HEARTLAND GROUP INC, 497, 2000-05-04

HEARTLAND GROUP INC
497, 2000-05-04

Previous: VINTAGE PETROLEUM INC, 8-K, 2000-05-04

Next: KILICO VARIABLE SEPARATE ACCOUNT/IL, 497, 2000-05-04

<PAGE>

Rule 497(c)

PROSPECTUS/MAY 1, 2000

This Prospectus contains information you should know about the following mutual
fund portfolios of Heartland Group, Inc. (the "Funds") before you invest. Each
Fund is a no-load fund. Investors pay no sales fees to purchase their shares.
Investments for each of the Funds are selected on a value basis.

- - Heartland Select Value Fund - Its investment objective is long-term capital
appreciation. This Fund seeks to achieve its objective through investing
in equity securities whose current market prices, in Heartland Advisors'
judgment, are undervalued relative to their intrinsic value. Heartland
Advisors will consider companies of all market capitalization sizes for
investment for the Fund.

- - 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.

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.

<PAGE>

TABLE OF CONTENTS

Page
----
RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE
The Heartland Approach To Investing..................................... 3
Select Value Fund....................................................... 4
Value Plus Fund......................................................... 6
Value Fund.............................................................. 8
Government Fund......................................................... 10
Fees and Expenses of the Funds.......................................... 13
Investment Returns...................................................... 15

MANAGEMENT OF THE FUNDS...................................................... 16
Heartland Group......................................................... 16
Heartland Advisors...................................................... 16

PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT RISKS......................... 19
Heartland Advisors' Ten-Point Value Investment Grids(TM)................ 19
Additional Information About Principal Strategies and Risks............. 22
Other Investments and Investment Strategies............................. 23
Additional Risks........................................................ 25

HOW TO INVEST................................................................ 27

ACCOUNT POLICIES............................................................. 35
Redeeming Shares........................................................ 36
Exchanging Shares....................................................... 38
Share Price............................................................. 39

SHAREHOLDER INFORMATION AND REPORTING........................................ 40
Heartland Value Source(TM).............................................. 40
Investment Reports and Prospectuses..................................... 40
Dividends and Capital Gain Distributions................................ 41
Taxes................................................................... 41
Financial Highlights.................................................... 42

2
<PAGE>

RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE

THE HEARTLAND APPROACH TO 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 outperform the "growth" style of investing
securities market over extended periods, which may include bear markets as well
as volatile markets or "sideways moving" markets (i.e., markets that only move
within a narrow range upward or downward over an extended period of time). 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.
Investing in equity securities is a principal strategy for all Funds other than
the Government Fund. The criteria used are:

. Catalyst for recognition . Positive earnings
. Low price/earnings multiple . Business strategy
. High cash flow . Capable management and ownership
. Discount to book value . Value of the company
. Financial soundness . Positive technical analysis

Heartland Advisors' Fixed Income Ten-Point Value Investment GridO is used to
evaluate the relative worth of fixed-income securities in the Funds' portfolios.
Investing in fixed-income securities is a principal strategy for the Government
Fund. 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 investment objective, to reposition
the Fund's portfolio to maintain relative industry or market sector weightings
or because of market or economic factors.

Elsewhere in this prospectus you will find a discussion of the differences
between the performance of a mutual fund portfolio and the performance of a
market index, together with an explanation of the different measures of mutual
fund performance.

3
<PAGE>

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. Each Fund's
share price will fluctuate.

SELECT VALUE FUND

Investment Goal. The Select Value Fund seeks long-term capital appreciation by
investing in equity securities whose current market prices, in Heartland
Advisors' judgment, are undervalued relative to their intrinsic value.

Principal Investment Strategies. Heartland Advisors uses its strict value
criteria to identify what it believes are the best available investment
opportunities for the Select Value Fund. Normally, the Fund invests in common
stocks of companies with market capitalizations in excess of $500 million, but
it may invest in companies of all sizes. The median market capitalization of
the Fund is expected to fluctuate over time depending on Heartland Advisors'
perceptions of relative valuations, future prospects and market conditions.

The Fund generally sells a stock when Heartland Advisors believes the stock has
reached its full valuation, a better valuation opportunity exists elsewhere or a
change in the investment thesis occurs which Heartland Advisors believes will
inhibit the stock's ability to realize its intrinsic value.

Principal Risks. The principal risk of investing in the Select Value Fund is
that its share price and investment return will fluctuate, and you could lose
money. Because the Fund invests in value stocks, it is subject to the risk that
their intrinsic values may never be recognized by the broad market or that their
prices may decline. At times the Fund may invest in stocks of small or mid-
sized companies, which are generally more volatile and less liquid than stocks
of larger, more established companies.

The Select Value Fund is a relatively new fund, having only commenced operations
on October 11, 1996. In its early years of operation, the performance of a fund
may be adversely affected by factors that may make it more difficult to
establish meaningful portfolio positions as quickly and as efficiently as a more
seasoned fund, such as uneven cash flows, absolute size and greater portfolio
turnover.

Who Should Consider Investing in the Fund? The Select Value Fund is designed
for investors who seek long-term capital appreciation from a diversified,
actively managed portfolio of stocks of companies of all sizes. The Fund's
investment style is constructed to fit the core value portion of an investor's
equity portfolio. The Fund 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.

4
<PAGE>

Past Performance. The following tables show historical performance of the
Select Value Fund. Table I provides some indication of the risks of investing
in the Fund by showing how the Fund's total returns have varied from year to
year since January 1, 1997. Table II further provides indication of the risks
of investing in the Fund by showing how the Fund's average annual total returns
compare to those of two different securities market indices. Past performance
cannot predict or guarantee future results.

TABLE I
Select Value Fund - Year-by-Year Total Returns

[BAR CHART]

1997 1998 1999
22.91% 1.73% 1.95%

- -------------------------
Best Quarter:

Q2 '97 14.53%

Worst Quarter:

Q3 '98 -15.99%

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

TABLE II
Select Value Fund - Average Annual Total Return (through 12/31/99)

One Year Since inception (10/11/96)
-------- --------------------------

Select Value Fund 1.95% 9.48%

S&P Midcap Barra Value Index/(1)/ 2.33% 14.84%

S&P 500 Stock Index/(2)/ 21.04% 28.18%
________________________

(1) The S&P Midcap Barra Value Index is an unmanaged index of companies within
the S&P Mid Cap 400 Index that have the lowest price-to-book ratios within
the lower 50 percentile of market capitalizations. For comparative
purposes, the value of the S&P Midcap Barra Value Index on September 30,
1996 is used as the beginning value on October 11, 1996. The Select Value
Fund changed its primary benchmark index to the S&P Midcap Barra Value
Index from the S&P 500 Stock Index in connection with a change in its
investment policies effective December 6, 1999. Prior to that date, the
Fund was named the Heartland Large Cap Value Fund and was required to
invest primarily in large-cap stocks. The S&P Midcap Barra Value Index is
believed to be more representative of the Fund for comparative purposes.

(2) The S&P 500 Stock Index is an unmanaged index of 500 stocks representing
major U.S. industries. It is considered representative of the Fund's
investments prior to December 6, 1999 when the Fund invested primarily in
large-cap stocks.

5
<PAGE>

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. Income-producing equity securities include, for example, dividend-paying
common stocks, preferred stocks and convertible securities. Although it may
invest in securities of larger companies, the Fund generally invests in
companies with market capitalizations of less than $750 million. The Fund seeks
to reduce the risks associated with investing in small companies through the
income component of its portfolio. To further pursue its income objective, the
Fund also invests up to 35% of its total assets in other securities, such as
debt securities and cash equivalents. There are no limitations on the credit
quality or maturity of the debt securities in which the Fund may invest.

Principal Risks. The principal risk of investing in the Value Plus Fund is that
its share price and investment return will fluctuate, and you could lose money.
Because the Fund invests in value stocks, it is subject to the risk that their
intrinsic values may never be recognized by the broad market or that their
prices may decline.

Investing in the equity securities of small cap companies involves a higher
degree of risk than investing in the securities of larger companies. 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. There is no assurance that the income-producing features of the
Fund will reduce the risks associated with investing in small companies or the
Fund's volatility.

The Fund's investments in debt securities involve credit risk (the possibility
that the issuer will not make timely principal and interest payments) and market
risk (price fluctuations due to interest rate changes and other factors).
Normally, credit risk is greater for medium and lower quality debt securities,
and market risk is greater for debt securities with longer maturities.

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
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 manage these risks
with the careful selection of income-producing securities as an integral part of
their investment portfolio.

6
<PAGE>

Past Performance. The following tables show historical performance of the Value
Plus Fund. Table I provides some indication of the risks of investing in the
Fund by showing how the Fund's total returns have varied from year to year since
January 1, 1994. Table II provides further indication of the risks of investing
in the Fund by showing how the Fund's average annual total returns compare to
those of two different securities market indices. Table III shows the
annualized yield of the Fund and the indices for the 30 days ended December 31,
1999. Past performance cannot predict or guarantee future results.

TABLE I
Value Plus Fund - Year-by-Year Total Returns

[BAR CHART]

1994 1995 1996 1997 1998 1999
4.95% 24.39% 33.80% 30.60% -10.78% 1.67%

- -------------------------
Best Quarter:

Q2 '99 18.70%

Worst Quarter:

Q3 '99 -13.91%

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

TABLE II
Value Plus Fund - Average Annual Total Return (through 12/31/99)

Since inception
One Year Five Year (10/26/93)
-------- --------- ----------

Value Plus Fund 1.67% 14.54% 11.62%

Russell 2000 Value Index/(1)/ -1.49% 13.14% 10.46%

Russell 2000 Index/(2)/ 21.26% 16.69% 13.23%

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

(1) The Russell 2000 Value Index measures the performance of those companies
within the Russell 2000 Index with lower price-to-book ratios and lower
forecasted growth values, and is considered representative of the market
for small cap "value" stocks as opposed to "growth" stocks. The Fund
changed its primary benchmark index to the Russell 2000 Value Index from
the Russell 2000 Index beginning with its fiscal year ended December 31,
1999 because the Russell 2000 Value Index is believed to be more
representative of the Fund for comparative purposes given the Fund's focus
on small cap stocks and "value" style of investing.

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

7
<PAGE>

TABLE III
Yield for the 30 Days Ended 12/31/99 (annualized)

Value Plus Fund 2.49%

Russell 2000 Value Index 2.70%

Russell 2000 Index 1.28%

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 common
stocks of companies with market capitalizations of less than $750 million
selected on a value basis.

Principal Risks. The principal risk of investing in the Value Fund is that its
share price and investment return will fluctuate, and you could lose money.
Because the Fund invests in value stocks, it is subject to the risk that their
intrinsic values may never be recognized by the broad market or that their
prices may decline.

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 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.

8
<PAGE>

Past Performance. The following tables show historical performance of the Value
Fund. Table I provides some indication of the risks of investing in the Fund by
showing how the Fund's total returns have varied from year to year over the past
10 years. Table II provides further indication of the risks of investing in the
Fund by showing how the Fund's average annual total returns compare to those of
two different securities market indices. Past performance cannot predict or
guarantee future results.

TABLE I
Value Fund - Year-by-Year Total Returns

[BAR CHART]

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
- -17.09% 49.35% 42.48% 18.77% 1.71% 29.80% 20.99% 23.19% -11.46% 25.01%
- -------------------------

Best Quarter:

Q1 '91 29.24%

Worst Quarter:

Q3 '90 -24.39%

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

TABLE II
Value Fund - Average Annual Total Return (through 12/31/99)

<TABLE>
<CAPTION>
Since inception
One Year Five Year Ten Year (12/28/84)
-------- --------- -------- ----------
<S> <C> <C> <C> <C>

Value Fund 25.01% 16.45% 16.39% 15.64%

Russell 2000 Value Index/(1)/ -1.49% 13.14% 12.45% 12.93%

Russell 2000 Index/(2)/ 21.26% 16.69% 13.40% 13.30%
</TABLE>

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

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

9
<PAGE>

GOVERNMENT 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 U.S. Treasury and agency securities, and
mortgage-backed securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities. There are no restrictions on the types of
Government securities in which the Fund may invest, and they will differ
primarily in terms of interest rates, length of maturities, the nature of the
governmental obligation and issuance dates.

The balance of the Fund's assets may be invested in other securities such as
asset-backed and mortgage-backed securities issued by non-governmental entities;
other debt securities; and convertible securities and preferred stocks. Any
investments in debt securities will, at the time of purchase, be rated
investment grade or, if unrated, be of comparable quality in the opinion of
Heartland Advisors.

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. Duration measures the rate of sensitivity of a bond or a mutual fund
that invests in bonds to a 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.

Principal Risks. The principal risk of investing in the Government Fund is that
its share price and investment return will fluctuate, and you could lose money.
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.

10
<PAGE>

Rising interest rates generally will decrease the value of debt securities held
by the Fund. 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.

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 historical performance of the
Government Fund. Table I provides some indication of the risks of investing in
the Fund by showing how the Fund's total returns have varied from year to year
over the past 10 years. Table II provides further indication of the risks of
investing in the Fund by showing 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, 1999. Past
performance cannot predict or guarantee future results.

TABLE I
Government Fund - Year-by-Year Total Returns

[BAR CHART]

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
9.98% 16.97% 10.08% 17.82% -9.64% 19.00% 2.00% 9.69% 8.15% -3.90%

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

Best Quarter:

Q3 '91 7.10%

Worst Quarter:

Q1 '94 -4.81%

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

11
<PAGE>

TABLE II
Government Fund - Average Annual Total Return (through 12/31/99)

<TABLE>
<CAPTION>
One Five Ten Since inception
Year Year Year (4/9/87)
---- ---- ---- --------
<S> <C> <C> <C> <C>

Government Fund -3.90% 6.71% 7.63% 7.52%

Lehman Intermediate Treasury Index/(1)/ 0.41% 6.92% 7.09% 7.29%
</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 12/31/99 (annualized)

Government Fund 6.33%

Lehman Intermediate Treasury Index 6.34%

For current yield information, please call 1.800.432.7856.

12
<PAGE>

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).

Select Value Value Plus Value Government
Fund Fund Fund Fund
----------------- ------------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Maximum sales charge (load) None None None None
imposed on purchases

Maximum deferred sales charge None None None None
(load)

Maximum sales charge (load) None None None None
imposed on reinvested
dividends/ distributions

Redemption fee/(1)/ None 1%/(2)/ 1%/(2)/ None
</TABLE>
___________________________

(1) You will be charged a $12.00 service fee if you request that your
redemption proceeds be wired to your bank account.

(2) To defray certain transaction expenses and facilitate portfolio management,
the Value Plus Fund and the Value Fund charge an early redemption fee equal
to 1% of the proceeds from shares redeemed or exchanged that are held for
less than 270 days. The early redemption fee does not apply to certain
transactions and accounts (such as IRAs and tax-qualified retirement
plans). The other Funds reserve the right, upon notice to you, to charge
an early redemption fee as well.

13
<PAGE>

Annual Fund Operating Expenses (expenses that are deducted from Fund assets).

Select Value Value Plus Value Government
Fund Fund Fund Fund
--------------------- ------------------- ---------------- -----------------------
<S> <C> <C> <C> <C>
Management fees 0.75% 0.70% 0.75% 0.65%

Distribution (12b-1) fees 0.25% 0.25% 0.25% 0.25%

Other expenses 1.58% 0.44% 0.34% 0.35%
----- ----- ----- -----
Total annual Fund operating expenses 2.58%/(1)(2)/ 1.39% 1.34% 1.25%/(1)/

</TABLE>
____________________________________

(1) For the fiscal year ended December 31, 1999, total annual fund operating
expenses net of fees waived and/or expenses reimbursed by Heartland
Advisors were 0.74% of average daily net assets for the Select Value Fund
and 0.80% of average daily net assets for the Government Fund.

(2) Heartland Advisors is voluntarily waiving fees and/or reimbursing expenses
so that the Select Value Fund's net annual operating expenses (excluding
brokerage commissions, interest and taxes) do not exceed 1.90% of average
daily net assets, but may terminate or revise this voluntary undertaking at
any time. There are no voluntary undertakings to waive fees or reimburse
expenses for the other Funds.

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, and (b) each Fund's
total annual fund operating expenses remain the same as shown in the preceding
table. 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.)

Select Value Value Government
Value Fund Plus Fund Fund Fund
-------------- ------------- -------------- ----------
<S> <C> <C> <C> <C>
One Year $ 261 $ 142 $ 136 $ 127

Three Years $ 802 $ 440 $ 425 $ 397

Five Years $1,370 $ 761 $ 734 $ 686

Ten Years $2,915 $1,669 $1,613 $1,511
</TABLE>

14
<PAGE>

INVESTMENT RETURNS

Portfolio Performance vs. Index Performance. The information about each Fund's
past performance includes 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. An index is not available for direct investment, and past
performance cannot guarantee or predict future results. The securities included
in an index are not an exact match to the holdings in a mutual fund portfolio.
The performance of a mutual fund portfolio will differ from that of an index.
Unlike an index, a mutual fund portfolio is affected by operating expenses and
cash flow activity caused by daily purchases and redemptions. In addition, a
mutual fund portfolio will differ from the index in the number and size of
holdings or securities, their relative sector and industry weightings, the
market capitalization of individual securities and the median capitalization of
the index and Fund overall. 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.

Definitions. Total return measures the change in the share price of a Fund and
assumes the reinvestment of dividends and capital gains. Cumulative total return
is actual return for a given period, but does not indicate how much return
fluctuated during the period. Average annual total return is the hypothetical
constant annual 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 given period produces a Fund's cumulative total return. Yield is
annualized net income of a Fund during a 30-day period as a percentage of the
Fund's share price.

15
<PAGE>

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 various administrative services to the Funds. In addition to
managing the Heartland family of 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, 789 North Water Street, Milwaukee, Wisconsin 53202.

Heartland and Heartland Advisors, Inc., Heartland's investment advisor and
principal underwriter, each have adopted a code of ethics designed to ensure,
among other things, that the interests of Fund shareholders take precedence over
personal interests of their respective directors, officers and employees. Under
the code, personal investment activities are subject to limitations designed to
avoid both actual and perceived conflicts of interest with the investment
activities of the Funds.

16
<PAGE>

Portfolio Managers. The portfolio managers for the Funds are as follows:

Select Value Fund M. Gerard Sandel (lead manager)
Eric J. Miller
William J. Nasgovitz

Value Plus Fund William J. Nasgovitz
Patrick J. Retzer

Value Fund William J. Nasgovitz
Eric J. Miller

Government Fund Patrick J. Retzer

Eric J. Miller, Certified Management Accountant (CMA), has served as a member of
the portfolio management team for the Select Value Fund since September 1999.
He has also served as co-portfolio manager of the Value Fund since July 1997.
Mr. Miller is a Senior Vice President and a Director of Heartland Advisors,
having 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.

William J. Nasgovitz has been on the Select Value Fund's portfolio management
team since September 1999 and is co-portfolio manager for the Value Plus Fund
and the Value Fund, having been a portfolio manager of those Funds since
commencement of their operations. Mr. Nasgovitz has been President, Chief
Executive Officer and a Director of Heartland Advisors for the past five years.
During this same period, he also has been President and a Director of Heartland.

Patrick J. Retzer, Certified Public Accountant (CPA), is co-portfolio manager of
the Value Plus Fund and has been a manager of that Fund since July 1997. He is
also portfolio manager of the Government Fund and has been a manager of that
Fund since October 1988. 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.

M. Gerard Sandel has served as the lead portfolio manager for the portfolio
management team for the Select Value Fund, with final authority over investment
decisions, since September 1999. Mr. Sandel, Certified Financial Analyst (CFA),
joined Heartland Advisors in August 1999 as Senior Vice President and Director
of Equity Research. He was previously a Senior Vice President and principal of
Stein Roe & Farnham Incorporated and portfolio manager for institutional and
mutual fund accounts since July 1997. Prior to that time, Mr. Sandel was Vice
President of M&I Investment Management Corporation since October 1993, where he
was a portfolio manager for institutional and mutual fund accounts.

17
<PAGE>

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 daily net assets.
For the fiscal year ended December 31, 1999, the Funds paid the following
advisory fees which are set forth as a percentage of average daily net assets:

Fund Advisory Fee
---- ------------
Select Value Fund 0.58% (0.75% before fee waivers)

Value Plus Fund 0.70%

Value Fund 0.75%

Government Fund 0.54% (0.65% before fee waivers)

From time to time, Heartland Advisors may waive fees paid to it by a 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 a certain percentage of average
net assets. Heartland Advisors may modify or discontinue these waivers and/or
reimbursements at any time without notice. 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 a Fund's overall expense ratio and
increasing the Fund's overall return to investors.

For the period from April 1, 1999 through April 30, 2000, Heartland Advisors
contractually undertook to waive fees paid to it by the Funds and/or pay other
ordinary expenses (excluding brokerage commissions, interest and taxes) of the
Funds as follows: for the Select Value Fund, expenses in excess of 0.95% of
average daily net assets; and for the Government Fund, expenses in excess of
0.80% of average daily net assets. Through December 31, 1999, Heartland
Advisors voluntarily undertook to pay all interest expenses of these Funds. If
a Fund's operating expenses fall below the contractual expense limitation during
the three years subsequent to the fiscal year in which the contractual
waiver/reimbursement was made, the Fund will repay Heartland Advisors for fees
previously waived or expenses previously reimbursed up to that limitation. No
repayment will be made after the three-year period ends.

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 average 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 a
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.

18
<PAGE>

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 the "growth" style of investing 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.

- - Catalyst for Recognition. We not only look for undervalued securities, but
try to anticipate events which will close the gap between a stock's price and
its intrinsic value. Such a catalyst could be a large repurchase plan, new
products, new technology, margin expansion, or merger activity within the
company's industry.

- - Low Price/Earnings Multiple. We look for a stock's price/earnings (P/E) ratio
to be less than the market's average. If the stock is then "discovered" by
Wall Street, the low P/E provides opportunity for a sharp price increase.
Also, if the market drops, low P/E stocks have less downside risk.

- - High Cash Flow. A strong cash flow allows a company to generate greater
wealth over the long term. A high discretionary cash flow, after capital
expenditures and dividends, is especially attractive.

- - Discount to Book Value. The stock should be selling below its tangible book
value, which is equal to total assets minus all liabilities and goodwill.

- - Financial Soundness. Long-term debt should generally be less than 25% of
total capitalization. During difficult periods, a company's cash flow should
be directed to investments in operations rather than interest expense. A
highly leveraged balance sheet can become a hindrance to performance and
endanger the company's very existence.

- - Positive Earnings. We favor companies with improving earnings or upwardly
revised estimates.

19
<PAGE>

- - Business Strategy. We critically evaluate management's strategy for growing
the business. How does this strategy differ from their past efforts or
compare to that of their competitors? Why does management believe their
strategy will be successful, and more importantly, why do we?

- - Capable Management and Ownership. Capable management will demonstrate an
ability to effectively implement business strategies. Additionally, we
believe meaningful and increasing ownership by officers and directors
validates the business plan, demonstrates their personal commitment to
achieving their designated business goals and aligns their long-term interest
with the shareholders' interest.

- - Value of the Company. From the universe of stocks why is this one a
compelling value? We utilize traditional valuation parameters, such as
competitive Price/EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization), Enterprise Value/EBITDA, Price/Sale and Return on Equity to
determine the appreciation potential of the security. We determine fair value
through means such as discounted cash flow analysis. Is there more? A
franchise value or brand name that cannot be replicated, or hidden assets
that are not reflected on the balance sheet or recognized in the market.

- - Positive Technical Analysis. Technical analysis should indicate that a stock
is presently attractive for investing without undue speculation. We typically
seek "bases" in a stock's price pattern, with the belief that speculators
will not own the stock or be interested in it at that moment. A stock forms a
"base" when its trading range narrows following a movement up, or more
typically, down.

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.

- - 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 or total yields tends to reflect the relative value in
fixed-income investments. High "real" rates (i.e., the rate earned by a bond
in excess of inflation) cushion investors against adverse moves in inflation.

20
<PAGE>

- - 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 (such as U.S. Treasury or
agency securities, mortgage-backed securities, zero coupon bonds, asset-
backed securities and corporate debt securities) 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 or Acceptance. Strong fundamental and technical support
must be accompanied by general market sponsorship or acceptance 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. 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 securities disfavored by investors fleeing the market for short-term,
technical reasons may create opportunities for "value" investors.

Market Capitalizations of Portfolio Securities. The following table shows the
median and weighted average market capitalizations as of December 31, 1999, for
the companies whose equity securities are owned by the Funds with equity
holdings and for the companies included in the indices that are benchmarks for
each of those Funds.

21
<PAGE>

Market Capitalization of Common Stocks in Portfolio (as of 12/31/99)

Median Weighted Average
------ ----------------

Select Value Fund $1.98 billion $6.39 billion

S&P Midcap Barra Value Index 1.31 billion 2.27 billion

S&P 500 Index 7.97 billion 142.95 billion

Value Plus Fund 122 million 558 million

Value Fund 91 million 810 million

Russell 2000 Value Index 410 million 790 million

Russell 2000 Index 460 million 1,360 million

ADDITIONAL INFORMATION ABOUT PRINCIPAL STRATEGIES AND RISKS

Temporary Positions. Under adverse market, economic, political or other
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.

Small Cap and Mid Cap Securities. 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.

22
<PAGE>

OTHER INVESTMENTS AND INVESTMENT STRATEGIES

In addition to the principal investment strategies discussed above in this
prospectus, each Fund may engage in other non-principal investment strategies
discussed below and in its statement of additional information.

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 Heartland's 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 Heartland's 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) 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.

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.

23
<PAGE>

It is expected that a Fund only 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.

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 reverse 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 no 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.

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 investment 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.

Other Investments and Investment Techniques. Each Fund may utilize other
investments and investment techniques from time to time that may impact Fund
performance, including options, futures and other strategic transactions. Each
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").

24
<PAGE>

ADDITIONAL RISKS

The following information describes additional risks associated with certain
non-principal investment strategies employed by the Funds.

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 securities markets than on United States
securities markets. Moreover, brokerage commissions, fees for custodial services
and other costs related to foreign investments generally are greater than in the
United States. 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.

Initial Public Offerings. Each Fund (other than the Government Fund) may
purchase equity securities in initial public offerings ("IPOs"). Such
investments may have a magnified performance impact on a Fund due to the typical
price volatility of securities sold in IPOs. Investments in IPOs also involve
the risks that an active trading market may not develop or be sustained for the
securities and that the issuer may not have a significant operating history or
may not meet market expectations.

High-Yield and Unrated 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. Further-

25
<PAGE>

more, higher yielding bonds may contain redemption or call provisions which, if
exercised in 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 bonds (and therefore the respective Fund's
securities portfolio), and a Fund's ability to dispose of such bonds may be
limited.

Debt securities purchased by each of the Funds 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 each
Fund may be rated in any rating category established by a rating organization.
If a debt security is rated below investment grade or is unrated, Heartland
Advisors conducts its own assessment of the creditworthiness of the issuer.

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 United States authorities, and may offer less
liquidity and less protection to a Fund if the other party to the contract
defaults.

The Funds' use of options and futures and other investment techniques for
hedging purposes involves the risk that changes in the value of a hedging
instrument will not match those of the asset or security being hedged. Hedging
is the use of one investment to offset the effects of another investment.
Imperfect or no correlation of the values of the hedging instrument and the
hedged security or asset might occur because of characteristics of the
instruments themselves or unrelated factors involving, for example, the markets
on which the instruments are traded. As a result, hedging strategies may not
always be successful. While hedging strategies can help reduce or eliminate
portfolio losses, they also can reduce or eliminate portfolio gains.

26
<PAGE>

HOW TO INVEST

- ------------------------------------------------------------------------------------------------------------------------------------
INSTRUCTIONS FOR REGULAR ACCOUNT
- ------------------------------------------------------------------------------------------------------------------------------------
OPEN AN ACCOUNT ADD TO AN ACCOUNT SELL SHARES
- ------------------------------------------------------------------------------------------------------------------------------------
[PICTURE APPEARS HERE] By Telephone
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wire Call 800.443.2862 to obtain an account number and Telephone Purchase by Electronic Check Call us to request your
provide your Social Security or tax ID number. Have your Funds Transfer Available for redemption. A check will be mailed
bank send your investment to Firstar Bank, N.A. with these additional investments of $100 to to the address on the account.
instructions: $25,000. Your account will be Express mail delivery is available
charged a service fee (currently on request for an additional
. ABA #0750-00022 $20.00) if an electronic funds charge (currently $12.00).
. A/C #112-952-137 transfer cannot be processed due to
. CREDIT TO: Heartland (name of fund) insufficient funds or a stop Wire or Electronic Funds Transfer
. your Heartland account number transfer. Contact us for a Bank These services must be
. name(s) of investor(s) Options Form. pre-authorized in writing. To add
these services, call us to request
Wire Have your bank send your an account maintenance form. Once
investment to Firstar Bank, N.A. the Fund has your bank account
with these instructions: information on file, call us to
request your redemption. Proceeds
. ABA #0750-00022 will be wired or transferred
. A/C #112-952-137 electronically to your bank. For
. CREDIT TO: Heartland (name of wires, your account will be
fund) charged a service fee (currently
. your Heartland account number $12.00).
. name(s) of investor(s) Telephone and Wire Redemptions
are subject to a $1,000 minimum.

- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

27
<PAGE>

<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
[PICTURE APPEARS HERE] In Writing
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mail a completed application form and a check. Fill out the Additional Investment Write a letter of instruction that
Form attached to your statement and includes:
send with a check. Write your
Heartland account number on your . the names and signatures of
check. all account holders
. your Heartland account number
Mail the form and the check. . the amount in dollars or
shares you want to sell
. how and where to send the
proceeds

We will mail the proceeds to the
address on the account unless
otherwise requested. A signature
guarantee may be required.

Mail the letter of instruction.

NOTE: See page 31 for special
information on redemptions from IRA
accounts.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------------
[PICTURE APPEARS HERE] Automatically
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Complete the application form, including Automatic All Services Call us to request a Systematic Withdrawal Plan Call us
Investment Plan section, and return it with your form to add the Automatic to request an account maintenance
investment (minimum of $50 per transaction). Investment Plan (minimum of $50 per form to add the plan. Complete the
transaction) to your account. form, specifying the amount and
Complete and return the form along frequency of withdrawals you would
with any other required materials. like.
- ------------------------------------------------------------------------------------------------------------------------------------
[PICTURE APPEARS HERE] Via the Internet
- ------------------------------------------------------------------------------------------------------------------------------------
Computer Visit the Heartland web site
www.heartlandfunds.com and follow the instructions
to download an account application.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

29
<PAGE>

HOW MAY WE HELP YOU?

1.800.432.7856
www.heartlandfunds.com

Make a check payable to: Heartland Funds

ADDRESSES

Mailing Address
- ---------------

Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Overnight Delivery
- ------------------

Firstar Mutual Fund Services, LLC
615 East Michigan St.
Milwaukee, WI 53202

CONCEPTS TO UNDERSTAND

Wire Transfer: the fastest way to transfer money from one financial institution
to another. Your bank may charge a fee to send or receive a wire transfer.
Mail the letter of Instruction.

Electronic Funds Transfer: transferring money to your bank account
electronically may take up to eight business days to clear. EFT usually is
available without a fee at all Automated Clearing House (ACH) banks.
Establishing EFT services requires approximately 15 days.

30
<PAGE>

HOW TO INVEST

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR IRA ACCOUNTS
- --------------------------------------------------------------------------------
OPEN AN ACCOUNT ADD TO AN ACCOUNT SELL SHARES
- --------------------------------------------------------------------------------
[PICTURE APPEARS HERE] By Telephone
- --------------------------------------------------------------------------------
<S> <C> <C>
Wire After completing and Telephone Purchase by IRA redemptions
returning an IRA application Electronic Funds Transfer must be requested
form, call 800.443.2862 to Available for additional in writing.
obtain an account number and investments of $100 to
provide your Social Security $25,000. Your account will
or tax ID number. Have your be charged a service fee
bank send your investment (currently $20.00) if an
to Firstar Bank, N.A. with electronic funds transfer
these instructions: cannot be processed due to
insufficient funds or a
. ABA #0750-00022 stop transfer. Contact us
. A/C #112-952-137 for a Bank Options Form.
. CREDIT TO: Heartland
(name of fund) Wire Have your bank send
. your Heartland account your investment to Firstar
number Bank, N.A. with these
. name of investor instructions:

. ABA #0750-00022
. A/C #112-952-137
. CREDIT TO: Heartland
(name of fund)
. your Heartland account
number
. name(s) of investor(s)
- --------------------------------------------------------------------------------
</TABLE>

31
<PAGE>

- --------------------------------------------------------------------------------
[PICTURE APPEARS HERE] In Writing
- --------------------------------------------------------------------------------
<S> <C> <C>
Complete and return an IRA Fill out the Additional Write a letter of
application form, and a check Investment Form attached instruction that
or IRA transfer form. For to your statement and includes:
direct rollovers of assets send with a check. Write
from employer sponsored your Heartland account . the name and
qualified plans, mail number on your check. signature of
a completed IRA application. account holder
Mail the form and . your Heartland
the check. account number
. the fund name
. the amount in
dollars or shares
you want to sell
. how and where
to send the
proceeds
. whether the
distribution is
qualified
. whether taxes
should be
withheld (we will
withhold 10% if
you do not give
us instructions)

We will mail the
proceeds to the
address on the
account, unless
otherwise requested.
A signature
guarantee may be
required. Express
mail delivery is
available upon
request for an
additional charge
(currently $12.00)

Mail the letter of
instruction.
- --------------------------------------------------------------------------------
</TABLE>

32
<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
[PICTURE APPEARS HERE] Automatically
- --------------------------------------------------------------------------------
<S> <C> <C>
Complete the IRA application All Services Call Systematic Withdrawal
form, and the Automatic us to request a Plan Call us to request
Investment Plan application, form to add the an account maintenance
and return them with your Automatic Investment form to add the plan.
investment (minimum of $50 Plan (minimum of $50 Complete the form,
per transaction). per transaction) to specifying the amount
your account. Complete and frequency of
and return the form withdrawals you would
along with any other like.
required materials.
- --------------------------------------------------------------------------------
[PICTURE APPEARS HERE] Via the Internet
- --------------------------------------------------------------------------------
Computer Visit the Heartland
web site www.heartlandfunds.com
and follow the instructions to
download an IRA account application.
- --------------------------------------------------------------------------------
</TABLE>

33
<PAGE>

HOW MAY WE HELP YOU?

1.800.432.7856
www.heartlandfunds.com

Make checks payable to: Heartland Funds

ADDRESSES

Mailing Address
- ----------------
Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Overnight Delivery
- -------------------
Firstar Mutual Fund Services, LLC
615 East Michigan St.
Milwaukee, WI 53202

CONCEPTS TO UNDERSTAND

Wire Transfer: the fastest way to transfer the amount and frequency of
withdrawals you would like from one financial institution to another. Your bank
may charge a fee to send or receive a wire transfer.

34
<PAGE>

ACCOUNT POLICIES

If you wish to make a telephone transaction under one of the purchase or
redemption options described, please call Shareholder Services at 1.800.432.7856
or 414.289.7000. If you have a question about investing or need forms for
electing an option, call Shareholder Services at either number or visit our
website at www.heartlandfunds.com.

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,
including but not limited to restricting excessive exchange activity that the
officers of Heartland determine is not in the best interests of the Funds or
their shareholders. The Funds also reserve the right to waive or lower any
minimum dollar amounts applicable to the transactions discussed.

Copies of account statements are available upon request. However, if you request
a statement for a period other than for the current or prior year, the Fund's
transfer agent will charge you a research fee (currently $5.00).

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. Net asset value is determined at the close of regular
trading on the New York Stock Exchange (generally 4:00 p.m., Eastern Time).
Payment must be in U.S. dollars by check drawn on a bank in the United States,
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, and such orders are priced at the net asset
value per share on that next day. Purchase orders for a Fund are not binding
until accepted by the Fund or its authorized agent. 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.

35
<PAGE>

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. Subsequent purchases made by mail,
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.

Tax Identification Numbers. Under IRS rules, we must receive your correct social
security or tax identification number on a signed Account Application or IRS
Form W9 when you open your account. Otherwise, you may be subject to an IRS
fine, and we may be required to withhold a percentage (currently 31%) of your
dividend and capital gain distributions and of your redemption proceeds.

Purchases Through Third Parties. You may purchase shares through a third party
broker-dealer or other financial intermediary, but 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, different investment minimums and other
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 allowed some third parties to authorize selected designees to
accept purchase orders for the third party on a Fund's behalf. If you purchase
shares through a third party which is also an authorized agent of the Funds,
your order will be processed at the net asset value per share next determined
after the third party (or its authorized designee) receives your order; other
orders will be processed at the net asset value next determined after receipt by
the Funds.

REDEEMING SHARES

Redemptions by Shareholders Who Are Not Individuals. For corporate, trust,
partnership, and other institutional accounts, the persons signing should also
indicate their office 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.

36
<PAGE>

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 days after redemption. The Funds do not guarantee the time of receipt of
your proceeds and are not responsible for delays in mail or wire services. In
limited circumstances as permitted by the Securities and Exchange Commission
(such as when the New York Stock Exchange is closed or trading is restricted, or
when an emergency exists), 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 which may
take up to 15 days. 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 United States 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 give the Funds different
instructions. No interest will accrue on amounts represented by uncashed
redemption checks.

Early Redemption Fee. To defray certain transaction expenses and facilitate
portfolio management, each of the Value Fund and the Value Plus Fund will charge
you an early redemption fee of 1% of the current net asset value of shares being
redeemed or exchanged that are held for less than 270 days. The fee applies to
shares being redeemed or exchanged in the order in which they were purchased.
The Funds reserve the right to modify the terms of or terminate the fee at any
time. The fee is normally waived for Value Fund or Value Plus Fund shares
purchased:

- - For an account registered as either an Individual Retirement Account (IRA) or
a tax-qualified retirement plan on the books of the Fund's transfer agent or
on the books of other third parties who are authorized agents of the Fund;

37
<PAGE>

- - By automatic reinvestment of income or capital gains distributions from the
Fund, another Heartland Fund or the Firstar Money Market Fund;

- - Through an automatic purchase plan offered by the Fund; and

- - That are redeemed through an automatic redemption plan offered by the Fund.

If you purchase shares through a broker-dealer or other financial intermediary
who maintains your individual account on its books and an omnibus account with
the Fund's transfer agent, your record keeper may not be able to apply the fee
waiver in all of the circumstances discussed above. Before purchasing shares,
please check with your account representative to determine if the fee waiver is
available.

The other Heartland Funds reserve the right to charge you an early redemption
fee on the shares being redeemed or exchanged that are held for less than a
specified number of days.

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
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 record keeping 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.

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.

38
<PAGE>

The IRA custodian charges certain account fees that are subject to changes upon
notice to you, including an annual maintenance fee of $12.50 per Fund account
($25.00 per social security number). Distributions, asset transfers, excess
contribution withdrawals and Roth IRA re-characterizations are each subject to a
$15.00 fee.

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. A signature guarantee will also be required if the proceeds are being
paid to a third party, mailed to an address other than the address listed on the
Fund's records or forwarded to a bank not identified on the Fund's records as
authorized to receive the proceeds. Acceptable guarantors include, among others,
banks and brokerage firms that are members of a domestic stock exchange.
Notaries public cannot guarantee signatures.

Redemptions Through Third Parties. You may redeem shares through a third party
broker-dealer or other financial institution provided the third party presents
documentation satisfactory to the Funds indicating it is your authorized agent.
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
allowed some third parties to authorize selected designees to accept redemption
orders for the third party on the Fund's behalf. If you redeem shares through a
third party which is also an authorized agent of the Funds, your order will be
processed at the net asset value per share next determined after the third party
(or its authorized designee) receives your order; other orders will be processed
at the net asset value per share next determined after receipt by the Funds.

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 an 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) on each day the Exchange is open. 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. 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.

39
<PAGE>

You should always verify your order against your confirmation when you receive
it. Please contact Heartland or the third party with which you placed your
order promptly if you notice any discrepancy.

Portfolio securities are valued on the basis of market quotations or at fair
value using methods determined by Heartland's Board of Directors. The Funds use
a "fair value" methodology to value securities for which market quotations are
not readily available. Debt securities purchased with remaining maturities of 60
days or less are valued at acquisition cost, plus or minus any amortized
discount or premium.

SHAREHOLDER INFORMATION AND REPORTING

HEARTLAND VALUE SOURCE/TM/

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 1.800.432.7856 and requesting a personal identification number,
shareholders can access their accounts directly to review current balances,
recent transactions and other account information.

INVESTMENT REPORTS AND PROSPECTUSES

The Funds' portfolio managers review their strategies and results in Value
Reports, which also contain schedules of investments and Fund financial
statements. Heartland Advisors periodically publishes and mails to shareholders
other investment and performance information. Shareholders also receive annual
prospectus updates.

Whenever practicable, and to the extent permitted by applicable law, a single
report, prospectus or other communication will be mailed to shareholders who
share a single address. In some cases, Heartland may be required to obtain
advance written consent. To receive additional copies, you may call Shareholder
Services at 1.800.432.7856 or 414.289.7000, or write to Heartland Advisors at
789 North Water Street, Milwaukee, WI 53202.

40
<PAGE>

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 Select 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. Fund dividends and
capital gain distributions that are reinvested will be confirmed on your account
statement for the quarter in which the reinvestment is made.

If you choose to have dividends or capital gain distributions, or both, mailed
to you and either the United States Postal Service is unable to deliver the
distribution check to you or the check remains outstanding for least six months,
the Funds reserve the right to reinvest the check and future distributions in
shares of the particular Fund at their then current net asset value until you
give the Funds different instructions. No interest will accrue on amounts
represented by uncashed distribution checks.

"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 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 distribution and send you a
statement for tax purposes each year showing the source of distributions for the
preceding year.

41
<PAGE>

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 period 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.

42
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Select Value Fund
=====================================================================
For the year ended December 31, October 11, 1996/(1)/
through
1999 1998 1997 December 31, 1996
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Data

Net asset value, beginning of period $11.94 $12.30 $10.50 $10.00

Income from investment operations:

Net investment income 0.17 0.30 0.11 -

Net realized and unrealized gains 0.04 (0.10) 2.28 0.50
(losses) on investments ------ ------ ------ ------

Total income from investment operations 0.21 0.20 2.39 0.50

Less distributions from:

Net investment income (0.17) (0.30) (0.11) -

Net realized gains on investments (0.25) (0.26) (0.48) -
------ ------ ------ ------
Total distributions (0.42) (0.56) (0.59) -
------ ------ ------ ------
Net asset value, end of period $11.73 $11.94 $12.30 $10.50
====== ====== ====== ======
Total Return 1.95% 1.73% 22.91% 5.00%/(2)/

Ratios and Supplemental Data

Net assets, end of period (in thousands) $7,118 $8,025 $7,665 $2,441

Ratio of net expenses to average net assets 0.74%/(4)/ 0.00%/(4)/ 1.36%/(4)/ 2.73%/(3)/

Ratio of net investment income (loss) to 1.38%/(4)/ 2.37%/(4)/ 1.14%/(4)/ 0.25%/(3)/
average net assets

Portfolio turnover rate 160% 48% 30% 1%
</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 ratios of net expenses to average net assets for the years
ended December 31, 1999, 1998 and 1997 would have been 2.58%, 1.92% and
2.00%, respectively, and the ratios of net investment income (loss) to
average net assets would have been (0.46)%, 0.45% and 0.50%, respectively.

43
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Value Plus Fund
=============================================================
For the year ended December 31,
1999 1998 1997 1996 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data

Net asset value, beginning of period $ 13.80 $ 16.13 $ 13.73 $ 11.17 $ 9.53

Income (loss) from investment operations:

Net investment income 0.46 0.62 0.48 0.38 0.41

Net realized and unrealized gains (losses) on (0.25) (2.32) 3.66 3.33 1.89
investments ------- -------- -------- ------- -------

Total income (loss) from investment operations 0.21 (1.70) 4.14 3.71 2.30

Less distributions from:

Net investment income (0.44) (0.60) (0.48) (0.38) (0.41)

Net realized gains on investments - (0.03) (1.26) (0.77) (0.25)
------- -------- -------- ------- -------
Total distributions (0.44) (0.63) (1.74) (1.15) (0.66)
------- -------- -------- ------- -------
Net asset value, end of period $ 13.57 $ 13.80 $ 16.13 $ 13.73 $ 11.17
======= ======== ======== ======= =======
Total Return 1.67% (10.78)% 30.60% 33.80% 24.39%

Ratios and Supplemental Data

Net assets, end of period (in thousands) $87,065 $174,314 $336,281 $66,582 $19,123

Ratio of net expenses to average net assets 1.39% 1.24% 1.12% 1.45% 1.54%

Ratio of net investment income to average net assets 3.05% 3.77% 3.32% 3.23% 3.90%

Portfolio turnover rate 82% 64% 74% 73% 150%
</TABLE>

44
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Value Fund
=====================================================================
For the year ended December 31,
1999 1998 1997 1996 1995
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data

Net asset value, beginning of period $ 29.29 $ 33.87 $ 31.65 $ 27.95 $ 22.72

Income (loss) from investment operations:

Net investment income (loss) (0.21)/(1)/ 0.08 0.17 0.06 0.13

Net realized and unrealized gains (losses) on 7.52 (3.97) 7.09 5.78 6.63
investments ---------- ---------- ---------- ---------- ----------

Total income (loss) from investment operations 7.31 (3.89) 7.26 5.84 6.76

Less distributions from:

Net investment income -- (0.06) (0.17) (0.06) (0.13)

Net realized gains on investments (0.10) (0.63) (4.87) (2.08) (1.40)
---------- ---------- ---------- ---------- ----------
Total distributions (0.10) (0.69) (5.04) (2.14) (1.53)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 36.50 $ 29.29 $ 33.87 $ 31.65 $ 27.95
========== ========== ========== ========== ==========
Total Return 25.01% (11.46)% 23.19% 20.99% 29.80%

Ratios and Supplemental Data

Net assets, end of period (in thousands) $1,195,067 $1,545,495 $2,126,715 $1,626,760 $1,190,926

Ratio of net expenses to average net assets 1.34% 1.15% 1.12% 1.23% 1.29%

Ratio of net investment income (loss) to average net (0.70)% 0.22% 0.49% 0.22% 0.61%
assets

Portfolio turnover rate 23% 36% 55% 31% 31%
</TABLE>

(1) Net investment loss per share is calculated using average shares
outstanding.

45
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
Government Fund
================================================================
For the year ended December 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per Share Data

Net asset value, beginning of period $ 10.06 $ 9.85 $ 9.54 $ 9.96 $ 8.91

Income (loss) from investment operations:

Net investment income 0.57 0.57 0.58 0.59 0.60

Net realized and unrealized gains (losses) on (0.95) 0.21 0.31 (0.42) 1.05
investments ------- ------- ------- ------- -------

Total income (loss) from investment operations (0.38) 0.78 0.89 0.17 1.65

Less distributions from:

Net investment income (0.57) (0.57) (0.58) (0.59) (0.60)
------- ------- ------- ------- -------
Total distributions (0.57) (0.57) (0.58) (0.59) (0.60)
------- ------- ------- ------- -------
Net asset value, end of period $ 9.11 $ 10.06 $ 9.85 $ 9.54 $ 9.96
======= ======= ======= ======= =======
Total Return (3.90)% 8.15% 9.69% 2.00% 19.00%

Ratios and Supplemental Data

Net assets, end of period (in thousands) $42,760 $54,886 $48,562 $51,713 $66,261

Ratio of net expenses to average net assets/(1)/ 0.80% 0.76% 0.87% 1.06% 1.07%

Ratio of net investment income to average net 5.93% 5.73% 6.12% 6.36% 6.31%
assets/(1)/

Portfolio turnover rate 185% 90% 143% 30% 97%
</TABLE>

(1) 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, 1999, 1998, 1997, 1996 and 1995 would have been 1.25%,
1.16%, 1.20%, 1.21% and 1.22%, respectively, and the ratios of net
investment income to average net assets would have been 5.48%, 5.33%,
5.79%, 6.21% and 6.16%, respectively.

46
<PAGE>

- --------------------------------------------------------------------------------
HEARTLAND FUNDS
General Information and Account/Price Information (24 hours):
1.800.432.7856 or 414.289.7000
www.heartlandfunds.com
- --------------------------------------------------------------------------------

HEARTLAND FUNDS
789 North Water Street
Milwaukee, Wisconsin 53202

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

CUSTODIAN
Firstar Bank, 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

47
<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.
789 North Water Street
Milwaukee, Wisconsin 53202
1.800.432.7856 or 414.289.7000

You may also obtain the Annual and Semi-Annual Reports and other relevant
information at Heartland Funds' 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 significantly 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 1.202.942.8090. Additionally, copies of this
information can be obtained, after paying a duplicating fee, by sending an e-
mail request to [email protected] or by writing the Public Reference Section of
the SEC, Washington, D.C. 20549-0102.

Investment Company Act File No. 811-4982

48
<PAGE>

Rule 497(c)

PROSPECTUS/MAY 1, 2000

Heartland Taxable Short Duration Municipal Fund

The Fund seeks a high level of current income with a low degree of share price
fluctuation. It invests primarily in short and intermediate term taxable
municipal obligations of medium and lower quality, and maintains an average
portfolio duration of three years or less. The Fund is managed using the
Heartland Advisors' Municipal Ten-Point Value Investment Grid/TM/, a strict
investment discipline designed to identify value. The Fund is a no-load fund.
Investors pay no sales fees or charges to purchase, redeem or exchange their
shares.

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE............. 3
Investment Goal................................................. 3
Principal Investment Strategies................................. 3
Principal Investment Risks...................................... 4
Who Should Consider Investing?.................................. 5
Past Performance................................................ 6
Fees and Expenses of the Fund................................... 8
Investment Returns.............................................. 10

MANAGEMENT OF THE FUND............................................... 11
Heartland Group................................................. 11
Heartland Advisors.............................................. 11

PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT RISKS................. 13
Heartland Advisors' Municipal Ten-Point Value Investment
Grid/TM/...................................................... 13
Municipal Obligations........................................... 14
Credit Quality.................................................. 15
Temporary Positions............................................. 16
Other Investment Strategies and Investment Risks................ 16

HOW TO INVEST........................................................ 20

ACCOUNT POLICIES..................................................... 28
Redeeming Shares................................................ 30
Exchanging Shares............................................... 31
Share Price..................................................... 32

SHAREHOLDER INFORMATION AND REPORTING................................ 33
Heartland Value Source/TM/...................................... 33
Investment Reports and Prospectuses............................. 33
Dividends and Capital Gain Distributions........................ 33
Taxes........................................................... 34
Financial Highlights............................................ 34
</TABLE>

2
<PAGE>

RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE

INVESTMENT GOAL

The Fund seeks a high level of current income with a low degree of share price
fluctuation.

PRINCIPAL INVESTMENT STRATEGIES

The Fund invests primarily in a diversified portfolio of taxable medium and
lower-quality obligations issued by municipalities ("Municipal Obligations").
Although no duration restrictions apply to the Municipal Obligations in which
the Fund invests, it expects to emphasize short and intermediate duration
obligations, and it maintains an average portfolio duration of three years or
less. Certain medium and lower quality obligations, sometimes referred to as
"junk bonds," generally offer higher yields than investment grade securities
with similar maturities, but involve greater investment risk, including the
possibility of default or bankruptcy. The Fund seeks to manage this risk through
intensive credit research and may never invest more than 20% of its total assets
in debt obligations rated lower than B-.

Heartland Advisors' Municipal Ten-Point Value Investment Grid./TM/ The Fund's
investments are selected using Heartland Advisors' Municipal Ten-Point Value
Investment GridTM, a set of strict value criteria:

. Essential Service . A Financial Stake by Management
. Financial Soundness . Strong Legal Covenants
. Strong Competitive Position . High Yield vs. U.S. Treasuries
. High Debt Service Coverage . Catalyst for Change
. Experienced Management . Willingness to Pay Debt Obligations

Duration Management. The Fund's share price is affected by changes in the value
of bonds held in its portfolio. The value of a bond generally moves in the
opposite direction from a change in interest rates. 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.

Taxable Municipal Obligations. Most Municipal Obligations offer income free from
federal income tax. However, another type of Municipal Obligation is subject to
federal income tax for a variety of reasons. These Municipal Obligations do not
qualify for the federal tax exemption because (i) they did not receive the
necessary authorization for tax-exempt treatment from state or local
governmental authorities, (ii) they exceed certain regulatory limitations on the
cost of issuance for tax-exempt financing, or (iii) they finance

3
<PAGE>

public or private activities that do not qualify for the federal income tax
exemption. These non-qualifying activities might include, for example, certain
types of multi-family housing, certain professional and local sports facilities,
refinancing of certain municipal debt, and borrowing to replenish a
municipality's underfunded pension plan.

Taxable Municipal Obligations may offer yields comparable to those of corporate
debt obligations. However, they also may have less credit risk than corporate
debt obligations because of stronger legal covenants and lower risk of default.

PRINCIPAL INVESTMENT RISKS

The principal risk of investing in the Taxable Short Duration Municipal Fund is
that its share price and performance may fluctuate, and you could lose money.
The Fund is not designed to be a complete investment program. The value of your
investment in the Fund will be affected primarily by changes in the value of its
portfolio of Municipal Obligations. As with any mutual fund, the Fund cannot
guarantee that it will achieve its investment goal. Like investing in most
mutual funds that invest primarily in medium and lower quality debt obligations,
investing in the Fund involves the following risks:

Market Risk. Market risk is the possibility that the value of the Fund's
portfolio securities will decline due to (a) an increase in interest rates, (b)
adverse changes in supply and demand for debt obligations because of market,
sector, industry or political factors, or (c) the unavailability or inaccuracy
of key information about a particular security or market.

"High Yield" Risk. "High yield" risk is a characteristic of medium and lower
quality Municipal Obligations. These obligations offer higher yields, but
greater investment risk than higher quality securities with similar maturities.
In general, these securities are considered to be more speculative with respect
to the issuer's capacity to pay interest and repay principal, and involve
greater risk of issuer default or bankruptcy. High-yield debt obligations also
may be more susceptible to real or perceived adverse economic conditions or
political developments. Investing in lower quality and defaulted securities also
may lead to additional expense if the Fund is required to seek recovery of
principal and interest payments, and the Fund's right to payment may rank behind
those of other creditors of the issuer.

Liquidity Risk. The Fund's investments may be more thinly traded than secondary
trading in higher quality securities. This could cause the Fund difficulty in
disposing of portfolio securities and in valuing portfolio securities because of
the lack of objective pricing data provided by actively traded markets.

4
<PAGE>

Concentration Risk. Although the Fund may not invest more than 25% of its total
assets in securities of non-governmental issuers whose principal activities are
in the same industry, the Fund may invest 25% or more of its total assets in
Municipal Obligations that finance similar types of projects or projects in
related industry sectors or whose issuers or projects are located in the same
state or geographic region. These factors may cause the Fund to bear greater
risk from the effects of an economic, business or political development
affecting a particular region or industry. Concentration may also result in
potential volatility, causing the Fund's share price and performance to
fluctuate.

Miscellaneous. The Fund commenced operations on December 29, 1998. In its early
years of operation, the performance of a fund may be adversely affected by
factors that may make it more difficult for a newer fund to establish meaningful
portfolio positions as quickly and as efficiently as a more seasoned fund, such
as uneven cash flows, absolute size and greater portfolio turnover.

The Fund's investment goal may be changed by its Board of Directors upon notice
to shareholders, but without shareholder approval.

An investment in the Fund is not a deposit of a bank, nor insured or guaranteed
by the Federal Deposit Insurance Corporation (FDIC) or any other governmental
agency.

WHO SHOULD CONSIDER INVESTING?

The Fund is designated for investors who seek higher income than that generally
available from higher quality taxable Municipal obligations, and who are willing
to accept the higher risk of loss and principal fluctuation associated with
medium and lower quality taxable Municipal Obligations. Because the Fund seeks
to minimize share price fluctuation by maintaining a short portfolio duration,
the Fund may be appropriate for short-term investment needs. However, the Fund's
share price will fluctuate. The Fund is not an appropriate investment for those
whose primary objective is absolute stability of principal.

The Fund may be appropriate as part of your investment portfolio if:

. You are interested in a value-based approach to fixed income investing that
uses duration to help limit share price volatility associated with interest
rate risk.

. You are looking for a high yield taxable fixed income alternative to balance
your investment portfolio.

. You are investing through an Individual Retirement Account, 401(k) or other
retirement plan for which Municipal Obligations free from federal income tax
would not be appropriate.

5
<PAGE>

. You believe high yield Municipal Obligations can offer superior credit
quality, higher yield potential, and greater price stability compared to high
yield corporate bonds.

PAST PERFORMANCE

The following tables show historical performance of the Taxable Short Duration
Municipal Fund. Table I shows the Fund's total return for 1999. Table II
provides some indication of the risks of investing in the Fund by showing how
the Fund's average annual total returns compare to those of two different
securities market indices. Table III shows the annualized yields of the Fund and
the indices for the 30 days ended December 31, 1999. Past performance cannot
predict or guarantee future results.

Table I
Taxable Short Duration Municipal Fund - Total Return for 1999

[BAR GRAPH APPEARS HERE]

1999 5.51%

Best Quarter:

Q1 '99 1.71%

Worst Quarter:

Q4 '99 1.14%

6
<PAGE>

Table II
Taxable Short Duration Municipal Fund - Average Annual Total Return (through
12/31/99)

One Year Since Inception (12/29/98)
-------- -------------------------
<S> <C> <C>

Taxable Short Duration Municipal Fund 5.51% 6.69%

Merrill Lynch High Yield, U.S. 3.90% 4.12%
Corporate, Cash Pay, BB Rated,
1-3 Year Index(1)

Heartland Customized Short-Term Bond 6.65% 6.62%
Index(2)
</TABLE>
____________________________

(1) The Merrill Lynch High Yield, U.S. Corporate, Cash Pay, BB Rated, 1-3 Year
Index is a market capitalization weighted index including U.S. Domestic and
Yankee, cash pay, high-yield bonds. Qualifying bonds must have at least
$100 million par amount outstanding, and a remaining term to maturity
greater than or equal to one year but less than three years. The quality
range is BB3-BB1 based on the composite rating of Moody's and S&P.
Structured-Note issues, DIBs (deferred interest bonds), and PIKs (pay in
kind bonds) are excluded.

(2) The Heartland Customized Short-Term Bond Index is an equally-weighted index
developed by Heartland Advisors, Inc. consisting of equal allocations of
the Merrill Lynch High Yield, U.S. Corporate, Cash Pay, 1-3 year, BBB
Rated, BB Rated and B Rated Indices, respectively.

Table III
Yield for the 30 Days Ended 12/31/99 (annualized)

Taxable Short Duration Municipal Fund 10.13%

Merrill Lynch High Yield, U.S. Corporate, Cash Pay, BB Rated, 9.89%
1-3 Year Index

Heartland Customized Short-Term Bond Index 9.28%

For current yield information, please call 1.800.432.7856.

7
<PAGE>

FEES AND EXPENSES OF THE FUND

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

Shareholder fees (fees paid directly from your investment).

Maximum sales charge (load) imposed on purchases None

Maximum deferred sales charge (load) None

Maximum sales charge (load) imposed on reinvested None
dividends/distributions

Redemption fee(1) None
________________________

(1) You will be charged a $12.00 service fee if you request that your
redemption proceeds be wired to your bank account.

Annual Fund Operating Expenses (expenses that are deducted from Fund assets).

Management and administrative fees 0.60%

Distribution (12b-1) fees 0.25%

Other expenses 1.42%
----
Total annual Fund operating expenses 2.27%(1)
________________________

(1) For the fiscal year ended December 31, 1999, the Fund's total annual
operating expenses net of fees waived and/or expenses reimbursed by
Heartland Advisors were 0.95% of average daily net assets. Heartland
Advisors is voluntarily waiving fees and/or reimbursing expenses of the
Fund so that the Fund's net annual operating expenses (excluding brokerage
commissions, interest and taxes) do not exceed 0.95% of average daily net
assets, but may terminate or revise this voluntary undertaking at any time.

8
<PAGE>

Example. (This example is intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The example assumes
that you invest $10,000 in the 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, and (b) the Fund's
total annual operating expenses remain the same as shown in the preceding table.
The assumed return in the example does not represent actual or future
performance, and your actual cost of investing in the Fund may be higher or
lower.)

One Year $ 230

Three Years $ 709

Five Years $1,215

Ten Years $2,605

9
<PAGE>

INVESTMENT RETURNS

Portfolio Performance vs. Index Performance. The information about the Fund's
past performance includes a comparison of the Fund's average annual total
returns to two different market indices believed to be representative of the
Fund's portfolio. An index is not available for direct investment and the
securities included in an index are not an exact match to the holdings in a
mutual fund portfolio. The performance of a mutual fund portfolio will differ
from that of an index. Unlike an index, a mutual fund portfolio is affected by
operating expenses and cash flow activity caused by daily purchases and
redemptions. In addition, a mutual fund portfolio will differ from the index in
the number and size of holdings or securities, their relative sector and
industry weightings, the market capitalization of individual securities and the
median capitalization of the index and Fund overall. Fee waivers may have been
in effect for the Fund during the periods in which performance information is
presented. Without fee waivers, the Fund's returns and yields would have been
lower.

Definitions. Total return measures the change in the share price of the Fund
and assumes the reinvestment of dividends and capital gains. Cumulative total
return is actual return for a given period, but does not indicate how much
return fluctuated during the period. Average annual total return is the
hypothetical constant annual return that would have produced the Fund's
cumulative total return for a given period. It should not be confused with
actual annual returns, the sum of which over a given period produces the Fund's
cumulative total return. Yield is annualized net income of the Fund during a
30-day period as a percentage of the Fund's share price.

10
<PAGE>

MANAGEMENT OF THE FUND

HEARTLAND GROUP

The Fund is a mutual fund portfolio series of Heartland Group, Inc.
("Heartland"). The shares of the Fund 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 Fund's investments,
performance, and expenses. It elects the officers of Heartland and hires the
Fund's service providers, including the Fund's investment advisor. As a matter
of policy, Heartland requires that a majority of its Board members be
independent of the Fund's investment advisor.

Heartland and Heartland Advisors, Inc., Heartland's investment advisor and
principal underwriter, each have adopted a code of ethics designed to ensure,
among other things, that the interests of the Fund's shareholders take
precedence over the personal interests of their respective directors, officers
and employees. Under the code, personal investment activities are subject to
limitations designed to avoid the actual or perceived conflicts of interest with
the investment activities of the Fund.

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 Fund's
shares and provides various administrative services to the Fund. In addition to
managing the Heartland family of eight 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, 789 North Water Street, Milwaukee,
Wisconsin 53202.

Portfolio Managers. Thomas J. Conlin and Greg D. Winston are co-portfolio
managers of the Fund, having managed the Fund since commencement of its
operations. Messrs. Conlin and Winston are both Chartered Financial Analysts
(CFAs), and Vice Presidents and principals of Heartland Advisors, which they
joined in August 1996. They have been managing municipal investments since 1978
and 1988, respectively.

11
<PAGE>

Management Fee and Expense Limitation. For Heartland Advisors' investment
management services, the Fund pays an annual fee, accrued daily and paid
monthly, computed as a percentage of each Fund's average daily net assets. For
the fiscal year ended December 31, 1999, the Fund paid fees of 0.60% of its
average daily net assets to Heartland Advisors, which consisted of a portfolio
management fee of 0.45% of average daily net assets and an administrative fee of
0.15% of average daily net assets.

Heartland Advisors contractually undertook to waive fees paid to it by and/or
pay other expenses (excluding brokerage commissions, interest and taxes) of the
Fund through April 30, 2000 so as to limit the Fund's total annual ordinary
operating expenses to 0.95% of average daily net assets. Through December 31,
1999, Heartland Advisors voluntarily undertook to pay all interest expense of
the Fund. If the Fund's operating expenses fall below this contractual expense
limitation during the three years subsequent to the fiscal year in which the
contractual waiver/reimbursement was made, the Fund will repay Heartland
Advisors for fees previously waived and expenses previously reimbursed up to
that limitation. No repayment will be made after the three-year period ends.

Rule 12b-1 Fees. The 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 average 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.

12
<PAGE>

PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT RISKS

HEARTLAND ADVISORS' MUNICIPAL TEN-POINT VALUE INVESTMENT GRID/TM/

The following questions illustrate Heartland Advisors' process for evaluating
the value characteristics of Municipal Obligations for the Fund using its
proprietary Municipal Ten-Point Value Investment Grid./TM/

. Essential Service - Does the municipality provide a vital public
service? Will the demographics of the public sector help ensure the
service's continued importance?

. Financial Soundness - Are the municipality's financials sound? We
prefer low to moderate debt, rising revenues and ample liquidity.

. Strong Competitive Position - Does the municipality have a strong
competitive position? We prefer a municipality that holds a #1 or #2
market position (or an improving position) or one that has a
competitive advantage in terms of service or price.

. High Debt Service Coverage - Does the municipality have a stable or
improving ability to pay interest and principal on its bonds?

. Experienced Management - Does the municipality have seasoned, highly
specialized and focused management?

. A Financial Stake by Management - Does sharing the financial risk with
bondholders give management an incentive for superior performance?

. Strong Legal Covenants - Do the legal documents adequately protect
bondholders with such provisions as first mortgages, prior claims on
revenues, funding levels of debt reserves, occupancy targets,
operating ratios and control of management's accountability to
bondholders?

. High Yield vs. U.S. Treasuries - Is the yield attractive relative to
that currently available on U.S. Treasuries?

. Catalyst for Change - Does the municipality enjoy a feature or benefit
that may improve its competitive or financial position, such as new
management, technological advances or changes in the political,
economic or regulatory environment?

. Willingness to Pay Debt Obligations - Is there public support for the
project to be financed by the municipality and are there legal, tax or
political considerations that could affect its ability to meet its
financial commitments?

13
<PAGE>

MUNICIPAL OBLIGATIONS

Under normal market conditions, the Fund invests at least 65% of its total
assets in taxable Municipal Obligations. When Heartland Advisors considers the
yield on Municipal Obligations exempt from federal income tax to be high in
relation to taxable Municipal Obligations, the Fund may also invest in tax-
exempt Municipal Obligations.

The term "Municipal Obligations" means debt obligations issued by or on behalf
of states, territories, or possessions of the United States and sovereign
nations within the territorial boundaries of the United States, the District of
Columbia and their respective political subdivisions, agencies, and
instrumentalities, and corporations duly authorized by them.

The two principal classifications of Municipal Obligations are "general
obligations" and "revenue obligations." General obligations are secured by the
municipality's pledge of its credit and taxing power for the payment of
principal and interest. Revenue obligations are generally payable only from the
revenues from a particular facility or project or, in some cases, from the
proceeds of a special excise tax or other specific revenue source. In most
cases, revenue obligations are not supported by the municipality's general power
to levy taxes.

Municipal Obligations may bear either fixed or variable rates of interest.
Variable rate securities bear rates of interest that are adjusted periodically
according to formulas intended to minimize fluctuation in the value of the
instruments.

Within the two principal classifications of Municipal Obligations, there are
various types of securities, including, in part, municipal bonds, private
activity bonds, municipal notes, mortgage-backed obligations, municipal leases,
loan interests, custodial receipts and participation certificates.

Private Activity Bonds are a type of revenue obligation issued by municipalities
and other public authorities to provide funding for various privately operated
business facilities ("industrial revenue bonds" or "IRBs"). In most cases IRBs
are not secured by the credit of the municipality, but rather the payment of
principal and interest depends solely upon payments by the user of the
industrial facility financed by the bond or a separate guarantor of the bond.
In some instances, real and personal property is pledged as security for
principal and interest payments.

14
<PAGE>

Mortgage-Backed Municipal Obligations are a type of municipal security issued by
a state, authority or municipality to provide financing for residential housing
mortgages to target groups, generally low income individuals who are first-time
home buyers. The Fund's interest, evidenced by such obligations, is an
undivided interest in a pool of mortgages. Payments made on the underlying
mortgages and passed through to the Fund represent both regularly scheduled
principal and interest payments. The Fund also may receive additional principal
payments representing prepayments of the underlying mortgages. While a certain
level of prepayments can be expected regardless of the interest rate
environment, it is anticipated that prepayment of the underlying mortgages will
accelerate in periods of declining interest rates. In the event the Fund
receives principal prepayments in a declining interest rate environment, the
Fund may have to invest the unanticipated proceeds in lower-yielding securities.
This prepayment risk causes mortgage-backed securities to be more significantly
affected by changes in interest rates than is the case for Municipal Obligations
that are not subject to such prepayments.

Municipal Lease Obligations are another type of revenue obligation issued by
municipalities and other public authorities to acquire land, equipment or
facilities. These obligations are not secured by the credit of the
municipality, but rather the payment of principal and interest depends solely
upon payments by the municipality under a lease or installment purchase
contract. Payments by the municipality may be subject to certain conditions,
including, for example, clauses that do not require the municipality to make
lease or contractual payments unless specific annual appropriations are made by
the municipality. If the municipality stops making payments, the obligations
could lose value. Some of these instruments may be illiquid and, as such, will
be subject to the Fund's 15% limit on illiquid securities.

Participation interests or certificates of participation represent interests in
all or part of specific holdings of Municipal Obligations, including, for
example, municipal lease obligations.

CREDIT QUALITY

Although credit ratings issued by credit rating agencies are designed to
evaluate the risk that a municipality will be able to make timely principal and
interest payments on its obligations, such ratings are not always accurate.
Even if the ratings are accurate when made, the rating agencies may not always
make timely changes in a rating in response to changes in the economy or in the
condition of the issuer that could affect the likelihood of timely repayment of
the Municipal Obligation. Many debt obligations and, in particular, higher
yield debt obligations, are unrated. As a result, Heartland Advisors uses
credit ratings only as a preliminary indicator of investment quality, relying on
its own proprietary credit research and analysis of Municipal Obligations and
continually monitoring portfolio securities to determine whether credit quality
has changed.

15
<PAGE>

Nationally recognized statistical rating organizations publishing rating
information on which Heartland Advisors may rely include S&P, Moody's Investors
Service Inc. and Fitch IBCA, Inc., among others. The Fund also may invest in
unrated securities.

All rating limitations on investments are applied at time of purchase.
Subsequent to purchase, a rated debt obligation may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require the sale of such a security, but it will be a factor
in considering whether to continue to hold the security. To the extent that
ratings may change as a result of changes in a rating organization or its rating
system, the Fund will attempt to use comparable ratings as standards for
selecting investments.

TEMPORARY POSITIONS

Under adverse market, economic, political or other conditions, the Fund may take
a temporary defensive position and invest, without limitation, in higher quality
taxable or tax-exempt Municipal Obligations and other debt securities, including
liquid reserves. Taking a temporary defensive position is not required, and may
not be possible because of market conditions. It also might prevent the Fund
from achieving its investment objective.

OTHER INVESTMENT STRATEGIES AND INVESTMENT RISKS

In addition to the investment strategies discussed above in this prospectus, the
Fund may engage in other non-principal investment strategies discussed below and
in its statement of additional information.

Other Securities. Consistent with its investment objective, the Fund may invest
up to 35% of net assets in other debt securities; convertible securities;
preferred and common stocks, and other equity securities; warrants or other
securities exchangeable for shares of equity securities; foreign securities;
options; futures; and hybrid instruments. A hybrid instrument is an instrument
that has characteristics of securities, futures and options. For example, an
instrument whose principal value and interest rate is tied to a commodity,
currency, or securities index or another interest rate is a hybrid instrument.

When-Issued and Delayed-Delivery Securities; Forward Commitments. The 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 Fund purchases 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 the Fund will make such commitments only with
the intention of actually acquiring the securities, they may sell the securities
before settlement if it is deemed advisable for investment reasons. When-issued
or delayed-delivery securities may sometimes be purchased on a "dollar roll"
basis, meaning that the Fund will sell securities with a commitment to purchase
similar, but not

16
<PAGE>

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.

Futures and Options. The Fund may engage in transactions in options, futures
contracts, and options on futures contracts to hedge against anticipated
declines in the market value of portfolio securities and increases in the market
value of securities it intends to acquire. The Fund may also engage in such
transactions to protect against exposure to interest rate changes. Finally, the
Fund 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 the Fund's total return. The Fund's
potential losses from the use of futures extend beyond its initial investment in
such contracts. The 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 the Fund if the other party to the contract defaults.

The Fund's use of options and futures and other investment techniques for
hedging purposes involve the risk that changes in the value of a hedging
investment will not match those of the asset or security being hedged. Hedging
is the use of one investment to offset the effects of another investment.
Imperfect or no correlation of the values of the hedging instrument and the
hedged security or asset might occur because of characteristics of the
instruments themselves or unrelated factors involving, for example, the markets
on which the instruments are traded. As a result, hedging strategies may not
always be successful. While hedging strategies can help reduce or eliminate
portfolio losses, they can also reduce or eliminate portfolio gains.

Borrowing. The 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 the Fund within 60 days and is not extended or
renewed. The Fund also may borrow solely from banks to facilitate the
management of its investment portfolio and make other investments or engage in
other transactions permissible under the 1940 Act which may be considered a
borrowing (such as dollar rolls and reverse repurchase agreements), provided
such borrowings for these purposes do not exceed one-third of total assets.

17
<PAGE>

Currently, the Fund intends to borrow only from banks, for periods 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 the Fund
will borrow will depend, among other things, on market conditions and interest
rates.

Illiquid Securities. The Fund will not 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 the Fund. The 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 the Fund's limitation on illiquid securities. Municipal lease obligations,
which also 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.

Standby Commitments. To facilitate portfolio liquidity, the Fund may obtain
standby commitments when it purchases debt obligations. A standby commitment
gives the holder the right to sell the underlying security back to the seller at
an agreed price on certain dates or within a certain period. Standby
commitments generally increase the cost of the acquisition of the underlying
security, reducing its yield.

Loan Interests. The Fund may invest in loan interests, which are interests in
amounts owed by a municipality or other borrower to lenders or lending
syndicates. Loan interests purchased by the Fund will vary in maturity, may be
subject to restrictions on resale, are not readily marketable and may be secured
or unsecured. They involve the risk of loss in case of default or bankruptcy of
the borrower or, if in the form of a participation interest, the insolvency of
the financial intermediary.

Portfolio Turnover. The Fund's portfolio turnover rate indicates changes in its
portfolio of securities and will vary year to year as well as within a year.
The Fund may purchase or sell securities without regard to the length of time
the security has been held to take advantage of short-term differentials in bond
yields consistent with their objective of seeking tax-exempt interest income.
The Fund may engage in short-term trading if the

18
<PAGE>

anticipated benefits are expected by Heartland Advisors to exceed the
transaction costs. Portfolio turnover may also be affected by the sale of
portfolio securities to meet cash requirements for redemption of shares of the
Fund. High portfolio turnover could result in increases in transaction costs and
may result in realized capitalized gains which would be taxable distributions to
shareholders.

19
<PAGE>

HOW TO INVEST

INSTRUCTIONS FOR REGULAR ACCOUNTS
- ----------------------------------------------------------------------------------------------------
OPEN AN ACCOUNT ADD TO AN ACCOUNT SELL SHARES
- ----------------------------------------------------------------------------------------------------
By Telephone
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Wire. Call 800-443-2862 to obtain Telephone Purchase by Check. Call us to request
an account number and provide your Electronic Funds Transfer. your redemption. A check
Social Security or tax ID number. Available for additional will be mailed to the
Mail a completed application form. investments of $100 to address on the account.
Have your bank send your $25,000. Your account will Express mail delivery is
investment to Firstar Bank, N.A. be charged a service fee available upon request for
with these instructions: (currently $20.00) if an an additional charge
electronic funds transfer (currently $12.00).
. ABA #0750-00022 cannot be processed due to
. A/C #112-952-137 insufficient funds or a Wire or Electronic Funds
. CREDIT TO: Heartland (name of stop transfer. Contact us Transfer. These services
Fund) for a Bank Options Form. must be pre-authorized in
. your Heartland account number writing. To add these
. name(s) of investor(s) Wire. Have your bank send services, call us to
your investment to Firstar request an account
Bank, N.A. with these maintenance form. Once the
instructions: Fund has your bank account
information on file, call
. ABA #0750-00022 us to request your
. A/C #112-952-137 redemption. Proceeds will
. CREDIT TO: Heartland be wired or transferred
(name of Fund) electronically to your
. your Heartland account bank. For wires, your
number account will be charged a
. name(s) of investor(s) service fee (currently
$12.00).

Telephone and Wire
Redemptions are subject to
a $1,000 minimum.

</TABLE>

20
<PAGE>
<TABLE>
<CAPTION>

INSTRUCTIONS FOR REGULAR ACCOUNTS
- ------------------------------------------------------------------------------------------------
In Writing
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Mail a completed application form Fill out the Additional Write a letter of
and a check. Investment Form attached to instruction that includes:
your statement and send . the names and signature
with a check. Write your of all accountholders
Heartland account number on . your Heartland account
your check. number
. the Fund name
Mail the form and the check. . the amount in dollars or
shares you want to sell
. how and where to send
the proceeds

We will mail the proceeds
to the address on the
account, unless otherwise
requested. A signature
guarantee may be required.

Mail the letter of
instructions.

Note: See page 24 for
special information on
redemptions from IRA
accounts.
- ------------------------------------------------------------------------------------------------
Automatically
- ------------------------------------------------------------------------------------------------
Complete the application form, All Services. Call us to Systematic Withdrawal Plan.
including Automatic Investment request a form to add the Call us to request an
Plan section, and return it with Automatic Investment Plan account maintenance form to
your investment (minimum of $50 (minimum of $50 per add the plan. Complete the
per transaction). transaction) to your form, specifying the amount
account. Complete and and frequency of
return the form along with withdrawals you would like.
any other required material.
- ------------------------------------------------------------------------------------------------
</TABLE>

21
<PAGE>

INSTRUCTIONS FOR REGULAR ACCOUNTS
- ------------------------------------------------------------------------------
Via the Internet
- ------------------------------------------------------------------------------

Computer. Visit the Heartland web
site www.heartlandfunds.com and
follow the instructions to
download an account application.
Mail a completed application form
and purchase check.
- ------------------------------------------------------------------------------

22
<PAGE>
- ------------------------------------------------------------------
HOW MAY WE HELP YOU?
- ------------------------------------------------------------------

1.800.432.7856

www.heartlandfunds.com

Make check payable to:
Heartland Funds

- ------------------------------------------------------------------
ADDRESS
- ------------------------------------------------------------------

Mailing Address
- ---------------
Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Overnight Delivery
- ------------------
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202

- ------------------------------------------------------------------
CONCEPTS TO UNDERSTAND
- ------------------------------------------------------------------

Wire transfer: the fastest way to transfer money from one
financial institution to another. Your bank may charge a fee to
send or receive a wire transfer.

Electronic funds transfer: transferring money to your bank
account electronically may take up to eight business days to
clear. EFT usually is available without a fee at all Automated
Clearing House (ACH) banks. Establishing EFT services requires
approximately 15 days.

23
<PAGE>

HOW TO INVEST

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
INSTRUCTIONS FOR IRA ACCOUNTS
- ------------------------------------------------------------------------------------------------
OPEN AN ACCOUNT ADD TO AN ACCOUNT SELL SHARES
- ------------------------------------------------------------------------------------------------
By Telephone
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Wire. After completing and Telephone Purchase by IRA redemptions must be
returning an IRA application Electronic Funds Transfer. requested in writing.
form, call 800-443-2862 to Available for additional
obtain an account number and investments of $100 to $25,000.
provide your Social Security Your account will be charged a
or tax ID number. Have your service fee (currently $20.00)
bank send your investment to if an electronic funds transfer
Firstar Bank, N.A. with these cannot be processed due to
instructions: insufficient funds or a stop
transfer. Contact us for a
. ABA #0750-00022 Bank Options Form.
. A/C #112-952-137
. CREDIT TO: Heartland Wire. Have your bank send your
(name of Fund) investment to Firstar Bank,
. your Heartland account N.A. with these instructions:
number
. name(s) of investor(s) . ABA #0750-00022
. A/C #112-952-137
. CREDIT TO: Heartland (name
of Fund)
. your Heartland account number
. name(s) of investor(s)
- ------------------------------------------------------------------------------------------------
</TABLE>

24
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
INSTRUCTIONS FOR IRA ACCOUNTS
- ------------------------------------------------------------------------------------------------
In Writing
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Complete and return an IRA Fill out the Additional Write a letter of
application form and a check Investment Form attached to instruction that includes:
or IRA transfer form. For your statement and send with a . the names and signature
direct rollovers of assets check. Write your Heartland of all accountholders
from employer sponsored account number on your check. . your Heartland account
qualified plans, mail a number
completed IRA application. Mail the form and the check. . the Fund name
. the amount in dollars or
shares you want to sell
. how and where to send
the proceeds
. whether the distribution
is qualified or premature
. whether taxes should be
withheld (we will withhold
10% if you do not give us
instructions)

We will mail the proceeds
to the address on the
account, unless otherwise
requested. A signature
guarantee may be required.
Express mail delivery is
available upon request for
an additional charge
(currently $12.00).

Mail the letter of
instruction.
- ------------------------------------------------------------------------------------------------
</TABLE>

25
<PAGE>

- ------------------------------------------------------------------------------------------------
INSTRUCTIONS FOR IRA ACCOUNTS
- ------------------------------------------------------------------------------------------------
Automatically
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Complete the IRA application All Services. Call us to Systematic Withdrawal Plan.
form, including Automatic request a form to add the Call us to request an
Investment Plan section, and Automatic Investment Plan account maintenance form to
return them with your (minimum of $50 per add the plan. Complete the
investment (minimum of $50 per transaction) to your account. form, specifying the amount
transaction). Complete and return the form and frequency of
along with any other required withdrawals you would like.
material.
- ------------------------------------------------------------------------------------------------
Via the Internet
- ------------------------------------------------------------------------------------------------

Computer. Visit the Heartland
website www.heartlandfunds.com
and follow the instructions to
download an IRA account
application.
- ------------------------------------------------------------------------------------------------
</TABLE>

26
<PAGE>

- --------------------
HOW MAY WE HELP YOU?
- --------------------
1.800.432.7856

www.heartlandfunds.com

Make check payable to:
Heartland Funds

- --------------------
ADDRESS
- --------------------

Mailing Address
- ---------------
Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Overnight Delivery
- ------------------
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202

- ----------------------
CONCEPTS TO UNDERSTAND
- ----------------------

Wire transfer: the fastest way to transfer money from one
financial institution to another. Your bank may charge a fee to
send or receive a wire transfer.

27
<PAGE>

ACCOUNT POLICIES

If you wish to make a telephone transaction under one of the purchase or
redemption options described below, please call Shareholder Services at
1.800.432.7856 or 414.289.7000. If you have a question about investing or need
forms for electing an option, call Shareholder Services at either number or
visit our website at www.heartlandfunds.com. Please note that you may terminate
or change any option you elect at any time upon five days' advance notice to
Heartland Advisors. The Fund 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, including but not limited to restricting excessive exchange
activity that the officers of Heartland determine is not in the best interests
of the Fund or its shareholders. The Fund also reserves the right to waive or
lower any minimum dollar amounts applicable to the transactions discussed.

Copies of account statements are available upon request. However, if you request
a statement for a period other than the current or prior year, the Fund's
transfer agent will charge you a research fee (currently $5.00).

Time of Purchase and Form of Payment. Shares of the Fund are sold without a
sales charge. Your purchase of the 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. Net asset value is determined at the close of regular
trading on the New York Stock Exchange (generally 4:00 p.m., Eastern Time).
Payment must be in U.S. dollars by check drawn on a U.S. bank, wire transfer, or
electronic transfer. Usually the 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 the Fund are not binding
until accepted by the Fund or its authorized agent. The 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.

28
<PAGE>

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

Tax Identification Numbers. Under IRS rules, we must receive your correct social
security or tax identification number on a signed Account Application or IRS
Form W-9 when you open your account. Otherwise, you may be subject to an IRS
fine, and we may be 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 Fund or
its shareholders. Shares purchased through third parties may be subject to
special fees, different investment minimums and other 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
Fund's behalf. If you purchase shares through a third party which is also an
authorized agent of the Fund, your order will be processed at the net asset
value per share next determined after the third party (or its authorized
designee) receives your order; other orders will be processed at the net asset
value next determined after receipt by the Fund.

29
<PAGE>

REDEEMING SHARES

Redemptions by Shareholders Who Are Not Individuals. 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.

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 the Fund or its authorized agent in
good order as further explained below. The Fund will not accept an order with
instructions for redemption on a particular date or at a particular price. The
Fund uses procedures reasonably designed to authenticate telephone instructions
including, for example, requesting personal identification information from
callers. The Fund is 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 days after redemption. The Fund does not guarantee the time of receipt of
your proceeds and is not responsible for delays in mail or wire services. In
limited circumstances as permitted by the Securities and Exchange Commission
(such as when the New York Stock Exchange is closed or trading is restricted, or
when an emergency exists), the Fund may elect to suspend the redemption of
shares.

Generally, proceeds will be paid in cash, but the Fund reserves 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 Fund reserves the right to
hold the proceeds until payment of the purchase price can be confirmed, which
may take up to 15 days. 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 Fund
reserves the right to reinvest the check in shares of the Fund at their then
current net asset value until you notify the Fund with different instructions.

30
<PAGE>

Early Redemption Fee. To defray certain transaction expenses and facilitate
portfolio management, upon advance written notice to you, the Fund reserves the
right to charge you an early redemption fee for shares being redeemed or
exchanged that are held for less than a specified number of days.

EXCHANGING SHARES

Unless you instruct the Fund that you do not want this service, you are
automatically permitted to purchase shares of the 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.

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. The 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.

Signature Guarantees. To protect your account, the Fund reserves 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 Fund's records. Acceptable
guarantors include, among others, banks and brokerage firms that are members of
a domestic stock exchange. Notaries public cannot guarantee signatures.

31
<PAGE>

fees for their services and impose terms or conditions that do not apply if you
do business directly with the Fund. Heartland has authorized some third parties
to designate selected agents to accept redemption orders on the Fund's behalf.
If you redeem shares through a third party which is also an authorized agent of
the Fund, your order will be processed at the net asset value per share next
determined 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
Fund.

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

SHARE PRICE

Shares of the 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) on each day when the Exchange is open.
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.

Third parties acting as authorized agents of the Fund 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.

You should always verify your order against your confirmation when you receive
it. Please contact the Fund or the third party with which you placed your order
promptly if you notice any discrepancy.

Portfolio securities are valued on the basis of market quotations or at fair
value using methods determined by Heartland's Board of Directors. The Fund uses
a "fair value" methodology to value securities when market quotations are not
readily available. Fair values of debt securities 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.

32
<PAGE>

SHAREHOLDER INFORMATION AND REPORTING

HEARTLAND VALUE SOURCE/TM/

Heartland Advisors' website, Heartland Value Source/TM/, located at
www.heartlandfunds.com, provides investors with a variety of information about
the Fund, 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 AND PROSPECTUSES

The Fund's portfolio managers review their strategies and results in Value
Reports, which also contain schedules of investments and Fund financial
statements. Heartland Advisors periodically publishes and mails to shareholders
other investment and performance information. Shareholders also receive annual
prospectus updates.

Whenever practicable and, to the extent permitted by applicable law, a single
report, prospectus or other communication will be mailed to shareholders who
share a single address. In some cases, Heartland may be required to obtain
advance written consent. To receive additional copies, you may call Shareholder
Services at 1.800.432.7856 or 414.289.7000, or write to Heartland Advisors at
789 North Water Street, Milwaukee, Wisconsin 53202.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS

A dividend from net investment income represents the income the 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.

Income dividends are declared by the Fund each day and paid monthly. If the 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. Fund dividends and capital
gain distributions that are reinvested will be confirmed on your account
statement for the quarter in which the reinvestment is made.

If you choose to have dividends or capital gain distributions, or both, mailed
to you and either the United States Postal Service is unable to deliver the
distribution check to you or

33
<PAGE>

the check remains outstanding for at least six months, the Fund reserves the
right to reinvest the check and future distributions in shares of the Fund at
their then current net assets value until you give the Fund different
instructions. No interest will accrue on amounts represented by uncashed
distribution checks.

"Buying a Dividend." Please note that if you purchase shares of the 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. A 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 short-term capital gain distributions will be
taxable to you as ordinary income for federal income tax purposes. Long-term
capital gain distributions will be taxable as long-term capital gains to
shareholders. If the 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.

FINANCIAL HIGHLIGHTS

The following financial highlights table is intended to help you understand the
Fund's financial performance since inception. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned 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 Fund's financial statements, are included in
the Annual Report to Shareholders, which is available upon request.

34
<PAGE>

Taxable Short Duration Municipal Fund
-------------------------------------

For the period
from Jan. 1, 1999 Dec. 29, 1998(1)
through through
Dec. 31, 1999 Dec. 31, 1998
------------------ ----------------
<S> <C> <C>
Per Share Data

Net asset value, beginning of period.......... $ 10.11 $10.00
Income from investment operations:
Net investment income.................... 0.89 0.00
Net realized and unrealized gains (losses) (0.35) 0.11
on investments.......................... ------- ------
0.54 0.11
Total income from investment
operations..........................
Less distributions from: (0.89) 0.00
Net investment income.................... -- --
Net realized gains on investments........ ------- ------
Total distributions (0.89) 0.00
$ 9.76 $10.11
Net asset value, end of period................ ======= ======

Total Return.................................. 5.51% 1.15%(2)

Ratios and Supplemental Data
Net assets, end of period
(in thousands).......................... $21,913 $1,227
Ratio of net expenses to average
net assets/(4)/......................... 0.95% 0.48%(3)
Ratio of net investment income
to average net
assets/4)/.............................. 9.02% 6.36%(3)
Portfolio turnover rate.................. 43% 0%
</TABLE>

(1) Commencement of operations.
(2) Not annualized.
(3) Annualized.
(4) If there had been no expense reimbursement by the Advisor, the ratios of
annualized net expenses to average net assets for the periods ended
December 31, 1999 and 1998 would have been 2.27% and 4.80%, respectively,
and the ratios of annualized net investment income to average net assets
would have been 7.70% and 2.04%, respectively.

35
<PAGE>

___________________________________________________________________

HEARTLAND FUNDS
General Information and Account/Price Information (24 hours):
1.800.432.7856 or 414.289.7000
www.heartlandfunds.com
___________________________________________________________________

HEARTLAND FUNDS
789 North Water Street
Milwaukee, Wisconsin 53202

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

CUSTODIAN
Firstar Bank, 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

36
<PAGE>

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

Heartland Advisors, Inc.
789 North Water Street
Milwaukee, WI 53202
1.800.432.7856 or 414.289.7000

You may also obtain the Annual and Semi-Annual Reports and other relevant
information at Heartland Funds' website (www.heartlandfunds.com).

The SAI, which contains more information on the Fund, 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 the Fund's performance
during the prior fiscal year and six-month fiscal period, respectively.

Investment Company Act File No. 811-4982.

37
<PAGE>

Rule 497(c)

PROSPECTUS/MAY 1, 2000

This prospectus contains information you should know about the following mutual
fund portfolios of Heartland Group, Inc. (the "Funds") before you invest. Each
Fund is managed using Heartland Advisors' Municipal Ten-Point Value Investment
Grid,/TM/ a strict investment discipline designed to identify value. Each Fund
is a no-load fund. Investors pay no sales fees or charges to purchase, redeem or
exchange their shares.

* Heartland Short Duration High-Yield Municipal Fund - Its investment
objective is a high level of federally tax-exempt current income with a low
degree of share price fluctuation. This Fund invests primarily in short and
intermediate duration, medium and lower quality municipal obligations and
maintains an average portfolio duration of three years or less.

* Heartland High-Yield Municipal Bond Fund - Its investment objective is to
maximize after-tax total return by investing for a high level of federally
tax-exempt current income. This Fund invests primarily in medium and lower
quality municipal obligations and maintains an average portfolio duration
of greater than five years.

TABLE OF CONTENTS
<TABLE>
<CAPTION>

Page
----

<S> <C>
RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE............. 3
The Heartland Approach To Investing............................. 3
Short Duration High-Yield Municipal Fund........................ 4
High-Yield Municipal Bond Fund.................................. 7
Fees and Expenses of The Funds.................................. 10
Investment Returns.............................................. 13

MANAGEMENT OF THE FUNDS.............................................. 14
Heartland Group................................................. 14
Heartland Advisors.............................................. 14

PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT RISKS................. 16
Heartland Advisors' Municipal Ten-Point Value Investment Grid/TM/ 16
Municipal Obligations........................................... 17
Credit Quality.................................................. 18
Temporary Positions............................................. 19
Principal Investment Risks...................................... 19
Other Investment Strategies and Investment Risks................ 21

HOW TO INVEST........................................................ 24

ACCOUNT POLICIES..................................................... 27
Redeeming Shares................................................ 29
Exchanging Shares............................................... 30
Share Price..................................................... 31

SHAREHOLDER INFORMATION AND REPORTING................................ 32
Heartland Value Source/TM/...................................... 32
Investment Reports and Prospectuses............................. 32
Dividends and Capital Gain Distributions........................ 32
Taxes........................................................... 33
Financial Highlights............................................ 34
</TABLE>

2
<PAGE>

RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND PERFORMANCE

THE HEARTLAND APPROACH TO INVESTING

Heartland Advisors, Inc. ("Heartland Advisors"), America's Value Investor(R),
selects investments 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 the "growth" style of investing over
extended periods, which may include bear markets as well as volatile or
"sideways moving" markets (i.e., markets that only move within a narrow range
upward or downward over an extended period of time). The value style may perform
less well in markets that favor faster growing companies.

Each Fund's investments are selected using Heartland Advisors' Municipal Ten-
Point Value Investment Grid/TM/, a set of strict value criteria:

* Essential Service * A Financial Stake by Management
* Financial Soundness * Strong Legal Covenants
* Strong Competitive Position * High Yield vs. U.S. Treasuries
* High Debt Service Coverage * Catalyst for Change
* Experienced Management * Willingness to Pay Debt Obligations

Elsewhere in this prospectus you will find a discussion of a mutual fund
portfolio and the performance of a market index, together with an explanation of
the different measures of mutual fund performance.

An investment in a Fund is not a deposit of a bank, nor insured or guaranteed by
the Federal Deposit Insurance Corporation (FDIC) or any other governmental
agency. It is not designed to be a complete investment program, and while you
may make money, you can also lose money. Each Fund's share price will
fluctuate.

3
<PAGE>

SHORT DURATION HIGH-YIELD MUNICIPAL FUND

Investment Goal. The Short Duration High-Yield Municipal Fund seeks a high
level of federally tax-exempt current income with a low degree of share price
fluctuation.

Principal Investment Strategies. The Short Duration High-Yield Municipal Fund
invests primarily in medium and lower-quality obligations issued by
municipalities ("Municipal Obligations"), the income from which is exempt from
federal personal income tax. Although no duration restrictions apply to the
Municipal Obligations in which the Fund invests, it expects to emphasize short
and intermediate duration obligations, and it maintains an average portfolio
duration of three years or less. Medium and lower quality obligations,
sometimes referred to as "junk bonds," generally offer higher yields than
investment grade securities with similar maturities, but involve greater
investment risk, including the possibility of default or bankruptcy. The Fund
seeks to manage this risk through intensive credit research and may never invest
more than 20% of its total assets in debt obligations rated lower than B-. The
Fund may invest, without limitation, in securities subject to the alternative
minimum tax.

Duration Management. The Fund's share price is affected by changes in the value
of bonds held in its portfolio. A bond's value will generally move in the
opposite direction of a change in interest rates. 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.

Principal Risks. The Fund's share price and performance may fluctuate, and you
could lose money. The Fund invests in Municipal Obligations, which, like other
debt securities, involve credit risk (the possibility that the issuer will not
make timely principal and interest payments) and market risk (price fluctuations
due to interest changes and other factors). Rising interest rates generally
will result in a decrease in the value of the Municipal Obligations held by the
Fund.

<PAGE>

redemption obligations so as to facilitate a more orderly liquidation of
securities in a manner that Heartland Advisors believes would help maximize the
proceeds received by the Fund from the sale. These borrowings may cause the Fund
to incur additional expense, which could further reduce shareholder returns. For
these reasons, the Fund is considered more speculative than a portfolio of
higher quality obligations with similar maturities.

The Fund commenced operations on January 2, 1997. In its early years of
operation, the performance of a fund may be adversely affected by factors that
may make it more difficult for a newer fund to establish meaningful portfolio
positions as quickly and as efficiently as a more seasoned fund, such as uneven
cash flows, absolute size and greater portfolio turnover.

Who Should Consider Investing in the Fund? The Short Duration High-Yield
Municipal Fund is designed for investors who seek higher income than that
generally available from higher quality Municipal Obligations, and who are
willing to accept the higher risk of loss and principal fluctuation associated
with medium and lower quality Municipal Obligations. Because the Fund seeks to
minimize share price fluctuation by maintaining a short portfolio duration, the
Fund may be appropriate for short-term investment needs. However, the Fund's
share price will fluctuate. The Fund is not an appropriate investment for those
whose primary objective is absolute stability of principal.

The Fund may be appropriate as part of your investment portfolio if:

* You are interested in a value-based approach to fixed income investing that
uses duration to help limit share price volatility associated with interest
rate risk.

* You are looking for a high-yield fixed income alternative to balance your
investment portfolio.

Past Performance. The following tables show historical performance of the Short
Duration High-Yield Municipal Fund. Table I provides some indication of the
risks of investing in the Fund by showing how the Fund's total returns have
varied from year to year. Table II provides further indication of the risks of
investing in the Fund by showing how the Fund's average annual total returns
compare to those of a broad-based securities market index. Table III shows the
annualized yields and taxable equivalent yields of the Fund and the index for
the 30 days ended December 31, 1999. Past performance cannot predict or
guarantee future results.

5
<PAGE>

Table I
Short Duration High-Yield Municipal Fund - Year-by-Year Total Returns

[Bar Graph Appears Here]

1997 7.44%
1998 3.65%
1999 1.42%

Best Quarter:

Q2 '97 2.08%

Worst Quarter:

Q4 '99 -0.98%

Table II
Short Duration High-Yield Municipal Fund - Average Annual Total Return (through
12/31/99)

One year Since inception (1/2/97)

Short Duration High-Yield
Municipal Fund 1.42% 4.15%

Lehman Municipal 1-3 Year Non-
Investment Grade Bond Index/(1)/ 3.66% 5.39%

____________________________

(1) The Lehman Municipal 1-3 Year Non-Investment Grade Bond Index is an
unmanaged index and includes issues that have a maximum credit rating of
"Ba1," were issued as part of a deal of at least $20 million, have an
amount outstanding of at least $3 million, have a maturity of one to three
years and were issued after December 31, 1990.

6
<PAGE>

Table III
Yield for the 30 Days Ended 12/31/99 (annualized)

Taxable Equivalent Yield/(1)/

Short-Duration High-Yield Municipal Fund 6.77% 11.21%

Lehman Municipal 1-3 Year
Non-Investment Grade Bond Index 5.62% 9.30%
____________________________

(1) Based on a federal tax rate of 39.6%.

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

HIGH-YIELD MUNICIPAL BOND FUND

Investment Goal. The High-Yield Municipal Bond Fund seeks to maximize after-tax
total return by investing for a high level of federally tax-exempt current
income.

Principal Investment Strategies. The High-Yield Municipal Bond Fund invests
primarily in medium and lower quality Municipal Obligations, the income from
which is exempt from federal personal income tax. Although no duration
restrictions apply to the Fund or individual Municipal Obligations in which it
invests, the Fund expects to maintain an average portfolio duration of greater
than five years under normal market conditions. Medium and lower quality
obligations, sometimes referred to as "junk bonds," generally offer higher
yields than investment grade securities with similar maturities, but involve
greater investment risk, including the possibility of default or bankruptcy.
The Fund seeks to manage this risk through intensive credit research and may
never invest more than 20% of its total assets in debt obligations rated lower
than B-. The Fund may invest, without limitation, in securities subject to the
alternative minimum tax.

Duration Management. The Fund's share price is affected by changes in the value
of bonds held in its portfolio. A bond's value will generally move in the
opposite direction of a change in interest rates. 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 5-year duration would expect its
share price to decline by about 5%; conversely, if interest rates fall by 1%,
the fund would expect to see about a 5% 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.

7
<PAGE>

Because the Fund invests primarily in medium and lower quality Municipal
Obligations, the Fund's portfolio involves risk associated with prolonged
adverse changes in interest rates and the economy generally and greater credit
risks. More specifically, these risks include the possibility of default or
bankruptcy of an issuer that could cause the Fund to incur additional expense in
seeking recovery under legal claims. These expenses would reduce shareholder
returns. Additionally, adverse interest rate, economic or credit conditions
could cause the Fund to experience delays or difficulties in disposing of
portfolio securities. Under these circumstances, the Fund may elect to borrow
to meet its redemption obligations so as to facilitate a more orderly
liquidation of securities in a manner that Heartland Advisors believes would
help maximize the proceeds received by the Fund from the sale. These borrowings
may cause the Fund to incur additional expense, which could further reduce
shareholder returns. For these reasons, the Fund is considered more speculative
than a portfolio of higher quality obligations with similar maturities.

Who Should Consider Investing in the Fund? The High-Yield Municipal Bond Fund
is designed for investors who seek higher income than that generally available
from higher quality Municipal Obligations, and who are willing to accept the
higher risk of loss and principal fluctuation associated with long-term medium
and lower quality Municipal Obligations.

The Fund may be appropriate as part of your investment portfolio if:

* You are interested in a value-based approach to fixed income investing that
uses duration to help limit share price volatility associated with interest
rate risk.

* You are looking for a high-yield fixed income alternative to balance your
investment portfolio.

8
<PAGE>

Past Performance. The following tables show historical performance of the High-
Yield Municipal Bond Fund. Table I provides some indication of the risks of
investing in the Fund by showing how the Fund's total returns have varied from
year to year. Table II provides further indications of risks of investing in
the Fund by showing how the Fund's average annual total returns compare to those
of a broad-based securities market index. Table III shows the annualized yields
and taxable equivalent yields of the Fund and the index for the 30 days ended
December 31, 1999. Past performance cannot predict or guarantee future results.

TABLE I
High-Yield Municipal Bond Fund - Year-by-Year Total Returns
[Bar Graph Appears Here]

1997 11.67%
1998 6.66%
1999 - 2.45%

Best Quarter:

Q4 '97 3.61%

Worst Quarter:

Q4 '99 -3.33%

TABLE II
High-Yield Municipal Bond Fund - Average Annual Total Return (through 12/31/99)

One year Since inception (1/2/97)

High-Yield Municipal -2.45% 5.14%
Bond Fund

Lehman Municipal -1.80% 4.99%
Non-Investment Grade
Bond Index(1)

__________________________

(1) The Lehman Municipal Non-Investment Grade Bond Index is an unmanaged index
and includes issues that have a maximum credit rating of "Ba1," were issued
as part of a deal of at least $20 million, have an amount outstanding of at
least $3 million, have a maturity of at least one year and were issued
after December 31, 1990.

9
<PAGE>

TABLE III
Yield for the 30 Days Ended 12/31/99 (annualized)

Taxable Equivalent Yield/(1)/
-----------------------------

High-Yield Municipal Bond Fund 7.66% 12.68%

Lehman Municipal Non-Investment Grade
Bond Index 7.12% 11.79%
__________________________

(1) Based on a federal tax rate of 39.6%.

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 pay if you buy and hold
shares of the Funds.

Shareholder fees (fees paid directly from your investment).

Short Duration High-Yield
High-Yield Municipal
Municipal Fund Bond Fund
-------------------------- -------------------------
<S> <C> <C>

Maximum sales charge (load) imposed None None
on purchases

Maximum deferred sales charge (load) None None

Maximum sales charge (load) imposed None None
on reinvested dividends/distributions

Redemption fee/(1)/ None None

</TABLE>
________________________

(1) You will be charged a $12.00 service fee if you request that your
redemption proceeds be wired to your bank account.

10
<PAGE>

Annual Fund Operating Expenses (expenses that are deducted from Fund assets).

Short Duration High-Yield
High-Yield Municipal
Municipal Fund Bond Fund
-------------- ----------
<S> <C> <C>

Management fees 0.40% 0.60%

Distribution (12b-1) fees 0.25% 0.25%

Other expenses 0.26% 0.32%
---- ----
Total annual Fund operating expenses (1)(2) 0.91% 1.17%
</TABLE>
________________________

(1) For the fiscal year ended December 31, 1999, total annual fund operating
expenses net of fees waived and/or expenses reimbursed by Heartland
Advisors were 0.75% of average daily net assets for the Short Duration
High-Yield Municipal Fund and 0.95% of average daily net assets for the
High-Yield Municipal Bond Fund. Heartland Advisors is voluntarily waiving
fees and/or reimbursing expenses of the Funds so that the Short Duration
High-Yield Municipal Fund's and the High-Yield Municipal Bond Fund's net
annual operating expenses (excluding brokerage commissions, interest and
taxes) do not exceed 0.75% and 0.95%, respectively, of average daily net
assets, but may terminate or revise this voluntary undertaking at any time.

(2) Each Fund has entered into arrangements with its Custodian whereby interest
earned on uninvested cash balances is used to reduce Custodian expenses.
The ratio does not include these fees paid indirectly. If the Funds did not
have these fees paid indirectly, the total annual operating expenses of the
Short Duration High-Yield Municipal Fund and High-Yield Municipal Bond Fund
would have been 0.92% and 1.18%, respectively, of average daily net assets.

11
<PAGE>

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, and (b) each Fund's
total annual operating expenses remain the same as shown in the preceding table.
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.)

Short Duration High-Yield
High-Yield Municipal
Municipal Fund Bond Fund
--------------- ----------
<S> <C> <C>

One Year $ 93 $ 119

Three Years $ 290 $ 372

Five Years $ 504 $ 644

Ten Years $1,120 $1,420
</TABLE>

12
<PAGE>

INVESTMENT RETURNS

Portfolio Performance vs. Index Performance. The information about each Fund's
past performance includes 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. An index is not available for direct investment and the
securities included in an index are not an exact match to the holdings in a
mutual fund portfolio. The performance of a mutual fund portfolio will differ
from that of an index. Unlike an index, a mutual fund portfolio is affected by
operating expenses and cash flow activity caused by daily purchases and
redemptions. In addition, a mutual fund portfolio will differ from the index in
the number and size of holdings or securities, their relative sector and
industry weightings, the market capitalization of individual securities and the
median capitalization of the index and Fund overall. 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.

Definitions. Total return measures the change in the share price of a Fund and
assumes the reinvestment of dividends and capital gains. Cumulative total return
is actual return for a given period, but does not indicate how much return
fluctuated during the period. Average annual total return is the hypothetical
constant annual return that would have produced a Fund's cumulative total return
for a given period. It should not be confused with actual annual returns, the
sum of which over a given period produces a Fund's cumulative total return.
Yield is annualized net income of a Fund during a 30-day period as a percentage
of the Fund's share price. Taxable equivalent yield shows the yield that you
would need to receive from taxable income to match a Fund's tax-free yield.

13
<PAGE>

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 of the Funds 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 and Heartland Advisors, Inc., Heartland's investment advisor and
principal underwriter, each have adopted a code of ethics designed to ensure,
among other things, that the interests of the Funds' shareholders take
precedence over the personal interests of their respective directors, officers
and employees. Under the code, personal investment activities are subject to
limitations designed to avoid the actual or perceived conflicts of interest with
the investment activities of the Funds.

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 various administrative services to the Funds. In addition to
managing the Heartland family of eight 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, 789 North Water Street, Milwaukee,
Wisconsin 53202.

Portfolio Managers. Thomas J. Conlin and Greg D. Winston are co-portfolio
managers of the Funds, having managed each Fund since commencement of its
operations. Messrs. Conlin and Winston are both Chartered Financial Analysts
(CFAs), and Vice Presidents and principals of Heartland Advisors, which they
joined in August 1996. They have been managing municipal investments since 1978
and 1988, respectively.

14
<PAGE>

Fund Advisory Fee
---- ------------
<S> <C>

Short Duration High-Yield Municipal Fund 0.40%

High-Yield Municipal Bond Fund 0.60%
</TABLE>

From time to time, Heartland Advisors may waive fees paid to it by each of the
Funds 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 a certain
percentage of average daily net assets. Heartland Advisors may modify or
discontinue these waivers and/or reimbursements at any time without notice. If
any fees are owed to Heartland Advisors, Heartland Advisors may pay a 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 a Fund's overall expense
ratio and increasing a Fund's overall return to investors.

For the period from April 1, 1999 through April 30, 2000, Heartland Advisors
contractually undertook to waive fees paid to it by and/or pay other expenses
(excluding brokerage commissions, interest and taxes) of, each of the Short
Duration High-Yield Municipal Fund and High-Yield Municipal Bond Fund so as to
limit the Fund's total annual ordinary operating expenses to 0.75% and 0.95%,
respectively, of average daily net assets. Through December 31, 1999, Heartland
Advisors voluntarily undertook to pay all interest expenses of the Funds. If a
Fund's operating expenses fall below the contractual expense limitation during
the three years subsequent to the fiscal year in which the contractual
waiver/reimbursement was made, the Fund will repay Heartland Advisors for fees
previously waived and expenses previously reimbursed up to that limitation. No
repayment will be made after the three-year period ends.

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 average 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.

15
<PAGE>

PRINCIPAL INVESTMENT STRATEGIES AND INVESTMENT RISKS

HEARTLAND ADVISORS' MUNICIPAL TEN-POINT VALUE INVESTMENT GRID/TM/

The following questions illustrate Heartland Advisors' process for evaluating
the value characteristics of Municipal Obligations for the Funds using its
proprietary Municipal Ten-Point Value Investment Grid./TM/

. Essential Service - Does the municipality provide a vital public
service? Will the demographics of the public sector help ensure the
service's continued importance?

. Financial Soundness - Are the municipality's financials sound? We prefer
low to moderate debt, rising revenues and ample liquidity.

. Strong Competitive Position - Does the municipality have a strong
competitive position? We prefer a municipality that holds a #1 or #2
market position (or an improving position) or one that has a competitive
advantage in terms of service or price.

. High Debt Service Coverage - Does the municipality have a stable or
improving ability to pay interest and principal on its bonds?

. Experienced Management - Does the municipality have seasoned, highly
specialized and focused management?

. A Financial Stake by Management - Does sharing the financial risk with
bondholders give management an incentive for superior performance?

. Strong Legal Covenants - Do the legal documents adequately protect
bondholders with such provisions as first mortgages, prior claims on
revenues, funding levels of debt reserves, occupancy targets, operating
ratios and control of management's accountability to bondholders?

. High Yield vs. U.S. Treasuries - Is the yield attractive relative to
that currently available on U.S. Treasuries?

16
<PAGE>

MUNICIPAL OBLIGATIONS

Under normal market conditions, each Fund invests at least 65% of its total
assets in medium and lower-quality Municipal Obligations. As a fundamental
policy, under normal market conditions each Fund will invest at least 80% of its
net assets in Municipal Obligations.

Private Activity Bonds are a type of revenue obligation issued by municipalities
and other public authorities to provide funding for various privately operated
business facilities ("industrial revenue bonds" or "IRBs"). In most cases IRBs
are not secured by the credit of the municipality, but rather the payment of
principal and interest depends solely upon payments by the user of the
industrial facility financed by the bond or a separate guarantor of the bond. In
some instances, real and personal property is pledged as security for principal
and interest payments.

17
<PAGE>

Mortgage-Backed Municipal Obligations are a type of municipal security issued by
a state, authority or municipality to provide financing for residential housing
mortgages to target groups, generally low income individuals who are first-time
home buyers. A Fund's interest, evidenced by such obligations, is an undivided
interest in a pool of mortgages. Payments made on the underlying mortgages and
passed through to a Fund represent both regularly scheduled principal and
interest payments. A Fund also may receive additional principal payments
representing prepayments of the underlying mortgages. While a certain level of
prepayments can be expected regardless of the interest rate environment, it is
anticipated that prepayment of the underlying mortgages will accelerate in
periods of declining interest rates. In the event a Fund receives principal
prepayments in a declining interest rate environment, the Fund may have to
invest the unanticipated proceeds in lower-yielding securities. This prepayment
risk causes mortgage-backed securities to be more significantly affected by
changes in interest rates than is the case for Municipal Obligations that are
not subject to such prepayments.

Municipal Lease Obligations are another type of revenue obligation issued by
municipalities and other public authorities to acquire land, equipment or
facilities. These obligations are not secured by the credit of the municipality,
but rather the payment of principal and interest depends solely upon payments by
the municipality under a lease or installment purchase contract. Payments by the
municipality may be subject to certain conditions, including, for example,
clauses that do not require the municipality to make lease or contractual
payments unless specific annual appropriations are made by the municipality. If
the municipality stops making payments, the obligations could lose value. Some
of these instruments may be illiquid and, as such, will be subject to each
Fund's 15% limit on illiquid securities.

Participation interests or certificates of participation represent interests in
all or part of specific holdings of Municipal Obligations, including, for
example, municipal lease obligations.

CREDIT QUALITY

Although credit ratings issued by credit rating agencies are designed to
evaluate the risk that a municipality will be able to make timely principal and
interest payments on its obligations, such ratings are not always accurate. Even
if the ratings are accurate when made, the rating agencies may not always make
timely changes in a rating in response to changes in the economy or in the
condition of the issuer that could affect the likelihood of timely repayment of
the Municipal Obligation. Many debt obligations and, in particular, higher yield
debt obligations, are unrated. As a result, Heartland Advisors uses credit
ratings only as a preliminary indicator of investment quality, relying on its
own proprietary credit research and analysis of Municipal Obligations and
continually monitoring portfolio securities to determine whether credit quality
has changed.

18
<PAGE>

All rating limitations on investments are applied at time of purchase.
Subsequent to purchase, a rated debt obligation may cease to be rated or its
rating may be reduced below the minimum required for purchase by a Fund. Neither
event will require the sale of such a security, but it will be a factor in
considering whether to continue to hold the security. To the extent that ratings
may change as a result of changes in a rating organization or its rating system,
each Fund will attempt to use comparable ratings as standards for selecting
investments.

TEMPORARY POSITIONS

Under adverse market, economic, political or other conditions, each Fund may
take a temporary defensive position and invest, without limitation, in higher
quality taxable or tax-exempt Municipal Obligations, other debt securities and
liquid reserves, including money market instruments, certificates of deposit,
commercial paper, variable rate demand notes and U.S. Government securities.
Normally, it is not anticipated that such liquid reserves will exceed 20% of a
Fund's total assets. 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.

PRINCIPAL INVESTMENT RISKS

As with any mutual fund, neither Fund can guarantee that it will achieve its
investment goal. Like investing in most mutual funds that invest primarily in
medium and lower quality debt obligations, investing in either Fund involves the
following risks:

Credit Risk. Credit risk is the possibility that the municipality or other legal
entity ("municipality") issuing a security, or its guarantor, will not be able
to make timely principal and interest payments on its obligations. Securities
with lower credit ratings involve greater credit risk. Credit risk also includes
the possibility that the interest on an otherwise tax-exempt Municipal
Obligation may be subject to federal income tax for a variety of reasons.

Market Risk. Market risk is the possibility that the value of a Fund's portfolio
securities will decline due to (a) an increase in interest rates, (b) adverse
changes in supply and demand for debt obligations because of market, sector,
industry or political factors, or (c) the unavailability or inaccuracy of key
information about a particular security or market.

19
<PAGE>

"High Yield" Risk. "High yield" risk is a characteristic of medium and lower
quality Municipal Obligations. These obligations offer higher yields, but
greater investment risk than higher quality securities with similar maturities.
In general, these securities are considered to be more speculative with respect
to the issuer's capacity to pay interest and repay principal, and involve
greater risk of issuer default or bankruptcy. High-yield debt obligations also
may be more susceptible to real or perceived adverse economic conditions or
political developments. Investing in lower quality and defaulted securities also
may lead to additional expense if a Fund is required to seek recovery of
principal and interest payments, and a Fund's right to payment may rank behind
those of other creditors of the issuer.

Liquidity Risk. A Fund's investments may be more thinly traded than secondary
trading in higher quality securities. This could cause a Fund difficulty in
disposing of portfolio securities and in valuing portfolio securities because of
the lack of objective pricing data provided by actively traded markets.

Borrowing. Each Fund may borrow from any bank or other person up to 5% of its
total assets for temporary purposes. A borrowing is presumed to be for temporary
purposes if it is repaid by the Fund within 60 days and is not extended or
renewed. Each Fund may also borrow from banks up to one-third of its total
assets for other purposes such as facilitating the management of its investment
portfolio and making other investments or engaging in other transactions
permissible under the 1940 Act which may be considered a borrowing (such as
dollar rolls and reverse repurchase agreements).

Each Fund presently intends to borrow only from banks to avoid liquidating
securities under circumstances which Heartland Advisors believes are unfavorable
to shareholders, such as to meet large, continuing or unexpected redemptions.
Other than temporary borrowings and borrowings described in the preceding
sentence, each Fund presently plans to limit its borrowings to periods not
longer than 60 days, in amounts not to exceed 20% of total assets, and only for
the following purposes: (a) 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.

Concentration Risk. Although neither Fund may invest more than 25% of its total
assets in securities of non-governmental issuers whose principal activities are
in the same industry, each Fund may invest 25% or more of its total assets in
Municipal Obligations that finance similar types of projects or projects in
related industry sectors or whose issuers or projects are located in the same
state or geographic region. These factors may cause the Fund to bear greater
risk from the effects of an economic, business or political development

20
<PAGE>

affecting a particular region or industry. Concentration may also result in
potential volatility, causing a Fund's share price and performance to fluctuate.

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

OTHER INVESTMENT STRATEGIES AND INVESTMENT RISKS

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 the Funds will make such commitments only with
the intention of actually acquiring the securities, they may sell the securities
before settlement if it is deemed advisable for investment 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.

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. 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.

21
<PAGE>

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.

Illiquid Securities. Neither 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 also 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.

Standby Commitments. To facilitate portfolio liquidity, each Fund may obtain
standby commitments when it purchases debt obligations. A standby commitment
gives the holder the right to sell the underlying security back to the seller at
an agreed price on certain dates or within a certain period. Standby
commitments generally increase the cost of the acquisition of the underlying
security, reducing its yield.

Loan Interests. Each Fund may invest in loan interests, which are interests in
amounts owed by a municipality or other borrower to lenders or lending
syndicates. Loan interests purchased by a Fund will vary in maturity, may be
subject to restrictions on resale, are not readily marketable and may be secured
or unsecured. They involve the risk of loss in case

22
<PAGE>

of default or bankruptcy of the borrower or, if in the form of a participation
interest, the insolvency of the financial intermediary.

Portfolio Turnover. A Fund's portfolio turnover rate indicates changes in its
portfolio of securities and will vary year to year as well as within a year.
The Funds may purchase or sell securities without regard to the length of time
the security has been held to take advantage of short-term differentials in bond
yields consistent with their objective of seeking tax-exempt interest income.
The Funds may engage in short-term trading if the anticipated benefits are
expected by Heartland Advisors to exceed the transaction costs. Portfolio
turnover may also be affected by the sale of portfolio securities to meet cash
requirements for redemption of shares of a Fund. High portfolio turnover could
result in increases in transaction costs and may result in realized capitalized
gains which would be taxable distributions to shareholders.

23
<PAGE>

HOW TO INVEST

INSTRUCTIONS
- -------------------------------------------------------------------------------------------------------

OPEN AN ACCOUNT ADD TO AN ACCOUNT SELL SHARES
- -------------------------------------------------------------------------------------------------------

By Telephone
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Wire. Call 800-443-2862 to Telephone Purchase by Check. Call us to request
obtain an account number and Electronic Funds Transfer. your redemption. A check
provide your Social Security Available for additional will be mailed to the
or tax ID number. Mail a investments of $100 to address on the account.
completed application form. $25,000. Your account will be Express mail delivery is
Have your bank send your charged a service fee available upon request for
investment to Firstar Bank, (currently $20.00) if an an additional charge
N.A. with these instructions: electronic funds transfer (currently $12.00).
cannot be processed due to
. ABA #0750-00022 insufficient funds or a stop Wire or Electronic Funds
. A/C #112-952-137 transfer. Contact us for a Transfer. These services
. CREDIT TO: Heartland Bank Options Form. must be pre-authorized in
(name of fund) writing. To add these
. your Heartland account Wire. Have your bank send services, call us to request
number your investment to Firstar an account maintenance form.
. name(s) of investor(s) Bank, N.A. with these Once the Fund has your bank
instructions: account information on file,
call us to request your
. ABA #0750-00022 redemption. Proceeds will
. A/C #112-952-137 be wired or transferred
. CREDIT TO: Heartland (name electronically to your bank.
of fund) For wires, your account will
. your Heartland account be charged a service fee
number (currently $12.00).
. name(s) of investor(s)
Telephone and Wire
Redemptions are subject to a
$1,000 minimum.
</TABLE>

24
<PAGE>
<TABLE>
<CAPTION>

INSTRUCTIONS
- -------------------------------------------------------------------------------------------------------------------
In Writing
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mail a completed application Fill out the Additional Write a letter of
form and a check. Investment Form attached to instruction that includes:
your statement and send with a . the names and signature
check. Write your Heartland of all accountholders
account number on your check. . your Heartland account
number
Mail the form and the check. . the fund name
. the amount in dollars or
shares you want to sell
. how and where to send the
proceeds

We will mail the proceeds to
the address on the account,
unless otherwise requested.
A signature guarantee may be
required.

Mail the letter of
instructions.
- -------------------------------------------------------------------------------------------------------------------
Automatically
- -------------------------------------------------------------------------------------------------------------------
Complete the application form, All Services. Call us to Systematic Withdrawal Plan.
including Automatic request a form to add the Call us to request an
Investment Plan section, and Automatic Investment Plan account maintenance form to
return it with your (minimum of $50 per add the plan. Complete the
investment (minimum of $50 transaction) to your account. form, specifying the amount
per transaction) Complete and return the form and frequency of withdrawals
along with any other required you would like.
material.
- -------------------------------------------------------------------------------------------------------------------
Via the Internet
- -------------------------------------------------------------------------------------------------------------------
Computer. Visit the Heartland
web site
www.heartlandfunds.com and
follow the instructions to
download an account
application. Mail a
completed application form
and purchase check.
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

25
<PAGE>

HOW MAY WE HELP YOU?

1.800.432.7856

www.heartlandfunds.com

Make check payable to:
Heartland Funds

ADDRESS

Mailing Address
- ---------------
Firstar Mutual Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53201-0701

Overnight Delivery
- ------------------
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, WI 53202

CONCEPTS TO UNDERSTAND

Wire transfer: the fastest way to transfer
money from one financial institution to
another. Your bank may charge a fee to
send or receive a wire transfer.

Electronic funds transfer: transferring
money to your bank account electronically
may take up to eight business days to
clear. EFT usually is available without
a fee at all Automated Clearing House
(ACH) banks. Establishing EFT services
requires approximately 15 days.

26
<PAGE>

ACCOUNT POLICIES

If you wish to make a telephone transaction under one of the purchase or
redemption options described below, please call Shareholder Services at
1.800.432.7856 or 414.289.7000. If you have a question about investing or need
forms for electing an option, call Shareholder Services at either number or
visit our website at www.heartlandfunds.com. 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, including but not limited to restricting excessive exchange
activity that the officers of Heartland determine is not in the best interests
of the Funds or their shareholders. The Funds also reserve the right to waive
or lower any minimum dollar amounts applicable to the transactions discussed.

Copies of account statements are available upon request. However, if you
request a statement for a period other than for the current or prior year, the
Funds' transfer agent will charge you a research fee (currently $5.00).

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. Net asset value is determined at the close of regular
trading on the New York Stock Exchange (generally 4:00 p.m., Eastern Time).
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 a 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. 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 Funds 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, except for accounts opened with an
automatic investment plan. 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.

<PAGE>

Tax Identification Numbers. Under IRS rules, we must receive your correct
social security or tax identification number on a signed Account Application or
IRS Form W-9 when you open your account. Otherwise, you may be subject to an
IRS fine, and we may be 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, different investment minimums and other conditions that
do not apply if you purchase your shares directly from the Funds. 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 a
Fund's behalf. If you purchase shares through a third party which is also an
authorized agent of the Funds, your order will be processed at the net asset
value per share next determined after the third party (or its authorized
designee) receives your order; other orders will be processed at the net asset
value next determined after receipt by the Funds.

<PAGE>

REDEEMING SHARES

Redemptions by Shareholders Who Are Not Individuals. 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.

Redeeming Shares By Check (Short Duration High-Yield Municipal Fund only). You
may redeem shares of the Short Duration High-Yield Municipal Fund by writing
special checks in the amount of $250 or more. This service is provided free of
charge. Because these checks are drawn on a special account at the Fund's
custodian bank, you will be subject to that bank's procedures and rules relating
to its checking accounts. Canceled checks are not returned, but copies may be
obtained upon request. Please note that you may realize a taxable gain or loss
when you redeem shares by check.

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

<PAGE>

payment of the purchase price can be confirmed, which may take up to 15 days.
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.

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.

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. Notaries public cannot guarantee signatures.

<PAGE>

third party which is also 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 orders will be processed at the net asset value per
share next determined after receipt by the Funds.

SHARE PRICE

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.

You should always verify your order against your confirmation when you receive
it. Please contact the Funds or the third party with which you placed your
order promptly if you notice any discrepancy.

Portfolio securities are valued on the basis of market quotations or at fair
value using methods determined by Heartland's Board of Directors. The Funds use
a "fair value" methodology to value securities when market quotations are not
readily available. Fair values of debt securities 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.

31
<PAGE>

SHAREHOLDER INFORMATION AND REPORTING

HEARTLAND VALUE SOURCE/TM/

INVESTMENT REPORTS AND PROSPECTUSES

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.

Income dividends are declared by the Funds each day and paid 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. Fund dividends and
capital gain distributions that are reinvested will be confirmed on your account
statement for the quarter in which the reinvestment is made.

32
<PAGE>

If you choose to have dividends or capital gain distributions, or both, mailed
to you and either the United States Postal Service is unable to deliver the
distribution check to you or the check remains outstanding for at least six
months, the Funds reserve the right to reinvest the check and future
distributions in shares of the particular Fund at their then current net asset
value until you give the Funds different instructions. No interest will accrue
on amounts represented by uncashed distribution checks.

"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. A 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

Interest earned by the Funds on Municipal Obligations is in general federally
tax-free when distributed to you. If a Fund earns taxable income from any of
its investments, it will be distributed as a taxable dividend and taxable to you
as ordinary income for federal income tax purposes.

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

Short-term capital gains will be taxable to you 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.

<PAGE>

FINANCIAL HIGHLIGHTS

The following financial highlights tables are intended to help you understand
each Fund's financial performance 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 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.

<PAGE>

Short Duration High-Yield Municipal Fund
----------------------------------------

For the For the Jan. 2, 1997(1)
year ended year ended through
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997
----------------- ----------------- ------------------

Per Share Data
<S> <C> <C> <C>

Net asset value, beginning of period............... $ 9.98 $ 10.15 $ 10.00
Income (loss) from investment operations:
Net investment income......................... 0.56 0.53 0.57
Net realized and unrealized gains (losses) on (0.42) (0.17) 0.15
investments.................................. -------- -------- --------
Total income (loss) from investment
operations............................... 0.14 0.36 0.72
======== ======== ========

Less distributions from: (0.56) (0.53) (0.57)
Net investment income......................... - - -
Net realized gains on investments............. -------- -------- --------
Total distributions (0.56) (0.53) (0.57)
-------- -------- --------
$ 9.56 $ 9.98 $ 10.15
Net asset value, end of period..................... ======== ======== ========

Total Return....................................... 1.42% 3.65% 7.44%

Ratios and Supplemental Data
Net assets, end of period (in thousands)...... $122,152 $149,643 $120,942
Ratio of net expenses to average net assets... 0.75%(2) 0.62%(2) 0.00%(2)
Ratio of net investment income to average net
assets....................................... 5.69%(2) 5.26%(2) 5.33%(2)
Portfolio turnover rate....................... 71% 215% 175%
</TABLE>

<TABLE>
<CAPTION>
High-Yield Municipal Bond Fund
------------------------------

For the For the Jan. 2, 1997(1)
year ended year ended through
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1997
----------------- ----------------- ------------------
Per Share Data
<S> <C> <C> <C>
Net asset value, beginning of period............... $ 10.38 $ 10.45 $ 10.00
Income (loss) from investment operations:
Net investment income......................... 0.65 0.65 0.68
Net realized and unrealized gains (losses) on (0.88) 0.03 0.48
investments.................................. -------- -------- --------
Total income (loss) from investment
operations............................... (0.23) 0.68 1.16
======== ======== ========

Less distributions from: (0.65) (0.65) (0.68)
Net investment income......................... - (0.10) (0.03)
Net realized gains on investments............. -------- -------- --------
Total distributions (0.65) (0.75) (0.71)
--------
$ 9.50 10.38 $ 10.45
Net asset value, end of period..................... ======== ======== ========

Total Return....................................... (2.45)% 6.66% 11.67%

Ratios and Supplemental Data
Net assets, end of period (in thousands)...... $ 78,484 $ 73,455 $ 30,608
Ratio of net expenses to average net assets... 0.95%(3) 0.76%(3) 0.00%(3)
Ratio of net investment income to average net
assets....................................... 6.35%(3) 6.01%(3) 6.01%(3)
Portfolio turnover rate....................... 95% 223% 439%
</TABLE>

(1) Commencement of operations.
(2) If there had been no fees paid indirectly or expense reimbursement and
management fee waiver by the Advisor, the ratios of net expenses to average
net assets for the periods ended December 31, 1999, December 31, 1998 and
December 31, 1997 would have been 0.92%, 0.80% and 0.84%, respectively, and
the ratios of net investment income to average net assets would have been
5.52%, 5.08% and 4.49%, respectively.
(3) If there had been no fees paid indirectly or expense reimbursement and
management fee waiver by the Advisor, the ratios of net expenses to average
net assets for the periods ended December 31, 1999, December 31, 1998 and
December 31, 1997 would have been 1.18%, 1.08% and 1.25%, respectively, and
the ratios of net investment income to average net assets would have been
6.12%, 5.69% and 4.76%, respectively.