Heartland Value Fund

Heartland Value Fund 30th anniversary logoInvestment Focus

Pursues long-term capital appreciation by investing in micro- and small-cap companies

Distinguishing Characteristics

  • Named to Forbes 2014 Mutual Fund Honor Roll for top performance
  • A pioneer, one of the oldest small-cap value funds in its Lipper universe
  • Barbell approach that balances micro- and small-cap stocks
  • Designed to capture upside potential while minimizing downside risk
  • Institutional and investor share classes
  • Actively managed by a team with 64 years of industry experience, 46 at Heartland

Investment Process

All stocks are evaluated based on our proprietary, consistent, and time-tested 10 Principles of Value Investing™. These criteria are central to Heartland’s contrarian value investing philosophy and provide a framework for evaluating securities.

The Investment Team applies a bottom-up research approach, marrying traditional fundamental analysis and meetings with more than 1,000 company management teams each year. The 10 Principles™ are designed to help the Team assess a company's valuation, but also focus on metrics associated with financial soundness, management team strength, and future outlook.
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Overall Morningstar Rating

2Overall Morningstar Rating™ as of 11/30/2014, out of 350 Small Value funds, based on risk-adjusted performance for investor class shares

Fund Basics

9/30/2014

Benchmark: Russell 2000® Value Index

Investor
Class
Institutional
Class
Ticker HRTVXHNTVX
CUSIP 422359109422352831
Inception Date 12/28/198405/01/2008
Assets $1.1 billion$75 million

Literature Downloads

3Q14 Factsheet   Morningstar Ratings™
3Q14 Performance Commentary   Portfolio Manager Perspective: The Value in Banks
3Q14 Sector-Level Attribution   Portfolio Manager Perspective: How Micro-Caps Add Value to a Small-Cap Strategy
3Q14 Market Update Letter to Shareholders    
Lipper Rankings    

Investment Minimums

  Investor Class ($) Institutional Class ($)
Initial Investment 1,000 500,000
IRA Initial Investment 500 500,000
Subsequent Investments 100 100

Shareholder Fees

Paid directly from total investment

  Investor Class (%) Institutional Class (%)
Load 0 0
Sales Charge 0 0
Exchange Fee 0 0
Redemption Fee* 2 2

*If shares are redeemed or exchanged within 10 days of purchase

Annual Fund Operating Expenses

Paid annually as a percent of total investment value*

  Investor Class (%) Institutional Class (%)
Management Fee 0.75 0.75
12b-1 Distribution Fee 0.17 0.00
Other Expenses 0.16 0.16
Total Expense Ratio 1.08 0.91

*As stated in the prospectus (pdf) dated 5/1/2014

Portfolio Management Team

Heartland Value Fund Portfolio Management Team

 

Pictured from Left to Right:

  • 64 years of industry experience
  • 46 years of experience at Heartland

Heartland Value Fund 30th anniversary logo

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Bill Nasgovitz

Nasgovitz is Chairman and CIO of Heartland Advisors, and Portfolio Manager for the Heartland Value Fund and Heartland International Value Fund. He is also Portfolio Manager for the Small Cap Value separately managed account strategy, and he is President and Director of the Heartland Funds. He has 46 years of industry experience, 31 at Heartland.

Bradford A. Evans

Evans, CFA, is Senior Vice President, Director of Equity Research, and Portfolio Manager for the Value Plus Fund and Value Fund. He is also Portfolio Manager for two separately managed account strategies: Small Cap Value and Small Cap Value Plus. He has 18 years of industry experience, 15 at Heartland.

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Portfolio Manager Perspectives

The Value in Banks

10/2014

Banks have not fully participated in market advances, but we believe they stand to benefit from growth in loan demand, rising short rates, or both. Portfolio Manager of the Value Fund and Value Plus Fund Bradford A. Evans, CFA, shares why we see opportunity for both earnings growth and multiple expansion.

Morningstar Q&A: Where to Find the Small-Cap Winners

2/2014 - 9:13

Portfolio Manager Bradford A. Evans, CFA, explains why our valuation criteria have led us to areas of the market others have shunned. He provides his perspective in a Morningstar Q&A.

How Micro-Caps Add Value to a Small-Cap Value Strategy

2/2014

Value Fund Portfolio Managers Bradford A. Evans, CFA, and Bill Nasgovitz share why they emphasize exposure to micro-caps as part of a small-cap strategy.

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In the News

Heartland Advisors Portfolio Manager Bradford A. Evans

PM Demonstrates How Heartland Evaluates Management and Insider Ownership

11/16/2014

Senior Vice President and Portfolio Manager Bradford A. Evans, CFA, applies several criteria from Heartland’s 10 Principles of Value Investing to weigh in on an out-of-favor stock.

Heartland Portfolio Managers Bill Nasgovitz and Bradford A. Evans, CFA

Heartland Value Fund Named to Forbes 2014 Mutual Fund Honor Roll

5/26/2014

Forbes Honor Roll recognizes the Heartland Value Fund as a top performer in both bear and bull markets over two market cycles. The Fund is managed by Bill Nasgovitz and Bradford A. Evans, CFA.

Heartland Advisors Portfolio Manager Bradford Evans

Column by Portfolio Manager Bradford A. Evans in Milwaukee BizTimes

2/3/2014

Portfolio Manager Bradford A. Evans, CFA, explains how the enterprise multiple metric can be used to help identify true discounted companies.

Heartland Advisors Portfolio Manager Bradford Evans

Heartland Senior Vice President Explains a Useful Valuation Tool: EV/EBITDA

1/8/2014

Senior Vice President and Portfolio Manager Bradford A. Evans, CFA, shares why the common valuation measure price-to-earnings ratio only tells part of the story when determining value stocks.

Performance

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Month-End Average Annual Total Returns
11/30/2014

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Since Inception (%)20-Year (%)15-Year (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD* (%)QTD* (%)
Value
Investor Class
12.5211.2410.736.2311.7913.16-1.36-2.91-0.68
Value
Institutional Class
12.5711.3210.836.3812.0013.35-1.18-2.75-0.67
Russell 2000® Value11.5010.9610.266.8515.3117.843.361.456.49
*Not annualized
Quarter-End Average Annual Total Returns
9/30/2014

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Since Inception (%)20-Year (%)15-Year (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD* (%)QTD* (%)
Value
Investor Class
12.6211.0610.867.1211.5417.687.73-2.24-9.76
Value
Institutional Class
12.6711.1410.967.2711.7417.897.95-2.09-9.72
Russell 2000® Value11.3410.299.687.2513.0220.614.13-4.74-8.58
*Not annualized

Annual Total Returns


2013 (%)2012 (%)2011 (%)2010 (%)2009 (%)2008 (%)
Value Investor Class32.1113.83-6.9221.2844.49-39.53
Value Institutional Class32.3713.98-6.7321.5044.86-39.38
Russell 2000® Value Index34.5218.05-5.5024.5020.58-28.92
Russell 2000® Index38.8216.35-4.1826.8527.17-33.79

Growth of a Hypothetical $10,000 Investment

9/30/2014

Since inception of the investor class, 12/28/1984 to 9/30/2014
The above chart represents a hypothetical example of an investment in the Value Fund representing historical returns.

 

Morningstar Ratings TM
11/30/2014
RatingTotal Funds
Overall2350
10-Year2191
5-Year2277
3-Year2350

Past performance does not guarantee future results. Performance represents past performance; current returns may be lower or higher. Performance information for institutional class shares prior to 5/1/2008, is based on the performance of investor class shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. All returns reflect reinvested dividends and capital gains distributions, but do not reflect the deduction of taxes that an investor would pay on distributions or redemptions. Subject to certain exceptions, shares of a Fund redeemed or exchanged within 10 days (90 days for the International Value Fund) of purchase are subject to a 2% redemption fee. Performance does not reflect this fee, which if deducted would reduce an individual's return.

In the prospectus (pdf) dated 5/1/2014, the gross expense ratio for the Value Fund was 1.08% for investor class shares and 0.91% for institutional class shares. The Advisor has voluntarily agreed to waive fees and/or reimburse expenses with respect to the institutional class, to the extent necessary to maintain the institutional class “Net Annual Operating Expenses” at a ratio not to exceed 0.99% of average daily net assets. This voluntary waiver and/or reimbursement may be discontinued at any time.

The inception date for the Value Fund is 12/28/1984 for the investor class.

Historical NAVs

Heartland Advisors Client Relations TeamContact the Client Relations Team by email or at 800-432-7856 for historical NAVs. The Team is available Monday to Friday from 8 a.m. to 5 p.m. CT.

Historical NAVs also are available from third party websites, such as Bloomberg, Yahoo! Finance, or Google Finance.

Quarterly Fund Performance Commentary

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Performance Commentary

Heartland Value Fund Portfolio Manager Commentary

Heartland Value Fund 3Q14 Portfolio Manager Commentary

9/30/2014

Year-to-date, the Fund is outpacing its benchmark by over 200 basis points, although it underperformed for the quarter. Our holdings in Energy, a sector broadly hurt by declining commodity prices, Financials, and Health Care dampened returns; stock selection within Industrials was a bright spot.

Commentary Archive

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Heartland Value Fund 2Q14 Portfolio Manager Commentary

6/30/2014

Strong contributions from Health Care and Industrial sector names lead the Fund to outperform its benchmark, while a stealth bear market in small-caps presented our research team with new value opportunities to explore.

Heartland Value Fund 1Q14 Portfolio Manager Commentary

3/31/2014

Portfolio holdings benefited from mergers and acquisitions (M&A) activity. We believe conditions could support more such transactions in the months to come.

Heartland Value Fund 4Q13 Portfolio Manager Commentary

12/31/2013

Investors appear to be paying greater attention to valuations, which has been positive for our holdings.

Portfolio Composition

Characteristics

9/30/2014

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CharacteristicValue
Holdings 132
Assets $1.1 billion
Median Market Cap $299 million
Weighted Average Market Cap $828 million
Annualized YTD Turnover 42.8%

Fundamental Analysis

9/30/2014

Heartland Value Fund Price-to-Earnings and Price-to-Cash FlowHeartland Value Fund Price-to-Book and Debt-to-Capital

Top 10 Holdings

9/30/2014

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TickerHolding% of Net AssetsIndustry
UNTUnit Corp.3.1Energy Equipment & Services
SFYSwift Energy Co.2.7Oil Gas & Consumable Fuels
SPRSpirit Aerosystems Holdings, Inc. (Class A)2.3Aerospace & Defense
NRNewpark Resources, Inc.2.2Energy Equipment & Services
IDCCINTERDIGITAL, INC. 2.1Communications Equipment
UPLUltra Petroleum Corp.2.0Oil Gas & Consumable Fuels
6960 JPFukuda Denshi Co., Ltd.1.9Health Care Equipment & Supplies
ENSGThe Ensign Group, Inc.1.8Health Care Providers & Services
FSSFederal Signal Corp.1.7Machinery
PLUSePlus, Inc.1.7Software
% of Total Net Assets21.5

9/30/2014

Cap Range% of Equities in Portfolio
Large-Cap 0.0
Mid-Cap 11.7
Small-Cap 54.4
Micro-Cap 33.9

The Value Fund utilizes a barbell approach to investing in small- and micro-cap stocks. This strategy is designed to complement the unique attributes of each cap range.

 

Heartland Value Fund Barbell Approach


As a result of the focus on micro-caps, the Fund has a lower median market cap than its peers and benchmark.
 

Median Market Capitalization: Value Fund vs. Russell 2000® Value

Heartland Value Fund Market Capitalization Chart

Source: FactSet Research Systems Inc., Russell Investment Group, and Heartland Advisors, Inc., 9/30/2009 to 9/30/2014

Sector Allocation

9/30/2014

Source: FactSet Research Systems Inc., and Russell Investment Group

5-Year Risk Analysis

9/30/2014

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Alpha*Standard Deviation (%)*BetaInfo RatioSharpe RatioUpside Capture (%)*Downside Capture (%)*R-
Squared (%)
Active Share
Value-0.2017.080.91-0.280.6790.0793.3991.1596.41
Russell 2000® Value0.0017.951.000.000.72100.00100.00100.000.00
Russell 2000®1.0318.291.010.530.78103.9899.9098.34-

*Annualized
Source: FactSet Research Systems Inc., Russell Investment Group
Alpha, beta, and information ratio are versus the Russell 2000® Value. Depiction is for investor class shares.

Distributions

Investor Class Distributions

Record
Date
Payable
Date
  Ordinary Dividend ($/share) Short-Term Capital Gain ($/share) Long-Term Capital Gain ($/share)
12/26/13 12/27/13   0.42958 1.17103 3.98433
12/26/12 12/27/12   - 0.17740 2.74405
12/28/11 12/29/11   - 0.675954 1.798273
12/28/10 12/29/10   - 0.058470 -
3/28/08 3/31/08   - - 0.084234
12/26/07 12/27/07   0.239182 0.710262 5.923943

No distributions were paid in 2009.

Institutional Class Distributions

Record
Date
Payable
Date
  Ordinary Dividend ($/share) Short-Term Capital Gain ($/share) Long-Term Capital Gain ($/share)
12/26/13 12/27/13   0.50608 1.17103 3.98433
12/26/12 12/27/12   - 0.17740 2.74405
12/28/11 12/29/11   - 0.675954 1.798273
12/28/10 12/29/10   - 0.058470 -

No distributions were paid in 2008 and 2009.

Additional Historical Distributions

Contact the Client Relations Team by email or at 800-432-7856 for distribution information prior to December 2007. The Team is available Monday to Friday from 8 a.m. to 5 p.m. CT.

Account Access

Contact the Client Relations Team by email or at 800-432-7856.

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Explore Heartland Funds

Heartland Select Value Fund

The Select Value Fund (HRSVX, HNSVX) dynamically pursues the best opportunities regardless of market capitalization

Heartland Mid Cap Value Fund

The Mid Cap Value Fund (HRMDX, HNMDX) seeks long-term appreciation by investing in mid-cap, dividend-paying companies

Heartland Value Plus Fund

The Value Plus Fund (HRVIX, HNVIX) invests in undervalued small companies and seeks to reduce volatility through strong balance sheets and dividends

Heartland International Value Fund

The International Value Fund (HINVX) seeks long-term capital appreciation by investing in small- and mid-cap international companies, with an emphasis on dividends

Subscribe to Emails

Monthly e-news

Quarterly Fund factsheets and commentary

 

©2014 Heartland Funds
789 N. Water Street, Suite 500, Milwaukee, WI 53202
Business Office: 414-347-7777
Shareholders: 800-432-7856
The Heartland Funds are distributed by ALPS Distributors, Inc.

 

Past performance does not guarantee future results. Performance represents past performance; current returns may be lower or higher. Performance information for institutional class shares prior to 5/1/2008, is based on the performance of investor class shares. The investment return and principal value will fluctuate so that an investor's shares, when redeemed may be worth more or less than the original cost. All returns reflect reinvested dividends and capital gains distributions, but do not reflect the deduction of taxes that an investor would pay on distributions or redemptions. Subject to certain exceptions, shares of a Fund redeemed or exchanged within 10 days (90 days for the International Value Fund) of purchase are subject to a 2% redemption fee. Performance does not reflect this fee, which if deducted would reduce an individual's return.

In the prospectus (pdf) dated 5/1/2014, the gross expense ratio for the Value Fund was 1.08% for investor class shares and 0.91% for institutional class shares. The Advisor has voluntarily agreed to waive fees and/or reimburse expenses with respect to the institutional class, to the extent necessary to maintain the institutional class “Net Annual Operating Expenses” at a ratio not to exceed 0.99% of average daily net assets. This voluntary waiver and/or reimbursement may be discontinued at any time.

The Value Fund primarily invests in small companies selected on a value basis. Such securities generally are more volatile and less liquid than those of larger companies.

Heartland Advisors considers large-caps to be larger than $15 billion in market cap, mid-caps to be $2 billion to $15 billion, small-caps to be $300 million to $2 billion, and micro-caps to be less than $300 million. This breakdown does not include short-term investments. Portfolio holdings are subject to change without notice.

Value investments are subject to the risk that their intrinsic value may not be recognized by the broad market.

The value of the Fund's investments will vary from day to day in response to the activities of individual companies and general market and economic conditions, which may cause loss of principal.

Portfolio holdings are subject to change without notice. Current and future portfolio holdings are subject to risk.

The holdings list excludes cash, cash equivalents, options, and futures.

Information about Morningstar Ratings™ are ©2013 Morningstar, Inc. All rights reserved. The information contained herein is (1) proprietary to Morningstar and/or its content providers, (2) may not be copied or distributed, and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. The Overall Morningstar Rating™ for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year Morningstar Rating™ metrics. For each fund with at least a 3-year history, Morningstar calculates a Morningstar Rating™ based on a risk-adjusted return measure that accounts for variation in a fund’s monthly performance – including the effects of sales charges, loads, and redemption fees – places greater emphasis on downward variations, and rewards consistent performance. The top 10% of funds in a category receive 5 stars, next 22.5% receive 4 stars, next 35% receive 3 stars, next 22.5% receive 2 stars, and bottom 10% receive 1 star. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in distribution percentages. The Morningstar Ratings™ are for the investor class. Other classes have a common portfolio, different expense structures, and may have different performance characteristics.

As of 11/30/2014 Morningstar Ratings™: The Heartland Value Fund was rated against 191, 277, and 350 U.S.-domiciled Small Value funds over the 10-, 5-, and 3-year periods and received 2, 2, and 2 stars, respectively.

Heartland’s investing glossary provides definitions for several terms used on this page.

Sector classifications are generally determined by referencing the Global Industry Classification Standard Codes developed by Standard & Poor’s and Morgan Stanley Capital International. Sector allocations are a percent of equity investments and subject to change.

The members of the Portfolio Management Team are registered representatives of ALPS Distributors, Inc.

CFA is a trademark owned by CFA Institute.

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