fees 0.75% 0.75% 0.70% 0.75% 0.65%

Rule 12b-1 fees 0.25% 0.25% 0.25% 0.25% 0.25%

Other expenses 0.92% 0.34% 0.26%/2/ 0.15% 0.26%

Total annual operating
expenses 1.92% 1.34% 1.21% 1.15% 1.16%

Fee waiver and/or expense
reimbursement (0.97%) (0.09%) (0.00%) (0.00%) (0.36%)
----- ----- -------- ----- -----

Net accrued operating
expenses 0.95% 1.25% 1.21% 1.15% 0.80%
</TABLE>

________________________

(1) Heartland Advisors has contractually undertaken to waive fees paid to it by
the Funds and to pay other ordinary expenses of the Funds on an annual
basis through April 30, 2000 as follows: for the Large Cap Value Fund,
expenses in excess of 0.95% of average net assets; for the Mid Cap Value
Fund, expenses in excess of 1.25% of average net assets; and for the
Government Fund, expenses in excess of 0.80% of average net assets. After
that date, these fee waivers and expense reimbursement undertakings may be
continued, terminated or revised at any time. If a Fund's operating
expenses fall below the current expense limitation, the Fund will repay
Heartland Advisors for expenses previously reimbursed. Repayment will
continue for up to three years after the fiscal year in which the
reimbursement occurred, subject to any expense limitation then in effect.
Repayment will stop when the Fund has repaid the entire amount or the
three-year period ends.

(2) Not including interest expense of 0.03%.

EXAMPLE. (This example is intended to help you compare the cost of investing in
the Funds with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in each Fund for the time periods indicated and then
redeem all of your shares at the end of those time periods. The example also
assumes that (a) your investment has a 5% return each year, (b) any contractual
fee waivers will not be renewed after April 30, 2000, and (c) each Fund's total
annual operating expenses remain the same as shown in the table above for
periods greater than one year. The assumed return in the example does not
represent actual or future performance, and your actual cost of investing in the
Funds may be higher or lower.)

20
<PAGE>

<TABLE>
<CAPTION>
LARGE CAP MID CAP VALUE VALUE GOVERNMENT
VALUE FUND VALUE FUND PLUS FUND FUND FUND
---------- ---------- --------- ---- ----
<S> <C> <C> <C> <C> <C>
ONE YEAR $ 97 $ 127 $ 123 $ 117 $ 82

THREE YEARS $ 509 $ 416 $ 384 $ 365 $ 333

FIVE YEARS $ 947 $ 725 $ 665 $ 633 $ 604

TEN YEARS $2,164 $1,605 $1,466 $1,398 $1,377
</TABLE>

MANAGEMENT OF THE FUNDS

HEARTLAND GROUP

The Funds are mutual fund portfolio series of Heartland Group, Inc.
("Heartland"). For each of the Funds, the shares offered by this prospectus are
the "no-load" class. No other classes of shares have been authorized at this
time.

Heartland is governed by a Board of Directors that oversees its business
affairs. The Board meets regularly to review the Funds' investments,
performance, and expenses. It elects the officers of Heartland and hires the
Funds' service providers, including the Funds' investment advisor. As a matter
of policy, Heartland requires that a majority of its Board members be
independent of the Funds' investment advisor.

HEARTLAND ADVISORS

Founded in 1982 by William J. Nasgovitz, Heartland Advisors, Inc., America's
Value Investor(R), is an independent firm owned by its employees. It manages
the Funds' investments subject to, the authority of and supervision by the Board
of Directors of Heartland. Heartland Advisors also distributes the Funds'
shares and provides administrative and accounting services to the Funds and
shareholder services to the Funds' investors. In addition to managing the
Heartland family of nine equity and fixed income mutual funds, Heartland
Advisors provides investment advisory and brokerage services to individuals,
institutions and retirement plans. Its principal offices are located at, and
its mailing address is, 790 North Milwaukee Street, Milwaukee, Wisconsin 53202.

PORTFOLIO MANAGERS. James P. Holmes, Chartered Financial Analyst ("CFA"), is
portfolio manager for the LARGE CAP VALUE FUND and has managed the Fund since
its inception. Mr. Holmes is a Vice President and principal of Heartland
Advisors, which he joined in July 1996. Prior to that time, Mr. Holmes had been
a Managing Director of Dreman Value Advisors, Inc. and its predecessor since
1986, with responsibility for portfolio management of institutional accounts.

21
<PAGE>

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

William J. Nasgovitz is co-portfolio manager for the VALUE PLUS FUND and the
VALUE FUND and has been a portfolio manager of each Fund since commencement of
its operations. For the past five years, Mr. Nasgovitz has been President, Chief
Executive Officer and a Director of Heartland Advisors. During this same
period, he also has been President and a Director of Heartland.

Eric J. Miller, Certified Management Accountant ("CMA"), is co-portfolio manager
of the VALUE FUND with Mr. Nasgovitz. Mr. Miller, a Senior Vice President and a
Director of Heartland Advisors, has co-managed the Fund since July 1997. He
joined the firm as a portfolio manager and research analyst for advisory clients
in January 1994. Prior to that time, Mr. Miller had been with American
Appraisal Associates, Inc. since 1986, serving as Vice President, Head of U.S.
Appraisal Operations.

Patrick J. Retzer, Certified Public Accountant ("CPA"), is co-portfolio manager
of the GOVERNMENT FUND and has been a manager of the Fund since October 1988.
Mr. Retzer also is co-manager of the VALUE PLUS FUND with Mr. Nasgovitz and has
been a manager of that Fund since July 1997. Mr. Retzer is a Senior Vice
President and a Director of Heartland Advisors, and has been associated with the
firm in various capacities since 1988.

Lawrence J. Pavelec, CFA, is co-portfolio manager of the GOVERNMENT FUND. Mr.
Pavelec is a Vice President of Heartland Advisors, which he joined in October
1998. Prior to that time, Mr. Pavelec was Director of Fixed Income at M&I
Investment Management Corporation, with which he was associated in various
capacities since 1985.

MANAGEMENT FEE AND EXPENSE LIMITATION. For Heartland Advisors' investment
management services, each of the Funds pays an annual fee, accrued daily and
paid monthly, computed as a percentage of each Fund's average net assets. For
the fiscal year ended December 31, 1998, the Funds paid the following advisory
fees which are set forth as a percentage of average daily net assets:

22
<PAGE>

FUND ADVISORY FEE
- ---- ------------
Large Cap Value Fund 0% (0.75% before fee waivers)

Mid Cap Value Fund 0.75%

Value Plus Fund 0.70%

Value Fund 0.75%

Government Fund 0.25% (0.65% before fee waivers)

Through April 30, 2000, Heartland Advisors has contractually agreed to waive
fees paid to it by each of the Large Cap Value Fund, the Mid Cap Value Fund, and
the Government Fund and/or pay other Fund ordinary operating expenses (excluding
brokerage commissions, interest and taxes) to the extent necessary to ensure
that the Fund's total annual ordinary operating expenses do not exceed the
percentage of average net assets noted in "Fees and Expenses of the Funds."
After such time, Heartland Advisors may continue, modify or discontinue these
waivers and/or reimbursements. Any waiver of fees or reimbursement of expenses
is made on an annual basis. If any fees are owed to Heartland Advisors by a
Fund, Heartland Advisors may pay the Fund's expenses indirectly by reducing the
amount of such fees owed to it by the Fund. Waivers and reimbursements have the
effect of lowering the Fund's overall expense ratio and increasing the Fund's
overall return to investors.

If a Fund's operating expenses fall below the expense limitation, the Fund will
begin paying Heartland Advisors for fees previously waived and expenses
previously reimbursed. This repayment will continue for up to three years after
the end of the fiscal year in which a fee is waived or an expense is paid,
subject to any expense limitation then in effect, until the Fund has repaid
Heartland Advisors for the entire amount or such three-year period expires.

RULE 12B-1 FEES. Each Fund has adopted a plan under Rule 12b-1 whereby the Fund
pays Heartland Advisors a fee of up to 0.25% of the Fund's daily net assets
computed on an annual basis and paid monthly for distributing its shares and
providing certain shareholder services. Because the fee is paid out of the
Fund's assets on an ongoing basis, fees paid under the Rule 12b-1 plan will
increase the cost of your investment and may cost you more over time than paying
other types of sales charges imposed by some mutual funds.

YEAR 2000 READINESS. Many computer systems use two digits rather than four to
identify the year in a date. These systems, if not modified, will not correctly
handle the change from "99" to "00" on January 1, 2000, causing them to be
unable to accurately perform certain functions ("Year 2000 processing"). This
problem affects virtually all companies and organizations, and, among other
things, could have a negative impact on the handling

23
<PAGE>

of securities trades, payments of interest and dividends, and the pricing of and
accounting for securities portfolios.

Heartland Advisors has taken steps to help assure that its major computer
systems are capable of handling Year 2000 processing. It is also assessing the
readiness of the Funds' custodian and transfer and dividend disbursing agent and
other third parties performing major Year 2000 processing services for the Funds
and Heartland Advisors. Although Heartland Advisors expects all major Fund
computer systems to be ready in time, the Funds could be adversely affected if
Year 2000 processing systems are not properly modified in a timely manner.

In addition, the issuers of the Funds' portfolio securities could have Year 2000
processing issues, as could the service providers who administer the payment of
principal and interest on fixed-income securities owned by investors, such as
the Funds. These problems might negatively affect the value of the issuer's
securities, which, in turn, could adversely impact the Funds' performance.
Heartland Advisors has established a process to gather publicly available
information about the Year 2000 readiness of portfolio companies. However, this
process may not uncover all relevant information, and the information gathered
may not be complete or accurate. Moreover, an issuer's Year 2000 processing
readiness is only one of many factors a Fund's portfolio manager may have
considered when making investment decisions, and other factors may receive
greater weight.

PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT RISKS

Heartland Advisors, America's Value Investor(R), selects investments for the
Funds that it believes are undervalued as measured by sets of criteria known as
Heartland Advisors' Ten-Point Value Investment Grids(TM). The portfolios of the
Heartland Funds are actively managed. Although no one can predict a Fund's
future performance, Heartland Advisors believes that the "value" style of
investing will outperform over extended periods, which may include bear markets
as well as volatile or "sideways moving" markets. The value style may perform
less well in markets that favor faster growing companies.

HEARTLAND ADVISORS' TEN-POINT VALUE INVESTMENT GRIDS(TM)

EQUITY TEN-POINT VALUE INVESTMENT GRID(TM). Heartland Advisors' Equity Ten-
Point Value Investment Grid(TM) consists of the following criteria for selecting
equity securities for the Funds:

. Low Price/Earnings Multiple. Is the stock's price/earnings ratio less than
the average in the marketplace? If so, and the stock is then "discovered" by
Wall Street, the low P/E provides an opportunity for a price increase. Also, if
the market drops, low P/E stocks have less downside risk.

24
<PAGE>

. High Cash Flow. Does the company have high cash flow? Strong cash flow
permits a company to finance expansion internally, repurchase shares or increase
its dividends.

. Positive Earnings Dynamics. Does the company have improving earnings or
upwardly revised estimates? Heartland Advisors favors companies with prospects
for improved earnings.

. Discount to Book Value. Is the stock selling at prices below its tangible
book value? A company's book value - assets minus liabilities - gives an
indication of what it would be worth if liquidated. Heartland Advisors likes to
buy a stock for less than book value. Stocks that are very popular with
investors may sell at five or more times book value.

. Financial Soundness. How much debt does a company have relative to its
equity? Heartland Advisors prefers companies whose balance sheets have a ratio
of debt to total capital of no more than 25%.

. High Insider Ownership. Does management own a significant percentage of a
company's stock, and are they buying shares? Executives who invest in their own
companies usually have aligned their interests with those of other shareholders.

. Capable Management. Do the top decision-makers have a realistic vision for
the company as well as a history of success and the drive to accomplish their
goals? The ability of management and management's plans for the company's
prosperity are of paramount importance.

. Hidden Assets. Does the company have undervalued assets? These may
include understated natural resources, real estate, overfunded pension plans or
fixed assets worth substantially more than their stated book value.

. Positive Technical Analysis. How has the stock's price performed over
time? Heartland Advisors prefers to buy stocks whose prices have experienced
limited fluctuation over long periods.

. Catalyst for Recognition. Is there a factor that could potentially ignite
market interest in the stock and close the gap between the stock's price and
Heartland Advisors' assessment of its true value? Examples of a catalyst
include a new product or technology, a large repurchase plan, or merger
activity.

FIXED INCOME TEN-POINT VALUE INVESTMENT GRID(TM). Heartland Advisors' Fixed
Income Ten-Point Value Investment Grid(TM) consists of the following criteria
for selecting fixed income securities for the Funds.

25
<PAGE>

. Economic Trends. Identifying the trend in economic growth is a main
determinant to formulating our investment strategy. Heartland Advisors combines
the perspectives of trusted outside economists with our own independent analysis
to develop a short- and long-term outlook.

. Federal Reserve Policy. The potential for the Federal Reserve to shift
monetary policy has significant implications for market interest rates, the
yield curve and sector weightings.

. "Real" Interest Rates. Over long periods of time the relationship between
inflation and nominal yields tends to reflect the relative value in fixed income
investments. High "real" rates cushion investors against adverse moves in
inflation.

. Attractive Risk Premiums. The relative attractiveness of fixed income
investments is gauged by the "risk premium," or additional yield to U. S.
Treasury securities. Heartland Advisors studies historical relationships in an
attempt to discover pricing anomalies and profit from their reversion to the
mean.

. Sector Outlook. Each of the fixed income sectors offers different
risk/return attributes at different points of the economic and interest rate
cycle. Heartland Advisors typically favors corporate bonds during periods of
stronger economic growth, while Treasuries are favored in times of slowing
growth and uncertainty.

. Financial Soundness. Heartland Advisors employs primary research to assess
an issuer's financial soundness, which is essential to evaluating the quality
and value of debt instruments.

. Market Sponsorship. Strong fundamental and technical support must be
accompanied by general market sponsorship for an investment to achieve full
value.

. Positive Technical Analysis. Technical analysis is employed to identify
turning points and confirm trends derived from fundamental analysis. Technical
analysis can be used as a tool to reveal market sentiment.

. Innovative Asset Classes. The capital markets are constantly evolving with
innovative securities and investment strategies. Discerning investors who
capitalize on the pricing inefficiencies that typically surround new
developments, such as commercial mortgage-backed securities and taxable
municipal bonds, may capture significant additional returns.

. Catalyst for Recognition. To maximize total return, Heartland Advisors not
only looks for undervalued securities, but tries to anticipate events which will
close the gap between an investment's current price and its intrinsic value.
For example, investing in

26
<PAGE>

securities disfavored by investors fleeing the market for short-term, technical
reasons may create opportunities for "value" investors.

OTHER INVESTMENTS AND INVESTMENT STRATEGIES

In addition to the investments and investment strategies discussed under "Fund
Highlights" in this prospectus, each Fund may engage in the strategies and may
purchase and sell the investments discussed below and in its statement of
additional information.

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES; FORWARD COMMITMENTS. Each Fund may
purchase securities on a when-issued or delayed-delivery basis, and may purchase
forward commitments. Although the payment and interest terms of these
securities are established at the time the purchaser enters into the commitment,
the securities may be delivered and paid for a month or more after the purchase
date. The Funds purchase securities in this manner in order to secure an
advantageous price and yield but the value of the security could change before
settlement. Therefore, although a Fund will make such commitments only with the
intention of actually acquiring the securities, it may sell the securities
before settlement if it is deemed advisable for reinvestment reasons. When-
issued or delayed-delivery securities may sometimes be purchased on a "dollar
roll" basis, meaning that a Fund will sell securities with a commitment to
purchase similar, but not identical, securities at a future date. Dollar rolls
are engaged in when Heartland Advisors believes securities similar to those sold
can be purchased a short time later at a lower price.

BORROWING. Each Fund may borrow from any bank or other person up to 5% of total
assets for temporary purposes. A borrowing is presumed to be for temporary
purposes if it is repaid by a Fund within 60 days and is not extended or
renewed. Each Fund also may borrow solely from banks to facilitate the
management of its investment portfolio to make other investments or engage in
other transactions permissible under the 1940 Act which may be considered a
borrowing (such as dollar rolls and reserve repurchase agreements), provided
such borrowings for these purposes do not exceed one-third of total assets.

Currently, each Fund intends to borrow only from banks, for periods of not
longer than 60 days, in amounts not to exceed 20% of total assets and only for
the following purposes: (a) to avoid liquidating securities under circumstances
which Heartland Advisors believes are unfavorable to shareholders, such as to
meet large or unexpected redemptions or to purchase debt obligations pending
receipt of proceeds in the settlement of the sale of other portfolio securities;
and (b) when the Fund is scheduled to receive cash in exchange for debt
obligations that are being retired, called or exchanged pursuant to a sinking
fund provision or put feature of the instrument. The extent to which a Fund
will borrow will depend, among other things, on market conditions and interest
rates.

DURATION MANAGEMENT. A Fund's share price is affected by changes in the value
of bonds held in its portfolio. In general, when interest rates rise, a bond's
value falls, and when

27
<PAGE>

interest rates fall, a bond's value rises. Duration measures the approximate
price sensitivity of a bond, or bond mutual fund, to a one percent (1%) rise or
fall in interest rates. For example, all else being equal, if interest rates
rise by 1%, a bond fund with a 3-year duration would expect its share price to
decline by about 3%; conversely, if interest rates fall by 1%, the fund would
expect to see about a 3% rise in price. When a change in direction of, or degree
of movement in interest rates is anticipated, the Fund will shorten or lengthen
its duration to help manage share price fluctuation.

ILLIQUID SECURITIES. No Fund will invest more than 15% of its net assets in
illiquid securities. For purposes of applying this limitation, an "illiquid
security" means one that may not be sold or disposed of in the ordinary course
of business within seven days at a price approximating the value at which the
security is carried by a Fund. Each Fund may invest in debt obligations that
are purchased in private placements (that is, transactions in which securities
have not been registered under federal law) and that are subject to restrictions
on resale as a matter of contract or law. Private placement notes issued
pursuant to a private placement exemption provided by Section 4(2) of the
Securities Act of 1933 (the "1933 Act") have been determined to be liquid by the
Heartland Board of Directors. These securities and restricted securities issued
under Rule 144A of the 1933 Act that are deemed to be liquid by Heartland
Advisors under guidelines established by the Board of Directors are not subject
to a Fund's limitation on illiquid securities. Municipal lease obligations,
which may be considered illiquid, may similarly be determined to be liquid in
accordance with guidelines adopted by the Heartland Board of Directors. Absent
such determinations, such securities, and repurchase agreements maturing in more
than seven days, are considered illiquid.

INFLUENCE OR CONTROL OVER PORTFOLIO COMPANIES. As a shareholder of a portfolio
company, each Fund reserves the right to freely communicate its views as a
shareholder on matters of policy to the company's management, board of directors
and other shareholders when a policy may affect the value of the Fund's
investment. In exercising this right, each of the Funds (other than the
Government Fund and, to a lesser degree, the Large Cap Value and Mid Cap Value
Funds) may, from time to time, use its ownership interest in a portfolio company
to seek to influence or control the company's management. For example, a Fund
might take steps, either individually or as part of a group, (a) to actively
support, oppose or influence a company's decision-making, (b) to seek changes in
a company's management or board of directors, (c) to effect the sale of all or
some of a company's assets or (d) to vote to participate in or oppose a takeover
of a portfolio company or an acquisition by a portfolio company. A Fund would
engage in such activities in an effort to protect and maximize the value of its
investment on behalf of the Fund's shareholders. The extent to which a Fund
might invest for purposes of obtaining control or influencing management would
depend, among other things, on facts and circumstances specific to the issuer as
well as general market conditions.

28
<PAGE>

Investing for purposes of obtaining control or influencing management could
result in additional expense to a Fund, including expenses associated with
operational or regulatory requirements and the ongoing cost of potential
litigation. It could also restrict a Fund's ability to freely dispose of the
securities of a portfolio company with respect to which it is deemed to be
investing for control, which might adversely affect the Fund's liquidity as well
as the sales price of those securities. Finally, greater public disclosure is
required regarding a Fund's investment and trading strategies in regulatory
filings relating to such securities.

It is expected that only the Value and Value Plus Funds, and to a lesser degree
the Mid Cap Value and Large Cap Value Funds, would make investments for control
on a selective basis when Heartland Advisors believes it would be in the best
interests of the Fund and its shareholders.

RISKS

SMALLER COMPANIES. Equity securities of small and mid cap companies involve a
higher degree of risk than investments in the broad-based equity markets. In
general, the prices of the securities of small and mid cap companies may be more
volatile than those of larger companies, they may have less market liquidity,
and they may be more likely to be adversely affected by poor economic or market
conditions. Small and mid-cap companies may have relatively lower revenues,
limited product lines, less management depth and a lower share of the market for
their products or services as compared to larger companies, any or all of which
could give rise to their greater risk. A Fund's position in such securities may
be substantial in relation to the market for such securities. As a result, it
may be difficult at times for a Fund to dispose of such securities at prevailing
market prices in order to meet redemptions or other cash needs.

FOREIGN SECURITIES. Each Fund may invest in foreign securities (including
depository receipts) traded both within and, to a lesser degree, outside of the
United States. Investments in foreign securities may be subject to certain risks
in addition to those normally associated with domestic stocks. These risks are
greater with respect to companies domiciled in developing countries.

Such risks include adverse political and economic developments or social
instability; the imposition of foreign withholding taxes or exchange controls;
expropriation or nationalization; currency blockage (which could prevent cash
from being brought back to the United States); the impact of exchange rate and
foreign currency fluctuations on the market value of foreign securities; more
limited availability of public information regarding security issuers; the
degree of governmental supervision regarding securities markets; different
accounting, auditing and financial standards; difficulties in enforcing legal
rights (particularly with regard to depository receipts in which the holders may
not have the same rights as shareholders); and the potential for less liquidity
and more volatility on foreign

29
<PAGE>

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

EUROPEAN ECONOMIC AND MONETARY UNION (EMU). Certain European countries have
joined the EMU in an effort to, among other things, reduce barriers between
countries and eliminate fluctuations in their currencies. The EMU has
established a single European currency, the euro, which was introduced on
January 1, 1999, and is scheduled to replace the existing national currencies of
all initial EMU participants by July 1, 2002. Certain securities, beginning
with government and corporate bonds have now redenominated in the euro and trade
and make dividend and other payments only in euros. Major European markets now
trade securities in euro denominations. If the Funds hold investments in
countries with currencies replaced by the euro, the investment process,
including trading, foreign exchange, payments, settlements, cash accounts,
custody and accounting will be impacted. Because this change to a single
currency is new and untested, the establishment of the euro may result in market
volatility. Accordingly, it is not possible to predict the impact of the euro
on the business or financial condition of European issuers which the Funds may
hold in their portfolios, and their impact on the value of the Funds' shares and
performance. To the extent the Funds hold non-U.S. dollar (euro or other)
denominated securities, they will continue to be exposed to currency risk due to
fluctuations in those currencies versus the U.S. dollar.

HIGH-YIELD SECURITIES. Each of the Funds (other than the Government Fund) may
invest a portion of its assets in non-investment grade debt securities,
including securities in default. Non-investment grade securities (commonly known
as "junk bonds") in which each Fund may invest may be regarded as predominantly
speculative with regard 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 a Fund's net asset value. Furthermore, higher
yielding bonds may contain redemption or call provisions which, if exercised in
a declining interest rate environment, may require a 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 for lower yielding bonds. As a result, it may be difficult to
accurately assess the value of such

30
<PAGE>

bonds (and therefore the respective Fund's securities portfolio), and a Fund's
ability to dispose of such bonds may be limited.

FUTURES AND OPTIONS. Each Fund may engage in transactions in options, futures
contracts and options on futures contracts to hedge against anticipated declines
in the market value of portfolio securities and increases in the market value of
securities it intends to acquire. Each Fund may also engage in such transactions
to protect against exposure to interest rate changes or changes in currency
exchange rates. Finally, the Funds may use these instruments to enhance total
return or to invest in eligible asset classes with greater efficiency and lower
cost than is believed to be possible through direct investments.

Options and futures can be highly volatile investments and involve certain
risks. These strategies require the ability to predict future movements in
securities prices, interest rates, currency exchange rates and other economic
factors. Heartland Advisors' attempts to use such investments may not be
successful and could result in reduction of a Fund's total return. A Fund's
potential losses from the use of futures extend beyond its initial investment in
such contracts. Each Fund could also experience losses if the prices of its
options or futures positions were poorly correlated with its other investments
(that is, the underlying investment moves in a direction opposite or more than
anticipated), or if the Fund were unable to close out its positions due to
disruptions in the market or lack of liquidity. Over-the-counter options and
futures generally involve greater credit and liquidity risks than exchange-
traded options and futures. Options and futures traded on foreign exchanges
generally are not regulated by U.S. authorities, and may offer less liquidity
and less protection to a Fund if the other party to the contract defaults.

TEMPORARY POSITIONS. Under adverse market conditions, or other extraordinary
economic or market conditions, each Fund may take a temporary defensive position
and invest, without limitation, in liquid reserves such as money market
instruments, certificates of deposit, commercial paper, short-term corporate
debt securities, variable rate demand notes, Government securities and
repurchase agreements. Taking a temporary defensive position is not required,
and may not be possible because of market conditions. It also might prevent a
Fund from achieving its investment objective.

INVESTMENT OBJECTIVES. Each Fund's investment goal may be changed by
Heartland's Board of Directors upon notice to shareholders, but without
shareholder approval.

HOW TO INVEST

31
<PAGE>

Please note that you may terminate or change any option you elect at any time
upon five days' advance notice to Heartland Advisors. The Funds may suspend,
modify, or terminate any purchase or redemption option, other than the option to
redeem by mail, at any time without notice to you. The Funds also reserve the
right to waive or lower any minimum dollar amounts applicable to the
transactions discussed below.

PURCHASING SHARES

OPENING AND ADDING TO ACCOUNTS.

By Mail - Mail or send by courier your check to Firstar Mutual Fund Services,
LLC, the Funds' transfer agent (the "Transfer Agent"), at one of the following
addresses. Make your check payable to the Fund you want to invest in. Checks
for new accounts should be mailed with an Account Application. Checks for
existing accounts should include your account number and be mailed with the
Additional Investment Form that is attached to your account statement.

Mail: Courier:
Firstar Mutual Fund Services, LLC Firstar Mutual Fund Services, LLC
P.O. Box 701 3rd Floor
Milwaukee, WI 53201-0701 615 East Michigan Street
Milwaukee, WI 53202

By Wire - Instruct your bank to wire federal funds to the Transfer Agent using
the following wire instructions. Specify the name of the Fund you want to
invest in. If you are opening a new account, you must first call 1-800-443-2862
to obtain an account number from the Fund and provide your tax identification
number.

Firstar Bank Milwaukee, N.A.
ABA #0750-00022
Firstar Mutual Fund Services A/C #112-952-137
777 East Wisconsin Avenue, Milwaukee, WI 53202
CREDIT TO: Heartland (Name of Fund)
Account of (exact name(s) listed in your account registration)
Your Fund Account No.__________

By Electronic Transfer - These services allow you to add to your account by
electronic transfer of funds from your bank account, and must be elected in
advance of use. You may obtain the forms for electing these services by calling
Heartland Advisors at one of the numbers listed above. Please allow
approximately 15 days for these services to be established. Please note that if
your electronic transfer order cannot be processed because of insufficient funds
or a stop payment, the Transfer Agent will charge your account a service fee of
$20.

32
<PAGE>

. Electronic Transfer by Telephone Request - You may add to your account
by electronic transfer in any amount between $100 and $25,000 on any
day your Fund is open for business by calling Heartland Advisors at
one of the numbers listed above.

. Electronic Transfer by Automatic Investment Plan - You also may add to
your account on a pre-scheduled basis in an amount of not less than
$50 per transaction. You may change the schedule of your investments
or the investment amount, or you may terminate this service at any
time on five days' advance notice to Heartland Advisors. Your
automatic investments will be confirmed on your quarterly account
statement.

TIME OF PURCHASE AND FORM OF PAYMENT. Shares of the Funds are sold without a
sales charge. Your purchase of a Fund's shares will, therefore, be made at the
net asset value per share next determined after the Fund or its authorized agent
receives your payment. Payment must be in U.S. dollars by check drawn on a U.S.
bank, wire transfer, or electronic transfer. Usually, a Fund will not accept
payment in the form of a check payable to you or a third party, and endorsed
over to the Fund. Shares purchased by checks that are returned will be canceled
and you will be liable for any losses or fees incurred by the Fund or its
agents, including bank handling charges for returned checks.

If your payment is received after 4:00 p.m., Eastern time, your purchase will be
effective on the next business day. Purchase orders for a Fund are not binding
until accepted by the Fund or its authorized agent, and entered on the Fund's
books. A Fund may reject any order its officers determine is not in the best
interests of the Fund or its shareholders, and the offering of Fund shares may
be suspended or limited at any time without notice to shareholders. The Fund
also may reject any order not accompanied by instructions in English. Once
accepted, you may not cancel or revoke your purchase order, but you may redeem
your shares.

INVESTMENT MINIMUMS. If you purchase shares directly from a Fund, your initial
investment must be for a minimum of $1,000 (or $5,000 for the Value Fund),
except for accounts opened under prototype Individual Retirement Accounts
("IRAs") or tax-sheltered retirement plans sponsored by Heartland and accounts
opened with an automatic investment plan described above. Subsequent purchases,
other than through dividend reinvestment, must be for a minimum of $100. Each
Fund may waive or lower its investment minimums for any reason. Different
minimums may apply to accounts opened through third parties.

33
<PAGE>

required to withhold a percentage (currently 31%) of your dividend and capital
gain distributions and of your redemption proceeds.

PURCHASE THROUGH THIRD PARTIES. Heartland reserves the right to refuse
purchases through any intermediary arrangement that the officers of Heartland
determine employs investment strategies which are not in the best interests of
the Funds or their shareholders. Shares purchased through third parties may be
subject to special fees and conditions that do not apply if you purchase your
shares directly from the Fund. Third parties also may place limits on your
ability to use the shareholder services or receive shareholder information
described in this prospectus. Heartland has authorized some third parties to
designate selected agents to accept purchase orders on the Funds' behalf.

REDEEMING SHARES

By Mail - Mail or send by courier your redemption instruction to the Transfer
Agent at one of the following addresses. Please specify the name of the Fund
and include the number of shares or dollar amount you wish to redeem, and your
name and account number. Please also be sure that your instruction is signed by
all persons in whose names your account is registered. Signatures must match
the names in the account registration and be guaranteed as further explained
below.

For corporate, trust, partnership, and other institutional accounts, the persons
signing should also indicate their officer or other fiduciary capacity. A
certified corporate resolution evidencing the signing officer's authority to
sign on behalf of a shareholder corporation also is required. Executors,
administrators, guardians, trusts, and other institutional shareholders should
call Heartland Advisors prior to mailing their instructions to determine if
other documentation may be required.

Mail: Courier:
Firstar Mutual Fund Services, LLC Firstar Mutual Fund Services, LLC
P.O. Box 701 3rd Floor
Milwaukee, WI 53201-0701 615 East Michigan Street
Milwaukee, WI 53202

By Telephone - This service allows you to redeem shares in an amount of $1,000
or more on any day the Funds are open for business by calling Heartland Advisors
at one of the numbers listed above. You may direct that your redemption
proceeds be mailed to your registered address or wired to your bank account
subject to a wire fee (currently $12.00) charged by the Transfer Agent. Unless
you instruct the Funds that you do not want this service, you are automatically
eligible to use it. However, wire instructions must be pre-authorized in
writing on your Account Application or another form furnished when you request
wire privileges after you open your account.

34
<PAGE>

By Systematic Withdrawals - You may redeem your shares on a pre-scheduled basis
in an amount of at least $100 per transaction, provided you have an account
balance of at least $25,000 when you set up this service. You may obtain the
form to elect this service by calling 1-800-432-7856.

TIME OF REDEMPTION; FORM OF INSTRUCTIONS AND PAYMENT. Your shares will be
redeemed at the net asset value per share next determined after your
instructions, in English, are received by your Fund or its authorized agent in
good order as further explained below. The Funds will not accept an order with
instructions for redemption on a particular date or at a particular price. The
Funds use procedures reasonably designed to authenticate telephone instructions
including, for example, requesting personal identification information from
callers. The Funds are not liable for any losses due to unauthorized or
fraudulent telephone instructions if these procedures are followed. Once
accepted, you may not cancel or revoke your redemption order.

Usually, proceeds are mailed within one or two days of redemption or wired on
the next business day, but in no event are proceeds remitted to you later than
seven business days after redemption. In limited circumstances, the Funds may
elect to suspend the redemption of shares.

Generally, proceeds will be paid in cash, but the Funds reserve the right to pay
redemptions in the amount of $250,000 or more "in kind," which means you would
be paid in portfolio securities. If this occurred, you might incur transaction
costs when you sell the portfolio securities.

If redemption instructions are received in good order for shares that have not
been paid for, your shares will be redeemed, but the Funds reserve the right to
hold the proceeds until payment of the purchase price can be confirmed. This
type of delay can be avoided by purchasing shares by federal funds wire. If you
choose to have your redemption proceeds mailed to you and either the U.S. Postal
Service is unable to deliver the redemption check to you or the check remains
outstanding for at least six months, the Funds reserve the right to reinvest the
check in shares of the particular Fund at their then current net asset value
until you notify the Funds with different instructions.

EARLY REDEMPTION FEE. To defray certain transaction expenses and facilitate
portfolio management, upon 90 days' advance written notice to you, the Fund
reserves the right to charge you an early redemption fee of 1% of the proceeds
of shares being redeemed or exchanged that are held for less than 90 days.

35
<PAGE>

EXCHANGING SHARES

Unless you instruct the Funds that you do not want this service, you are
automatically permitted to purchase shares of a Fund with the proceeds of a
redemption for your account in any other Heartland Fund or the Firstar Money
Market Fund, a money market fund sponsored by an affiliate of the Transfer
Agent. This type of transaction is referred to as an "exchange" and may be
effected by writing or calling Heartland Advisors. Written exchanges may be for
any amount, but telephone exchanges may be for not less than $1,000 and not more
than $500,000.

Exchanges with the Firstar Money Market Fund are subject to the terms and
conditions of that fund's prospectus, which may be obtained from Heartland
Advisors. Heartland Advisors receives an annual fee from Firstar Money Market
Fund for shareholder account servicing and recordkeeping and distribution
services in the amount of 0.20% of the average daily net assets of shares for
which Heartland Advisors is the holder or dealer of record.

TO MINIMIZE FUND EXPENSES AND TO PROTECT THE FUNDS AND THEIR SHAREHOLDERS FROM
UNFAIR EXPENSE BURDENS, THE FUNDS RESERVE THE RIGHT TO RESTRICT EXCESSIVE
EXCHANGE ACTIVITY BY ANY SHAREHOLDER UPON 60 DAYS' ADVANCE NOTICE.

IRAS AND TAX-SHELTERED RETIREMENT PLANS. Heartland sponsors an IRA plan for
individual investors as well as SIMPLE IRAs and other tax-sheltered retirement
plans for self-employed persons and employers. Each Fund is available for
investment under these programs at the reduced initial investment minimum of
$500. Booklets describing the programs and the forms necessary for establishing
accounts under them are available on request from Heartland Advisors. THE
ANNUAL MAINTENANCE FEE ON IRAS IS WAIVED FOR ACCOUNT HOLDERS WHOSE IRA ASSETS AT
HEARTLAND TOTAL $10,000 OR MORE.

SIGNATURE GUARANTEES. To protect your account, the Funds reserve the right to
require a signature guarantee for written redemption instructions. Normally, a
signature guarantee will be required if the redemption proceeds will exceed
$50,000 or if the proceeds are being paid to a third party or mailed to an
address other than the address listed on the Funds' records. Acceptable
guarantors include, among others, banks and brokerage firms that are members of
a domestic stock exchange. Signatures witnessed by notaries public are not
acceptable for this purpose.

36
<PAGE>

after the third party receives your order; other orders will be processed at the
net asset value per share next determined after receipt by the Funds. Third
parties may charge fees for their services and impose terms or conditions that
do not apply if you do business directly with the Funds. Heartland has
authorized some third parties to designate selected agents to accept redemption
orders on the Funds' behalf.

INVOLUNTARY REDEMPTION. If your account value in any Fund falls below $500 for
three months or more, the Funds may redeem all of your shares in that Fund upon
60 days' advance notice to you. You may avoid involuntary redemption by making
additional investments to bring your account value up to at least $1,000.

SHARE PRICE

Shares of a Fund are purchased and redeemed at the net asset value per share
next determined following receipt of your order in proper form by the Fund or
its authorized agent. Net asset value is the difference between the values of
the Fund's assets and liabilities divided by the number of shares outstanding.
It is determined at the close of regular trading on the New York Stock Exchange
(generally 4:00 p.m., Eastern time). Orders received after 4:00 p.m., Eastern
time, are priced at the net asset value per share determined on the next
business day of the Fund.

If you purchase or redeem shares through a third party which is an authorized
agent of the Funds, your order will be processed at the net asset value per
share next determined after the third party receives your order; other purchases
and redemptions through third parties are processed at the net asset value per
share next determined after receipt by the Fund. Third parties acting as
authorized agents of the Funds are required to segregate orders received after
the close of regular trading on the New York Stock Exchange and transmit those
orders separately for execution at the net asset value per share next
subsequently determined.

Portfolio securities are valued on the basis of market quotations or at fair
value using methods determined by Heartland's Board of Directors. Like most
mutual funds, the Funds generally use a "fair value" methodology to value debt
obligations because market quotations are generally not available for most debt
obligations. Fair values are normally determined by using valuations furnished
by one or more pricing services approved by Heartland's Board of Directors.
Debt securities purchased with remaining maturities of 60 days or less are
valued at acquisition cost, plus or minus any amortized discount or premium.

37
<PAGE>

SHAREHOLDER INFORMATION AND REPORTING

HEARTLAND VALUE SOURCE

Heartland Advisors' website, Heartland Value Source(TM), located at
www.heartlandfunds.com, provides investors with a variety of information about
the Funds, including daily share prices, market updates and shareholder reports.
By calling 800-432-7856 and requesting a personal identification number,
shareholders can access their accounts directly to review current balances,
recent transactions and other account information.

INVESTMENT REPORTS

SHAREHOLDER REPORTS. The Funds' portfolio managers review their strategies and
results in quarterly Value Reports. In addition, semiannually these reports
contain schedules of investments and Fund financial statements. If several
members of a household own a Fund, only one Value Report is mailed to that
address. To receive additional copies, you may call Shareholder Services at 1-
800-432-7856 or 414-289-7000, or write to Heartland Advisors at 790 North
Milwaukee Street, Milwaukee, WI 53202.

OTHER REPORTS. Heartland Advisors also publishes and mails to shareholders News
& Views, a quarterly investment newsletter providing market analysis and
commentary. In addition, it publishes investment research pieces that are
mailed to shareholders periodically.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS

A dividend from net investment income represents the income a Fund earns from
dividends and interest paid on its investments, after payment of Fund expenses.
A capital gain or loss is the increase or decrease in the value of a security
that a Fund holds compared to its original purchase price. The gain or loss is
"unrealized" until the security is sold. Each realized capital gain or loss is
either short-term or long-term depending on whether the Fund held the security
for one year or less, or more than one year. This is the case regardless of how
long you hold your Fund shares.

Substantially all of the net investment income of the Large Cap Value, Mid Cap
Value and Value Funds will be paid to shareholders annually as a dividend. The
Value Plus Fund will pay dividends from net investment income quarterly. The
Government Fund will declare dividends from net investment income daily and pay
them monthly. If a Fund has net capital gains for a year, the Fund normally
will distribute substantially all of its net capital gains at the end of the
year. Both types of distributions are automatically invested in additional
shares for your account unless you elect on your Account Application to have
them invested in another Heartland Fund or to have them paid to you in cash.

38
<PAGE>

"BUYING A DIVIDEND." Please note that if you purchase shares of a Fund just
before the record date of a capital gain distribution, you will receive a
portion of your purchase price back as a taxable distribution. The Fund's net
asset value per share on the record date will be reduced by the amount of the
dividend. This is sometimes referred to as "buying a dividend."

TAXES

All income dividend distributions and short-term capital gains will be taxable
to shareholders as ordinary income for federal income tax purposes. Long-term
capital gain distributions will be taxable as long-term capital gains to
shareholders. If a Fund declares a distribution in December, but does not pay
it until January of the following year, you still will be taxed as if the
distribution were paid in December. The Transfer Agent will process your
distributions and send you a statement for tax purposes each year showing the
source of distributions for the preceding year.

If you redeem or exchange your shares, the transaction is a taxable event.
Special tax rules apply to non-individual shareholders and shareholders owning
Fund shares in IRAs and tax-sheltered retirement plans. State and local tax
rules differ from the federal tax rules described in this prospectus. Because
this tax information is only a general overview, you should consult with your
own tax advisor about the tax consequences of your investment in the Funds.

FINANCIAL HIGHLIGHTS

The following financial highlights tables are intended to help you understand
each Fund's financial performance for the past 5 years or since inception.
Certain information reflects financial results for a single Fund share. The
total returns in the tables represent the rate that an investor would have
earned or lost on an investment in the Funds over the periods presented
(assuming reinvestment of all dividends and distributions). This information
has been audited by PricewaterhouseCoopers LLP, whose report, along with the
Funds' financial statements, are included in the Annual Report to Shareholders,
which is available upon request.

39
<PAGE>

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS

Large Cap Value Fund Mid Cap Value Fund
----------------------------------------- ---------------------------------------
For the year ended Oct. 11, 1996/(1)/ For the year ended Oct. 11, 1996/(1)/
December 31, through December 31, through
1998 1997 Dec. 31, 1996 1998 1997 Dec. 31, 1996
----------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per Share Data
Net asset value, beginning of period........ $ 12.30 $ 10.50 $ 10.00 $ 12.78 $ 10.66 $ 10.00
Income (loss) from investment operations:
Net investment income.................... 0.30 0.11 -- 0.07 0.05 --
Net realized and unrealized gains
(losses) on investments............... (0.10) 2.28 0.50 (1.09) 2.38 0.66
------- ------- ------- ------- ------- -------
Total income (loss) from investment
operations......................... 0.20 2.39 0.50 (1.02) 2.43 0.66
Less distributions from:
Net investment income.................... (0.30) (0.11) -- (0.07) (0.05) --
Net realized gains on investments........ (0.26) (0.48) -- -- (0.26) --
------- ------- ------- ------- ------- -------
Total distributions................... (0.56) (0.59) -- (0.07) (0.31) --
------- ------- ------- ------- ------- -------
Net asset value, end of period.............. $ 11.94 $ 12.30 $ 10.50 $ 11.69 $ 12.78 $ 10.66
======= ======= ======= ======= ======= =======
Total Return................................ 1.7% 22.9% 5.0%/(2)/ (8.0)% 22.8% 6.6%/(2)/
Ratios and Supplemental Data
Net assets, end of period
(in thousands)........................ $ 8,025 $ 7,665 $ 2,441 $34,686 $36,558 $ 6,934
Ratio of net expenses to average
net assets............................ 0.00%/(4)/ 1.36%/(4)/ 2.73%/(3)/ 1.25%/(3)/ 1.29%/(3)/ 1.94%/(2)/
Ratio of net investment income (loss)
to average net assets................. 2.37%/(4)/ 1.14%/(4)/ (0.25)%/(4)/ 0.52%/(3)/ 0.54%/(3)/ (0.16)%/(3)/
Portfolio turnover rate.................. 48% 30% 1% 47% 48% 4%
</TABLE>
(1) Commencement of operations.
(2) Not annualized.
(3) Annualized.
(4) If there had been no expense reimbursement or management fee waiver by the
Advisor, the ratio of net expenses to average net assets for the years ended
December 31, 1998 and 1997 would have been 1.92% and 2.00%, respectively and
the ratio of net investment income to average net assets would have been
0.45% and 0.50%, respectively.
(5) If there had been no expense reimbursement or management fee waiver by the
Advisor, the ratio of net expenses to average net assets for the years ended
December 31, 1998 and 1997 would have been 1.34% and 1.32%, respectively and
the ratio of net investment income to average net assets would have been
0.43% and 0.51%, respectively.

40
<PAGE>
FINANCIAL HIGHLIGHTS

Value Plus Fund
------------------------------------------------------------------------------
For the year ended December 31,
1998 1997 1996 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data
Net asset value, beginning of year............. $ 16.13 $ 13.73 $ 11.17 $ 9.53 $ 10.45
Income (loss) from investment operations:
Net investment income..................... 0.62 0.48 0.38 0.41 0.41
Net realized and unrealized gains (losses)
on investments.......................... (2.32) 3.66 3.33 1.89 (0.92)
---------- ---------- --------- --------- ---------
Total income (loss) from investment
operations........................... (1.70) 4.14 3.71 2.30 (0.51)
Less distributions from:
Net investment income..................... (0.60) (0.48) (0.38) (0.41) (0.41)
Net realized gains on investments......... (0.03) (1.26) (0.77) (0.25) --
---------- ---------- --------- --------- ---------
Total distributions..................... (0.63) (1.74) (1.15) (0.66) (0.41)
---------- ---------- --------- --------- ---------
Net asset value end of year.................... $ 13.80 $ 16.13 $ 13.73 $ 11.17 $ 9.53
========== ========== ========= ========= =========
Total Return(1)................................. (10.8)% 30.6% 33.8% 24.4% (4.9)%

Ratios and Supplemental Data
Net assets, end of year (in thousands).... $ 174,314 $ 336,281 $ 66,582 $ 19,123 $ 9,884
Ratio of operating expenses to average
net assets.............................. 1.21% 1.12% 1.45% 1.54% 1.80%
Ratio of interest expense to average
net assets.............................. 0.03% -- -- -- --
Ratio of net investment income to average
net assets.............................. 3.77% 3.32% 3.23% 3.90% 4.39%
Portfolio turnover rate................... 64% 74% 73% 150% 127%

</TABLE>

(1) The contingent deferred sales charge in effect for the Fund prior to
June 1, 1994 is not reflected in Total Return.

<PAGE>

FINANCIAL HIGHLIGHTS

Value Fund
-----------------------------------------------------------------------------
For the year ended December 31,
1998 1997 1996 1995 1994
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data
Net asset value, beginning of year............. $ 33.87 $ 31.65 $ 27.95 $ 22.72 $ 23.22
Income (loss) from investment operations;
Net investment income (loss)................. 0.08 0.17 0.06 0.13 (0.09)
Net realized and unrealized gains (losses) on
investments................................ (3.97) 7.09 5.78 6.63 0.47
---------- ---------- ---------- ---------- --------
Total income (loss) from investment
operations............................... (3.89) 7.26 5.84 6.76 0.38
Less distribution from:
Net investment income........................ (0.06) (0.17) (0.06) (0.13) --
Net realized gains on investments............ (0.63) (4.87) (2.08) (1.40) (0.88)
---------- ---------- ---------- ---------- --------
Total distributions........................ (0.69) (5.04) (2.14) (1.53) (0.88)
---------- ---------- ---------- ---------- --------
Net asset value, end of year................... $ 29.29 $ 33.87 $ 31.65 $ 27.95 $ 22.72
========== ========== ========== ========== ========
Total return(1)................................ (11.5)% 23.2% 21.0% 29.0% 1.79%
Ratios and Supplemental Data
Net assets, end of year (in thousands)....... $1,545,495 $2,126,715 $1,626,760 $1,190,926 $339,364
Ratio of net expenses to average net assets.... 1.15% 1.12% 1.23% 1.29% 1.39%
Ratio of net investment income (loss) to
average net assets........................... 0.22% 0.49% 0.22% 0.61% (0.52)%
Portfolio turnover rate........................ 36% 55% 31% 31% 35%
</TABLE>

(1) The contingent deferred and initial sales charges in effect for the Fund
prior to June 1, 1994 are not reflected in Total return.

42
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
U.S. Government Securities Fund
--------------------------------------------------------
For the year ended December 31,
1998 1997 1996 1995 1994
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data
Net asset value, beginning of year............... $ 9.85 $ 9.54 $ 9.96 $ 8.91 $ 10.50
Income (loss) from investment operations:
Net investment income......................... 0.57 0.58 0.59 0.60 0.59
Net realized and unrealized gains (losses)
on investments.............................. 0.21 0.31 (0.42) 1.05 (1.59)
-------- -------- -------- -------- --------
Total income (loss) from investment
operations.................................. 0.76 0.89 0.17 1.65 (1.00)
Loss distributions from:
Net investment income......................... (0.57) (0.58) (0.59) (0.60) (0.59)
-------- -------- -------- -------- --------
Total distributions......................... (0.57) (0.58) (0.59) (0.60) (0.59)
-------- -------- -------- -------- --------
Net asset value, end of year..................... $ 10.06 $ 9.85 $ 9.54 $ 9.96 $ 8.91
======== ======== ======== ======== ========
Total Return/(1)/................................ 8.1% 9.7% 2.0% 19.0% (9.6)%
Ratios and Supplemental Data
Net assets, end of year (in thousands)........ $ 54,886 $ 48,562 $ 51,713 $ 66,261 $ 64,807
Ratio of net expenses to average
net assets/(2)/............................. 0.76% 0.87% 1.06% 1.07% 1.07%
Ratio of net investment income to
average net assets/(2)/..................... 5.73% 6.12% 6.36% 6.31% 6.30%
Portfolio turnover rate....................... 90% 143% 30% 97% 95%
</TABLE>

/(1)/ The contingent deferred and initial sales charges in affect for the Fund
prior to June 1, 1994 are not reflected in Total Return.
/(2)/ If there had been no expense reimbursement or management fee waiver by the
Advisor, the ratios of net expenses to average net assets for the years
ended December 31, 1998, 1997, 1996, 1995, and 1994, would have been
1.16%, 1.20%, 1.21%, 1.22%, and 1.22%, respectively, and the ratios of net
investment income to average net assets would have been 5.33%, 5.79%,
6.21%, 6.16%, and 6.15%, respectively.

43
<PAGE>

___________________________________________________________________

HEARTLAND FUNDS
General Information and Account/Price Information (24 hours):
1-800-432-7856 or (414) 289-7000
Website: www.heartlandfunds.com
___________________________________________________________________

HEARTLAND FUNDS
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

INVESTMENT ADVISOR AND DISTRIBUTOR
Heartland Advisors, Inc.
790 North Milwaukee Street
Milwaukee, Wisconsin 53202

CUSTODIAN
Firstar Bank Milwaukee, N.A.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

TRANSFER AND DIVIDEND DISBURSING AGENT
Firstar Mutual Fund Services, LLC
615 East Michigan Street, 3rd Floor
P.O. Box 701
Milwaukee, Wisconsin 53201-0701

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

COUNSEL
Quarles & Brady LLP
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202

44
<PAGE>

If you have any questions about the Heartland Funds or would like more
information, including a free copy of the Funds' Statement of Additional
Information ("SAI"), or their Annual or Semi-Annual Reports, you may call or
write Heartland Advisors at:

Heartland Advisors, Inc.
790 N. Milwaukee Street
Milwaukee, WI 53202
1.800.432.7856 or (414) 289.7000
Website: www.heartlandfunds.com

The SAI, which contains more information on the Funds, has been filed with the
Securities and Exchange Commission ("SEC"), and is legally a part of this
prospectus. The Annual and Semi-Annual Reports, also filed with the SEC,
discuss market conditions and investment strategies that affected each Fund's
performance during the prior fiscal year and six-month fiscal period,
respectively.

To view these documents, along with other related documents, you can visit the
SEC's Internet website (http://www.sec.gov) or the SEC's Public Reference Room
in Washington, D.C. Information on the operation of the Public Reference Room
can be obtained by calling 1.800.SEC.0330. Additionally, copies of this
information can be obtained, for a duplicating fee, by writing the Public
Reference Section of the SEC, Washington, D.C. 20549-6009.

Investment Company Act File No. 811-4982.

45
<PAGE>

HEARTLAND GROUP, INC.
FORM N-1A
CROSS-REFERENCE SHEET
TO POST-EFFECTIVE AMENDMENT NO. 38
_________________________________________________________

HEARTLAND SHORT DURATION HIGH-YIELD MUNICIPAL FUND
HEARTLAND HIGH-YIELD MUNICIPAL BOND FUND

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

PART A

1. Front and Back Cover Pages ................... Front and Back Cover Pages

2. Risk/Return Summary: Investments, Risks, and
Performance .................................. Fund Highlights

3. Risk/Return Summary: Fee Table ............... Fund Highlights

4. Investment Objectives, Principal Investment
Strategies, and Related Risks ................ Fund Highlights;
Investment Objectives and
Policies; Principal
Investments and Investment
Strategies