ARTISAN FUNDS INC, N-30D, 1997-09-05

ARTISAN FUNDS INC
N-30D, 1997-09-05

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(LOGO)
ARTISAN FUNDS

ARTISAN SMALL CAP FUND
ANNUAL REPORT
JUNE 30, 1997

INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.

(LOGO)
August 21, 1997
Dear Fellow Shareholder,

We're pleased to provide you with this annual report for the Artisan Small Cap
Fund. Thank you for your interest and support.

For its fiscal year ended June 30, 1997, the Artisan Small Cap Fund (the "Fund")
rose 11.3%. By comparison, the Fund's benchmark index, the Russell 2000, gained
16.3% and the Lipper Small Cap Fund index rose 6.4%. Since its inception on
March 28, 1995, the Fund has appreciated 64.6% versus 58.0% for the Russell 2000
and 50.7% for the Lipper Small Cap Fund index.

At this time last year, we reported that the overvalued small-cap market was "in
the midst of a correction." We noted that such events are normal and healthy, as
they bring expectations into alignment with reality. Needless to say, we didn't
know the correction would last so long. For the first ten months of the fiscal
year - until a May/June rally - the small-cap market proved to be less than
satisfying. Moreover, the large-cap sector greatly outperformed during the same
period, with a stunning gain of 34.7% by the S&P 500. This superb performance
reflected the recent earnings growth of large companies.

COMPARATIVE QUARTERLY PERFORMANCE
3/28/95 6/30/95 9/30/95 12/31/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ARTISAN SMALL CAP FUND $10,000 $11,520 $12,650 $13,283 $14,059 $14,785 $14,160 $14,857 $14,150 $16,459
Russell 2000 index $10,000 $10,962 $12,045 $12,306 $12,934 $13,581 $13,627 $14,336 $13,594 $15,797
Lipper Small Cap Fund index $10,000 $10,927 $12,293 $12,462 $13,165 $14,211 $14,390 $14,253 $12,874 $15,070
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS:
One Year: 11.3%
Since Inception: 24.6%

<TABLE>
<CAPTION>
6/30/95 9/30/95 12/31/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SMALL CAP 15.2% 9.8% 5.0% 5.8% 5.2% -4.2% 4.9% -4.8% 16.3%
Russell 2000 9.6% 9.9% 2.2% 5.1% 5.0% 0.3% 5.2% -5.2% 16.2%
Lipper index 9.0% 12.5% 1.4% 5.6% 7.9% 1.3% -1.0% -9.4% 17.1%
</TABLE>

This graph and chart compare the results of $10,000 invested in the Artisan
Small Cap Fund on March 28, 1995 (the date the Fund began operations) with the
Russell 2000 stock index and the Lipper Small Cap Fund index. The Russell 2000
is an unmanaged index of small companies, formed by taking the largest 3,000
companies and eliminating the largest 1,000. The Lipper Small Cap Fund index
reflects the net asset value weighted return of the 30 largest small-cap mutual
funds. All returns include reinvested dividends. Past performance does not
guarantee future results. The investment return and principal value of an
investment in the Fund will fluctuate so that Fund shares, when redeemed, may be
worth more or less than their original cost.
<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

OUR INVESTMENT APPROACH
Before discussing the Fund's performance during the past year, it is important
to review our investment approach and goals. IN A NUTSHELL, WE INVEST IN
UNDERFOLLOWED, SMALL-CAP GROWTH COMPANIES WHOSE STOCK PRICES DO NOT FULLY
REFLECT THEIR INTRINSIC VALUE.

The Fund focuses on small-cap stocks that are not widely followed and evaluated
by Wall Street. Often, these stocks are inefficiently priced and investors are
paid a premium for taking the risk of having incomplete information. By doing
our own fundamental research, we aim to reduce the information risk while
earning premium returns. Finding these stocks requires a lot of hard work, but
there are several areas that are frequently successful sources of ideas:

Transactions. Often, there are small "jewels" within larger conglomerates
which are great investments when they are free to operate on their own.
Littelfuse, a superbly managed growth company which was spun-out of a
large bankrupt defense conglomerate, is an example of this type of
investment.
Industry Contacts. Some of our best ideas come from company managements,
suppliers and competitors. We always ask managements about their toughest
competitors and most reliable suppliers. For example, Silicon Valley
Bancshares is the bank of choice of our West Coast technology companies.

Regional Brokerage Firms. Far away from the giant New York brokerage
firms, these smaller firms only cover companies in their own backyards.
Often, they are the first to recognize new investment opportunities. We
have developed a large network of contacts at these brokerage firms.
Expeditors International, a global freight forwarder based in Seattle,
was suggested by a small Portland-based brokerage firm, and we get our
best information on Midwest Express from a local firm in Milwaukee.

Once we find these underfollowed companies, we perform a detailed analysis of
the industry fundamentals, financial statements and, importantly, the quality of
management. We believe that the quality of management in small companies is
often the key to ultimate success or failure. We usually meet with management in
person to discuss the company's goals, strategies, competitive position and
control systems.

A very important part of our research process is the determination of the
"intrinsic value" of the business. By intrinsic value, we mean the price a
strategic buyer would pay to own the entire company. We will only purchase a
stock when it sells at a substantial discount to our estimate of its intrinsic
value and we sell stocks when they approach their intrinsic value. This
discipline reduces the down-side risk of the investment. Our goal is to find
well-run, growing companies with stock prices that do not yet reflect all the
good things that we see in them.

We recognize that small-cap investing can be volatile. Thus, we use a number of
strategies designed to reduce risk. In addition to our focus on stocks that sell
at discounts to intrinsic value, we limit the size of individual positions to no
more than 3% of assets, avoid industry concentration, pay careful attention to
liquidity, and continuously monitor and reappraise all of our holdings on an
ongoing basis.

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

The Artisan Small Cap Fund is designed as a long-term core investment which
seeks to outperform its benchmark, the Russell 2000 index, over a full market
cycle. It stays fully invested in US small-cap stocks. We believe it is most
appropriately used as part of a long-term diversified portfolio.

TWELVE MONTH REVIEW
During the quarter ended September 30, 1996, the Fund underperformed the Russell
2000, returning -4.2% versus 0.3% for the index. The Fund rebounded, however, to
outperform in the next three quarters, with a return of 16.2% versus 15.9% for
its benchmark index.

The fiscal year started with a sharp correction in July, followed by a bounce-
back in August and September. While the correction was broadly based, the
bounce-back was quite narrow...limited to a relatively small group of "brand
name," high P/E stocks that were favored by more aggressive investors. Because
the Fund focuses on underfollowed stocks, its holdings, as one would expect, did
not rebound as dramatically. In addition, a number of the Fund's positions
experienced earnings shortfalls during the quarter, for which - in a market
where excess reigned - they were severely punished.

While the market for small-cap stocks continued to deteriorate during the
quarters ended in December and March, the Fund performed better on a relative
basis. Our strict attention to valuation helped to prop us up, and our industry
exposure - most notably in energy, media and business services - aided our
performance. In addition, the Fund participated nicely in a broad market rally
during the quarter ended in June. Also during this quarter, earnings of small
caps outpaced those of large caps, hopefully setting the stage for relative
outperformance.

Some of our stocks did very well, while others were quite disappointing.

TOP 5 GAINERS TOP 5 LOSERS
------------- ------------
SECURITY % SECURITY %
---------------------------------- -------------------------------
Dallas Semiconductor 65.6% Housecall Medical -75.0%
Whole Foods Market 64.5% Daka International -56.5%
Expeditors International 52.7% CP Clare -55.1%
Showbiz Pizza Time 48.0% Donnelley Enterprises -54.4%
Analysts International 46.4% Ross Systems -54.4%

The gainers and losers had two things in common: earnings surprises and altered
expectations for growth. The gainers were companies that reported better-than-
expected earnings and whose stocks were accorded higher valuations based on the
greater potential for business growth. Conversely, the losers were companies
that reported disappointing earnings and whose deteriorated fundamentals pointed
to slower business growth.

Included among our winners during the year were holdings that became takeovers.
Among these were: Syratech, Production Operators, Petrolite, International
Family Entertainment and CommNet Cellular. As we've stated before, seeking
takeover candidates is not an explicit part of our investment process. But look
behind a takeover and you'll find a strategic buyer...someone who emerges to buy
an entire company when its stock is selling at a substantial discount to the
intrinsic value of the business. If that

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

sounds familiar, it should. This strategy is fundamental to our process; in
searching for opportunities, we think like strategic buyers. Thus, it's almost
inevitable that some of our holdings will ultimately prove attractive as
takeovers.

PORTFOLIO CHARACTERISTICS
As of June 30, 1997, the Fund's net assets were $267.8 million and it was 97.9%
invested in stocks, which we consider fully invested. The Fund held 74 stocks
with a median market capitalization of $383 million. On average, these companies
are growing 24% a year and selling at 17.6X 1997 estimated earnings. In other
words, we own these stocks at a significant discount to the growth rate of their
companies. In addition, these stocks are priced at an average of only 79% of our
estimate of the companies' intrinsic values. Yet, despite these attractive
valuation characteristics, our stocks are largely under-researched and
undiscovered...followed by an average of five or fewer analysts.

TOP TEN HOLDINGS
----------------
COMPANY NAME %
-------------------------------------
K2, Inc. 2.6%
Libbey 2.2%
Zale 2.2%
Showbiz Pizza Time 2.1%
Littelfuse 2.1%
AptarGroup 2.1%
Lomak Petroleum 2.1%
Penn Treaty 2.1%
Dress Barn 2.0%
Silicon Valley Bancshares 1.9%
-----
TOTAL 21.4%

As of June 30, the Fund remained broadly diversified by economic sector. For
strategic reasons, we strive to participate in virtually every industry, and our
research typically enables us to do so. We believe this approach helps to reduce
potential price volatility and places emphasis on picking stocks, which is where
we add the most value. During the past twelve months, we increased the Fund's
participation in insurance and packaging, while we lowered its exposure to media
and health care.

In early 1997, we decided to purchase some stocks that appeared temporarily
depressed. To do so required our selling some stocks that we felt had less
potential for appreciation. Among our purchases were: EXPRESS SCRIPTS, a
pharmacy benefits manager and mail-order drug supplier; WHOLE FOODS MARKET, the
leading natural foods grocery chain; and MILLER INDUSTRIES, a growing tow truck
company consolidating a fragmented industry. Our sales included: HARDINGE, a
machine tool manufacturer; MATTHEWS INTERNATIONAL, maker of bronze cemetery
memorials; and SIERRA HEALTH, a Nevada-based HMO. As you can see, these
investment decisions dealt with a number of sectors.

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

INDUSTRY DIVERSIFICATION (%)
----------------------------
WEIGHTING WEIGHTING
--------- ---------
6/30 6/30 6/30 6/30
SECTOR 1997 1996 SECTOR 1997 1996
----------------------------------- -------------------------------------
Banks/Savings & Loans 3.0 2.2 Exploration/Production 7.2 4.8
Basic Industry 1.7 3.1 Insurance 6.2 4.3
Biotech/Pharmaceutical 1.3 2.0 Medical Devices/Supplies 4.2 6.5
Business Services 6.9 6.7 Medical and Other Health
Care Services 3.1 3.5
Capital Spending 7.2 7.4 Other Financial 3.1 0.7
Computer Related 3.1 3.0 Paper and Packaging 2.3 0.0
Consumer Cyclicals 4.0 4.3 Restaurants 5.0 4.0
Consumer Services 5.9 8.9 Retailing/Apparel 7.3 6.8
Consumer Staples 8.9 11.0 Telecommunications/
Technology 2.2 2.9
Electronics 8.9 8.6 Transportation Related 3.0 1.4
Energy Services 1.9 4.3 Utilities 1.5 0.0
Other assets less
liabilities 2.1 3.6

TOTAL 100.0%

OUTLOOK AND STRATEGY
We came into 1997 concerned about valuation levels, especially those of the
sizzling large-cap market. We believed that corporate profit growth -
reflecting, in our opinion, unrepeatable gains in productivity - would slow from
the pace of the past two years and increase more in line with economic growth.
This assumption led us to approach the year with an attitude of caution.
We're still cautious - only more so. Productivity gains continue to be strong,
the growth in corporate profits is still robust, and the large-cap sector's
ascent appears relentless.

All things considered, we believe that a measure of vigilance makes sense.

- We will focus on our analysis of intrinsic value. That is, we will search
for growing companies whose stock prices do not appear to reflect the
value of the business. Our intent: to find attractive opportunities based
on absolute value, avoiding the relative value of stocks that merely look
cheap compared to this very expensive market.

- We will be conservative in our estimates of earnings growth and will
consider only those companies that appear to meet or exceed our
realistic expectations.

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

- We will seek situations where, in combination, the internal dynamics of
the company and our attention to valuation can help shelter the Fund in
the event of a correction.

As always, we thank you for your confidence. In the coming year, we look forward
to the challenge of earning superior investment returns for you.

Sincerely,

/s/Carlene Murphy Ziegler /s/Millie Adams Hurwitz
Carlene Murphy Ziegler Millie Adams Hurwitz
Portfolio Manager Portfolio Manager

<PAGE>

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
SCHEDULE OF INVESTMENTS
JUNE 30, 1997

Shares Quoted
Held Market Value
------ ------------
COMMON STOCKS - 97.9%
BANKS/SAVINGS AND LOANS - 3.0%
140,505 *Columbia Banking System, Inc. - Tacoma,
WA based community bank........................ $2,827,663
114,100 *Silicon Valley Bancshares - bank holding
company serving the high technology
industry....................................... 5,163,025
-----------
7,990,688

BASIC INDUSTRY - 1.7%
158,100 Oregon Metallurgical Corporation -
titanium producer.............................. 4,446,563

BIOTECHNOLOGY/PHARMACEUTICAL - 1.3%
557,200 *IBAH, Inc. - pharmaceutical research services ... 1,985,025
108,600 *Neurex Corporation - development
stage drug company............................. 1,533,975
-----------
3,519,000

BUSINESS SERVICES - 6.9%
129,400 *Bell &Howell Holding Company - systems
and services............ for information access
and dissemination.............................. 3,987,137
213,300 *Borg-Warner Security Corporation - physical and
electronic security services................... 3,812,738
104,400 *CommNet Cellular - rural cellular phone systems
in the Rockies................................. 3,627,900
134,700 Expeditors International of Washington,
Inc. - freight forwarder....................... 3,822,112
114,200 Pittson Burlington Group - air cargo
and logistics.................................. 3,211,875
-----------
18,461,762

CAPITAL SPENDING - 7.2%
192,000 *Cuno, Inc. - filtration products ................ 3,216,000
128,400 *Decrane Aircraft Holdings, Inc. -
avionics components............................ 1,909,950
186,150 *Holophane Corporation - highly-engineered
lighting fixtures.............................. 3,723,000
222,200 *International Comfort Products
Corporation - heating and air
conditioning systems........................... 1,208,213
276,000 *Park Ohio Industries - multi-industry ........... 4,209,000
170,900 W.H. Brady Co. - specialty adhesives
and graphics................................... 4,956,100
-----------
19,222,263
<PAGE>

SCHEDULE OF INVESTMENTS (CONTINUED)

Shares Quoted
Held Market Value
------ ------------

COMPUTER RELATED - 3.1%
240,500 *DH Technology Inc. - specialty printers ......... 3,908,125
111,000 *Daisytek International Corporation -
computer accessories........................... 4,398,375
-----------
8,306,500

CONSUMER CYCLICALS - 4.0%
162,200 Culp, Inc. - fabrics for home furnishings ....... 2,939,875
89,000 *Monaco Coach Corporation - recreational vehicles 2,158,250
122,600 *Pameco Corporation - heating and air
conditioning distributor....................... 2,176,150
299,950 *Southern Energy Homes, Inc. -
manufactured homes............................. 2,737,044
31,200 Watsco, Inc. - heating and air
conditioning products.......................... 780,000
-----------
10,791,319

CONSUMER SERVICES - 4.7%
199,800 *ITI Technologies, Inc. - wireless home
security systems............................... 4,570,425
354,300 *Seattle Filmworks, Inc. - mail-order
film processor................................. 4,251,600
158,300 *Telemundo Group, Inc. - hispanic
television broadcaster......................... 3,799,200
-----------
12,621,225

CONSUMER STAPLES - 8.9%
101,600 *Action Performance Companies, Inc. - licensed
motorsports collectibles....................... 2,463,800
246,000 *Amscan Holdings, Inc. - manufacturer and
distributor of party supplies.................. 3,259,500
152,700 *Ballantyne of Omaha, Inc. - movie
projection systems............................. 2,748,600
300,300 *GT Bicycles, Inc. - high-end bicycles ........... 2,402,400
223,400 K2 Inc.- recreational and industrial products ... 7,078,987
171,900 Libbey Inc. - consumer and commercial
glassware...................................... 6,016,500
-----------
23,969,787

ELECTRONICS - 8.9%
78,150 Belden Inc. - electrical wire and
cable products................................. 2,661,984
179,100 *General Cable Corporation - electrical
wire and cable products........................ 4,589,437
200,600 *Littelfuse, Inc. - circuit protection
devices........................................ 5,666,950
251,050 Methode Electronics, Inc. - electronic
interconnect devices........................... 4,989,619
27,500 *Photronics, Inc. - photomasks for
semiconductor manufacturing.................... 1,313,125
207,200 *Richey Electronics - passive electronic
component distribution......................... 1,735,300
125,100 *Ultratech Stepper, Inc. - semiconductor
capital equipment.............................. 2,861,663
-----------
23,818,078

<PAGE>

SCHEDULE OF INVESTMENTS (CONTINUED)

Shares Quoted
Held Market Value
------ ------------

ENERGY SERVICES - 1.9%
114,000 *Hvide Marine Incorporated - marine
transportation services to the oil
and gas industry............................... 2,522,250
146,400 *Oceaneering International, Inc. -
underwater vehicles for offshore drilling...... 2,708,400
-----------
5,230,650

EXPLORATION/PRODUCTION - 5.3%
311,300 Lomak Petroleum, Inc. - oil and gas
exploration.................................... 5,545,031
98,300 *Neuvo Energy Company - oil and gas
exploration.................................... 4,030,300
129,300 St. Mary's Land & Exploration Company -
oil and gas exploration........................ 4,541,663
-----------
14,116,994

INSURANCE - 4.8%
118,500 *Amerin Corporation - private mortgage
insurance...................................... 2,873,625
130,900 CapMAC Holdings Inc. - financial
guaranty insurance............................. 4,401,513
180,800 *Penn Treaty American Corporation -
long-term care insurance....................... 5,537,000
-----------
12,812,138

MEDICAL DEVICES/SUPPLIES - 4.2%
117,100 *ATL Ultrasound, Inc. - diagnostic medical
ultrasound systems............................. 5,035,300
176,500 Kinetic Concepts, Inc. - specialty
hospital beds.................................. 3,177,000
174,100 Vital Signs, Inc. - anesthesia and
respiratory medical products................... 3,057,631
-----------
11,269,931

MEDICAL AND OTHER
HEALTH CARE SERVICES - 3.1%
136,900 *CompDent Corporation - managed dental
plan operator.................................. 2,883,456
81,300 *Express Scripts, Inc. - pharmacy
benefits management............................ 3,394,275
104,500 *Gulf South Medical Supply Inc -
disposable medical supplies.................... 2,037,750
-----------
8,315,481

OTHER FINANCIAL - 3.1%
162,700 *CB Commercial Real Estate Services
Group, Inc. - commercial real
estate services................................ 4,921,675
161,400 *Healthcare Financial - specialty finance
for healthcare providers....................... 3,288,525
-----------
8,210,200

<PAGE>

SCHEDULE OF INVESTMENTS (CONTINUED)

Shares Quoted
Held Market Value
------ ------------

PAPER AND PACKAGING - 2.3%
122,800 AptarGroup, Inc. - pumps, valves and
closures for consumer packaging................ 5,556,700
26,000 *Shorewood Packaging Corporation -
specialty paperboard packaging................. 591,500
-----------
6,148,200

RESTAURANTS - 5.0%
113,900 *JP Foodservice - wholesale food distributor ..... 3,267,506
281,800 Morrison Health Care, Inc. - food service
to health care institutions.................... 4,491,187
216,400 *Showbiz Pizza Time, Inc. - Chuck E. Cheese
restaurants.................................... 5,707,550
-----------
13,466,243

RETAILING/APPAREL - 7.3%
273,200 *The Dress Barn, Inc. - women's
clothing retailer.............................. 5,327,400
108,700 *Peapod, Inc. - on-line grocery shopping ......... 1,222,875
135,600 *Stage Stores, Inc - department store retailer ... 3,542,550
107,900 *Whole Foods Market, Inc. - natural food
grocery stores................................. 3,574,188
290,900 *Zale Corporation - fine jewelry retailer ........ 5,763,456
-----------
19,430,469

TELECOMMUNICATIONS/TECHNOLOGY - 2.2%
124,900 *SPSS Inc. - statistical software ................ 3,622,100
86,200 *Wall Data Incorporated - desktop to mainframe
connectivity software.......................... 2,273,525
-----------
5,895,625

TRANSPORTATION RELATED - 3.0%
34,800 *Keystone Automotive Industries Inc. -
after-market auto body parts .................. 591,600
111,500 *Midwest Express Holdings, Inc. -
regional airline .............................. 3,052,312
278,700 *Miller Industries, Inc. - tow truck
manufacturer................................... 4,459,200
-----------
8,103,112

UTILITIES - 1.5%
103,600 WICOR - gas utility and pump manufacturer ....... 4,033,925

FOREIGN SECURITIES - 4.5%

BERMUDA - 1.4%
INSURANCE
98,700 RenaissanceRe Holdings Ltd. (USD/NYSE) -
property catastrophe reinsurance............... 3,762,938
<PAGE>

SCHEDULE OF INVESTMENTS (CONTINUED)

Shares Quoted
Held Market Value
------ ------------

CANADA - 3.1%

CONSUMER SERVICES - 1.2%
263,600 *Livent Inc.(USD/NYSE) - producer of theatrical
productions.................................... 3,262,050

EXPLORATION/PRODUCTION - 1.9%
296,200 *Denbury Resources Inc. (USD/NASDAQ) - oil
and gas exploration............................ 4,961,350
-----------
Total foreign securities....................... 11,986,338
-----------
Total common stocks (Cost $226,371,167)........ $262,166,491

Par Market
Amount Value
------ ------
SHORT TERM INVESTMENTS - 3.5%
$9,283,000 Repurchase agreement with State Street Bank and Trust
Company, 5.0%, dated 6/30/97, due 7/1/97, maturity
value $9,284,289, collateralized by $8,060,000 par value
U.S. Treasury Bond 8.125%, due 8/15/19
(Cost $9,283,000) ............................ $ 9,283,000
-----------
Total investments-101.4% (Cost $235,654,167) ... 271,449,491

Other assets less liabilities-(1.4)% ............ (3,629,603)
-----------
Total net assets-100.0% (**) .................... $267,819,888
===========

* Non-income producing securities
** Percentages for the various classifications relate to total net assets

The accompanying notes are an integral part of the financial statements.

<PAGE>

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997
ASSETS:
Investments in securities, at value (cost $235,654,167) .... $ 271,449,491
Cash ....................................................... 498
Receivable for investments sold ............................ 1,548,020
Receivable from fund shares sold ........................... 14,901
Interest receivable ........................................ 1,289
Dividends receivable ....................................... 35,123
Organizational costs ....................................... 38,298
------------
Total assets............................................. 273,087,620

LIABILITIES:
Payable for investments purchased .......................... 4,979,378
Payable for organizational costs ........................... 38,298
Payable for operating expenses ............................. 250,056
------------
Total liabilities........................................ 5,267,732
------------
Total net assets......................................... $267,819,888
============

NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding ......................... $205,535,540
Net unrealized appreciation on investments ................. 35,795,324
Accumulated undistributed net realized
gains on investments..................................... 26,489,024
------------
$267,819,888
============
NET ASSET VALUE PER SHARE
Net asset value, offering price and redemption price per
share($0.01 par value, 5,000,000,000 shares authorized,
[$ 267,819,888/ 17,722,769 shares outstanding]).......... $15.11
======

The accompanying notes are an integral part of the financial statements.

<PAGE>

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997

INVESTMENT INCOME:
Interest .................................................. $ 620,047
Dividends ................................................. 1,357,501
------------
Total investment income................................. 1,977,548

EXPENSES:
Advisory fees ............................................. 2,906,791
Transfer agent fees ....................................... 649,589
Shareholder communications ................................ 153,090
Registration fees ......................................... 143,557
Custodian fees ............................................ 102,106
Professional fees ......................................... 65,998
Accounting fees ........................................... 46,047
Directors' fees ........................................... 15,000
Organizational costs ...................................... 14,492
Other operating expenses .................................. 5,230
------------
Total expenses.......................................... 4,101,900
------------
Net investment loss..................................... (2,124,352)

REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS - NET:
Net realized gain on investments .......................... 28,932,063
Net decrease in unrealized appreciation on investments .... (6,867,786)
------------
Net gain on investments................................. 22,064,277
------------
Net increase in net assets resulting from operations.... $19,939,925
============

The accompanying notes are an integral part of the financial statements.

<PAGE>

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF CHANGES IN NET ASSETS

For the For the
Year Ended Year Ended
June 30, June 30,
1997 1996
---------- ----------
OPERATIONS:
Net investment loss ............................ $(2,124,352) $(2,029,400)
Net realized gain on investments ............... 28,932,063 27,026,370
Net increase (decrease) in unrealized
appreciation on investments.................. (6,867,786) 36,295,167
------------ ------------
Net increase in net assets resulting
from operations.............................. 19,939,925 61,292,137

DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Net realized gains on
investment transactions ..................... (21,951,585) (2,110,073)

FUND SHARE ACTIVITIES:
Proceeds from shares issued (4,247,380
and 25,268,039 shares, respectively)......... 58,361,524 327,727,662
Net asset value of shares issued in
reinvestment of distributions from net
realized gains (1,600,012 and 155,258
shares, respectively)........................ 21,200,167 2,046,303
Cost of shares redeemed (15,384,496 and
6,778,168 shares, respectively) ............. (209,730,732) (88,224,291)
------------ ------------
Net increase (decrease) in net assets resulting
from fund share activities...................(130,169,041) 241,549,674
------------ ------------
Total increase (decrease) ......................(132,180,701) 300,731,738
Net assets at the beginning of the year ........ 400,000,589 99,268,851
------------ ------------
Net assets at the end of the year .............. $267,819,888 $400,000,589
============ ============

The accompanying notes are an integral part of the financial statements.

<PAGE>
ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD

Year Year Period
Ended Ended Ended
June 30, June 30, June 30,
1997 1996 1995***
------- ------- -------

Net asset value, beginning of period.... $14.67 $11.52 $10.00
Income from investment operations:
Net investment loss................... (0.04) (0.07) (0.01)
Net realized and unrealized gains
on securities....................... 1.55 3.32 1.53
----- ----- -----
Total from investment operations.... 1.51 3.25 1.52
Distributions paid to shareholders:
Net realized gains on investment
transactions........................ (1.07) (0.10)
----- ----- -----
Net asset value, end of period.......... $15.11 $14.67 $11.52
====== ====== ======

Total return............................ 11.3% 28.3% 15.2%**
Ratios/supplemental data:
Net assets, end of period (millions).. $267.8 $400.0 $99.30%*
Ratio of expenses to average
net assets.......................... 1.41% 1.52% 2.00%*
Ratio of net investment income to
average net assets.................. (0.73)% (0.75)% (0.59)%*
Portfolio turnover rate............... 87.18% 105.19% 9.28%**
Average commission rate............... $0.0527

* Annualized
** Not annualized
*** For the period from commencement of operations (March 28, 1995) through
June 30, 1995

The accompanying notes are an integral part of the financial statements.

<PAGE>

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

(1) Organization

The Artisan Small Cap Fund (the "Fund") is a series of Artisan Funds, Inc.
which was incorporated on January 5, 1995 as a Wisconsin corporation and is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company.

(2) Summary of significant accounting policies:

The following is a summary of significant accounting policies of the Fund:

(a) Security valuation - Each security is valued at the latest sales price
reported by the principal securities exchange on which the issue is
traded, or if no sale is reported, the latest bid price reported.
Securities for which prices are not readily available or which
management believes that the latest sales or bid price is not
reflective of a fair value of the security are valued at a fair value
as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of
Directors. Short-term investments maturing within sixty days of their
purchase date are valued at amortized cost which approximates market.

(b) Income taxes - No provision has been made for federal income taxes
since the Fund intends to 1) distribute substantially all of its
taxable income as well as realized gains from the sale of investment
securities to its shareholders and 2) comply with all provisions of
the Internal Revenue Code applicable to regulated investment
companies.

(c) Portfolio transactions - Security and shareholder transactions are
recorded no later than the first business day after the trade date.
Net realized gains and losses on common stocks are computed on
specific security lot identification.

(d) Use of estimates - The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results
could differ from those estimates.

(e) Other - Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is reported on the accrual
basis. Generally accepted accounting principles require that certain
differences between financial reporting and tax purposes be
reclassified to capital stock.

(3) Transactions with affiliates:

Artisan Partners Limited Partnership (the "Adviser"), with which certain
officers and directors of the Fund are affiliated, provides investment
advisory and administrative services to the Fund. In exchange for these
services, the Fund pays a monthly management fee to the Adviser as follows:

<PAGE>
ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

Average Daily Net Assets Annual Rate
------------------------ -----------
Less than $500 million 1.000%
$500 million to $750 million 0.975%
$750 million to $1 billion 0.950%
Greater than $1 billion 0.925%

The Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports.
At June 30, 1997, the Fund owned 5% or more of the outstanding voting
securities of each of the issuers listed below. A summary of open market
transactions in the securities of each such issuer, gain realized on sales
and dividends received for the fiscal year follows:

Purchases Sales
---------------- ------------------ Realized Dividend
Affiliate Shares Cost Shares Cost Gain Income
--------- ------ ---- ------ ---- ---- ------
DH Technology 28,000 $ 621,353 55,800 $1,246,209 $371,153
GT Bicycles 312,200 3,921,218 11,900 165,832 20,468

(4) Organization costs and prepaid registration expenses:

Organization costs are amortized over sixty months. These expenses were
paid by the Adviser which will be reimbursed by the Fund over the same time
period. The proceeds of any redemption of the initial shares by the
original shareholders will be reduced by a pro-rata portion of any
unamortized expenses at the time of redemption. Registration expenses of
the Fund are amortized over twelve months.

(5) Investment transactions:

For the year ended June 30, 1997, the cost of purchases and the proceeds
from the sales of investment securities (excluding short-term securities)
were $246,009,137 and $391,599,815, respectively.

(6) Line of credit arrangements:

Artisan Funds, Inc. is party to a line of credit agreement under which the
Fund may borrow 5% of net assets up to a maximum of $30 million. The use
of the line of credit is generally restricted to temporary borrowing for
extraordinary or emergency purposes. The Fund made no borrowing under the
line of credit during the fiscal year.

(7) Income tax information:

Aggregate gross unrealized appreciation (depreciation) on investments as of
June 30, 1997, based on investment cost of $235,923,490 for federal tax
purposes, is as follows:

Aggregate gross unrealized appreciation on investments $44,824,862
Aggregate gross unrealized depreciation on investments (9,298,861)
-----------
Net unrealized appreciation $35,526,001
===========

The difference between cost amounts for financial reporting and tax purposes
is due primarily to timing differences in recognizing certain gains and
losses on security transactions. For the year ended June 30, 1997, 5% of
distributions paid qualified for the dividend received deduction available to
corporate shareholders.

<PAGE>

100 East Wisconsin Avenue Telephone 414 276-9500
Suite 1500
Milwaukee, WI 53202

PRICE WATERHOUSE LLP (LOGO)

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Artisan Funds, Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Artisan Small Cap Fund (one of the
portfolios constituting Artisan Funds, Inc., hereafter referred to as the
"Fund") at June 30, 1997, the results of its operations, the changes in its net
assets and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1997 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

/s/Price Waterhouse LLP

July 29, 1997

<PAGE>

(LOGO)
ARTISAN FUNDS

C/O BOSTON FINANCIAL DATA SERVICES
P.O. BOX 8412
BOSTON MA 02266-8412
1 800 344 1770

<PAGE>

(LOGO)
ARTISAN FUNDS

ARTISAN INTERNATIONAL FUND
ANNUAL REPORT
JUNE 30, 1997

INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.

<PAGE>

August 21, 1997
Dear Fellow Shareholder,

Thank you for your investment in the Artisan International Fund. We are pleased
to send you this annual report covering the fiscal year ended June 30, 1997.

THE FUND'S PERFORMANCE
The Artisan International Fund (the "Fund") gained 20.9% for its fiscal year
ended June 30, 1997, outdistancing its benchmarks, the Morgan Stanley EAFE index
and Lipper International Fund index, which gained 12.8% and 20.0%, respectively.
For the six months ended June 30, 1997, the Fund gained 8.7%, trailing its
benchmarks slightly. In the six quarters since its inception, the Fund has
gained over 46%, while the EAFE index has gained just 17.9%. We believe this
eighteen-month performance by the Fund to be exceptional.

COMPARATIVE QUARTERLY PERFORMANCE

12/28/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
<S> <C> <C> <C> <C> <C> <C> <C>
ARTISAN INTERNATIONAL FUND $10,000 $10,910 $12,080 $12,220 $13,437 $14,153 $14,607
Lipper International Fund index $10,000 $10,441 $10,868 $10,878 $11,443 $11,730 $13,043
EAFE index $10,000 $10,289 $10,452 $10,439 $10,605 $10,439 $11,793
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS:
One Year: 20.9%
Since Inception: 28.5%

<TABLE>
<CAPTION>
3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97
<S> <C> <C> <C> <C> <C> <C>
INTERNATIONAL FUND 9.1% 10.7% 1.2% 10.0% 5.3% 3.2%
Lipper index 4.4% 4.1% 0.1% 5.2% 2.5% 11.2%
EAFE index 2.9% 1.6% -0.1% 1.6% -1.6% 13.0%
</TABLE>

This graph and chart compare the results of $10,000 invested in Artisan
International Fund on December 28, 1995 (the date the Fund began operations),
with Morgan Stanley's Europe, Australasia and Far East (EAFE) index and Lipper
International Fund index. EAFE is an unmanaged index of companies throughout the
world in proportion to world stock market capitalization, excluding the U.S. and
Canada. The Lipper International Fund index reflects the net asset value
weighted return of the 30 largest international equity funds. All returns
include net reinvested dividends. Past performance does not guarantee future
results. The investment return and principal value of an investment in the Fund
will fluctuate so that Fund shares, when redeemed, may be worth more or less
than their original cost.

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

OUR INVESTMENT APPROACH
As is our custom, we would like to briefly review our investment approach before
discussing the Fund's recent performance in detail. There are a variety of
distinct approaches to international investing, and we believe it is very
important for investors to understand how a fund achieves its returns.

The Artisan International Fund invests in a broadly-diversified portfolio of
international growth stocks, concentrating on developed countries that have
accelerating growth prospects. It will have some emerging market holdings, but
these will be relatively modest and are not the central focus of the Fund's
investment strategy.

The Fund's style is often characterized as "top-down and bottom-up," meaning
that country selection and stock selection are both important parts of the
investment process. Our approach has four basic elements:

Country Allocation. Our first step involves searching for countries and
regions of the world that will provide a good environment for growth. For
example, we look for countries where economic development is accelerating
(in our present portfolio, our investments in Brazil and Hong Kong would
fall into this category), or where economies are becoming more competitive
or benefiting from economic stimulus (for example, the Scandinavian
countries). Importantly, we do not make reference to the index weighting of
various countries as part of our investment process. So, for example, we
will not maintain a large position in Japan simply because it constitutes a
large portion of the EAFE index. This differentiates the Fund from many of
its peers.

Broad Themes. The Fund will frequently reflect one or more broad themes
which influence or combine both country allocation and stock selection. For
example, the Fund was positioned for all of 1996 to benefit from lower
interest rates in Europe with significant positions in interest-sensitive
stocks across the region.

Stock Selection. Having identified favorable areas of the world for growth
and broad investment themes, we then look for companies that can capitalize
on that growth and whose stocks are selling at attractive prices relative to
their local markets. Our portfolio management team travels widely, meeting
with company managements and spending time on fundamental research. We
emphasize companies in good financial condition with strong market shares
that are well-managed with a reputation for competence and integrity. Stocks
that are trading at unsustainable or unusually high valuations are strictly
avoided. Our emphasis on valuation analysis often leads the Fund's security
selection style to be characterized as "growth-at-a-price."

Portfolio Management. Stock picking isn't the whole story, however.
Recognizing that international markets can be volatile, our team makes a
concerted effort to manage risk. To this end, the portfolio is broadly
diversified among different stocks, industries and regions of the world.
While this diversification cannot eliminate market risk, it should cushion
the impact of a decline in any one country or region on the overall
portfolio. We also monitor the size of individual positions, trading
liquidity, emerging market exposure and country exposure as part of the
portfolio management process.

FINALLY, WE BELIEVE THAT THE FUND SHOULD BE VIEWED AS A LONG-TERM INVESTMENT BY
SHAREHOLDERS. FOREIGN MARKETS CAN BE QUITE VOLATILE; THEREFORE, THE FUND

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

MAY EXPERIENCE WIDE PERFORMANCE SWINGS ON A SHORT-TERM BASIS. WHILE WE MANAGE
THE FUND TO TRY TO DAMPEN THIS VOLATILITY, WE CANNOT ELIMINATE IT. ACCORDINGLY,
WE ENCOURAGE OUR SHAREHOLDERS TO USE THE FUND AS PART OF A DIVERSIFIED
INVESTMENT PORTFOLIO AND, OF COURSE, ONLY IF ONE IS ABLE TO ACCEPT THE
POSSIBILITY OF SHORT-TERM CAPITAL LOSSES.

INVESTMENT REVIEW
We are very pleased with the Fund's performance during the past twelve months.
While the gains for the year were comparable during the first and second halves,
performance relative to the EAFE - i.e., outperformance from July through
December, underperformance from January through June - largely reflected our
modest investment in Japan. The country's economic uncertainties and inflated
stock valuations convinced us to maintain a significant under-weighting relative
to the EAFE throughout the year. In the first half, this caution helped as
turmoil in Japan's financial system caused its market to drop 18.8% in dollar
terms. In the quarter ended June 30, however, Japan's stock market surged 23.5%
in dollar terms. Nonetheless, we have no regrets about our posture toward Japan.
We are still cautious, and still intend to maintain just a modest commitment.

By contrast, the Fund's holdings elsewhere - especially Northern Europe, Hong
Kong, Mexico and Brazil - contributed strongly to returns. In Hong Kong, we were
overweight the EAFE throughout the fiscal year, convinced that the hand-off to
China would go smoothly. That market's gains - up, in dollar terms, 37.8% for
the year and 12.8%

REGION/COUNTRY ALLOCATION - 6/30/97
-----------------------------------
REGION/COUNTRY WEIGHTING REGION/COUNTRY WEIGHTING
--------------------------- --------------------------------
Switzerland 12.1% Hong Kong 10.9%
United Kingdom 9.3% Japan 8.6%
Norway 7.6% Indonesia 2.3%
Sweden 5.3% Philippines 0.9%
Spain 5.1% Thailand 0.9%
France 4.9% Singapore 0.8%
Portugal 4.0% Malaysia 0.5%
Denmark 3.9% New Zealand 0.3%
Finland 3.8% -----
Italy 2.8% Asia/Pacific Total 25.2%
Germany 2.3%
Ireland 0.6% Mexico 5.9%
Hungary 0.2% Brazil 4.9%
Poland 0.1% -----
----- Latin America Total 10.8%
Europe Total 62.0%
Other assets less
liabilities 2.0%

TOTAL 100.0%

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

for the six months ended June 30, 1997 - seemed to validate our assessment. Not
all went well for us in East Asia, however. We had significant exposure to
Thailand, the Philippines and Malaysia which declined for the year in dollar
terms 58.6%, 14.8%, and 7.2%, respectively.

Conditions in Europe, too, presented challenges. A dollar rally hurt European
small caps as investors rotated to large cyclicals. In addition, investors were
shaken by the French elections and concerned about the fate of a unified
European currency.

Thus stock selection played an especially strong role in performance. The 94
stocks in our portfolio on June 30 represented investment in 24 different
countries. To us, broad diversification by country and region is important. It
enhances performance opportunity and helps to shield the Fund from volatility in
a particular market. Like all international managers, we prefer to stress some
countries and limit or avoid exposure to others. But we don't make large,
concentrated bets. The combination of broad diversification by country and a
focus on astute stock picking seems the wiser strategy for this Fund.

TOP 10 GAINERS TOP 10 LOSERS
-------------- -------------
SECURITY COUNTRY % SECURITY COUNTRY %
------------------------------------- --------------------------------------
Beijing Enterprises Hong Kong 233.5% Bankard, Inc. Philippines -50.2%
Sona Topas Indonesia 85.0% Srithai Superware Thailand -48.1%
Wing Hang Bank Hong Kong 77.4% Engineering Philippines -46.7%
Ltd. Equipment, Inc.
GZI Transport Hong Kong 77.0% Calcutta Electric India -46.0%
Shares GDR
Ark ASA Norway 72.6% Tigaraksa Satria Indonesia -45.1%
S0ndagsavisen Denmark 64.9% Scala International Sweden -45.0%
Neurosearch Denmark 63.2% FiloFax United -43.1%
Kingdom
TT Tieto Oy Finland 62.7% Bandar Raya Malaysia -40.1%
Developments
Rayanair Holdings Ireland 62.1% Navia ASA Norway -40.0%
PLC Ethical Holdings United -37.7%
Cia de Saneamento Brazil 57.3% ADR Kingdom
Basico Sao Paulo

As an example of stock selection, one of our most successful holdings last year
was NEUROSEARCH. A Danish biotechnology company, NeuroSearch develops treatments
for a wide range of neurological disorders. It has assembled an exceptional
technology platform to address this large market opportunity, estimated at 29 to
33 million patients in the U.S. alone. Its flagship product, Brasofensine, is
designed to treat Parkinson's disease. Also under development, and ready for
human testing, is a promising compound for treating anxiety. A third compound,
recently identified by the company, appears to hold great promise for treating
depression. Despite recent appreciation in its stock, NeuroSearch still appears
undervalued relative to its peers, with very attractive prospects for growth.

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

PORTFOLIO CHARACTERISTICS
Total net assets in the Fund as of June 30, 1997 were $449 million. The median
market cap of the Fund's holdings was $645 million and its weighted average
market cap was $10.4 billion. The Fund had a weighted average growth rate of 29%
and a weighted average price-to-earnings ratio (1997 estimate) of 20.4X. We
believe this to be an excellent growth rate at a relatively modest P/E ratio and
an indication of our attention to valuation. On June 30 we were 98.0% invested
in equities which we consider to be fully invested. We did not hedge currency in
the preceding twelve months, although the Fund may hedge for defensive purposes.

INDUSTRY DIVERSIFICATION (%)
----------------------------
WEIGHTING WEIGHTING
6/30 6/30 6/30 6/30
SECTOR 1997 1996 SECTOR 1997 1996
---------------------------------- ---------------------------------------
Banking 17.9 14.9 Multi-Industry 6.8 9.1
Broadcast/Publishing 7.2 6.8 Retailing 6.5 12.7
Business &Public
Services 4.1 5.3 Software 4.8 5.4
Capital Spending 2.0 0.0 Special Financial 5.2 6.5
Construction/Housing 2.8 5.8 Technology 2.3 3.5
Consumer Cyclicals 8.7 2.7 Telecommunications 8.5 4.8
Consumer Services 0.9 2.0 Transportation/Distribution 1.5 2.8
Food/Restaurants 3.3 5.7 Utilities 3.7 1.1
Health Care Services 10.7 10.4
Mining/Metals 1.1 0.0 Other assets less
liabilities 2.0 0.5

TOTAL 100.0%

Our industry holdings remain broadly diversified. One area of emphasis is the
banking sector. In fact, four of our ten largest holdings on June 30 were
European banks. Our reasoning: We expect global inflation to be tame for some
time to come and interest rates, especially in Europe, to remain at low levels.
Our research in deregulation and privatization has led us to a number of
utilities and telecommunications firms. Moreover, no single stock - even among
our top ten holdings - represents more than 3.6% of assets. We intend to
continue our broad diversification by country, sector and company.

OUTLOOK AND STRATEGY
Looking ahead to the next twelve months, we expect to maintain our recent
elements of strategy. We expect, for example, to continue our underweighting in
Japan. Compared to the rest of the world, its market valuations are very high;
and we cannot feel sanguine about its fragile financial sector while
deregulation continues.

<PAGE>

LETTER TO SHAREHOLDERS (CONTINUED)

TOP TEN HOLDINGS - 6/30/97
--------------------------
COMPANY NAME COUNTRY %
------------ ------- ---
Credit Suisse Group Switzerland 3.6
Novartis Switzerland 3.6
Sankyo Co. Ltd. Japan 2.5
Union Bank of Switzerland Switzerland 2.3
Tabacalera SA Spain 2.1
CLF - Dexia France France 2.1
Credito Italiano Italy 2.0
Schibsted AS Norway 2.0
Whitbread plc United Kingdom 2.0
Guangzhou Investment Hong Kong 2.0
----
TOTAL 24.2%

Conversely, we will continue overweighting our positions in Brazil and Mexico.
We will also pursue other opportunities in Latin America uncovered during our
early summer trip to this region. In July, a visit to Europe reaffirmed our
optimism toward this area. Throughout Europe, we found a burgeoning "American-
style" concern about enhancing shareholder value. This awareness has already led
to considerable corporate restructuring and, in doing so, is creating tremendous
investment opportunities.

We still believe that Hong Kong offers very exciting prospects. China, based on
its actions thus far, appears to recognize the political importance of Hong
Kong's distinctive identity. And if China hopes for more than minor flirtations
with a market economy, then compromising Hong Kong's prosperity would simply be
counterproductive.

Regardless of where we invest, we will maintain our single focus: to find high-
quality, well-managed growth companies and invest in their stocks at prices we
consider attractive.

Thank you for your continued support of the Artisan International Fund.
Enhancing the myriad of opportunities in foreign markets, valuations, in many
cases, are compelling relative to current U.S. valuations. To us, that's another
reason to be excited about international investing. We will do our best to
transform that excitement into profitable investments for you.

Sincerely,

/s/ Mark L. Yockey
Mark L. Yockey
Portfolio Manager

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
SCHEDULE OF INVESTMENTS
JUNE 30, 1997

Quoted
Shares Industry Market
Held Classification Value
- -------------------------------------------------------------------------------
COMMON AND PREFERRED
STOCKS - 98.0%

BRAZIL - 4.9%
14,280,000 * Cia de Saneamento Basico de Estado
de Sao Paulo - water and sewage utility.........(18) $4,350,787
4,533,000 * Cia Riograndense Telecom - PFA -
telecommunications..............................(16) 6,863,397
899,500,000 * Fertilizantes Fosfatados SA-Fosfertil -
phosphatic mining and fertilizer................(10) 5,055,014
11,620,000 * Light-Servicos de Electricidade S/A -
electric utility................................(18) 5,782,638
-----------
22,051,836

DENMARK - 3.9%
30,000 * Falck - home security systems...................(6) 1,581,349
8,588 NESA AS - electrical utility...................(18) 1,940,089
22,938 * Scanbox Danmark - music and video producer......(7) 984,553
120,000 * Sydbank A/S - banking and financial services....(1) 5,475,986
90,000 * Vest-Wood A/S - furniture manufacturer..........(6) 7,522,704
-----------
17,504,681

FINLAND - 3.8%
109,600 Aamulehti II - newspaper publisher..............(2) 4,010,207
655,400 Silja OY AB - passenger and cargo ship operator(17) 6,121,400
33,900 * TT Tieto Oy - computer data services...........(13) 2,937,750
368,000 Talentum Oy - information technology publisher..(2) 4,110,346
-----------
17,179,703

FRANCE - 4.9%
95,000 CLF-Dexia France - banking and
financial services..............................(1) 9,246,686
53,250 Cap Gemini Sogeti SA - computer
consulting services............................(15) 2,808,974
8,000 Damart SA - thermal apparel manufacturer.......(12) 6,004,731
32,000 * Union Financiere de France Banque SA -
investment management services.................(14) 3,800,773
-----------
21,861,164

GERMANY - 2.3%
33,293 Escada AG - men's and women's
apparel retailer...............................(12) 5,316,267
194,967 * Marseille-Kliniken AG - health care services....(9) 4,862,717
-----------
10,178,984

<PAGE>

SCHEDULE OF INVESTMENTS (CONTINUED)
Quoted
Shares Industry Market
Held Classification Value
- -------------------------------------------------------------------------------
HONG KONG - 10.9%
500,000 Cheung Kong (Holdings) Ltd. - real
estate development..............................(5) 4,937,204
9,462,000 * Dongfang Electrical Machinery Company
Ltd. - electrical generators....................(4) 3,053,322
700,000 First Tractor Company Limited -
agricultural tractors...........................(4) 460,806
10,961,033 Founder Hong Kong Limited - software
development....................................(13) 7,427,804
3,000,000 Glorious Sun Enterprises - men's and
women's apparel................................(12) 1,423,077
16,000,000 Guangzhou Investment - multi-industry .........(11) 8,828,882
5,378,000 Harbin Power Equipment Company
Limited - hydro and thermal power equipment.....(4) 1,187,043
2,192,000 Hong Kong & China Gas Company
Ltd. - gas utility.............................(18) 4,385,528
2,500,000 Peregrine Investment Holdings
Limited - investment services..................(14) 5,146,954
600,000 Swire Pacific Ltd. - multi-industry............(11) 5,401,882
1,080,000 Wing Hang Bank Ltd. - banking and
financial services..............................(1) 6,524,079
-----------
48,776,581

HUNGARY - 0.2%
100,000 Euronet Services, Inc. - ATM network
in Europe..................................... (14) 1,106,250

INDONESIA - 2.3%
2,342,000 PT Indosat - telecommunications................(16) 7,005,777
3,305,000 Sona Topas - duty free retailing...............(12) 2,344,213
674,700 Tigaraksa Satria - consumer products
distributor....................................(17) 825,342
-----------
10,175,332

IRELAND - 0.6%
241,724 Bank of Ireland - banking and
financial services............................. (1) 2,653,283

ITALY- 2.8%
5,000,000 Credito Italiano - banking and financial
services........................................(1) 9,149,373
400,000 * De Rigo S.p.A - optical frame company..........(12) 3,375,000
-----------
12,524,373

JAPAN - 8.6%
400,000 Banyu Pharmaceutical Co Ltd - pharmaceuticals...(9) 7,014,483
90,000 Circle K Japan - convenience stores............(12) 5,166,638
90,000 Nintendo Co. Ltd. - video game machines
and software....................................(6) 7,522,248
800 Nippon Telegraph & Telephone -
telecommunications.............................(16) 7,677,543
335,000 Sankyo Co. Ltd. - pharmaceuticals...............(9) 11,252,400
-----------
38,633,312

MALAYSIA - 0.5%
475,000 MNI Holdings BHD - insurance...................(14) 2,239,501

<PAGE>

SCHEDULE OF INVESTMENTS (CONTINUED)
Quoted
Shares Industry Market
Held Classification Value
- -------------------------------------------------------------------------------
MEXICO - 5.9%
900,000 Carso Grupo A1 - multi-industry ...............(11) 6,284,995
399,300 * Empresas (ICA) Sociadad Controladora
S.A. de C.V. - commercial construction..........(5) 6,413,756
2,000,489 Grupo Financiero Inbursa S.A.
de C.V. - banking services......................(1) 8,507,899
241,100 Sigma BCP - food producer.......................(8) 2,608,946
877,500 * Seguros Comercial America - insurance..........(14) 2,627,807
-----------
26,443,403

NEW ZEALAND - 0.3%
750,000 Restaurant Brand - fast food restaurants........(8) 1,304,160

NORWAY - 7.6%
400,000 Ark ASA - computer equipment retailer..........(12) 3,383,725
140,000 Blom ASA - geographical surveying...............(3) 5,042,842
150,000 Computer Advances Group ASA - hardware
and software...................................(13) 1,862,413
423,800 Fokus Bank - regional bank......................(1) 3,585,057
210,000 Merkantildata - information technology provider(13) 4,154,615
500,000 Navia ASA - navigation instruments and services.(3) 2,046,608
569,800 Radio P4 - radio stations.......................(2) 4,820,117
460,000 Schibsted AS - newspaper publisher..............(2) 9,100,584
-----------
33,995,961

PHILIPPINES - 0.9%
16,444,000 * Bankard, Inc. - credit card provider...........(14) 2,587,299
35,000,000 Engineering Equipment, Inc. -
commercial construction.........................(5) 1,459,660
-----------
4,046,959

POLAND - 0.1%
60,000 Bank Handlowy W Warszawie - banking and
financial services..............................(1) 691,922

PORTUGAL - 4.0%
60,000 Banco Totta & Acores, SA - banking and
financial services..............................(1) 1,002,557
200,000 Investec-Consultoria Internacional,
SA - newspaper publisher........................(2) 6,816,658
174,600 Portugal Telecom SA - telecommunications.......(16) 7,043,122
40,000 Telecel-Comunicacaoes Pessoais, SA -
cellular phone service ........................(16) 3,317,993
-----------
18,180,330

SINGAPORE - 0.8%
500,000 Jardine Matheson Holdings Ltd. -
multi-industry.................................(11) 3,550,000

<PAGE>

SCHEDULE OF INVESTMENTS (CONTINUED)
Quoted
Shares Industry Market
Held Classification Value
- -------------------------------------------------------------------------------
SPAIN - 5.1%
200,000 Banco Central Hispanoamericano,
S.A. - banking services.........................(1) 7,315,914
50,000 Corporacion Financiera Alba, S.A. -
multi-industry ................................(11) 6,342,042
175,000 Tabacalera SA - tobacco products................(6) 9,394,299
-----------
23,052,255

SWEDEN - 5.3%
453,700 Atle - venture capital firm....................(14) 6,099,774
374,666 Astra - pharmaceuticals.........................(9) 6,974,585
237,875 Caran AB Class B - aerospace software..........(13) 1,783,563
114,400 Esselte AB - office products....................(6) 2,691,591
205,200 Intelligent Micro Systems Data AB - computer
systems and consulting services.................(3) 1,326,353
188,600 MTV Produktion AB - television production.......(2) 1,536,009
60,700 * Scala International AB - business
application software...........................(13) 3,452,653
-----------
23,864,528

SWITZERLAND - 12.1%
6,000 Clariant AG - color dyes........................(6) 3,883,562
124,500 Credit Suisse Group - banking and
financial services..............................(1) 15,988,870
10,000 Novartis - pharmaceuticals......................(9) 15,986,301
10,000 Publicitas Holdings S.A. - advertising .........(3) 1,904,110
13,000 Swisslog Holding AG - factory automation
systems.........................................(4) 4,318,493
13,400 * TAG Heuer International S.A. - sports watches..(12) 2,010,000
9,000 Union Bank of Switzerland - banking and
financial services..............................(1) 10,294,520
-----------
54,385,856

THAILAND - 0.9%
334,300 The Pizza PLC - fast food restaurant franchise..(8) 1,716,344
972,200 Srithai Superware PLC - consumer
plastic products................................(6) 2,195,472
-----------
3,911,816

<PAGE>

SCHEDULE OF INVESTMENTS (CONTINUED)
Quoted
Shares Industry Market
Held Classification Value
- -------------------------------------------------------------------------------
UNITED KINGDOM - 9.3%
600,000 * AEA Technology plc - engineering services......(15) 4,046,682
1,189,900 * Colt Telecom Group plc - telecommunications....(16) 6,122,964
2,050,000 The Corporate Services Group PLC -
employment services.............................(3) 6,383,932
446,600 * Ethical Holdings plc - pharmaceuticals..........(9) 1,981,787
3,160,000 * Freepages Group plc - telephone classified
information services............................(2) 1,894,447
250,821 Granada Group PLC - television broadcasting
and theme parks.................................(7) 3,299,771
450,000 D.F.S. Furniture Company plc - home furniture
manufacturer and retailer.......................(6) 4,211,547
350,000 Johnson Matthey PLC - electronic materials.....(15) 3,371,818
200,000 Select Appointments Holdings plc - employment
services........................................(3) 1,552,061
720,000 Whitbread plc - restaurants and brewing.........(8) 9,094,543
-----------
41,959,552
-----------
Total common and preferred stocks
(Cost $406,285,723) .................................$440,271,742

Par Market
Amount Value
- -------------------------------------------------------------------------------
SHORT TERM INVESTMENTS - 2.6%
$11,624,000 Repurchase agreement with State
Street Bank and Trust Company,
5.0%, dated 6/30/97, due 7/1/97,
maturity value $11,625,614,
collateralized by $10,095,000
par value U.S. Treasury Bond, 8.125%,
due 8/15/19 (Cost $11,624,000).....................$ 11,624,000
-----------

Total investments - 100.6% (Cost $417,909,723).....$451,895,742
Other assets less liabilities - (0.6%)............. (2,715,672)
-----------
Total net assets - 100.0% (**).....................$449,180,070
===========

* Non-income producing securities
** Percentages for the various classifications relate to total net assets

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
PORTFOLIO DIVERSIFICATION
JUNE 30, 1997

Percent of
Industry Market Total Net
Classification Value Assets
-------------- ------ --------
Banking (1) $ 80,436,146 17.9%
Broadcast/Publishing (2) 32,288,368 7.2
Business & Public Services (3) 18,255,906 4.1
Capital Spending (4) 9,019,664 2.0
Construction/Housing (5) 12,810,620 2.8
Consumer Cyclicals (6) 39,002,772 8.7
Consumer Services (7) 4,284,324 0.9
Food/Restaurants (8) 14,723,993 3.3
Health Care Services (9) 48,072,273 10.7
Mining/Metals (10) 5,055,014 1.1
Multi-Industry (11) 30,407,801 6.8
Retailing (12) 29,023,651 6.5
Software (13) 21,618,798 4.8
Special Financial (14) 23,608,358 5.2
Technology (15) 10,227,474 2.3
Telecommunications (16) 38,030,796 8.5
Transportation/Distribution (17) 6,946,742 1.5
Utilities (18) 16,459,042 3.7
------------ ------
Total common and preferred stocks 440,271,742 98.0
Total short term investments 11,624,000 2.6
------------ ------
Total investments 451,895,742 100.6
Other assets less liabilities (2,715,672) (0.6)
------------ ------
Net assets $449,180,070 100.0%
============ ======

The accompanying notes to financial statements are
an integral part of this statement.

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997

ASSETS:
Investments in securities, at value (cost $417,909,723)... $451,895,742
Cash...................................................... 776
Receivable for investments sold........................... 3,049,056
Receivable from forward currency contracts................ 9,533,952
Receivable from fund shares sold.......................... 843,277
Interest receivable....................................... 1,614
Dividends receivable...................................... 1,440,312
Organizational costs...................................... 25,620
------------
Total assets........................................... 466,790,349

LIABILITIES:
Payable for investments purchased......................... 7,443,106
Payable for forward currency contracts.................... 9,543,809
Payable for withholding tax liability..................... 111,427
Payable for organizational costs.......................... 25,620
Payable for operating expenses............................ 486,317
------------
Total liabilities...................................... 17,610,279
------------
Total net assets....................................... $449,180,070
===========

NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding........................ $402,232,773
Net unrealized appreciation on investments
and foreign currency transactions..................... 33,937,518
Accumulated undistributed net investment income........... 2,577,725
Accumulated undistributed net realized gain on sales
of investments and foreign currency
related transactions................................... 10,432,054
------------
$449,180,070
============
NET ASSET VALUE PER SHARE
Net asset value, offering price and redemption price
per share ($0.01 par value, 5,000,000,000
shares authorized, [$449,180,070/31,015,095
shares outstanding])................................... $14.48
======

The accompanying notes to financial statements are
an integral part of this statement.

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1997

INVESTMENT INCOME:
Interest................................................. $ 465,933
Dividends (net of foreign taxes withheld of $801,141).... 6,102,067
------------
Total investment income................................ 6,568,000

EXPENSES:
Advisory fees............................................ 2,444,080
Transfer agent fees...................................... 569,950
Custodian fees........................................... 421,554
Registration fees........................................ 223,149
Shareholder communications............................... 110,381
Professional fees........................................ 91,615
Accounting fees.......................................... 57,343
Directors' fees.......................................... 15,000
Insurance................................................ 12,097
Organizational costs..................................... 7,372
Other operating expenses................................. 372
------------
Total expenses......................................... 3,952,913
------------
Net investment income.................................. 2,615,087

REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS - NET:
Net realized gain (loss) on:
Investments............................................ 11,001,981
Foreign currency related transactions.................. (419,819)
------------
10,582,162

Net increase in unrealized appreciation (depreciation) on:
Investments............................................ 30,260,301
Foreign currency related transactions.................. (31,194)
------------
30,229,107
------------
Net gain on investments................................ 40,811,269
------------
Net increase in net assets resulting from operations... $43,426,356
============

The accompanying notes to financial statements are
an integral part of this statement.

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF CHANGES IN NET ASSETS

For the For the
year ended period ended
June 30, 1997 June 30, 1996*
------------- --------------
OPERATIONS:
Net investment income....................... $ 2,615,087 $ 217,111
Net realized gain (loss) on:
Investments............................... 11,001,981 1,087,925
Foreign currency related transactions..... (419,819) (40,001)
Net increase in unrealized appreciation
(depreciation) on:
Investments............................... 30,260,301 3,720,376
Foreign currency related transactions..... (31,194) (11,966)
----------- ----------
Net increase in net assets resulting
from operations.......................... 43,426,356 4,973,445

DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Net investment income....................... (237,011)
Net realized gains on
investment transactions................. (1,238,614)
-----------
Total distributions paid
to shareholders......................... (1,475,625)

FUND SHARE ACTIVITIES:
Proceeds from shares issued (33,329,489
and 6,080,442 shares, respectively)..... 447,478,870 68,360,994
Net asset value of shares issued in
reinvestment of distributions from net
investment income and net realized gains
(108,735 shares).......................... 1,414,826
Cost of shares redeemed (8,344,932 and
158,639 shares, respectively)............. (113,176,055) (1,822,741)
----------- ----------
Net increase from fund share activities... 335,717,641 66,538,253
----------- ----------
Total increase............................ 377,668,372 71,511,698
Net assets at the beginning of
the period.............................. 71,511,698
----------- ----------
Net assets at the end of the period....... $449,180,070 $71,511,698
=========== ==========

* For the period from commencement of operations (December 28, 1995) through
June 30, 1996

The accompanying notes to financial statements are
an integral part of this statement.

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD

Year ended Period ended
June 30, 1997 June 30, 1996***
------------- ----------------
Net asset value, beginning of period.......... $ 12.08 $10.00
Income from investment operations:
Net investment income ...................... 0.07 0.04
Net realized and unrealized gains on
securities and foreign currency held..... 2.44 2.04
------ ------
Total from investment operations......... 2.51 2.08
Distributions paid to shareholders:
Net investment income ...................... (0.02)
Net realized gains on investment
transactions............................. (0.09)
------
Total distributions paid to shareholders ... (0.11)
------ ------
Net asset value, end of period................ $14.48 $12.08
====== ======

Total return.............................. 20.9% 20.8%**
====== ======
Ratios/supplemental data:
Net assets, end of period (millions) ....... $449.2 $71.5
Ratio of expenses to average net assets .... 1.61% 2.50%*
Ratio of net investment income to
average net assets....................... 1.07% 1.60%*
Portfolio turnover rate .................... 103.66% 57.00%**
Average commission rate .................... $0.0016

* Annualized
** Not annualized
*** For the period from commencement of operations (December 28, 1995) through
June 30, 1996

The accompanying notes to financial statements are
an integral part of this statement.

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

(1) Organization:

The Artisan International Fund (the "Fund") is a series of Artisan Funds,
Inc. which was incorporated on January 5, 1995, as a Wisconsin corporation
and is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. Effective July 1,
1997, the Fund issued an additional class of shares, the International
Institutional Shares.

(2) Summary of significant accounting policies:

The following is a summary of significant accounting policies of the Fund.

(b) Income taxes - No provision has been made for federal income taxes
since the Fund intends to 1) distribute substantially all of its
taxable income as well as realized gains from the sale of investment
securities to its shareholders and 2) comply with all provisions of the
Internal Revenue Code applicable to regulated investment companies.

(c) Portfolio transactions - Security and shareholder transactions are
recorded no later than the first business day after the trade date. Net
realized gains and losses on common stocks are computed on specific
security lot identification.

(d) Foreign currency translation - Values of investments denominated in
foreign currencies are converted into U.S. dollars using the spot
market rate of exchange at the time of valuation. Purchases and sales
of investments and dividend and interest income are translated to U.S.
dollars using the spot market rate of exchange prevailing on the
respective dates of such transactions. The portion of security gains
or losses resulting from changes in foreign exchange rates is included
with net realized and unrealized gain or loss from investments, as
appropriate, for both financial reporting and tax purposes.
The Fund enters into forward currency contracts which are recorded at
market value and any realized and unrealized gains and losses on
forward currency contracts are reported as foreign currency related
transactions for financial reporting purposes. For tax purposes, these
foreign exchange gains and losses are treated as ordinary income. The
Fund could be exposed to loss if the counterparties fail to perform
under these contracts.

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

(e) Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results
could differ from those estimates.

(f) Other - Dividend income is recorded on the ex-dividend date, except
that certain dividends from foreign securities are recorded as soon as
the information becomes available to the Fund. Interest income is
reported on the accrual basis. Distributions to shareholders are
recorded on the ex-dividend date. Generally accepted accounting
principles require that certain differences between financial reporting
and tax purposes be reclassified to capital stock.

(3) Transactions with affiliates:

The Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports.

At June 30, 1997, the Fund owned 5% or more of the outstanding voting
securities of each of the issuers listed below. A summary of open market
transactions in the securities of each such issuer, gain realized on sales
and dividends received for the fiscal year follows:

Purchases Sales
-------------------- -------------- Realized Dividend
Affiliate Shares Cost Shares Cost Gain Income
----------- ------ ---- ----- ---- ---- ------
Blom 140,000 $3,994,148 $41,306
IMS Data 205,200 1,868,222 22,777
Talentum 362,000 3,290,767 85,823
Investec 200,000 6,737,296
Dongfang Electric 9,468,000 2,868,613 6,000 $2,271 $764 100,060

(4) Organization costs and prepaid registration expenses:

Organization costs are amortized over sixty months. These expenses were
paid by the Adviser which will be reimbursed by the Fund over the same time
period. The proceeds of any redemption of the initial shares by the
original shareholder will be reduced by a pro-rata portion of any
unamortized expenses at the time of redemption. Registration expenses of
the Fund are amortized over twelve months.

<PAGE>

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

(5) Line of credit arrangements:

Artisan Funds, Inc. is party to a line of credit agreement under which the
Fund may borrow 5% of net assets up to a maximum of $30 million. The use of
the line of credit is generally restricted to temporary borrowing for
extraordinary or emergency purposes. The Fund made no borrowing under the
line of credit during the fiscal year.

(6) Investment transactions:

For the year ended June 30, 1997, the cost of purchases and the proceeds
from the sales of investment securities (excluding short-term securities)
were $576,040,546 and $248,130,089, respectively.

(7) Income tax information:

Aggregate gross unrealized appreciation (depreciation) on investments as of
June 30, 1997, based on investment cost of $419,890,227 for federal tax
purposes, is as follows:

Aggregate gross unrealized appreciation on investments $53,185,658
Aggregate gross unrealized depreciation on investments (21,180,143)
------------
Net unrealized appreciation $32,005,515
============

The difference between cost amounts for financial reporting and tax
purposes is due primarily to timing differences in recognizing certain
gains and losses on security transactions and passive foreign investment
company (PFIC) value adjustments. Losses from foreign currency related
transactions from November 1, 1996 to June 30, 1997 of $317,352 are not
recognized for federal income tax purposes until fiscal 1998.

During the fiscal year ended June 30, 1997, the Fund generated $5,653,486
of foreign source income on which $801,141 of foreign taxes were paid. The
Fund elects to pass foreign taxes through to shareholders for their 1997
tax returns. Updated data will be sent with 1997 form 1099s to provide
shareholders with information to claim either a foreign tax credit or to
take a foreign tax deduction on their 1997 income tax returns.

<PAGE>

100 East Wisconsin Avenue Telephone 414 276-9500
Suite 1500
Milwaukee, WI 53202

PRICE WATERHOUSE LLP (LOGO)

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Artisan Funds, Inc.

In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Artisan International Fund (one of
the portfolios constituting Artisan Funds, Inc., hereafter referred to as the
"Fund") at June 30, 1997, the results of its operations, the changes in its net
assets and the financial highlights for the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1997 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.

/s/PRICE WATERHOUSE LLP

July 29, 1997

<PAGE>
(LOGO)
ARTISAN FUNDS

C/O BOSTON FINANCIAL DATA SERVICES
P.O. BOX 8412
BOSTON MA 02266-8412
1 800 344 1770

<PAGE>

(LOGO)
ARTISAN FUNDS

ARTISAN MID CAP FUND
ANNUAL REPORT
JUNE 30, 1997

INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.

<PAGE>

September 5, 1997

Dear Fellow Shareholder,

We're pleased to provide you with this annual report for the Artisan Mid Cap
Fund for the very short fiscal period from the commencement of operations on
June 27, 1997 through the fiscal period end of June 30, 1997. Despite being in
existence for only four days the Fund is required to distribute an annual report
to shareholders for each fiscal year.

During the short period of operations which included a weekend the Fund sold
$1.8 million in fund shares. On Monday, June 30, 1997 the Fund purchased its
first securities; however, the Fund uses a trade date plus one accounting policy
which means that those securities are not reflected in the Fund's financial
statements on June 30, 1997. As a result, the financial statements for the Fund
reflect no operations except for the sale of fund shares.

OUR INVESTMENT APPROACH
To help you appreciate the thought process behind our investment decisions, we
would like to offer this overview of our philosophy and strategy.

We seek mid-cap companies that possess franchise characteristics and whose
stock is selling at compelling valuations. This focus leads us to companies
with superior business potential that are temporarily out of favor or
misunderstood by the market. We concentrate on identifying these companies
when they are experiencing a change dynamic that can leverage their inherent
strengths.

This strategy rests on a few basic beliefs:

- - An established franchise can protect a company from some of the effects of
competition. Over time, this advantage can lead to more stable cash flow and,
ultimately, to higher valuations. Examples of "franchise characteristics" are
proprietary technology, a defensible brand, a dominant market share, or the
position of a low-cost producer.

- - A franchise company selling at a significant discount to its intrinsic value
offers superior long-term investment potential. Thus, our assessment of
"intrinsic value" - the price a strategic buyer would pay to own the entire
company - is fundamental to our process. It guides our buying and selling
decisions - we buy only at a large discount and sell when the price
approaches intrinsic value - and helps to lower overall portfolio risk.

- - A company with franchise characteristics and an attractive valuation is often
one experiencing a major change - for instance, new management, a
restructuring, a new product cycle, acquisition or divestiture. Such a change
can serve as a catalyst to improved performance,

<PAGE>

higher earnings and, often, powerful, long-term market response. We actively
seek such opportunities, hoping to identify as early as possible the
potential for positive change.

- - The mid-cap universe provides the most fertile ground for identifying
franchise companies trading at attractive prices. Large-cap franchise
companies, because they are heavily followed and sponsored, tend to be priced
efficiently. And small-cap companies typically do not yet possess meaningful
franchise characteristics. By contrast, the mid-cap universe - in which
market caps range between $600 million and $6 billion - is less efficient
than the large-cap and more mature than the small-cap, is populated by many
established companies whose franchise characteristics are emerging or are
poised to create powerful competitive advantages.

Like any equity investment, an investment in this Fund entails certain risks. We
employ a number of strategies designed to reduce these risks. One, of course, is
our focus on stocks that sell at significant discounts to intrinsic value. Also,
in diversifying, we avoid industry concentration and limit the size of any
holding to 3% of assets. In addition, we pay strict attention to liquidity, and
we continuously monitor and reappraise our holdings.

PORTFOLIO CHARACTERISTICS

While not normally a part of the annual report for the fiscal period, we believe
you may be interested in some activities of the Fund subsequent to June 30,
1997. As of July 31, 1997, the Fund had $4.6 million in net assets with a net
asset value per share of $11.61. The Fund was 94.8% invested in equities in 65
different securities with a median market capitalization of $1.8 billion
distributed as follows:

MARKET CAP (IN $ BILLIONS) FUND (%) S&P 400 (%)
-------------------------- -------- -----------

$0.0 to 0.5 0.0 2.2
0.5 to 1.0 24.6 9.4
1.0 to 2.0 22.2 25.4
2.0 to 3.0 20.6 19.4
3.0 to 4.0 7.7 16.3
4.0 to 5.0 4.3 9.8
5.0 to 6.0 2.9 6.7
6.0 to 7.0 2.0 2.8
7.0 to 8.0 2.2 4.1
over 8.0 8.3 3.9

<PAGE>

On average, these companies are growing 17% per year and selling at 16.6X 1997
earnings. In addition, these stocks are priced at an average of only 85% of our
estimate of the companies intrinsic values. Our top ten holdings as of July 31,
1997 were as follows:

TOP TEN HOLDINGS
----------------
COMPANY NAME %
------------ ---
Gallaher 2.3%
AMP 2.3%
Minerals Technology 2.2%
Thermo Electron 2.2%
Crown Cork & Seal 2.2%
Ceridian 2.1%
Tidewater 2.1%
Equity Office Products 2.0%
Biochem Pharmaceutical 2.0%
RPM 2.0%
TOTAL 21.4%

As of July 31, 1997, the Fund was broadly diversified by economic sector. For
strategic reasons, we strive to participate in each key sector. We believe this
approach helps to reduce potential price volatility and places emphasis on
picking stocks. Our sector diversification was as follows:

INDUSTRY DIVERSIFICATION (%)
----------------------------
WEIGHTING WEIGHTING
--------- ---------
7/31 7/31
SECTOR 1997 SECTOR 1997
- ------------------------------ ---------------------------------------------
Energy 6.0% Materials & Processing 11.6%
Business Services 6.9% Financial Services 13.5%
Health Care 16.1% Transportation 6.7%
Consumer Staples 13.0% Utilities 2.4%
Technology 9.6% Consumer Discretionary & Services 14.2%
TOTAL 100.0%

<PAGE>

OUTLOOK AND STRATEGY

Although we're stock pickers, not market timers, we nonetheless monitor the
economy carefully, alert for signals or trends that could affect the stock
market. Right now, this market is very expensive, but given the recent economic
environment, is it any wonder? Low interest rates...subdued inflation...strong
corporate profits...moderate economic growth. The stars just don't align any
better than that.

But that, as we see it, has created a dilemma for investors like us. Yes,
things are great today; but how much better can they get in the near future? A
lot better, most are betting, with many raising the stakes. But what should we,
who proceed with caution, be willing to pay to invest? It strikes us that the
equity risk premium - the risk that a company won't be able to deliver on
earnings projections - has virtually evaporated. The market, it seems, has
extrapolated growth rates out to perpetuity.

Our response to this uncertainty? To proceed with caution and patience, so we
minimize downside risk. On a stock-by-stock basis, we'll look even harder at
valuation and at key investment issues such as revenues, margins and capability
of management. We'll also focus on stocks that may entail a longer holding
period - companies that have sown the seeds of improvement - giving us greater
potential to capture the benefit of our research.

Although we intend to stay fully invested, and seek to outperform our benchmark,
we believe our strategy of caution and patience will ultimately prove its merit.
In a market like this, a bolder stance would appear to us to be folly.

Sincerely,

/s/Andrew C. Stephens
Andrew C. Stephens
Portfolio Manager

<PAGE>

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1997

ASSETS:
Cash $1,436,166
Receivable from fund shares sold 377,311
Organizational costs 42,755
----------
Total assets $1,856,232

LIABILITIES:
Payable for organizational costs 42,755
----------
Total liabilities 42,755
----------
Total net assets $1,813,477
==========

NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding $1,813,477
==========

NET ASSET VALUE PER SHARE
Net asset value, offering price and
redemption price per share
($.01 par value, 5,000,000,000 shares
authorized, [$ 1,813,477/ 181,348
shares outstanding]) $10.00
======

The accompanying footnotes are an integral part of the financial statements.

<PAGE>

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM COMMENCEMENT OF OPERATIONS
(JUNE 27, 1997) THROUGH JUNE 30, 1997

Period Ended
June 30,
1997
----------
FUND SHARE ACTIVITIES:

Proceeds from shares issued (181,348 shares) $1,813,477
----------

Total increase 1,813,477

Net assets at the beginning of the period ----------

Net assets at the end of the period $1,813,477
==========

The accompanying footnotes are an integral part of the financial statements.

<PAGE>

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

Period ended
June 30, 1997*
--------------

Net asset value, beginning of period $10.00
------

Net asset value, end of period $10.00
======

Total Return 0.00%

Ratios/supplemental data:
Net assets, end of period (millions) $1.8
Ratio of expenses to average net assets 0.00%
Ratio of net investment income to average net assets 0.00%
Portfolio turnover rate 0.00%
Average commission rate $0.0000

* For the period from commencement of operations (June 27, 1997) through
June 30, 1997

The accompanying footnotes are an integral part of the financial statements.

<PAGE>

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

(1) Organization:

The Artisan Mid Cap Fund (the "Fund") is a series of Artisan Funds, Inc.
which was incorporated on January 5, 1995 as a Wisconsin corporation and is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. A statement of
operations is not presented as no transactions were entered into which
affected operations during the short period.

(2) Summary of significant accounting policies:

The following is a summary of significant accounting policies of the Fund:

(a) Security valuation - Each security is valued at the latest sales price
reported by the principal security exchange on which the issue is
traded, or if no sale is reported, the latest bid price reported.
Securities for which prices are not readily available or which
management believes that the latest sale or bid price is not
reflective of a fair value of the security are valued at a fair value
as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of
Directors. Short-term investments maturing within sixty days of their
purchase date are valued at amortized cost which approximates market.

<PAGE>

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

(2) Transactions with affiliates:

Average Daily Net Assets Annual Rate
------------------------ -----------

Less than $500 million 1.000%
$500 million to $750 million 0.975%
$750 million to $1 billion 0.950%
Greater than $1 billion 0.925%

The Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports. The
Adviser has undertaken to reimburse the Fund for any ordinary operating
expenses in excess of 2.00% of average daily net assets annually.

(3) Organization costs and prepaid registration expenses:

(4) Investment transactions:

For the period ended June 30, 1997, there were no purchases or sales of
investment securities.

<PAGE>

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997

(5) Line of credit arrangements:

(6) Income tax information:

There was no aggregate gross unrealized appreciation (depreciation) on
investments as of June 30, 1997.

<PAGE>

100 East Wisconsin Avenue Telephone 414 276-9500
Suite 1500
Milwaukee, WI 53202

PRICE WATERHOUSE LLP (LOGO)

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders
of Artisan Mid Cap Fund

In our opinion, the accompanying statement of assets and liabilities and the
related statement of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Artisan Mid Cap Fund
(one of the portfolios constituting Artisan Funds, Inc., hereafter referred to
as the "Fund") at June 30, 1997, and the results of its operations, the
changes in its net assets and the financial highlights for the period June 27,
1997 (commencement of operations) through June 30, 1997, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe our audit
provides a reasonable basis for the opinion expressed above.

/s/Price Waterhouse LLP

July 29, 1997

<PAGE>

(LOGO)
ARTISAN FUNDS

C/O BOSTON FINANCIAL DATA SERVICES
P.O. BOX 8412
BOSTON MA 02266-8412
1 800 344 1770

<PAGE>