Heartland Value Plus Fund

Investment Focus

Invests in undervalued small companies and seeks to reduce volatility through strong balance sheets and dividends

Distinguishing Characteristics

  • Focused on small-caps to capture their historical long-term outperformance
  • Inherent volatility of small-caps potentially mitigated by investing in strong balance sheets and dividends
  • Designed to capture upside potential while minimizing downside risk
  • Institutional and investor share classes
  • Actively managed by a  team with 30 years of industry experience, 23 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

3Overall Morningstar Rating™ as of 6/30/2014, out of 332 Small Value funds, based on risk-adjusted performance for investor class shares

Fund Basics

6/30/2014
Benchmark: Russell 2000® Value Index


Investor
Class
Institutional Class
TickerHRVIXHNVIX
CUSIP422352500422352849
Inception Date10/26/19935/1/2008
Assets$1.7 billion$1.4 billion

Literature Downloads

2Q14 Factsheet   Portfolio Manager Perspective: Industrials: Four Reasons a Not-So-Pretty Sector Looks Good to Us
2Q14 Performance Commentary    
2Q14 Sector-Level Attribution   Portfolio Manager Perspective: How Do We Know When a Stock is Truly Cheap?
2Q14 Market Update Letter to Shareholders    
Lipper Rankings   Portfolio Manager Perspective: Small-Cap Valuations: Way Too High or Room to Run?
Morningstar Ratings™    

Investment Minimums

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

New investor restrictions may apply.

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 0.70 0.70
12b-1 Distribution Fee 0.25 0.00
Other Expenses 0.19 0.14
Total Expense Ratio 1.14 0.84

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

Portfolio Management Team

Heartland Value Plus Fund Portfolio Management Team

Pictured from Left to Right:

  • 30 years of industry experience
  • 23 years of experience at Heartland
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Adam J. Peck

Peck, CFA, is Vice President and Portfolio Manager for the Value Plus Fund. He is also Portfolio Manager for the Small Cap Value Plus separately managed account strategy. He has 12 years of industry experience, 8 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

Heartland Advisors Portfolio Manager Adam Peck

Small-Cap Valuations: Way Too High or Room to Run?

4/2014

Small-company stocks have posted strong performance for many quarters. Does that mean they’ve run out of steam? We don’t believe so—and here are a few reasons why.

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.

Industrials: Four Reasons a Not-So-Pretty Sector Looks Good to Us

2/2014

Value Plus Fund Portfolio Manager Adam J. Peck, CFA, shares four reasons we believe the Industrials sector is attractive today.

How Do We Know When a Stock is Truly Cheap?

1/2014

Cheap stocks don’t always offer the best values. Portfolio Manager Bradford A. Evans, CFA, explains how the EV/EBITDA metric helps to separate the stocks that are truly undervalued from those that are simply inexpensive.

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In the News

Heartland Portfolio Managers Adam J. Peck and Robert C. Sharpe

'3 Rules for Dividend Investing' from Adam J. Peck and Robert C. Sharpe

5/12/2014

Quality dividends matter more than high dividends. Portfolio Managers from two of our dividend-focused strategies explain why yield does not drive our selection process.

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.

Portfolio Manager Bradford Evans Picks Energy Stock that’s ‘Ready to Roll’

5/28/2013

Although Energy stocks have lagged during the early 2013 market rally, Bradford A. Evans, CFA, and other money managers think they have struggled for the wrong reasons. He shares a stock he believes is attractively valued and likely to catch up with the rally.

Small Dividend-Paying Stocks Can Deliver ‘Hefty Returns’

5/10/2013

Portfolio Manager Adam J. Peck, CFA, explains how, by focusing on small-cap dividend-paying stocks, the Heartland Value Plus Fund is unique. Over the long-term, the asset class has been shown to do especially well and can be less volatile than non-dividend payers.

Performance

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Month-End Average Annual Total Returns
6/30/2014

Scroll over to view complete data

Since Inception (%)20-Year (%)15-Year (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD* (%)QTD* (%)
Value Plus
Investor Class
11.8012.1310.9310.0218.5212.2028.655.332.19
Value Plus
Institutional Class
11.8912.2311.0610.2118.8412.5028.995.452.25
Russell 2000® Value10.5811.049.748.2419.8814.6522.544.202.38
*Not annualized
Quarter-End Average Annual Total Returns
6/30/2014

Scroll over to view complete data

Since Inception (%)20-Year (%)15-Year (%)10-Year (%)5-Year (%)3-Year (%)1-Year (%)YTD* (%)QTR* (%)
Value Plus
Investor Class
11.8012.1310.9310.0218.5212.2028.655.332.19
Value Plus
Institutional Class
11.8912.2311.0610.2118.8412.5028.995.452.25
Russell 2000® Value10.5811.049.748.2419.8814.6522.544.202.38
*Not annualized

Annual Total Returns


2013 (%)2012 (%)2011 (%)2010 (%)2009 (%)2008 (%)
Value Plus Investor Class34.1511.38-5.3728.5026.37-17.88
Value Plus Institutional Class34.5311.67-5.0728.8526.70-17.71
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

6/30/2014
Heartland Value Plus Fund Growth of $10,000 Investment Chart

Since inception of the investor class, 10/26/1993 to 6/30/2014
The above chart represents a hypothetical example of an investment in the Value Plus Fund representing historical returns.

 

Morningstar Ratings TM
6/30/2014
RatingTotal Funds
Overall3332
10-Year4172
5-Year2256
3-Year2332

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 Plus Fund was 1.14% for investor class shares and 0.84% 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 Plus Fund is 10/26/1993 for the investor class.

Historical NAVs

Contact 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 Plus Fund Portfolio Manager Commentary

Heartland Value Plus Fund 2Q14 Portfolio Manager Commentary

6/30/2014

Energy was our strongest contributor for the quarter and, looking forward, a wide range of economic indicators appear to be at positive inflection points.

Commentary Archive

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Heartland Value Plus Fund 1Q14 Portfolio Manager Commentary

3/31/2014

Momentum stocks led the markets for much of the three months, but eventually investors gave more consideration to valuations—a shift that contributed to the Fund’s outperformance.

Heartland Value Plus Fund 4Q13 Portfolio Manager Commentary

12/31/2013

The patience that is central to our investment process was rewarded in a number of our positions this quarter.

Heartland Value Plus Fund 3Q13 Portfolio Manager Commentary

9/30/2013

Energy remains a major overweight, so it was encouraging to see a number of these holdings land among this Fund’s top contributors.

Portfolio Composition

Characteristics

6/30/2014

CharacteristicValue Plus Fund
Holdings72
Assets$3.1 billion
Holdings in Dividend Paying Companies86.1%
Median Market Cap$1.1 billion
Weighted Average Market Cap$1.7 billion
Annualized YTD Turnover

22.8%

Typically, 80% to 90% of the Value Plus Fund’s portfolio holdings are dividend-paying stocks.

Dividend-paying stocks historically have outperformed non-dividend payers, with dividend payers in the Russell 2000® Index outperforming non-dividend payers on average 2.1% since 1984.


Dividend Payers vs. Non-Dividend Payers

Source: Furey Research Partners, LLC, 12/31/1984 to 3/31/2014
Base value of 100 as of 12/31/1984 for dividend payers and non-dividend payers in the Russell 2000® Index.
Past performance does not guarantee future results.


Dividend payers have outperformed more significantly, at 8.1%, during the nine calendar years when the Russell 2000® Value Index had negative returns, beginning with 1985.*

Dividend payers also can help lower volatility.

*Source: Furey Research Partners, LLC, FactSet Research Systems, Inc., and Heartland Advisors, Inc., 12/31/1984 to 12/31/2013
 

Volatility Over 5 Years: Dividend Payers vs. Non-Dividend Payers
  Annualized Standard Deviation (%) Beta
Dividend Payers in the Russell 2000® Value Index 16.18 1.07
Non-Dividend Payers in the Russell® Value Index 22.80 1.52
Russell 2000® Value Index 18.89 1.27

Source: FactSet Research Systems, Inc., 4/1/2009 to 3/31/2014
Beta is versus the S&P 500 Index.

Fundamental Analysis

6/30/2014

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

Top 10 Holdings

6/30/2014

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TickerHolding% of Net AssetsIndustry
UNTUnit Corp.3.9Energy Equipment & Services
UPLUltra Petroleum Corp.3.8Oil Gas & Consumable Fuels
IPIIntrepid Potash, Inc.3.0Chemicals
GVAGranite Construction, Inc.2.9Construction & Engineering
WPXWPX Energy, Inc.2.8Oil Gas & Consumable Fuels
FSSFederal Signal Corp.2.7Machinery
SGYStone Energy Corp.2.7Oil Gas & Consumable Fuels
CRKComstock Resources, Inc.2.5Oil Gas & Consumable Fuels
MTRNMaterion Corp.2.3Metals & Mining
CHSChico's FAS, Inc.2.3Specialty Retail
% of Total Net Assets28.9

View full holdings

Capitalization Breakdown

6/30/2014

Cap Range % of Equities in Portfolio
Large-Cap 0.0
Mid-Cap 30.8
Small-Cap 68.4
Micro-Cap 0.8

Sector Allocation

Portfolio Manager Perspective: Industrials: Four Reasons a Not-So-Pretty Sector Looks Good to Us

6/30/2014

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

5-Year Risk Analysis

6/30/2014

  Alpha* Standard Deviation (%)* Beta Info Ratio Sharpe
Ratio
Upside Capture (%)* Downside Capture (%)* R-
Squared (%)
Active Share
Value Plus Fund -0.31 17.98 0.96 -0.25 1.03 96.36 100.27 91.33 95.16
Russell 2000® Value 0.00 17.93 1.00 0.00 1.10 100.00 100.00 100.00 0.00
Russell 2000®

0.36

18.08 1.00 0.13 1.11 101.36 100.67 97.84 -

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

Distributions

Investor Class Historical Distributions

Record
Date
Payable
Date
  Ordinary
Dividend ($/share)
Short-Term
Capital Gain ($/share)
Long-Term Capital Gain ($/share)
12/26/13 12/27/13   0.16431 0.54157 3.30825
12/26/12 12/27/12   0.35668 0.20864 0.60760
12/28/11 12/29/11   0.183006 - 0.319936
12/30/10 12/31/10   0.078769 - -
12/28/10 12/29/10   - - 0.160541
3/30/10 3/31/10   0.019995 - -
3/30/10 3/31/10   0.001223 - -
12/30/09 12/31/09   0.081006 - -
9/29/09 9/30/09   0.016893 - -
6/29/09 6/30/09   0.013335 - -
3/30/09 3/31/09   0.074305 - -
9/29/08 9/30/08   0.023100 - -
6/27/08 6/230/08   0.031991 - -
3/28/08 3/31/08   0.048473 - -
12/26/07 12/27/07   - 0.366103 3.707176
9/27/07 9/28/07   0.218534 0.213593 0.602828
6/28/07 6/29/07   0.047600 - -
3/29/07 3/30/07   0.154655 - -

Institutional Class Historical Distributions

Record
Date
Payable
Date
  Ordinary Dividend ($/share) Short-Term Capital Gain ($/share) Long-Term Capital Gain ($/share)
12/26/13 12/27/13   0.28097 0.54157 3.30825
12/26/12 12/27/12   0.45243 0.20864 0.60760
12/28/11 12/29/11   0.284872 - 0.319936
12/30/10 12/31/10   0.138722 - -
12/28/10 12/29/10   - - 0.160541
3/30/10 3/31/10   0.032692 - -
3/30/10 3/31/10   0.013036 - -
12/30/09 12/31/09   0.093645 - -
9/29/09 9/30/09   0.026711 - -
6/29/09 6/30/09   0.022818 - -
3/30/09 3/31/09   0.118031 - -
9/29/08 9/30/08   0.038800 - -
6/27/08 6/30/08   0.039712 - -

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 Value Fund

The Value Fund (HRTVX, HNTVX) pursues capital appreciation and liquidity by investing in micro- and small-cap companies

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

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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 Plus Fund was 1.14% for investor class shares and 0.84% 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 Plus Fund invests in small companies selected on a value basis. Such securities generally are more volatile and less liquid than those of larger companies. The Fund generally invests in 40 to 70 stocks, which is fewer than the average mutual fund. The performance of these holdings generally increases the volatility of the Fund’s return.

There is no assurance that dividend-paying stocks will mitigate volatility.

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 6/30/2014 Morningstar Ratings™: The Heartland Value Plus Fund was rated against 172, 256, and 332 U.S.-domiciled Small Value funds over the 10-, 5-, and 3-year periods and received 4, 2, and 2 stars, respectively.

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

Heartland Advisors considers large-caps to be larger than $10 billion in market cap, mid-caps to be $2 billion to $10 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.

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 above individuals are Registered Representatives of ALPS Distributors, Inc.

CFA is a trademark owned by CFA Institute.

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