N-Q 1 dnq.htm HEARTLAND GROUP, INC. Heartland Group, Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-04982

Heartland Group, Inc.

(Exact name of registrant as specified in charter)

 

789 N. Water Street, Suite 500, Milwaukee, WI   53202
(Address of principal executive offices)   (Zip code)

Heartland Group, Inc., 789 N. Water Street, Suite 500, Milwaukee, WI 53202

(Name and address of agent for service)

Conrad Goodkind; Quarles & Brady LLP, 411 East Wisconsin Avenue, Milwaukee, WI 53202

(With a copy to:)

Registrant’s telephone number, including area code: (414) 347-7777

Date of fiscal year end: December 31

Date of reporting period: September 30, 2006

Item 1. Schedule of Investments.

SELECT VALUE FUND- SCHEDULE OF INVESTMENTS

September 30, 2006 (Unaudited)

 

Common Stocks (95.8%)

    SHARES    VALUE  

Aerospace & Defense (2.3%)

      

Goodrich Corp.

      150,000    $ 6,078,000  

Airlines (1.9%)

      

Southwest Airlines Co.

      300,000      4,998,000  

Building Products (4.4%)

      

American Standard Cos., Inc. (a)

      150,000      6,295,500  

ElkCorp

      200,000      5,430,000  
           
        11,725,500  
           

Chemicals (8.1%)

      

Agrium, Inc. (CAD) (b)

      275,000      7,431,767  

RPM International, Inc.

      300,000      5,697,000  

PPG Industries, Inc.

      70,000      4,695,600  

The Dow Chemical Co.

      100,000      3,898,000  
           
        21,722,367  
           

Commercial Banks (5.0%)

      

SunTrust Banks, Inc.

      90,000      6,955,200  

Marshall & Ilsley Corp.

      135,000      6,504,300  
           
        13,459,500  
           

Communications Equipment (2.6%)

      

Motorola, Inc.

      275,000      6,875,000  

Computers & Peripherals (4.7%)

      

Hutchinson Technology, Inc. (a)

      300,000      6,309,000  

Seagate Technology

      270,000      6,234,300  
           
        12,543,300  
           

Diversified Consumer Services (2.0%)

      

H&R Block, Inc.

      250,000      5,435,000  

Diversified Financial Services (2.6%)

      

Bank of America Corp.

      130,000      6,964,100  

Diversified Telecommunication Services (1.8%)

      

AT&T, Inc.

      150,000      4,884,000  

Electronic Equipment & Instruments (2.2%)

      

Avnet, Inc. (a)

      300,000      5,886,000  

Energy Equipment & Services (3.3%)

      

ShawCor, Ltd. (CAD) (b)

      300,000      4,974,497  

Grey Wolf, Inc. (a)

      600,000      4,008,000  
           
        8,982,497  
           

Food & Staples Retailing (2.8%)

      

Wal-Mart Stores, Inc.

      150,000      7,398,000  

Food Products (2.5%)

      

Smithfield Foods, Inc. (a)

      250,000      6,755,000  

Gas Utilities (2.5%)

      

UGI Corp.

      270,000      6,601,500  

Household Durables (2.6%)

      

Toll Brothers, Inc. (a)

      130,000      3,650,400  

D. R. Horton, Inc.

      135,000      3,233,250  
           
        6,883,650  
           

Industrial Conglomerates (2.6%)

      

Tyco International, Ltd.

      250,000      6,997,500  

Insurance (5.1%)

      

The Allstate Corp.

      125,000      7,841,250  

UnumProvident Corp.

      300,000      5,817,000  
           
        13,658,250  
           

Machinery (1.4%)

      

Deere & Co.

      45,000      3,775,950  

Media (2.1%)

      

CBS Corp. (Class B)

      200,000      5,634,000  

Metals & Mining (5.7%)

      

Oregon Steel Mills, Inc. (a)

      125,000      6,108,750  

Alcoa, Inc.

      200,000      5,608,000  

Metal Management, Inc.

      125,000      3,480,000  
           
        15,196,750  
           

Multi-Utilities (2.3%)

      

WPS Resources Corp.

      125,000      6,203,750  

Oil, Gas & Consumable Fuels (4.3%)

      

Anadarko Petroleum Corp.

      140,000      6,136,200  

ConocoPhillips Co.

      90,000      5,357,700  
           
        11,493,900  
           

Paper & Forest Products (1.5%)

      

P.H. Glatfelter Co.

      300,000      4,065,000  

Pharmaceuticals (4.8%)

      

Pfizer, Inc.

      270,000      7,657,200  

Wyeth

      100,000      5,084,000  
           
        12,741,200  
           

Road & Rail (4.0%)

      

J.B. Hunt Transport Services, Inc.

      300,000      6,231,000  

Union Pacific Corp.

      50,000      4,400,000  
           
        10,631,000  
           

Semiconductors (2.4%)

      

MEMC Electronic Materials, Inc. (a)

      175,000      6,410,250  

Specialty Retail (2.7%)

      

Rent-A-Center, Inc. (a)

      250,000      7,322,500  

Thrifts & Mortgage Finance (3.2%)

      

Washington Mutual, Inc.

      100,000      4,347,000  

MGIC Investment Corp.

      70,000      4,197,900  
           
        8,544,900  
           

Tobacco (2.4%)

      

Universal Corp.

      180,000      6,575,400  
           

TOTAL COMMON STOCKS (Cost $230,533,565)

       $ 256,441,764  
           

SHORT-TERM INVESTMENTS (5.5%)

    PAR
AMOUNT		    VALUE  

TIME DEPOSITS (5.5%)

      

Brown Brothers Harriman, 4.63% (+)

    $ 14,823,967    $ 14,823,967  
           

TOTAL SHORT-TERM INVESTMENTS (Cost $14,823,967)

       $ 14,823,967  
           

TOTAL INVESTMENTS (Cost $245,357,532) (101.3%)

       $ 271,265,731  

Other assets and liabilities, net (-1.3)%

         (3,643,938 )
           

TOTAL NET ASSETS (100.0%)

       $ 267,621,793  
           
(a) Non-income producing security.

 

(b) Foreign-denominated security.

 

(+) Time deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2006.

 

CAD – Canadian issuer.

 

   Industry and sector classifications for each security held are generally determined by referencing the Global Industry Classification Standard Codes (GICS) developed by Standard & Poor’s and Morgan Stanley Capital International.

The accompanying Notes to Schedules of Investments are an integral part of this schedule.

VALUE PLUS FUND-SCHEDULE OF INVESTMENTS

September 30, 2006 (Unaudited)

 

COMMON STOCKS (92.9%)

    SHARES    VALUE  

Aerospace & Defense (6.6%)

      

Applied Signal Technology, Inc.

      499,795    $ 7,416,958  

Cubic Corp.

      375,000      7,342,500  
           
        14,759,458  
           

Building Products (2.9%)

      

Apogee Enterprises, Inc.

      425,000      6,464,250  

Chemicals (1.9%)

      

CF Industries Holdings, Inc.

      250,000      4,267,500  

Commercial Banks (2.6%)

      

Chittenden Corp.

      200,000      5,738,000  

Commercial Services & Supplies (4.0%)

      

ABM Industries, Inc.

      300,000      5,628,000  

Kelly Services, Inc. (Class A)

      125,000      3,426,250  
           
        9,054,250  
           

Communications Equipment (2.4%)

      

Inter-Tel, Inc.

      250,000      5,400,000  

Electronic Equipment & Instruments (1.1%)

      

Park Electrochemical Corp.

      81,600      2,585,088  

Energy Equipment & Services (6.3%)

      

TODCO (Class A) (a)

      170,000      5,882,000  

Tidewater, Inc.

      110,000      4,860,900  

Grey Wolf, Inc. (a)

      500,000      3,340,000  
           
        14,082,900  
           

Health Care Equipment & Supplies (7.7%)

      

Wright Medical Group, Inc. (a)

      300,000      7,275,000  

Orthovita, Inc. (a)

      1,128,572      3,938,716  

STERIS Corp.

      150,000      3,609,000  

Criticare Systems, Inc. (a)(b)

      625,000      2,437,500  
           
        17,260,216  
           

Insurance (5.5%)

      

UnumProvident Corp.

      440,000      8,531,600  

Horace Mann Educators Corp.

      200,000      3,846,000  
           
        12,377,600  
           

Internet Software & Services (0.5%)

      

Zix Corp. (a)

      1,837,500      1,139,250  

IT Services (3.1%)

      

Perot Systems Corp. (Class A) (a)

      500,000      6,895,000  

Leisure Equipment & Products (6.6%)

      

Oakley, Inc.

      500,000      8,525,000  

Nautilus, Inc.

      464,500      6,386,875  
           
        14,911,875  
           

Machinery (2.4%)

      

Federal Signal Corp.

      350,000      5,337,500  

Marine (5.1%)

      

Genco Shipping & Trading, Ltd.

      500,000      11,330,000  

Metals & Mining (1.0%)

      

Gerdau Ameristeel Corp.

      239,000      2,182,070  

Oil, Gas & Consumable Fuels (2.0%)

      

Callon Petroleum Co. (a)

      325,000      4,407,000  

Paper & Forest Products (3.3%)

      

Wausau-Mosinee Paper Corp.

      550,000      7,425,000  

Personal Products (2.5%)

      

Nu Skin Enterprises, Inc. (Class A)

      321,500      5,632,680  

Pharmaceuticals (2.7%)

      

Biovail Corp. (CAD) (c)

      400,000      6,085,011  

Road & Rail (1.9%)

      

RailAmerica, Inc. (a)

      400,000      4,368,000  

Semiconductors (2.2%)

      

Cohu, Inc.

      275,000      4,903,250  

Software (11.1%)

      

Mentor Graphics Corp. (a)

      700,000      9,856,001  

Parametric Technology Corp. (a)

      475,000      8,293,500  

Novell, Inc. (a)

      1,100,000      6,732,000  
           
        24,881,501  
           

Specialty Retail (4.4%)

      

Casual Male Retail Group, Inc. (a)

      500,000      6,865,000  

Stein Mart, Inc.

      200,000      3,042,000  
           
        9,907,000  
           

Textiles, Apparel & Luxury Goods (3.1%)

      

Stride Rite Corp.

      500,000      6,980,000  
           

TOTAL COMMON STOCKS (Cost $180,543,718)

       $ 208,374,399  
           

WARRANTS (0.1%)

    SHARES    VALUE  

Biotechnology (0.1%)

      

StemCells, Inc. (a)(d)

      575,658    $ 132,401  

GTC Biotherapeutics, Inc. (a)(d)

      273,224      —    

Internet Software & Services (0.0%)

      

Zix Corp. (a)(d)

      198,000      —    
           

TOTAL WARRANTS (Cost $34,153)

       $ 132,401  
           

SHORT-TERM INVESTMENTS (7.5%)

    PAR
AMOUNT		    VALUE  

TIME DEPOSITS (7.5%)

      

Brown Brothers Harriman, 4.63% (+)

    $ 16,835,568    $ 16,835,568  
           

TOTAL SHORT-TERM INVESTMENTS (Cost $16,835,568)

       $ 16,835,568  
           

TOTAL INVESTMENTS (Cost $197,413,439) (100.5%)

       $ 225,342,368  

Other assets and liabilities, net (-0.5%)

         (1,194,802 )
           

TOTAL NET ASSETS (100.0%)

       $ 224,147,566  
           
(a) Non-income producing security.

 

(b) Affiliated company. See Note 5 in Notes to Schedules of Investments.

 

(c) Foreign-denominated security.

 

(d) Valued at fair value using methods determined by the Board of Directors. See Note 2(a) in Notes to Schedules of Investments.

 

(+) Time deposits are considered short term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2006.

 

CAD – Canadian issuer.

 

   Industry and sector classifications for each security held are generally determined by referencing the Global Industry Classification Standard Codes (GICS) developed by Standard & Poor’s and Morgan Stanley Capital International.

The accompanying Notes to Schedules of Investments are an integral part of this schedule.

VALUE FUND - SCHEDULE OF INVESTMENTS

September 30, 2006 (Unaudited)

 

COMMON STOCKS (85.3%)

    SHARES    VALUE  

Aerospace & Defense (0.4%)

      

AAR Corp. (a)

      150,000    $ 3,576,000  

Allied Defense Group, Inc. (a)

      200,000      3,290,000  

Ducommun, Inc. (a)

      58,400      1,089,744  
           
        7,955,744  
           

Air Freight & Logistics (0.2%)

      

AirNet Systems, Inc. (a)(b)

      1,000,000      3,470,000  

Airlines (2.4%)

      

Alaska Air Group, Inc. (a)

      750,000      28,530,000  

Midwest Air Group, Inc. (a)(b)

      1,315,500      10,366,140  

Mesa Air Group, Inc. (a)

      503,500      3,907,160  
           
        42,803,300  
           

Auto Components (1.0%)

      

Hy-Drive Technologies, Ltd. (CAD) (a)(b)(c)

      2,500,000      8,612,975  

Noble International, Ltd.

      400,000      5,004,000  

Strattec Security Corp. (a)

      90,300      3,455,781  
           
        17,072,756  
           

Biotechnology (2.1%)

      

Sirna Therapeutics, Inc. (a)(b)

      5,000,000      27,850,000  

Origin Agritech, Ltd. (a)

      300,000      3,648,000  

Discovery Laboratories, Inc. (a)

      936,700      1,995,171  

Isolagen, Inc. (a)(b)

      485,400      1,674,630  

Senesco Technologies, Inc. (a)(b)(d)

      1,219,500      1,414,620  

AP Pharma, Inc. (a)

      800,000      856,000  

OrthoLogic Corp. (a)(b)

      203,200      264,160  

Aphton Corp. (a)(b)(e)(f)(h)

      375,000      —    
           
        37,702,581  
           

Building Products (0.7%)

      

Patrick Industries, Inc. (a)(b)

      293,525      3,651,451  

Maezawa Kasei Industries Co., Ltd. (JPY)(c)

      200,000      3,019,219  

Jacuzzi Brands, Inc. (a)

      285,500      2,852,145  

Aaon, Inc.

      100,000      2,281,000  
           
        11,803,815  
           

Capital Markets (1.5%)

      

FirstCity Financial Corp. (a)(b)

      811,800      8,580,726  

eSPEED, Inc. (Class A) (a)

      800,000      7,360,000  

Stifel Financial Corp. (a)

      200,000      6,348,000  

LaBranche & Co., Inc. (a)

      480,000      4,977,600  
           
        27,266,326  
           

Chemicals (1.1%)

      

Chemtura Corp.

      750,000      6,502,500  

Calgon Carbon Corp. (a)

      1,000,000      4,420,000  

A. Schulman, Inc.

      151,900      3,571,169  

Omnova Solutions, Inc. (a)

      850,000      3,553,000  

Quaker Chemical Corp.

      100,600      1,956,670  
           
        20,003,339  
           

Commercial Banks (4.4%)

      

Sterling Financial Corp.

      600,000      19,458,000  

Associated Banc-Corp

      450,000      14,625,000  

Independent Bank Corp.

      186,500      6,064,980  

FNB Corp.

      141,500      5,095,415  

Renasant Corp.

      162,300      4,555,761  

AmeriServ Financial, Inc. (a)(d)

      1,000,200      4,430,886  

Tennessee Commerce Bancorp, Inc. (a)

      125,000      2,762,500  

Eastern Virginia Bankshares, Inc.

      124,500      2,634,420  

Capital Bank Corp.

      145,000      2,547,650  

BancTrust Financial Group, Inc.

      88,000      2,454,320  

Summit Bank Corp.

      100,000      2,337,000  

Simmons First National Corp. (Class A)

      75,100      2,178,651  

PAB Bankshares, Inc.

      100,000      1,986,000  

Texas Capital Bancshares, Inc. (a)

      100,000      1,872,000  

Merchants & Manufacturers Bancorp., Inc.

      46,095      1,590,278  

Guaranty Financial Corp. (d)(e)

      10,388      1,381,604  

Southern Community Financial Corp.

      135,682      1,318,829  

Fidelity Southern Corp.

      61,113      1,106,145  
           
        78,399,439  
           

Commercial Services & Supplies (7.3%)

      

Hudson Highland Group, Inc. (a)(b)

      2,252,100      22,070,579  

The Geo Group, Inc. (a)

      300,000      12,675,000  

Exponent, Inc. (a)

      600,000      10,002,000  

Intersections, Inc. (a)(b)

      1,000,000      9,230,000  

Central Parking Corp.

      548,000      9,042,000  

SITEL Corp. (a)

      3,000,000      9,030,000  

Barrett Business Services, Inc. (a)(b)

      400,000      8,588,000  

FTI Consulting, Inc. (a)

      300,000      7,518,000  

LECG Corp. (a)

      300,000      5,628,000  

CompuDyne Corp. (a)(b)

      750,000      4,575,000  

Fuel-Tech N.V. (a)

      300,000      4,467,000  

Perma-Fix Environmental Services, Inc. (a)

      2,000,000      4,140,000  

RCM Technologies, Inc. (a)(b)

      780,100      3,955,107  

On Assignment, Inc. (a)

      377,600      3,704,256  

SM&A (a)

      600,300      3,667,833  

School Specialty, Inc. (a)

      100,000      3,529,000  

LESCO, Inc. (a)(b)

      346,401      2,805,848  

CDI Corp.

      125,000      2,588,750  

ABM Industries, Inc.

      100,000      1,876,000  
           
        129,092,373  
           

Communications Equipment (7.3%)

      

InterDigital Communications Corp. (a)(b)

      2,750,000      93,774,999  

ParkerVision, Inc. (a)(b)

      1,386,356      10,078,808  

EMS Technologies, Inc. (a)

      400,000      7,512,000  

Lantronix, Inc. (a)(b)(d)

      5,000,000      7,500,000  

Aastra Technologies, Ltd. (CAD) (a)(c)

      200,000      5,011,186  

EFJ, Inc. (a)

      600,000      4,452,000  
           
        128,328,993  
           

Computers & Peripherals (1.3%)

      

McDATA Corp. (Class A) (a)

      2,807,757      14,123,018  

SimpleTech, Inc. (a)

      769,074      7,006,264  

Hutchinson Technology, Inc. (a)

      48,600      1,022,058  
           
        22,151,340  
           

Construction & Engineering (1.3%)

      

URS Corp. (a)

      300,000      11,667,000  

Modtech Holdings, Inc. (a)(b)

      1,005,600      5,591,136  

Comfort Systems USA, Inc.

      300,000      3,438,000  

Insituform Technologies, Inc. (Class A) (a)

      100,000      2,428,000  
           
        23,124,136  
           

Diversified Consumer Services (2.2%)

      

Regis Corp.

      400,000      14,340,000  

Stewart Enterprises, Inc. (Class A)

      1,500,000      8,790,000  

The Princeton Review, Inc. (a)(b)(d)

      1,615,000      8,365,700  

Whitney Information Network, Inc. (b)(d)(e)(f)(g)

      600,000      4,105,500  

Educate, Inc. (a)

      400,000      3,196,000  
           
        38,797,200  
           

Diversified Financial Services (0.2%)

      

Collection House, Ltd. (AUD)(c)

      3,000,000      2,715,893  

Electrical Equipment (1.0%)

      

Xantrex Technology, Inc. (CAD) (a)(c)

      1,200,000      9,288,591  

Powell Industries, Inc. (a)

      300,000      6,639,000  

China BAK Battery, Inc. (a)

      303,200      2,037,504  
           
        17,965,095  
           

Electronic Equipment & Instruments (0.2%)

      

O.I. Corp. (b)(d)

      245,900      2,459,000  

MOCON, Inc.

      200,000      1,932,000  
           
        4,391,000  
           

Energy Equipment & Services (4.5%)

      

Newpark Resources, Inc. (a)(b)

      4,500,000      23,985,000  

Gulf Island Fabrication, Inc. (b)

      750,000      19,567,500  

Input/Output, Inc. (a)

      1,750,000      17,377,500  

Bristow Group, Inc. (a)

      200,000      6,880,000  

Grey Wolf, Inc. (a)

      1,000,000      6,680,000  

NATCO Group, Inc. (Class A) (a)

      200,000      5,760,000  
           
        80,250,000  
           

Food Products (1.6%)

      

Riken Vitamin Co., Ltd. (JPY) (c)(d)

      400,000      10,193,888  

Hanover Foods Corp. (Class A) (d)(e)

      49,250      4,555,625  

The Inventure Group, Inc. (a)(b)

      1,900,622      4,523,480  

Tasty Baking Co. (b)

      426,577      3,894,648  

John B. Sanfilippo & Son, Inc. (a)(b)

      300,000      3,060,000  

Monterey Gourmet Foods, Inc. (a)

      547,257      2,068,631  

NutraCea (a)

      452,000      596,640  
           
        28,892,912  
           

Health Care Equipment & Supplies (3.5%)

      

STAAR Surgical Co. (a)(b)

      2,000,000      15,040,000  

Analogic Corp.

      199,063      10,215,913  

Fukuda Denshi Co., Ltd. (JPY)(c)(d)

      300,000      9,296,419  

Nissui Pharmaceutical Co., Ltd. (JPY)(c)(d)

      938,000      6,909,322  

Invacare Corp.

      250,000      5,880,000  

Trinity Biotech (ADR) (a)

      600,000      5,580,000  

Osteotech, Inc. (a)(b)

      1,082,000      4,425,380  

STERIS Corp.

      100,000      2,406,000  

Medwave, Inc. (a)(b)

      1,199,000      1,966,360  
           
        61,719,394  
           

Health Care Providers & Services (2.9%)

      

PDI, Inc. (a)(b)

      1,110,000      12,898,200  

Hooper Holmes, Inc.

      3,000,000      10,110,000  

BioScrip, Inc. (a)(b)

      1,797,552      5,428,607  

VistaCare, Inc. (a)

      500,000      5,200,000  

America Service Group, Inc. (a)

      396,435      5,157,619  

Medical Staffing Network Holdings, Inc. (a)

      728,500      4,531,270  

National Home Health Care Corp. (b)(d)

      441,000      4,321,800  

SRI/Surgical Express, Inc. (a)(b)(d)

      500,000      2,175,000  

Matria Healthcare, Inc. (a)

      50,200      1,395,058  
           
        51,217,554  
           

Hotels, Restaurants & Leisure (0.7%)

      

Buca, Inc. (a)(b)

      1,200,000      6,324,000  

Champps Entertainment, Inc. (a)

      468,446      2,848,152  

Smith & Wollensky Restaurant Group, Inc. (a)(b)

      574,400      2,590,544  
           
        11,762,696  
           

Household Durables (0.3%)

      

Helen of Troy, Ltd. (a)

      200,000      3,512,000  

Global-Tech Appliances, Inc. (a)(b)

      304,100      745,045  

Warderly International Holdings, Ltd. (HK) (a)(c)

      10,000,000      352,999  
           
        4,610,044  
           

Household Products (0.5%)

      

Oil-Dri Corp. of America (b)(d)

      562,500      8,521,875  

Insurance (3.4%)

      

Presidential Life Corp.

      1,000,000      22,370,000  

SCPIE Holdings, Inc. (a)

      358,000      8,427,320  

Assured Guaranty, Ltd.

      300,000      7,779,000  

Clark, Inc.

      438,300      4,939,641  

Meadowbrook Insurance Group, Inc. (a)

      400,000      4,504,000  

Specialty Underwriters’ Alliance, Inc. (a)

      525,000      4,357,500  

PMA Capital Corp. (Class A) (a)

      400,000      3,528,000  

U.S.I. Holdings Corp. (a)

      250,000      3,387,500  

Financial Industries Corp. (a)(e)

      154,031      1,324,667  
           
        60,617,628  
           

Internet Software & Services (0.1%)

      

Digitas, Inc. (a)

      250,000      2,405,000  

IT Services (3.6%)

      

Tier Technologies, Inc. (Class B) (a)(b)(e)

      1,800,000      12,240,000  

First Consulting Group, Inc. (a)(b)

      1,250,000      12,187,500  

TechTeam Global, Inc. (a)(b)

      975,000      7,712,250  

Dynamics Research Corp. (a)(b)

      750,000      7,462,500  

Keane, Inc. (a)

      500,000      7,205,000  

MAXIMUS, Inc.

      250,000      6,525,000  

Forrester Research, Inc. (a)

      150,000      3,946,500  

Analysts International Corp. (a)(b)

      1,600,000      3,376,000  

Anacomp, Inc. (Class A) (a)(b)(d)(e)

      349,600      2,272,400  
           
        62,927,150  
           

Leisure Equipment & Products (0.3%)

      

Leapfrog Enterprises, Inc. (a)

      479,800      3,804,814  

Excelligence Learning Corp. (a)(e)

      76,500      946,305  

Corgi International, Ltd. (ADR) (a)(b)(d)

      563,000      591,150  
           
        5,342,269  
           

Life Sciences, Tools and Services (1.7%)

      

Cambrex Corp.

      500,000      10,355,000  

Third Wave Technologies, Inc. (a)

      1,500,000      6,720,000  

PAREXEL International Corp. (a)

      200,000      6,618,000  

MEDTOX Scientific, Inc.(a)(b)

      508,750      5,001,013  

Stratagene Corp.

      200,000      1,296,000  
           
        29,990,013  
           

Machinery (3.7%)

      

Badger Meter, Inc. (b)

      591,200      14,892,328  

Federal Signal Corp.

      600,000      9,150,000  

Robbins & Myers, Inc.

      275,700      8,524,644  

Flanders Corp. (a)

      800,000      6,848,000  

MFRI, Inc. (a)(b)

      400,000      5,920,000  

Met-Pro Corp.

      400,000      5,252,000  

Portec Rail Products, Inc. (b)

      533,600      5,122,560  

Alamo Group, Inc.

      150,600      3,424,644  

Railpower Technologies Corp. (CAD) (a)(c)

      1,880,300      2,995,019  

Astec Industries, Inc. (a)

      100,000      2,525,000  

Wabash National Corp.

      100,000      1,369,000  
           
        66,023,195  
           

Marine (0.3%)

      

Quintana Maritime, Ltd.

      500,000      5,125,000  

Media (2.4%)

      

Alliance Atlantis Communications, Inc. (Class B)(CAD) (a)(c)

      650,000      20,154,362  

Lions Gate Entertainment Corp. (a)

      1,200,000      12,012,000  

Horipro, Inc. (JPY) (c)

      700,000      6,774,194  

Saga Communications, Inc. (a)

      250,000      1,935,000  

SPAR Group, Inc. (a)(b)(d)

      1,228,000      1,289,400  

Emak Worldwide, Inc. (a)(b)

      109,083      687,223  
           
        42,852,179  
           

Metals & Mining (2.8%)

      

High River Gold Mines, Ltd. (CAD) (a)(c)

      9,500,000      18,957,495  

LionOre Mining International, Ltd. (CAD) (a)(c)

      1,750,000      10,680,089  

Northwest Pipe Co. (a)

      250,000      7,500,000  

PolyMet Mining Corp. (CAD) (a)(c)

      1,750,000      5,434,004  

North American Tungsten Corp. Ltd. (CAD) (a)(b)(c)

      5,050,700      3,841,696  

Constellation Copper Corp. (CAD) (a)(c)

      2,000,000      2,863,535  
           
        49,276,819  
           

Multiline Retail (1.2%)

      

Duckwall-ALCO Stores, Inc. (a)(b)

      380,400      14,158,488  

Fred's, Inc.

      350,000      4,417,000  

Tuesday Morning Corp.

      250,000      3,470,000  
           
        22,045,488  
           

Oil, Gas & Consumable Fuels (4.5%)

      

Sherritt International Corp. (CAD) (c)

      2,906,000      25,354,362  

Clayton Williams Energy, Inc. (a)(b)

      548,760      16,627,428  

Plains Exploration & Production Co. (a)

      300,000      12,873,000  

Far East Energy Corp. (a)(b)

      7,500,000      8,550,000  

Rossetta Resources, Inc. (a)

      400,000      6,868,000  

Forest Oil Corp. (a)

      200,000      6,318,000  

Quest Resource Corp. (a)

      300,000      2,664,000  
           
        79,254,790  
           

Paper and Forest Products (0.1%)

      

Buckeye Technologies, Inc. (a)

      216,800      1,842,800  

Personal Products (0.3%)

      

Nature’s Sunshine Products, Inc. (e)

      467,000      4,880,150  

Natrol, Inc. (a)(b)

      828,997      1,185,466  
           
        6,065,616  
           

Pharmaceuticals (1.7%)

      

Biovail Corp. (CAD) (c)

      950,000      14,451,902  

Fuji Pharmaceutical Co., Ltd. (JPY) (c)

      499,000      5,771,179  

Caraco Pharmaceutical Laboratories, Ltd. (a)

      500,000      5,080,000  

ASKA Pharmaceutical Co., Ltd. (JPY) (c)

      500,000      4,364,575  

Access Pharmaceuticals, Inc. (a)(b)(e)

      18,500      20,350  
           
        29,688,006  
           

Real Estate (1.4%)

      

Medical Properties Trust, Inc.

      822,000      11,006,580  

Capital Lease Funding, Inc.

      700,000      7,763,000  

Government Properties Trust, Inc.

      750,000      6,765,000  
           
        25,534,580  
           

Road & Rail (2.0%)

      

RailAmerica, Inc. (a)

      1,350,000      14,742,000  

Marten Transport, Ltd. (a)

      700,000      11,963,000  

Saia, Inc. (a)

      200,000      6,520,000  

Smithway Motor Xpress Corp. (Class A) (a)

      129,676      1,075,014  

Covenant Transport, Inc. (Class A) (a)

      50,096      611,672  
           
        34,911,686  
           

Semiconductors (2.3%)

      

Axcelis Technologies, Inc. (a)

      2,000,000      14,120,000  

Skyworks Solutions, Inc. (a)

      2,500,000      12,975,000  

Lattice Semiconductor Corp. (a)

      1,000,000      6,820,000  

hi/fn, inc. (a)(b)

      1,000,000      4,710,000  

FSI International, Inc. (a)

      500,000      2,875,000  
           
        41,500,000  
           

Software (2.7%)

      

Actuate Corp. (a)(b)

      4,000,000      17,679,999  

Quovadx, Inc. (a)(b)(d)

      3,700,000      9,657,000  

PLATO Learning, Inc. (a)

      750,000      4,777,500  

EPIQ Systems, Inc. (a)

      303,500      4,464,485  

OPNET Technologies, Inc. (a)

      261,550      3,428,921  

MetaSolv, Inc. (a)

      1,000,000      3,030,000  

Agile Software Corp. (a)

      400,000      2,612,000  

ePlus, Inc. (a)

      241,509      2,354,713  
           
        48,004,618  
           

Specialty Retail (0.5%)

      

Rent-A-Center, Inc. (a)

      200,000      5,858,000  

Shoe Carnival, Inc. (a)

      100,000      2,522,000  

America’s Car-Mart, Inc. (a)

      59,900      985,355  
           
        9,365,355  
           

Textiles, Apparel & Luxury Goods (0.8%)

      

Hampshire Group, Ltd. (a)(b)

      465,540      5,763,386  

Ashworth, Inc. (a)

      608,431      4,167,752  

Phoenix Footwear Group, Inc. (a)(b)(d)

      750,000      3,502,500  
           
        13,433,638  
           

Thrifts & Mortgage Finance (0.6%)

      

Pacific Premier Bancorp, Inc. (a)(b)

      265,700      3,188,400  

Riverview Bancorp, Inc.

      172,000      2,322,000  

Franklin Bank Corp. (a)

      100,000      1,988,000  

Timberland Bancorp, Inc.

      50,000      1,755,000  

B of I Holding, Inc. (a)

      207,297      1,347,431  
           
        10,600,831  
           

Trading Companies & Distributors (0.3%)

      

Industrial Distribution Group, Inc. (a)

      300,000      2,652,000  

Aceto Corp.

      300,000      2,112,000  
           
        4,764,000  
           

TOTAL COMMON STOCKS (Cost $1,101,742,422)

       $ 1,511,588,466  
           

CONVERTIBLE PREFERRED STOCKS (0.0%)

    SHARES    VALUE  

Biotechnology (0.0%)

      

Aphton Corp. (a)(b)(e)(f)(h)

      2,500    $ —    
           

Household Durables (0.0%)

      

Ronco Corp. (a)(b)(d)(e)(f)(g)

      1,762,186      —    
           

TOTAL CONVERTIBLE PREFERRED STOCKS (Cost $5,655,000)

       $ —    
           

WARRANTS (0.3%)

    SHARES    VALUE  

Biotechnology (0.3%)

      

Senesco Technologies, Inc. (a)(b)(e)

      50,000    $ —    

Sirna Therapuetics, Inc. (a)(b)(e)

      1,440,000      5,256,000  
           

Commercial Services & Supplies (0.0%)

         5,256,000  
           

Waste Services, Inc. (a)(e)

      25,000      —    

Communications Equipment (0.0%)

      

ParkerVision, Inc. (a)(b)(e)

      375,000      —    

Diversified Consumer Services (0.0%)

      

Whitney Information Network, Inc. (a)(b)(d)(e)(f)

      300,000      522,750  

Health Care Equipment & Supplies (0.0%)

      

Medwave, Inc.(a)(b)(e)

      37,250      —    

Software (0.0%)

      

VocalTec Communications, Ltd. (a)(e)

      222,500      —    
           

TOTAL WARRANTS (Cost $0)

       $ 5,778,750  
           

SHORT-TERM INVESTMENTS (14.4%)

    PAR AMOUNT    VALUE  

U.S. GOVERNMENT AND AGENCY SECURITIES (9.9%)*

      

U.S. Treasury Bills, 10/19/06, 4.77%*

    $ 125,000,000    $ 124,699,750  

U.S. Treasury Bills, 11/2/06, 4.61%*

      50,000,000      49,792,620  
           

TOTAL U.S. GOVERNMENT AND AGENCY SECURITIES

       $ 174,492,370  
           

TIME DEPOSITS (4.5%)

      

Brown Brothers Harriman, 4.63% (+)

      80,105,045      80,105,045  
           

TOTAL SHORT-TERM INVESTMENTS (Cost $254,611,138)

       $ 254,597,415  
           

TOTAL INVESTMENTS (Cost $1,362,008,560) (100.0%)

       $ 1,771,964,631  

Other assets and liabilities, net (0.0%)

         (857,876 )
           

TOTAL NET ASSETS (100.0%)

       $ 1,771,106,755  
           
(a) Non-income producing security.

 

(b) Affiliated company. See Note 5 in Notes to Schedules of Investments.

 

(c) Foreign-denominated security.

 

(d) Illiquid security, pursuant to the guidelines established by the Board of Directors. See Note 2(g) in Notes to Schedules of Investments.

 

(e) Valued at fair value using methods determined by the Board of Directors. See Note 2(a) in Notes to Schedules of Investments.

 

(f) Restricted security. See Note 2(h) in Notes to the Schedules of Investments.

 

(g) Currently in default of the penalty payment due in cash to the preferred stockholders for the delay in the effective date of the registration statement. The registration statement covers the common stock into which the convertible preferred stock held are convertible.

 

(h) Filed for bankruptcy.

 

(*) The rate denoted is the effective yield as of September 30, 2006.

 

(+) Time deposits are considered short-term obligations and are payable on demand. Interest rates change periodically on specified dates. The rates listed are as of September 30, 2006.

 

ADR – American Depositary Receipt.

 

AUD – Australian issuer.

 

CAD – Canadian issuer.

 

HK – Hong Kong issuer.

 

JPY – Japanese issuer.

 

   Industry and sector classifications for each security held are generally determined by referencing the Global Industry Classification Standard Codes (GICS) developed by Standard & Poor's and Morgan Stanley Capital International.

The accompanying Notes to Schedules of Investments are an integral part of this schedule.

NOTES TO SCHEDULES OF INVESTMENTS

September 30, 2006 (Unaudited)

 

(1) Organization

Heartland Group, Inc. (the “Corporation”) is registered as an open-end management (investment) company under the Investment Company Act of 1940. The capital shares of the Select Value Fund, Value Plus Fund and Value Fund (the “Funds”), each of which is a diversified fund, were issued by the Corporation at September 30, 2006.

Under the Corporation’s organizational documents, its Officers and Directors are indemnified against certain liabilities arising out of the performance of their duties to the Corporation. In addition, in the normal course of business, the Corporation enters into contracts with their vendors and others that provide for general indemnifications. The Corporation’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Corporation.

 

(2) Summary of Significant Accounting Policies

The following is a summary of significant accounting policies followed by the Funds in the preparation of the Schedules of Investments:

 

  (a) Portfolio securities traded on a national securities exchange or in the over-the-counter market are valued at the closing price on the principal exchange or market as of the close of regular trading hours on the day the securities are being valued, or, lacking any sales, at the latest bid price. Foreign securities are valued on the basis of quotations from the primary market in which they are traded, and are translated from the local currency into U.S. dollars using exchange rates as of the close of the New York Stock Exchange. Debt securities are stated at fair value as furnished by an independent pricing service based primarily upon information concerning market transactions and dealer quotations for similar securities, or by dealers who make markets in such securities. Debt securities having maturities of 60 days or less may be valued at acquisition cost, plus or minus any amortized discount or premium. Securities and other assets for which quotations are not readily available or deemed unreliable are valued at their fair value using methods determined by the Board of Directors. The Pricing Committee for the Corporation may also make a fair value determination if it reasonably determines that a significant event, which materially affects the value of a security, occurs after the time at which the market price for the security is determined, but prior to the time at which a Fund’s net asset value is calculated. Fair valuation of a particular security is an inherently subjective process, with no single standard to utilize when determining a security’s fair value. As such, different mutual funds could reasonably arrive at a different fair value price for the same security. In each case where a security is fair valued, consideration is given to the facts and circumstances relevant to the particular situation. This consideration includes reviewing various factors set forth in the pricing procedures adopted by the Board of Directors and other factors as warranted. In making a fair value determination, factors that may be considered, among others, include: the type and structure of the security; unusual events or circumstances relating to the security’s issuer; general market conditions; prior day’s valuation; fundamental analytical data; size of the holding; cost of the security on the date of purchase; nature and duration of any restriction on disposition; trading activities and prices of similar securities or financial instruments. At September 30, 2006, 0.1% and 2.1% of the Value Plus and Value Funds’ net assets, respectively, were valued at their fair value using methods determined by the Board of Directors.

 

  (b) The Funds’ policy is to comply with the requirements of the Internal Revenue Code that are applicable to regulated investment companies and to distribute substantially all of their taxable income to their shareholders. The Funds accordingly paid no Federal income taxes, and no Federal income tax provision is recorded.

 

  (c) The Funds record security transactions no later than one business day after trade date. For financial reporting purposes, however transactions are accounted for on trade date on the last business day of the reporting period. Net realized gains and losses on investments are computed on the identified cost basis. The portion of security gains and losses resulting from changes in foreign exchange rates is included with net realized and unrealized gains or losses from investments. Dividend income is recognized on the ex-dividend date, and interest income is recognized on an accrual basis. The Funds amortize premium and accrete discount on investments utilizing the effective interest method.

 

  (d) Each Fund may enter into futures contracts for hedging purposes, such as to protect against anticipated declines in the market value of its portfolio securities or to manage exposure to changing interest rates. The Fund receives from or pays to the broker, on a daily basis, an amount of cash equal to the daily fluctuation in value of the contract. Such receipts or payments are known as “variation margin,” and are recorded by the Fund as unrealized gains or losses. When the futures contract is closed, the Fund records a realized gain or loss equal to the difference between the value of the contract at the time it was opened and the value at the time it was closed.

The use of futures contracts involves, to varying degrees, elements of market risk. The predominant risk is that the movement of a futures contract’s price may

result in a loss, which could render a Fund’s hedging strategy unsuccessful. There were no futures positions held at September 30, 2006.

 

  (e) A short sale is a transaction in which a Fund sells a security it does not own (but has borrowed) in anticipation of a decline in the market value of that security. To complete a short sale, a Fund must borrow the security to deliver to the buyer. A Fund then is obligated to replace the security borrowed by purchasing it in the open market at a later date. A Fund could incur a loss, which could be substantial and potentially unlimited, if the market price of the security increases between the date of the short sale and the date on which the Fund replaces the borrowed security. A Fund will realize a gain if the security declines in value between those dates. A Fund must pay any dividends or interest payable to the lender of the security. All short sales must be collateralized in accordance with the applicable exchange or broker requirements. A Fund maintains the collateral in a segregated account with its custodian or broker, consisting of cash, obligations of the U.S. Government, its agencies or instrumentalities, or equity securities sufficient to collateralize its obligation on the short positions. There were no short positions held at September 30, 2006.

 

  (f) The Funds may write covered call options for which premiums received are recorded as liabilities and are subsequently adjusted to the current value of the options written. Premiums received from writing options that expire are treated as realized gains. Premiums received from writing options, which are either exercised or closed, are offset against the proceeds received or amount paid on the transaction to determine realized gains or losses. The Funds may enter into options transactions for hedging purposes, and will not use these instruments for speculation. The Value Fund had the following transactions in written covered call options during the nine-month period ended September 30, 2006:

 

Value Fund

    NUMBER OF
CONTRACTS		    PREMIUMS

Balance at December 31, 2005

    —        —  

Options written

    4,000    $ 884,088

Options expired

    —        —  

Options closed

    —        —  
           

Balance at September 30, 2006

    4,000    $ 884,088
           

The following is a summary of written covered call options outstanding as of September 30, 2006:

 

Value Fund

    NUMBER OF
CONTRACTS		    VALUE

InterDigital Communications, Inc., $40.00, 1/20/07

    2,000    $ 280,000

InterDigital Communications, Inc., $45.00, 1/20/07

    2,000      90,000
         
      $ 370,000
         

 

  (g) At September 30, 2006, 5.3% of the Value Fund’s net assets, were illiquid as defined pursuant to guidelines established by the Board of Directors of the Corporation.

 

  (h) A restricted security is a security which has been purchased through a private offering and cannot be resold to the general public without prior registration under the Securities Act of 1933 (the “Act”) or pursuant to the resale limitations provided by Rule 144 under the Act, or an exemption from the registration requirements of the Act. Whether a restricted security is illiquid is determined pursuant to guidelines established by the Board of Directors. Not all restricted securities are considered to be illiquid. At September 30, 2006, the Value Fund held restricted securities representing 0.3% of net assets. The restricted securities held as of September 30, 2006 are identified below:

 

SECURITY

    ACQUISITION
DATE		    ACQUISITION
COST		    SHARES    FAIR
VALUE

Value Fund

            

Aphton Corp. (Common Stock)

    11/09/2005    $ 128,625    375,000    $ —  

Aphton Corp. (Convertible Preferred Stock)

    11/09/2005      —      2,500      —  

Ronco Corp. (Convertible Preferred Stock)

    6/24/2005      5,655,000    1,762,186      —  

Whitney Information Network, Inc. (Common Stock)

    11/01/2005      2,700,000    600,000      4,105,500

Whitney Information Network, Inc. (Warrants)

    11/01/2005      —      300,000      522,750

  (i) The Funds invest in foreign equity securities, whose values are subject to change in market conditions, as well as changes in political and regulatory environments. Realized and unrealized gains or losses from investments include the effects of foreign exchange rates on investments. The Funds may utilize forward currency exchange contracts for the purpose of hedging foreign currency risk. Under these contracts, the Funds are obligated to exchange currencies at specific future dates. Risks arise from the possible inability of counterparties to meet the terms of their contracts and from movements in currency values. There were no forward currency exchange contracts at September 30, 2006.

 

  (j) Each Fund may purchase securities on a when-issued basis. Payment and interest terms of these securities are set out at the time a Fund enters into the commitment to purchase, but generally the securities are not issued, and delivery and payment for such obligations does not occur until a future date that may be a month or more after the purchase date. Obligations purchased on a when-issued basis involve a risk of loss if the value of the security purchased declines prior to the settlement date, and may increase fluctuation in a Fund’s net asset value. On the date a Fund enters into an agreement to purchase securities on a when-issued basis, it will record the transaction and reflect the value of the obligation in determining its net asset value. In addition, the respective Fund will segregate cash, obligations of the U.S. Government, its agencies or instrumentalities, or equity securities having a value at least equal to the Fund’s obligation under the position. There were no when-issued securities held at September 30, 2006.

 

  (k) Each Fund may own shares of real estate investment trusts (“REITS”) which report information on the source of their distributions annually. Certain distributions from REITS during the year, which are known to be a return of capital, are recorded as a reduction to the cost of the individual REIT.

 

  (l) The preparation of the Schedules of Investments in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that effect the reported amounts at the date of the Schedules of Investments. Actual results could differ from those estimates.

 

(3) Investment Transactions and Income Tax Basis Information

During the nine-month period ended September 30, 2006, the cost of purchases and proceeds from sales of securities (excluding securities maturing less than one year from acquisition), are noted below. During the same period there were no purchases or sales of long-term U.S. Government securities.

 

FUND

    COST OF
PURCHASES		   

PROCEEDS

FROM SALES

Select Value Fund

    $ 208,595,150    $ 112,024,520

Value Plus Fund

      87,766,654      155,972,869

Value Fund

      570,252,269      830,837,217

 

FUND

    TAX COST OF
INVESTMENTS		    GROSS
UNREALIZED
APPRECIATION		    GROSS
UNREALIZED
DEPRECIATION		     NET UNREALIZED
APPRECIATION ON
INVESTMENTS

Select Value Fund

    $ 245,357,532    $ 31,045,421    $ (5,137,222 )   $ 25,908,199

Value Plus Fund

      197,413,439      34,994,128      (7,065,199 )     27,928,929

Value Fund

      1,362,964,274      467,853,358      (58,853,001 )     409,000,357

 

(4) Litigation

On July 18, 2002, pursuant to a stipulation and following a fairness hearing, the U.S. District Court for the Eastern District of Wisconsin approved a settlement of a consolidated class action brought by shareholders of the Heartland High-Yield Municipal Bond Fund and the Short Duration High-Yield Municipal Fund (together, the “High-Yield Funds”), in which the Corporation, Heartland Advisors, Inc. (the “Advisor”), the High-Yield Funds and certain other parties were named as defendants. The litigation arose out of a repricing of the securities in the High-Yield Funds in October 2000. Under the terms of the settlement, the Corporation, the Advisor, the High-Yield Funds and certain related parties were dismissed and released from all claims in the class action upon establishment of a settlement fund for the benefit of the class plaintiffs. Neither the Corporation nor any of its separate funds, directors, or officers were required to contribute to the settlement fund (although an affiliate of the Advisor did make a substantial contribution to facilitate settlement). Subsequently, all other suits filed by persons who opted out of the class action settlement were also settled without any contribution from the Corporation, its Funds, directors or officers. The High-Yield Funds, which had been in receivership since March 2001, were liquidated in December 2004.

On December 11, 2003, the SEC filed a civil complaint in United States District Court for the Eastern District of Wisconsin (Civil Action No. 03C1427) relating to the High-Yield Funds against the Advisor; William J. Nasgovitz, President of the Advisor, President and a director of the Corporation and member of the Heartland Value Fund portfolio management team; Paul T. Beste, Chief Operating Officer of the Advisor, Vice President and Secretary of the Corporation; Kevin D. Clark, an officer of the Advisor; Hugh Denison, a former director of the Corporation who presently serves as Senior Vice President of

the Advisor and as a member of the portfolio management team for the Heartland Select Value Fund and Heartland Value Fund; certain former officers of the Advisor; and others.

The SEC alleges various violations of the federal securities laws with respect to the pricing of securities owned by the High- Yield Funds and the related calculation of the High-Yield Funds’ net asset value per share from March 2000 to March 2001; disclosures in the prospectus, other SEC filings and promotional materials for the High-Yield Funds relating to risk management, credit quality, liquidity and pricing; breach of fiduciary duty; the sale in September and October 2000 by certain individual defendants of shares of the High-Yield Funds while in possession of material, non-public information about those funds; and the disclosure of material, non-public information to persons who effected such sales. The SEC seeks civil penalties and disgorgement of all gains received by the defendants as a result of the conduct alleged in the complaint, a permanent injunction against the defendants from further violations of the applicable federal securities laws, and such other relief as the court deems appropriate.

In February 2004, the Advisor and Messrs. Nasgovitz, Beste, Denison, and Clark filed their answers to the SEC’s complaint, denying the allegations and claims made therein and raising affirmative defenses.

The complaint does not involve the Corporation, the Heartland Select Value, Value Plus or Value Funds, any portfolio manager of the Funds (other than Mr. Nasgovitz and Mr. Denison) or any of the current independent directors of the Corporation. However, an adverse outcome for the Advisor and/or its officers named in the complaint could result in an injunction that would bar the Advisor from serving as investment advisor to the Funds or bar such officers from continuing to serve in their official capacities for the Advisor. The Advisor has advised the Funds that, if these results occur, the Advisor will seek exemptive relief from the SEC to permit it to continue serving as investment advisor to the Funds. There is no assurance that the SEC will grant such exemptive relief.

 

(5) Transactions with Affiliates

The following investments are in companies deemed “affiliated” (as defined in Section (2)(a)(3) of the Investment Company Act of 1940) with the Value Plus and Value Funds; that is, the Funds held 5% or more of their outstanding voting securities at anytime during the nine-month period ended September 30, 2006:

VALUE PLUS FUND

 

SECURITY NAME

    SHARE
BALANCE AT
JANUARY 1, 2006		    PURCHASES    SALES    SHARE
BALANCE AT
SEPTEMBER 30, 2006		    DIVIDENDS     REALIZED
GAINS
(LOSSES)

Criticare Systems, Inc.

    625,000    —      —      625,000    $ —      $ —  
                         
               $ —      $ —  
                         

VALUE FUND

 

SECURITY NAME

    SHARE
BALANCE AT
JANUARY 1, 2006		    PURCHASES    SALES    SHARE BALANCE
AT
SEPTEMBER 30, 2006		    DIVIDENDS    REALIZED
GAINS
(LOSSES)		  

Access Pharmaceuticals, Inc.

    1,253,400    394,680    1,629,580    18,500    $ —      $ (3,866,433 )

Actuate Corp.

    4,000,000    —      —      4,000,000      —        —    

AirNet Systems, Inc.

    1,000,000    —      —      1,000,000      —        —    

American Physicians Service Group, Inc.

    185,649    —      185,649    —        —        1,698,143  

Anacomp, Inc. (Class A)

    350,000    —      400    349,600      —        (5,216 )

Analysts International Corp.

    1,600,000    —      —      1,600,000      —        —    

Aphton Corp.

    1,483,771    1,250,000    2,733,771    —        —        (3,108,265 )

Aphton Corp.

    375,000    —      —      375,000      —        —    

Aphton Corp. (convertible preferred stock)

    2,500    —      —      2,500      —        —    

Asia Pacific Wire & Cable Corp., Ltd.

    1,137,300    —      1,137,300    —        —        (1,423,904 )

Badger Meter, Inc. (1)

    800,000    —      208,800    591,200      151,636      5,349,945  

Barrett Business Services, Inc.

    555,600    —      155,600    400,000      —        3,564,571  

Bioscrip, Inc.

    1,000,000    1,500,000    702,448    1,797,552      —        (2,850,186 )

Buca, Inc.

    1,010,000    190,000    —      1,200,000      —        —    

Clayton Williams Energy, Inc.

    600,000    —      51,240    548,760      —        1,080,154  

CompuDyne Corp.

    636,600    113,400    —      750,000      —        —    

Corgi International, Ltd. (ADR)

    563,000    —      —      563,000      —        —    

Duckwall - ALCO Stores, Inc.

    400,000    —      19,600    380,400      —        296,937  

Dynamic Research Corp.

    —      750,000    —      750,000      —        —    

Emak Worldwide, Inc.

    524,413    25,587    440,917    109,083      —        (2,288,771 )

Far East Energy Corp.

    5,000,000    2,500,000    —      7,500,000      —        —    

First Consulting Group, Inc.

    1,000,000    250,000    —      1,250,000      —        —    

FirstCity Financial Corp.

    479,100    332,700    —      811,800      —        —    

Genitope Corp.

    1,364,620    635,380    2,000,000    —        —        (10,222,606 )

Global - Tech Appliances, Inc.

    1,181,200    —      877,100    304,100      —        (2,194,952 )

Gulf Island Fabrication, Inc.

    456,200    293,800    —      750,000      131,250      —    

Hampshire Group, Ltd.

    500,000    —      34,460    465,540      —        505,255  

hi/fn, inc.

    —      1,000,000    —      1,000,000      —        —    

Hudson Highland Group, Inc.

    —      2,330,000    77,900    2,252,100      —        (465,345 )

Hy - Drive Technologies, Ltd.

    2,739,891    1,680,234    1,920,125    2,500,000      —        4,401,496  

Hy - Drive Technologies, Ltd. (warrants)

    1,395,234    —      1,395,234    —        —        —    

InterDigital Communications Corp.

    3,000,000    —      250,000    2,750,000      —        3,181,327  

Intersections, Inc.

    950,000    130,000    80,000    1,000,000      —        (327,641 )

Isolagen, Inc.

    2,162,244    237,756    1,914,600    485,400      —        (593,600 )

John B. Sanfilippo & Son, Inc.

    750,000    —      450,000    300,000      —        (2,369,781 )

Lantronix, Inc.

    5,000,000    —      —      5,000,000      —        —    

Lesco, Inc.

    403,599    346,401    403,599    346,401      —        (2,598,701 )

MEDTOX Scientific, Inc.

    508,750    —      —      508,750      —        —    

Medwave, Inc.

    1,050,000    149,000    —      1,199,000      —        —    

Medwave, Inc. (warrants)

    —      37,250    —      37,250      —        —    

MFRI, Inc.

    463,200    —      63,200    400,000      —        131,628  

Midwest Air Group, Inc.

    1,315,500    —      —      1,315,500      —        —    

Modtech Holdings, Inc.

    —      1,005,600    —      1,005,600      —        —    

Mothers Work, Inc.

    525,975    —      525,975    —        —        10,032,617  

National Home Health Care Corp.

    441,000    —      —      441,000      99,225      —    

Natrol, Inc.

    1,250,000    —      421,003    828,997      —        (706,719 )

Newpark Resources, Inc.

    2,500,000    2,500,000    500,000    4,500,000      —        (1,088,710 )

North American Tungsten Corp., Ltd.

    —      5,050,700    —      5,050,700      —        —    

O.I. Corp.

    245,900    —      —      245,900      36,885      —    

Oil - Dri Corp. of America (2)

    562,500    —      —      562,500      175,500      —    

OrthoLogic Corp.

    3,100,000    34,800    2,931,600    203,200      —        (7,338,402 )

Osteotech, Inc.

    1,090,000    92,000    100,000    1,082,000      —        (499,160 )

Outlook Group Corp.

    300,000    —      300,000    —        54,000      2,222,338  

Pacific Premier Bancorp, Inc.

    —      265,700    —      265,700      —        —    

ParkerVision, Inc.

    —      1,500,000    113,644    1,386,356      —        458,215  

ParkerVision, Inc. (warrants)

    —      375,000    —      375,000      —        —    

Patrick Industries, Inc.

    293,525    —      —      293,525      —        —    

PDI, Inc.

    1,134,209    175,791    200,000    1,110,000      —        (1,144,914 )

Phoenix Footwear Group, Inc.

    646,700    103,300    —      750,000      —        —    

Portec Rail Products, Inc.

    —      533,600    —      533,600      6,000      —    

Quovadx, Inc.

    3,677,400    22,600    —      3,700,000      —        —    

RCM Technologies, Inc.

    780,100    —      —      780,100      —        —    

Ronco Corp. (convertible preferred stock)

    1,500,000    262,186    —      1,762,186      —        —    

Senesco Technologies, Inc.

    1,300,000    —      80,500    1,219,500      —        (158,491 )

Senesco Technologies, Inc. (warrants)

    50,000    —      —      50,000      —        —    

Sirna Therapeutics, Inc.

    5,000,000    —      —      5,000,000      —        —    

Sirna Therapeutics, Inc. (warrants)

    1,440,000    —      —      1,440,000      —        —    

Smith & Wollensky Restaurant Group, Inc.

    574,400    —      —      574,400      —        —    

SPAR Group, Inc.

    1,228,000    —      —      1,228,000      —        —    

SRI/Surgical Express, Inc.

    600,000    —      100,000    500,000      —        (1,043,542 )

STAAR Surgical Co.

    2,000,000    —      —      2,000,000      —        —    

Sunterra Corp.

    750,000    250,000    1,000,000    —        —        (4,625,081 )

Tasty Baking Co.

    305,200    121,377    —      426,577      61,973      —    

TechTeam Global, Inc.

    8,900    966,100    —      975,000      —        —    

The Inventure Group, Inc. (3)

    1,710,622    190,000    —      1,900,622      —        —    

The Princeton Review, Inc.

    1,200,000    415,000    —      1,615,000      —        —    

Tier Technologies, Inc. (Class B)

    1,000,000    800,000    —      1,800,000      —        —    

Vesta Insurance Group, Inc.

    2,000,000    —      2,000,000    —        —        (5,384,988 )

WatchGuard Technologies, Inc.

    2,229,305    —      2,229,305    —        —        (392,445 )

Whitney Information Network, Inc.

    600,000    —      —      600,000      753,885      —    

Whitney Information Network, Inc. (warrants)

    300,000    —      —      300,000      —        —    
                           
               $ 1,470,354    $ (21,775,227 )
                           
(1) 2:1 Stock Split on 6/16/06.
(2) 5:4 Stock Split on 9/11/06.
(3) Formerly known as Poore Brothers, Inc.

Item 2. Controls and Procedures.

(a) The registrant’s management, with the participation of its principal executive officer and principal financial officer has evaluated effectiveness of the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940), within 90 days of the filing date of this report. Based on such evaluation, the Registrant’s principal executive and financial officers have concluded that the design and operation of the Registrant’s disclosure controls and procedures are effective in providing reasonable assurance that the information required to be disclosed on Form N-Q is recorded, processed, summarized and reported within the applicable time periods.

(b) There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the Registrant’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

 

Item 3. Exhibits.

Certifications pursuant to Rule 30a-2(a) are attached hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

(Registrant) Heartland Group, Inc.
By (Signature and Title)   /s/ David C. Fondrie
  David C. Fondrie, Chief Executive Officer

Date November 28, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By (Signature and Title)   /s/ David C. Fondrie
  David C. Fondrie, Chief Executive Officer

Date November 28, 2006

 

By (Signature and Title)   /s/ Christopher E. Sabato
 

Christopher E. Sabato, Treasurer and

Principal Accounting Officer

Date November 28, 2006