As filed with the Securities and Exchange Commission on August 31, 1998
1933 Act Reg. No. 33-88316
1940 Act File No. 811-8932
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
--------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 10 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 12 [X]
-------------------------------
ARTISAN FUNDS, INC.
(Registrant)
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
Telephone Number: (414) 390-6100
Andrew A. Ziegler Janet D. Olsen
Artisan Funds, Inc. Bell, Boyd & Lloyd
1000 North Water Street, #1770 Three First National Plaza, #3300
Milwaukee, Wisconsin 53202 Chicago, Illinois 60602
(Agents for Service)
---------------------------
Amending Parts A, B, and C and filing Exhibits.
It is proposed that this filing will become effective:
immediately upon filing pursuant to rule 485(b)
------
on _________________pursuant to rule 485(b)
------
X 60 days after filing pursuant to rule 485(a)(1)
------
on _________________ pursuant to rule 485(a)(1)
------
75 days after filing pursuant to rule 485(a)(2)
------
on _________________ pursuant to rule 485(a)(2)
------
- -------------------------------------------------------------------------------
<PAGE>
ARTISAN FUNDS, INC.
Cross-reference sheet pursuant to rule 495(a) of Regulation C
PART A
PROSPECTUS
ARTISAN SMALL CAP FUND, ARTISAN INTERNATIONAL FUND, (including the separate
prospectus for Artisan International Fund, Institutional Shares)
ARTISAN MID CAP FUND, AND ARTISAN SMALL CAP VALUE FUND
Item Location or Caption
- ------- ----------------------
1(a)-(b) Front and back cover pages
2(a) Goals, Strategies, Philosophies
(b) Goals, Strategies, Philosophies
(c) Investment Risks You Should Consider
3 Investment Risks You Should Consider; Artisan Funds'
Investment Returns; Artisan Funds' Expenses; Artisan
Funds' Financial Highlights
4(a) Goals, Strategies, Philosophies
(b) Goals, Strategies, Philosophies; Investment Risks
You Should Consider
(c) Goals, Strategies, Philosophies; Investment Risks
You Should Consider
5 Not applicable [included in annual report to shareholders]
6(a)(1)-(2) Organization, Management and Management Fees
(a)(3) Not applicable
(b) Not Applicable
7(a) Shareholder and Account Policies - Share Price
(b) How to Buy Shares
(c) How to Sell Shares
(d) Dividends, Capital Gains, and Taxes
(e) Dividends, Capital Gains, and Taxes
8 Not Applicable
9 Artisan Funds' Financial Highlights
i
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
ARTISAN SMALL CAP FUND, ARTISAN INTERNATIONAL FUND,
ARTISAN MID CAP FUND, AND ARTISAN SMALL CAP VALUE FUND
Item Location or Caption
- ----- --------------------
10(a) Front cover
(b) Table of contents
11(a) Organization
(b) Not Applicable
12(a) Organization
(b) Investment Objectives and Policies; Investment Techniques and
Risks
(c) Investment Techniques and Risks; Investment Restrictions
(d) Investment Techniques and Risks
(e) Investment Techniques and Risks
13(a)-(d) Directors and Officers
(e) Not applicable
14(a) Not applicable
(b) Principal Shareholders
(c) Directors and Officers
15(a) Investment Advisory Services
(b) Distributor
(c) Investment Advisory Services
(d) Not applicable
(e)-(g) Not applicable
(h) Custodian; Independent Accountants
16(a) Portfolio Transactions
(b) Not applicable
(c)-(d) Portfolio Transactions
(e) Not applicable
17(a) Organization
(b) Not applicable
18(a)-(c) Purchasing and Redeeming Shares
19 Additional Tax Information
20 Not applicable
21(a) Not applicable
(b) Performance Information
22 Financial Statements
<PAGE>
PROSPECTUS
October xx, 1998
ARTISAN SMALL CAP FUND
ARTISAN INTERNATIONAL FUND
ARTISAN MID CAP FUND
ARTISAN SMALL CAP VALUE FUND
Each Artisan investment is 100% no-load. You pay no sales charge to purchase or
redeem your shares, and there is no annual 12b-1 fee.
ARTISAN FUNDS, INC.
c/o Boston Financial
P.O. Box 8412
Boston, MA 02266-8412
- ---------------------
The Securities and Exchange Commission has not approved any fund's shares as an
investment or determined whether this prospectus is accurate or complete. Anyone
who tells you otherwise is committing a crime.
<PAGE>
TABLE OF CONTENTS
To help make investing with Artisan Funds a pleasant experience for you, we've
designed this document to serve as an easy reference tool. For your
convenience, here are the topics you'll find in the following pages:
- --------------------------------------------------------
Topic Page
- --------------------------------------------------------
Important Legal Information cover
- --------------------------------------------------------
Goals, Strategies, Philosophies 1
- --------------------------------------------------------
Artisan Small Cap Fund 1
- --------------------------------------------------------
Artisan International Fund 2
- --------------------------------------------------------
Artisan Mid Cap Fund 3
- --------------------------------------------------------
Artisan Small Cap Value Fund 4
- --------------------------------------------------------
Investment Risks You Should Consider 6
- --------------------------------------------------------
Investment Returns 7
- --------------------------------------------------------
Fees and Expenses 12
- --------------------------------------------------------
Financial Highlights 14
- --------------------------------------------------------
Organization, Management and Management Fees 17
- --------------------------------------------------------
Investing with Artisan Funds 20
- --------------------------------------------------------
How to Buy Shares 20
- --------------------------------------------------------
Automatic Investing 21
- --------------------------------------------------------
How to Sell Shares 22
- --------------------------------------------------------
What Type of Account Would You Like 23
- --------------------------------------------------------
Systematic Withdrawal 23
- --------------------------------------------------------
Shareholder and Account Policies 24
- --------------------------------------------------------
- Statements and Reports 24
- --------------------------------------------------------
- Share Price 24
- --------------------------------------------------------
- Purchases 25
- --------------------------------------------------------
- Minimum Balances 26
- --------------------------------------------------------
- Authorized Agents 26
- --------------------------------------------------------
- Redemptions 27
- --------------------------------------------------------
- Signature Guarantees 27
- --------------------------------------------------------
- Account Registration 28
- --------------------------------------------------------
- Telephone Transactions 28
- --------------------------------------------------------
- Telephone Exchange Plan 28
- --------------------------------------------------------
- Dividends, Capital Gains and Taxes 29
- --------------------------------------------------------
- Distribution Options 29
- --------------------------------------------------------
- Taxes 29
- --------------------------------------------------------
For More Information 31
- --------------------------------------------------------
Please Note:
Be sure to read this prospectus before you invest. And please keep it on file
for future reference.
It presents essential facts about the Artisan Funds, including investment
strategies, management fees, and services available to you as an investor.
If you have a question about any part of the prospectus, please call the number
below. An Artisan Funds representative will be happy to help you.
1-800-344-1770
<PAGE>
ARTISAN SMALL CAP FUND<F1>:
GOAL, STRATEGY, PHILOSOPHY
GOAL. Artisan Small Cap Fund invests for maximum long-term capital growth.
This goal may be changed without the approval of shareholders.
STRATEGY. Under normal circumstances, the Fund invests at least 65% of its
assets in the common stocks of small companies. A "small" company is one whose
total stock market value is less than $1.5 billion.
The Fund's focus is on well-managed companies with sustainable growth prospects
whose stocks appear undervalued, either because they lack investor recognition
or are temporarily out of favor.
PHILOSOPHY. The Fund's investment approach rests on a few basic beliefs.
- - Small companies tend to have better growth potential than large companies,
and are less likely to be broadly recognized.
- - Over time, small-cap stocks have outperformed large-cap stocks.
- - Stocks that are underfollowed or under-researched by Wall Street tend to be
less efficiently priced because of lack of attention by investors. Investors
demand a premium for the risk of incomplete information. By doing its own
research, Artisan Partners expects to reduce this risk and realize the
premium returns.
Through its research, the Fund analyzes a company's operating history,
financial health, competitive position and prospects for growth. And through
face-to-face meetings it assesses the quality of management - a critical
factor in small company success.
Fund management also estimates a company's intrinsic value. It does so to
determine if a prospective investment is undervalued, and if so, to what
degree. This emphasis on stock valuation relative to growth prospects sets
the Fund apart from pure "growth" or "value" funds. Thus, the Fund's style
can be characterized as "growth at a reasonable price" or "growth/value
blend."
- - Because small-caps can be more volatile and less liquid than other stocks,
the Fund pays special attention to the management of risk. It seeks to limit
risk by choosing companies with positive cash flows and sustainable growth
prospects, and by diversifying its holdings. It monitors each holding
closely, evaluating new information relative to the original reasons for
investing.
- - Under ordinary circumstances, the Fund is substantially fully invested in
common stocks. At times, however, Artisan Partners, the advisor to the Fund,
may determine that market or economic conditions warrant a temporary
defensive position. In this
<PAGE>
case, the Fund may hold up to 100% of its assets in cash, cash equivalents,
or short-term government or corporate obligations.
In choosing to take a temporary defensive position, the Fund would be trying
to avoid losses. If, however, the choice proved to be wrong, the Fund would
have a harder time achieving its goal of long-term capital growth.
- - The Fund may engage in active and frequent trading to achieve its principal
investment strategies. A higher rate of portfolio turnover may result in
increased transaction expenses and the realization of capital gains or
losses.
<F1> ARTISAN SMALL CAP FUND IS CLOSED TO NEW INVESTORS. PLEASE REFER TO THE
SHAREHOLDER AND ACCOUNT POLICIES SECTION OF THE PROSPECTUS TO DETERMINE NEW
ACCOUNT ELIGIBILITY CRITERIA.
ARTISAN INTERNATIONAL FUND
GOAL, STRATEGY, PHILOSOPHY
GOAL. Artisan International Fund seeks maximum long-term capital growth. This
goal may be changed without the approval of shareholders.
STRATEGY. Under normal circumstances, the Fund invests at least 65% of its
total assets in stocks of foreign companies.
PHILOSOPHY.
- - From time to time, many foreign economies have grown faster than our own
(though some have not), and the returns on investments in these countries
have exceeded those of similar U.S. investments.
- - Foreign markets can offer opportunities that are unavailable domestically.
Thus, international investing brings you greater diversification and enables
you to take advantage of changes in foreign economies and equity markets.
- - Through its own research process, the Fund seeks to identify promising
investment opportunities.
<PAGE>
The Fund's research method is both "top-down" and "bottom-up." This means
that country selection and stock selection are equally important parts of the
investment process. The Fund favors countries and regions with improving or
rapidly expanding economies. To determine economic growth, it assesses
factors such as gross domestic product growth, corporate profitability,
current account and currency issues, interest rates, economic climate and
social change. Having identified favorable areas, the Fund eliminates those
whose stock markets appear to be overvalued.
In countries where economic and market conditions appear to be attractive,
the Fund seeks companies that seem well positioned for strong, sustainable
growth. It focuses on well-managed companies with above-average financial
characteristics, increasing earnings per share and dominant or increasing
market share in strong industries. Having isolated promising companies, the
Fund then limits its purchases to those whose stocks are attractively valued.
- - The Fund tries to lower the risks inherent in foreign investing though a
highly selective investment strategy and broad diversification by country,
industry and company.
- - Under ordinary circumstances, the Fund is fully invested fully in common
stocks. At times, however, Artisan Partners, the advisor to the Fund, may
determine that market or economic conditions warrant a temporary defensive
position. In this case, the Fund may hold up to 100% of its assets in cash,
cash equivalents, or short-term government or corporate obligations.
- - Changes in security prices, currency exchange rates and other factors can
affect the portfolio's value. To increase or decrease its exposure to the
effects of possible changes, the Fund may use various techniques, including
currency exchange transactions.
ARTISAN MID CAP FUND:
GOAL, STRATEGY, PHILOSOPHY
GOAL. Artisan Mid Cap Fund seeks maximum long-term capital growth. This goal
may be changed without the approval of shareholders.
STRATEGY. The Fund invests primarily in the common stocks of medium-sized
companies.
A medium-sized company is one whose total stock market value falls within the
range of companies in the S&P 400 Index. As of August 19, 1998, this index
included companies with capitalizations between approximately $356 million and
$24.5 billion. Over time, the capitalization range of the companies in the
index will change. As it does, the size of the companies in which the Fund
invests will change.
PHILOSOPHY.
<PAGE>
- - Medium-size companies can offer attractive investment characteristics. They
are typically small enough to have higher growth potential than the general
U.S. economy, mature enough to have seasoned management and established,
multiple product lines, and large enough to have liquid trading markets.
- - Relative to large companies, medium-size companies typically have analyst
coverage by fewer Wall Street firms. For this reason, they are more likely to
be trading at prices that reflect incomplete or inaccurate information.
- - The Fund prefers to invest in companies with "franchise" characteristics.
These could be a proprietary technology, dominant market share or some other
form of sustainable competitive advantage.
The Fund also favors companies with predictable streams of cash flow through
real growth in demand for their products or services. Such companies are
well positioned to leverage opportunities in their markets.
If the Fund is impressed with a company's competitive position and prospects
for growth, it then defines and researches key investment issues. It also
estimates the company's intrinsic value, and will buy the stock only if it
sells well below that estimate.
- - The Fund tries to lower the risks of investing in medium-sized companies
through broad diversification by industry and company, as well as continuous
monitoring of each holding.
- - Under ordinary circumstances, the Fund is fully invested in common stocks. At
times, however, Artisan Partners, the advisor to the Fund, may determine that
market or economic conditions warrant a temporary defensive position. In this
case, the Fund may hold up to 100% of its assets in cash, cash equivalents,
or short-term government or corporate obligations.
ARTISAN SMALL CAP VALUE FUND<F1>:
GOAL, STRATEGY, PHILOSOPHY
GOAL. Artisan Small Cap Value Fund seeks long-term capital growth. This goal
may be changed without the approval of shareholders.
STRATEGY. The Fund invests primarily in companies with a total stock market
value of less than $1.5 billion.
PHILOSOPHY.
<PAGE>
- - The Fund purchases a stock only at what it considers a bargain price...a price
that - because of market forces - is greatly below Artisan Partners' (the
advisor to the Fund) assessment of the true value of the business.
- - In looking for bargains, the Fund uses its own research process. The focus is
on individual companies, rather than on trends in the economy or securities
markets.
- - The Fund's research may uncover bargains in one or more of several
categories:
Turnarounds. At times, the Fund invests in companies that have had poor
results, but that Artisan Partners believes will be able to
substantially improve.
Undiscovered or unsponsored stocks. There need not be something wrong
with a company to qualify it as a bargain. Sometimes a company may
simply be little known to the investing public. Small companies
typically have little or no coverage by Wall Street analysts, so they
often lack a following among investors and become undervalued.
Companies with hidden assets. Undervalued real estate, unrecognized
business lines and other "hidden" assets may not be given enough credit
by investors, thus providing investment opportunity for the Fund.
Companies in the process of major change. A company's stock may not
reflect positive change in the business until it shows up in financial
results. The Fund tries to invest ahead of this broad recognition,
which, logically, can cause the stock's price to rise.
- - For the Fund to purchase a stock, a bargain price alone is not enough. To
provide an additional margin of safety, the Fund looks for two other
attributes:
Financial strength. The Fund favors companies with little debt and
positive cash flow.
Favorable economics. A company with acceptable returns on capital and
free cash over its business cycle is less likely to experience eroding
values over the long term.
Under ordinary circumstances, the Fund remains fully invested in equity
securities. At times, however, Artisan Partners may determine that market or
economic conditions warrant a temporary defensive position. In this case, the
Fund may hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.
<F1> PLEASE NOTE, THE ARTISAN SMALL CAP VALUE FUND INTENDS TO CLOSE TO NEW
INVESTORS WHEN IT REACHES ABOUT $400 MILLION IN TOTAL ASSETS. AFTER THE
FUND CLOSES, IT WILL APPLY CRITERIA SIMILAR TO THOSE USED BY ARTISAN SMALL
CAP FUND TO DETERMINE ELIGIBILITY FOR OPENING A NEW ACCOUNT.
<PAGE>
INVESTMENT RISKS YOU SHOULD CONSIDER
All of the Artisan Funds invest primarily in common stocks. Over time, stocks
have shown greater growth than other types of securities. In the short-term,
however, stock prices may fluctuate widely in response to company, market or
economic news. The value of a Fund's investments and the returns it generates
vary from day to day. Performance depends on Artisan Partners' skills in
identifying trends and picking stocks, as well as on general market and economic
conditions. When you sell your shares, they may be worth more or less than you
paid for them.
The Funds do not pursue income, and are not, alone or together, a balanced
investment plan. In addition, there can be no assurance that they will achieve
their investment goals.
Below are the principal investment risks of each Fund.
ARTISAN SMALL CAP FUND
- - During some periods, stocks of small companies as an asset class have under-
performed the stocks of large companies.
- - Stocks of small companies tend to be more volatile and less liquid than
stocks of large companies. Small companies may have a shorter history of
operations, less access to additional financing, and a less diversified
product line - making them more susceptible to market pressures.
ARTISAN INTERNATIONAL FUND
- - Foreign stocks as an asset class may under-perform U.S. stocks.
- - Foreign stocks tend to be more volatile than U.S. stocks.
- - Investments in foreign securities (including American Depository Receipts, or
"ADRs") are subject to risks. These risks include currency exchange rate
fluctuation; less available public information about the issuers of
securities; less stringent regulatory standards; lack of uniform accounting,
auditing and financial reporting standards; and country risks including less
liquidity, high inflation rates, unfavorable economic practices, and
political instability.
ARTISAN MID CAP FUND
- - Stocks of medium-sized companies tend to be more volatile than those of large
companies.
- - During some periods, stocks of mid-sized companies, as an asset class, have
underperformed the stocks of small and large companies.
ARTISAN SMALL CAP VALUE FUND
<PAGE>
- - During some periods, small company stocks as an asset class have
underperformed the stocks of large companies.
- - Stocks of small companies tend to be more volatile and less liquid than
stocks of large companies. Small companies may have a shorter history of
operations, less access to additional financing, and a less diversified
product line - making them more susceptible to market pressures.
- - Value stocks may fall out of favor with investors.
- - Value stocks may underperform other asset types during given periods.
HOW DO I KNOW IF AN ARTISAN FUND IS RIGHT FOR ME?
Investing with Artisan may be suitable for you if:
- - You want to invest for maximum long-term growth, rather than income.
- - You are a patient investor, and able to maintain your investment over a
relatively long period of time.
- - You understand the specific risks of investing in a particular market segment
- small-caps, mid-caps, value-based stocks or foreign stocks.
ARTISAN FUNDS' INVESTMENT RETURNS
A Fund's returns vary both day-to-day and over the long term. Each return
measure below reflects this variability.
- - TOTAL RETURN is the actual change in the value of an investment over a given
period. It includes the reinvestment of dividends and capital gains
distributions.
- - AVERAGE ANNUAL TOTAL RETURN does not represent actual year-by-year results.
Instead, it is a hypothetical figure. For periods of more than one year, it
indicates what would have been constant annual performance. In other words,
average annual total return is a way to "smooth out" variations in
performance over time.
- - Returns are based on PAST RESULTS; they do not predict future performance.
Nor do they include the effect of income taxes paid by investors.
- - The Funds may sometimes COMPARE PERFORMANCE with certain rankings, averages
or, as shown below, benchmark indexes.
<PAGE>
The bar charts and tables below illustrate certain risks of investing in the
Funds. As you can see, the returns achieved by each Fund vary from year to
year, as does its performance relative to the market in which it invests.
In the bar charts and tables below, the Funds' average annual returns may be
compared to the returns of the following market indexes:
- -----------------------------------------------------------------------------
ARTISAN FUND INDEX
- -----------------------------------------------------------------------------
Artisan Small - Russell 2000 index is an unweighted index of small
Cap Fund companies, formed by taking the largest 3,000 companies
and eliminating the largest 1,000 companies.
- Lipper Small Cap Fund index reflects the net asset value
weighted return of the 30 largest small-cap funds.<F1>
- -----------------------------------------------------------------------------
Artisan - Morgan Stanley's Europe, Australasia and Far East
International (EAFE) index is an unmanaged index of companies
Fund throughout the world in proportion to world stock
market capitalization, excluding the U.S. and Canada.
- Lipper International Fund index reflects the net asset
value weighted return of the 30 largest international
equity funds.<F1>
- -----------------------------------------------------------------------------
Artisan Mid Cap - S&P 400 index is an unmanaged, market-weighted
Fund index of 400 mid-cap companies.
- Lipper Mid Cap Fund index reflects the net asset value
weighted return of the 30 largest mid-cap funds.<F1>
- -----------------------------------------------------------------------------
Artisan Small Cap - Russell 2000 index is an unweighted index of small
Value Fund companies, formed by taking the largest 3,000 companies
and eliminating the largest 1,000 companies.
- Russell 2000 Value index is an unmanaged index of small
companies that measures the performance of those Russell
2000 companies with lower price-to-book ratios and lower
forecasted growth values.<F1>
- -----------------------------------------------------------------------------
<F1> An additional index is included to compare the Fund's performance with
funds that have similar investment objectives. All returns reflect
reinvested dividends.
<PAGE>
TOTAL RETURN FOR EACH CALENDAR YEAR SINCE INCEPTION
BY FUND
Artisan Small Russell Lipper Small Cap
Cap Fund 2000 Index Fund Index
-------------- -------------- --------------
Commencement of
Operations
(3/28/95) through
12/31/95 32.8% 23.1% 24.3%
1996 11.9% 16.5% 14.4%
1997 22.7% 22.4% 15.0%
Artisan Lipper
International Fund EAFE International
(International Shares)<F1> Index Fund Index
-------------- -------------- --------------
1996 34.4% 6.0% 14.4%
1997 3.5% 1.8% 7.2%
<F1> For the period from commencement of operations on December 28, 1995
through December 31, 1995, the Fund's total return was 0.00%
<PAGE>
Artisan S&P Lipper Mid Cap
Mid Cap Fund 400 Index Fund Index
-------------- -------------- --------------
Commencement of
Operations
(6/27/97) through
12/31/97 28.1% 15.9% 9.1%
Artisan Small Russell Russell 2000
Cap Value Fund 2000 Index Value Index
-------------- -------------- --------------
Commencement of
Operations
(9/29/97) through
12/31/97 3.1% -2.8% 2.2%
<PAGE>
Average Annual Total Returns
- ------------------------------------------------------------------
For the 12 From
month period inception
Fund ending 12/31/97 through 12/31/97
- ------------------------------------------------------------------
Artisan Small Cap Fund
(3/28/95 inception) 22.7% 24.2%
- ------------------------------------------------------------------
Artisan International Fund<F1>
(12/28/95 inception) 3.5% 17.8%
- ------------------------------------------------------------------
Artisan Mid Cap Fund
(6/27/97 inception) 28.1%<F2> 28.1%<F2>
- ------------------------------------------------------------------
Artisan Small Cap Value Fund
(9/29/97 inception) 3.1%<F2> 3.1%<F2>
- ------------------------------------------------------------------
<F1> Effective July 1, 1997, the Fund began offering an
institutional class of shares for institutional investors
meeting certain minimum investment requirements. That class of
shares is offered by a separate prospectus.
<F2> Fund not in existence for 12 month period.
ADDITIONAL PERFORMANCE INFORMATION
- -----------------------------------------------------------------------------
1998 Best Quarter Worst Quarter
Performance Return Since Return Since
Fund through 6/30/98 Inception Inception
- -----------------------------------------------------------------------------
Artisan Small Cap 3.6% 16.3% - 4.8%
Fund 2nd Quarter 1st Quarter
(3/28/95 inception) 1997 1997
- -----------------------------------------------------------------------------
Artisan International 30.4% 20.2% - 6.3%
Fund 1st Quarter 4th Quarter
(12/28/95 inception) 1998 1997
- -----------------------------------------------------------------------------
Artisan Mid Cap 14.0% 25.5% - 0.7%
Fund 3rd Quarter 2nd Quarter
(6/27/97 inception) 1997 1998
- -----------------------------------------------------------------------------
Artisan Small Cap 10.3% 8.8% 1.3%
Value Fund 1st Quarter 2nd Quarter
(9/29/97 inception) 1998 1998
- -----------------------------------------------------------------------------
ARTISAN FUNDS' EXPENSES
Below are the fees and expenses that you pay if you buy and hold shares in an
Artisan Fund.
<PAGE>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT<F1>)
Sales charge (load) on purchases None
Exchange fee None
Redemption fee None
<F1> A shareholder requesting payment of redemption proceeds by wire must pay
the cost of the wire (currently $5).
ANNUAL FUND OPERATING EXPENSES ARE FOR THE FISCAL YEAR ENDING 6/30/98 (EXPENSES
THAT ARE DEDUCTED FROM FUND ASSETS) AND ARE EXPRESSED AS A PERCENTAGE OF AVERAGE
NET ASSETS.
- -------------------------------------------------------------------------
SMALL CAP
EXPENSE SMALL CAP INTERNATIONAL MID CAP VALUE
=======--------------=========----=============---=======------==========
Management Fee 1.00% 1.00% 1.00% 1.00%
- -------------------------------------------------------------------------
12(b)-1 Fee None None None None
- -------------------------------------------------------------------------
Other Expenses 0.33% 0.45% 1.00% 0.93%
- -------------------------------------------------------------------------
Total Operating
Expenses 1.33% 1.45% 3.64%<F1> 1.93%
- -------------------------------------------------------------------------
<F1> The total operating expense ratio excludes fees paid by the Advisor.
Including fees paid by the Advisor, the total operating expense ratio
for the Artisan Mid Cap Fund would have been 2.00%.
EXAMPLE. This example is intended to help you compare the cost of investing in
an Artisan Fund with that of investing other mutual funds. The example assumes
you invest $10,000 for the time periods indicated, earn a 5% return each year,
and that operating expenses remain constant.
- -------------------------------------------------------------------------
TIME SMALL CAP
PERIOD SMALL CAP INTERNATIONAL MID CAP VALUE
======---------------=========----=============---=======------==========
After 1 year $135 $148 $203 $196
- -------------------------------------------------------------------------
After 3 years $421 $459 $627 $606
- -------------------------------------------------------------------------
After 5 years $729 $792 $1,078 $1,042
- -------------------------------------------------------------------------
<PAGE>
After 10 years $1,601 $1,735 $2,327 $2,254
- -------------------------------------------------------------------------
This example is for illustration only. It is not meant to suggest actual or
expected costs or returns, which may be more or less than the amounts shown.
ARTISAN FUNDS' FINANCIAL HIGHLIGHTS
The following tables are intended to help you understand each Fund's financial
performance since it began operations. Certain information reflects financial
results for a single Fund share. Total returns represent the rate you would
have earned [or lost] on an investment, assuming reinvestment of all dividends
and distributions. This information was audited by PricewaterhouseCoopers LLP,
independent accountants. Their unqualified report, along with each Fund's
financial statement, is included in the annual report, which is available on
request. For each year shown, all information is for the fiscal year ended June
30.
<TABLE>
<CAPTION>
Small Cap Fund
-------------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
For a share outstanding throughout each period 6/30/98 6/30/97 6/30/96 6/30/95 <F1>
--------- --------- --------- ---------
<C> <C> <C> <C>
Net asset value, beginning of period $15.11 $14.67 $11.52 $10.00
Income from investment operations:
Net investment loss (0.10) (0.04) (0.07) (0.01)
Net realized and unrealized gains on securities 2.23 1.55 3.32 1.53
--------- --------- --------- ---------
Total from investment operations 2.13 1.51 3.25 1.52
Distributions paid to shareholders:
Net realized gains on investment transactions (2.58) (1.07) (0.10) -
--------- --------- --------- ---------
Net asset value, end of period $14.66 $15.11 $14.67 $11.52
========= ========= ========= =========
Total return 14.7% 11.3% 28.3% 15.2%<F2>
Ratios/supplemental data:
Net assets, end of period (millions) $304.1 $267.8 $400.0 $99.3
Ratio of expenses to average net assets 1.33% 1.41% 1.52% 2.00%<F3>
Ratio of net investment income to average (0.74%) (0.73%) (0.75%) (0.59%)<F3>
net assets
Portfolio turnover rate 134.67% 87.18% 105.19% 9.28%<F2>
</TABLE>
<F1> For the period from commencement of operations (March 28, 1995) through
June 30, 1995.
<F2> Not annualized.
<F3> Annualized.
<PAGE>
INTERNATIONAL FUND
--------------------------------------------
Year Ended Year Ended Period Ended
6/30/98 6/30/97 6/30/96
For a share outstanding International International International
throughout each period Shares Shares Shares<F1>
------------- ------------- -------------
Net asset value, beginning
of period $14.48 $12.08 $10.00
Income from investment
operations:
Net investment income 0.06<F2> 0.07 0.04
Net realized and unrealized
gains on securities and
foreign currency transactions 3.04 2.44 2.04
--------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 3.1 2.51 2.08
--------- --------- ---------
Distributions paid to shareholders:
Net investment income -0.2 -0.02 0
Net realized gains on investment
transactions -1.13 -0.09 0
--------- --------- ---------
TOTAL DISTRIBUTIONS PAID
TO SHAREHOLDERS -1.33 -0.11 0
--------- --------- ---------
NET ASSET VALUE, END OF PERIOD $16.25 $14.48 $12.08
========= ========= =========
Total return 24.1% 20.9% 20.8%<F3>
Ratios/supplemental data:
Net assets, end of
period (millions) 414.5<F5> 449.2 71.5
Ratio of expenses to average
net assets 1.45% 1.61% 2.50%<F4>
Ratio of net investment income
to average net assets 0.37% 1.07% 1.60%<F4>
Portfolio turnover rate 109.42% 103.66% 57.00%<F3>
<F1> For the period from commencement of operations (December 28, 1995) through
June 30, 1996.
<F2> Computed based on average shares outstanding.
<F3> Not annualized.
<F4> Annualized.
<F5> Does not include assets represented by Institutional Shares,
which were first offered for sale on July 1, 1997.
Mid Cap Fund
--------------------------
For a share outstanding Year Ended Period Ended
throughout each period 6/30/98 6/30/97<F1>
----------- -----------
Net asset value, beginning of period $10.00 $10.00
Income from investment operations:
Net investment loss (0.08) -
Net realized and unrealized gains on securities 4.56 -
--------- ---------
<PAGE>
Total from investment operations 4.48 -
--------- ---------
Distributions paid to shareholders:
Net realized gains on investment transactions (0.79) -
--------- ---------
Net asset value, end of period $13.69 $10.00
========= =========
Total return 46.1% 0.0%<F2>
Ratios/supplemental data:
Net assets, end of period (millions) $12.8 $1.8
Ratio of expenses to average net assets 2.00%<F4> 0.00%<F3>
Ratio of net investment loss to
average net assets (0.77)%<F4> 0.00%<F3>
Portfolio turnover rate 235.65% 0.00%<F2>
<F1> For the period from commencement of operations (June 27, 1997) through
June 30, 1997.
<F2> Not annualized.
<F3> Annualized.
<F4> The ratios of expenses to average net assets and net investment loss to
average net assets include fees paid by the Adviser. Absent fees paid by
the Adviser, the ratios of expenses to average net assets and net
investment loss to average net assets would have been 3.64% (2.41%),
respectively.
Small Cap
Value Fund
------------
Period Ended
June 30,
For a share outstanding throughout each period 1998<F1>
------------
Net asset value, beginning of period $10.00
Income from investment operations:
Net investment loss (0.03)
Net realized and unrealized gains on securities 1.40
---------
Total from investment operations 1.37
---------
Net asset value, end of period $11.37
=========
Total return 13.7%<F2>
Ratios/supplemental data:
Net assets, end of period (millions) $47.2
Ratio of expenses to average net assets 1.93%<F3>
Ratio of net investment loss to average net assets (0.50)%<F3>
Portfolio turnover rate 52.58%<F2>
<F1> For the period from commencement of operations (September 29, 1997) through
June 30, 1998.
<F2> Not annualized.
<F3> Annualized.
<PAGE>
ORGANIZATION, MANAGEMENT and MANAGEMENT FEES
ORGANIZATION. Each Artisan Fund is a series of Artisan Funds, Inc.
MANAGEMENT. Each Artisan Fund is managed by Artisan Partners Limited
Partnership, which selects the Fund's investments and handles its business
affairs under the direction of the board of directors. Artisan Partners was
organized in 1994 and currently manages over $1.3 billion for Artisan Funds and
institutional clients. Artisan Partners is a limited partnership managed by its
general partner, Artisan Investment Corporation. The address is: Artisan
Partners, 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202.
ARTISAN SMALL CAP FUND
CARLENE MURPHY ZIEGLER, portfolio co-manager, is a Managing Director of Artisan
Partners and Director and President of Artisan Funds. Prior to founding Artisan
Partners in 1994, she was portfolio co-manager of the Strong Common Stock Fund
and Strong Opportunity Fund.
Ms. Ziegler holds BA and MA degrees from the University of Illinois and an MBA
from the University of Chicago Graduate School of Business. She is a Chartered
Financial Analyst and member of the Barron's Roundtable.
MILLIE ADAMS HURWITZ, portfolio co-manager, is a Partner of Artisan Partners and
a Vice President of Artisan Funds. She joined Artisan Partners in 1995 as
senior analyst for small-capitalization growth equity portfolios. From 1992-
1995, Ms. Hurwitz served as a portfolio co-manager with Stein Roe & Farnham.
Ms. Hurwitz holds a BA degree from Northwestern University and a Master of
Management degree from the Kellogg Graduate School of Management at Northwestern
University.
ARTISAN INTERNATIONAL FUND
MARK L. YOCKEY, portfolio manager, is a Partner of Artisan Partners and a Vice
President of Artisan Funds. He joined Artisan Partners in 1995. From 1990-1995,
Mr. Yockey was portfolio manager of United International Growth Fund and a Vice
President of Waddell & Reed. Prior to assuming fund management
responsibilities, he served as an equity analyst with Waddell & Reed.
Mr. Yockey holds a BA and MBA from Michigan State University and is a Chartered
Financial Analyst.
<PAGE>
ARTISAN MID CAP FUND
ANDREW C. STEPHENS, portfolio manager, is a Partner of Artisan Partners and a
Vice President of Artisan Funds. He joined Artisan Partners in 1997. From
1993-1997, Mr. Stephens was portfolio co-manager of the Strong Asset Allocation
Fund. From 1994-1996, he served as senior research analyst for the Strong
Common Stock Fund and Strong Opportunity Fund.
Mr. Stephens holds a BS degree in Economics from the University of Wisconsin -
Madison.
ARTISAN SMALL CAP VALUE FUND
SCOTT C. SATTERWHITE, portfolio manager, is a Partner of Artisan Partners and a
Vice President of Artisan Funds. Prior to joining Artisan Partners in 1997, Mr.
Satterwhite was Senior Vice President and portfolio manager at Wachovia
Corporation. From 1993-1997, Mr. Satterwhite was portfolio manager of the
Biltmore Special Values Fund in addition to being a personal trust portfolio
manager and manager of the Georgia Personal Trust Portfolio Group.
Mr. Satterwhite earned his BA from the University of the South and MBA from
Tulane University. He is a Chartered Financial Analyst.
MANAGEMENT FEES
Each Fund pays a management fee to Artisan Partners for serving as its
investment adviser and providing administrative services. The fee is determined
as a percentage of average daily net assets. For the fiscal year ended June 30,
1998, the management fees paid by the Funds were:
Artisan Small Cap Fund 1.00%
Artisan International Fund 1.00%
Artisan Mid Cap Fund 1.00%
Artisan Small Cap Value Fund was in operation for only part of the year. Like
all Artisan Funds, it pays a management fee at the annual rate of 1.00% on the
first $500 million of average daily net assets, declining to 0.975% on the next
$250 million, 0.950% on the next $250 million, and 0.925% on average daily net
assets in excess of $1 billion.
<PAGE>
INVESTING WITH ARTISAN FUNDS
Each Artisan Fund is 100% no-load.
This means you pay no sales charges to buy or sell your shares, to reinvest your
dividends or to exchange from one Artisan Fund to another. Nor do you pay a
12b-1 fee.
Right from the start, your entire investment goes to work for you.
MINIMUM INVESTMENTS
- -----------------------------------
To open an account $1,000
- -----------------------------------
To add to an account $50
- -----------------------------------
Minimum balance required $500
- -----------------------------------
The Fund will waive the initial minimum of $1,000 if you invest through the
Automatic Investment Plan, explained later.
HOW TO BUY SHARES
MAIL
TO OPEN AN ACCOUNT:
Complete and sign the new account application. Mail it to the address on the
application, along with your check or money order for $1,000 or more. Make
you check or money order payable to "Artisan Funds" or to the name of the fund
in which you are investing. Third-party checks will not be accepted.
FOR OVERNIGHT DELIVERY:
Artisan Funds
c/o Boston Financial
66 Brooks Drive
Braintree, MA 02184
TO ADD TO AN ACCOUNT:
Put your account number on a check or money order for $50 or more. Make you
check or money order payable to "Artisan Funds" or to the name of the fund in
which you are investing. Mail it, along with the form at the bottom of your
account statement, to the address on your account statement. Third-party
checks will not be accepted.
FOR OVERNIGHT DELIVERY:
Artisan Funds
c/o Boston Financial
66 Brooks Drive
Braintree, MA 02184
PHONE 1-800-344-1770
TO OPEN AN ACCOUNT:
You may open a new account by phone
<PAGE>
ONLY by exchange of $1,000 or more from your identically registered account in
another of the Artisan Funds.
You may establish the telephone transaction option by electing it on your new
account application. If you did not do so, please request and complete the
shareholder options form.
TO ADD TO AN ACCOUNT:
The telephone transaction option enables you to add from $50 to $25,000 to
your account by phone. It also lets you exchange among Artisan Funds by
phone.
You may elect the telephone transaction option on your applications or - at a
later date - by completing the shareholder options form.
WIRE
TO OPEN AN ACCOUNT:
Please call 1-800-344-1770 for instructions on opening an account by wire.
TO ADD TO AN ACCOUNT:
Please call 1-800-344-1770 for instructions on adding to an account by wire.
AUTOMATIC INVESTMENT PLAN (AIP)
This service is a convenient way to make regular, systematic investments into
your Artisan Fund. Once a month, you purchase shares by transferring money from
your designated checking or savings account directly into your Artisan Fund.
Simply decide how much you want to invest - the monthly minimum is $50 - and the
day - between the 3rd and the 28th - that you want the transfer to take place.
The rest is automatic. There are no phone calls to make, no monthly forms to
complete, no trips to the post office. And you're not locked in. If you wish to
discontinue the Plan, just notify us in writing.
TO OPEN AN ACCOUNT:
Complete and sign the Automatic Investment Plan section of the account
application.
If you choose the Plan when you open your account, the minimum initial
investment will be waived.
TO ADD TO AN ACCOUNT:
To add this convenient feature to your Artisan Fund account, please call
1-800-344-1770 for a shareholder options form.
<PAGE>
HOW TO SELL SHARES
You may request to take money out of your account at any time by selling some or
all of your shares. You will receive the share price calculated after your
order is received and accepted by the Fund or its authorized agent.
- - Some redemptions require SIGNATURE GUARANTEES. See page 27.
- - The following procedures apply ONLY TO NON-IRA ACCOUNTS. To sell shares in
an IRA, you must send us both a letter of instruction as described below and
an IRA distribution form. You may request the form by calling 1-800-344-
1770.
MAIL
INDIVIDUAL, JOINT OWNERS, SOLE PROPRIETORSHIPS, UGMA, UTMA
Mail a letter of instruction including: the Fund's name; your account number;
each owner's name and address; the dollar amount or number of shares to be sold;
and the signature of each owner as it appears on the account.
TRUST
All Trustees must sign the letter of instruction.
FOR REGULAR MAIL DELIVERY:
Artisan Funds
c/o Boston Financial
P.O. Box 8412
Boston, MA 02266-8412
FOR OVERNIGHT DELIVERY:
Artisan Funds
c/o Boston Financial
66 Brooks Drive
Braintree, MA 02184
ALL OTHERS
Call 1-800-344-1770 for instructions.
PHONE 1-800-344-1770
Available to all account types except IRAs
With the telephone redemption option, you can sell from $500 to $25,000 worth of
shares per day by telephone. You automatically have this option unless you
declined it on your account application. If you did decline and would like to
add it, call 1-800-344-1770.
WIRE
Available to all account types except IRAs
We will transmit payment by wire to a pre-authorized bank account. Usually, the
funds
<PAGE>
will arrive at your bank the next business day. This option is available to you
if you enclosed a voided check with your account application or have
subsequently completed a shareholder options form to have this featured added to
your Artisan Funds account. The fee for this service is currently $5.00.
SYSTEMATIC WITHDRAWALS
Available to all account types except IRAs
This service lets you withdraw a set amount from your account at regular
intervals. To be eligible for systematic withdrawal, you must have at least
$5,000 in your Artisan Fund Account. You must withdraw at least $50 per
transaction. If you'd like to add this option, please call us at 1-800-344-
1770.
WHAT TYPE OF ACCOUNT WOULD YOU LIKE?
RETIREMENT ACCOUNTS REQUIRE A SPECIAL APPLICATION. Please call us at 1-800-344-
1770 to request one.
- --------------------------------------------------------------------------------
INDIVIDUAL OR JOINT OWNERSHIP. These are intended for your general investment
needs. Individual accounts are owned by one person. Joint accounts can have
two or more owners.
- --------------------------------------------------------------------------------
GIFT OR TRANSFER TO A MINOR (UGMA, UTMA). These custodial accounts let you give
money to a minor for any purpose. This gift is irrevocable, and the minor gains
control of the account once he/she reaches the age of majority. Your
application should include the minor's social security number.
- --------------------------------------------------------------------------------
TRUST FOR ESTABLISHED EMPLOYEE BENEFIT OR PROFIT-SHARING PLAN. The trust or
plan must be established before you can open an account. Please include the
date of the trust or plan on the application.
- --------------------------------------------------------------------------------
BUSINESS OR ORGANIZATION. This account is for a group such as a corporation,
association, partnership or similar institution. Along with your application,
please enclose a certified corporate resolution that indicates which officers
are authorized to act.
- --------------------------------------------------------------------------------
RETIREMENT. A retirement account enables you to defer taxes on investment
income and capital gains. Your contributions may be tax-deductible. CALL US FOR
A SPECIAL APPLICATION.
- - INDIVIDUAL RETIREMENT ACCOUNT (IRA). You may invest up to $2,000 per tax
year in an IRA if you are of legal age, under 70 1/2 and have "earned" (non-
investment) income. If your spouse has less than $2,000 in earned income, he
or she may still contribute up to $2,000 in an IRA, so long as your combined
earned income is at least $4,000.
- - ROTH IRA. Compared to the traditional IRA, above, this new version has
different eligibility requirements and tax treatment. If you're a single
taxpayer with adjusted gross income up to $95,000, you may contribute up to
$2,000 per year - or up to $4,000 per year if you're married with adjusted
gross income up to $150,000 per year. Your contributions to a Roth IRA are
not tax-deductible. But your withdrawals are not taxable if you've held your
IRA for at least five years and are at least 59 1/2, disabled, or use the
proceeds (up to $10,000) to purchase a first home. The amount you can
contribute to a Roth IRA in any year is reduced by the amount you contribute
to a traditional IRA, and
<PAGE>
vice-versa.
For more information about the tax advantages and consequences of these various
IRAs, please consult your tax adviser.
- - ROLLOVER IRA. This plan offers you special tax advantages for certain
distributions from employer-sponsored retirement plans.
- - SIMPLIFIED EMPLOYEE PENSION PLAN (SEP-IRA). If you have a small business or
self-employment income, this plan lets you make annual tax-deductible
contributions of up to 15% of the first $160,000 of compensation for you and
any eligible employees.
- - OTHER RETIREMENT PLANS. You may also use an Artisan Fund for Keogh, profit
sharing and money purchase plans, 403(b) plans and 401(k) plans. The plan
trustee must establish the appropriate account; Artisan Funds does not offer
prototype plans.
The above is just a summary of the types of retirement accounts available. When
we send your retirement-account application, we will include an IRA DISCLOSURE
STATEMENT. It contains more detailed information about the requirements for
specific retirement accounts, including a summary of the custodian fees which
you may incur for account set-up and maintenance.
SHAREHOLDER AND ACCOUNT POLICIES
STATEMENTS AND REPORTS
As an Artisan Fund investor, you will receive:
- - Confirmation statements - after every transaction in your account or change
in your account registration.
- - Quarterly account statements.
- - Annual and semi-annual reports with financial statements.
- - Year-end tax statements.
We suggest you keep each quarterly and year-end account statement with your
other important financial papers. You may need them for tax purposes.
If you need copies of statements, call 1-800-344-1770. Copies of this year's or
last year's statements are free of charge; for earlier years, there is a $10
processing fee.
SHARE PRICE
Each Artisan Fund is open for business every day the New York Stock Exchange
("NYSE") is open. Shares will not be priced on days when the NYSE is closed.
Each Artisan Fund buys and sells its shares each day, at the net asset value per
share.
A Fund's NET ASSET VALUE PER SHARE is the value of a single share. It is
computed by totaling the Fund's investments, cash, and other assets, subtracting
its liabilities, then dividing the result by the number of shares outstanding.
<PAGE>
The net asset value is computed daily at the NYSE closing time - usually 3:00
p.m. Central time, but sometimes earlier.
Fund securities and assets are valued chiefly by quotations from the primary
market in which they are traded. If quotations are not readily available, they
are valued by a method that the board of directors believes reflects a fair
value.
Values of foreign securities are translated from local currencies into U.S.
dollars using current exchange rates. With respect to foreign securities _
traded primarily on foreign exchanges - a Fund's share price may change on days
when the Fund is not open for purchase or sale.
PURCHASES
- - Your purchases must be in U.S. dollars, and your checks must be drawn on U.S.
banks.
- - The Funds do not accept cash, credit cards or third-party checks.
- - If your check or telephone purchase order does not clear, your purchase will
be cancelled. You will also be liable for any resulting losses or fees a
Fund or its transfer agent incurs.
- - The price you pay for shares is the net asset value per share next calculated
after your investment is received. An order is considered received when the
Fund or its authorized agent receives and accepts an application or
appropriate instruction along with the intended investment if applicable.
- - A Fund may reject any purchase order it deems inappropriate - for example,
one that appears so large that it would disrupt management of the Fund, or an
order from someone ineligible to invest.
- - A holiday, weekend or other interruption, can affect the normal processing of
an investment. Thus, in the Automatic Investment Plan (AIP), your monthly
investment may be transferred from your bank to your Fund account either
earlier or later than the date you selected. Artisan Funds will not be
responsible for non-sufficient funds fees. If your AIP does not clear, your
purchase will be cancelled. You will also be liable for any resulting losses
or fees a Fund or its transfer agent incurs.
- - A Fund may immediately terminate your ability to make automatic investments
and telephone purchases if an item is not paid by your financial institution.
ARTISAN SMALL CAP FUND IS CLOSED TO NEW INVESTORS. YOU MAY, HOWEVER, OPEN AN
ACCOUNT IF YOU MEET ONE OF THESE CRITERIA:
- - If you are already a shareholder, either in your own name or as beneficial
owner of shares held in someone else's name.
- - If your business or other organization is already a shareholder and you want
to open an account for an employee benefit plan sponsored by that
organization or an affiliate.
- - If you wish to make a transfer or "rollover" into a Fund IRA from an employee
benefit plan through which you hold shares of the Fund. If your plan does
not qualify
<PAGE>
for rollovers, you may still open a Fund account with all or part of the
proceeds of a distribution from the plan.
- - If your employee benefit plan is sponsored by an institution or affiliate
that also sponsors another such plan that held shares in the Fund on or
before February 27, 1996;
- - If you are a director or officer of Artisan Funds, Inc. a partner or employee
of Artisan Partners, or a member of the immediate family of any of those
people.
- - If you are a client of Artisan Partners or have an existing business
relationship with Artisan Partners and, in the judgment of Artisan Partners,
your investment in the Fund would not adversely affect Artisan Partners'
ability to manage the Fund effectively.
- - If you are a client of a financial adviser or planner who had at least $1
million of client assets invested with Artisan Funds on or before February
27, 1996, or at the time of your application.
YOU MAY ADD TO AN EXISTING ACCOUNT IN ARTISAN SMALL CAP FUND.
- - You may add to your Fund account(s) by purchasing additional shares and by
reinvesting distributions from the Fund.
- - An employee benefit plan that holds shares in the Fund may purchase
additional shares for the plan, even for new participants.
- - An eligible financial adviser or planner may purchase shares for any client,
existing or new.
The Fund does not intend to re-open to new investors. Call us at 1-800-344-1770
if you are not sure whether you qualify to invest.
ARTISAN SMALL CAP VALUE FUND INTENDS TO CLOSE TO NEW INVESTORS WHEN IT REACHES
ABOUT $400 MILLION IN TOTAL ASSETS. AFTER THE FUND CLOSES, IT WILL APPLY
CRITERIA SIMILAR TO THOSE USED BY ARTISAN SMALL CAP FUND TO DETERMINE
ELIGIBILITY FOR OPENING A NEW ACCOUNT.
MINIMUM BALANCES
It is very expensive for a Fund to maintain small accounts, and that cost is
borne by all the Fund's investors. For this reason, each Fund reserves the
right to close your account if its value falls below $500. However, before
closing a small account, the Fund would notify you and give you at least 30 days
to bring your account's value up to the minimum.
If you discontinue an Automatic Investment Plan before your account reaches
$1,000, that account may also be closed.
If you participate in systematic withdrawal and your account has insufficient
funds to meet a withdrawal, the amount remaining will be completely redeemed.
<PAGE>
AUTHORIZED AGENTS
The Fund may authorize certain financial services companies, broker-dealers or
other authorized agents to accept share purchase and redemption orders on the
Fund's behalf. If you buy shares through an authorized agent, you will pay the
Fund's net asset value per share plus any transaction charge imposed by the
agent.
It is possible that an authorized agent may not charge you a direct transaction
fee. It may, however, charge a fee for accounting and shareholder services that
it provides to the Fund on your behalf. This fee may be a percentage -
currently up to 0.35% - of the annual average value of your account. The Fund's
portion of this fee does not exceed what it would normally pay if your shares
were registered directly with its own transfer agent. Artisan Partners pays the
balance of the fee.
REDEMPTIONS
- - Normally, redemption proceeds will be mailed to you within seven days after
receipt of your redemption request.
- - If you have recently made a purchase, the Fund may withhold redemption
proceeds until it is reasonably satisfied that it has received payment. This
confirmation process can take up to fifteen days.
- - If you make a telephone redemption, the Fund will send payment in one of
three ways: (i) by mail; (ii) by Electronic Funds Transfer (EFT) to a pre-
authorized bank account; or (iii) to your bank account by wire transfer, the
cost of which (currently $5.00) will be deducted from the payment. Your bank
also may impose a fee for the incoming wire or incoming EFT. Payment by EFT
will usually arrive at your bank two banking days after your call. Payment
by wire is usually credited to your bank account on the next business day
after your call.
- - Redemptions may be suspended or payment dates postponed on days when, other
than weekends or holidays, the NYSE is closed, its trading is restricted or
as permitted by the SEC.
- - If you place a redemption order through an authorized agent, your redemption
proceeds will reflect the net asset value per share next computed after the
agent's receipt of your order, less any redemption fees imposed by the agent.
If a Fund sends you a check - for a redemption, systematic withdrawal payment or
cash distribution - that is returned "undeliverable" or remains uncashed for six
months, Artisan Partners will cancel the check and reinvest the proceeds in your
Fund at the net asset value per share on the date of cancellation. And, if
applicable, Artisan Partners will (a) cancel your systematic withdrawal
payments, honoring withdrawals only by request and (b) automatically reinvest
your future dividends and capital gains, even if you had elected cash payment.
Each Fund intends to pay all redemptions in cash. During any 90-day period for
any one shareholder, the Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the Fund's net assets. Redemptions in excess of
these limits may be paid wholly or partly by an in-kind distribution of
securities.
SIGNATURE GUARANTEES
<PAGE>
To protect you and your Fund from fraud, the following redemption requests and
account changes must be submitted in writing and include a signature guarantee;
- - If you wish to redeem more than $25,000 worth of shares.
- - If you add/change your name or add/remove an owner on your account;
- - If you add/change the beneficiary on your account.
- - If you ask that a check be mailed to an address other than the one on your
account.
- - If you ask that a check be made payable to someone other than the account
owner.
- - If you wish to add the telephone redemption option to your existing account;
- - If you wish to transfer the ownership of your account.
- - If you have changed the address on your account by phone within the last 60
days.
You should be able to obtain a signature guarantee from a bank, broker-dealer,
securities exchange or association, clearing agency, savings association or
credit union if authorized under state law A NOTARY PUBLIC CANNOT PROVIDE A
SIGNATURE GUARANTEE.
ACCOUNT REGISTRATION
If you wish to change the address on your account, call us at 1-800-344-1770.
Your Fund will send a written confirmation of the change to both your old and
new addresses.
We prefer that a change of address request be submitted in writing with a
signature guarantee. If you make your request by phone, we will not honor a
telephone redemption for the following 60 days. During that period, we will
require written requests with signature guarantees.
TELEPHONE TRANSACTIONS
You may perform many transactions - including exchanges, purchases and
redemptions - by telephone.
You may place telephone trades only between 7:00 a.m. and 3:00 p.m. Central time
on days when the NYSE is open for business.
To prevent unauthorized transactions in your account, your Fund will take
precautions designed to verify the identity of every caller. It may record a
call, request more information and send written confirmation of telephone
transactions. If the Fund fails to follow reasonable precautions, it may be
considered responsible for resulting losses.
You should verify the accuracy of each telephone transaction as soon as you
receive your confirmation statement.
TELEPHONE EXCHANGE PLAN
This plan permits you to transfer investments among the Artisan Funds. Each
exchange between accounts must be at least $1,000. The price of shares
exchanged is determined at the end of that day's trading session.
<PAGE>
Please note: An exchange is a sale and may have tax consequences for you.
TELEPHONE EXCHANGE PLAN RESTRICTIONS:
- - If you wish to exchange between Funds, be sure both accounts are registered
in the same name, with the same address and taxpayer identification number.
- - You may open a Fund account by telephone exchange from another Artisan Fund
account only if you previously chose the telephone transaction option for the
Fund from which you want to make the exchange.
- - If your account is subject to backup withholding, you may not use the
telephone exchange plan.
- - Excessive trading can hurt both performance and shareholders. Thus, if you
make excessive use of the telephone exchange plan, Artisan Funds may
terminate your access to the plan or limit the number of transfers you can
make in a calendar year.
- - Artisan Funds reserves the right to terminate or modify the telephone
exchange plan at any time. If Artisan Funds find it necessary to do either,
it will try to notify you in advance.
DIVIDENDS, CAPITAL GAINS, AND TAXES
As a shareholder in an Artisan Fund, you are entitled to your share of its net
income and any gains realized on its investments. EACH FUND INTENDS TO
DISTRIBUTE SUBSTANTIALLY ALL OF ITS NET INCOME AND NET REALIZED CAPITAL GAINS TO
INVESTORS AT LEAST ANNUALLY.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to receive
your distributions. If you later want to change, you may either submit a
written request or call us at 1-800-344-1770.
Each Fund offers three options:
REINVESTMENT OPTION. Your dividends and capital gain distributions will be
reinvested in additional shares of the Fund. If you do not indicate a choice on
your application, we will automatically reinvest your distributions.
INCOME-ONLY OPTION. We will automatically reinvest your capital gain
distributions but send you a check for dividends.
CASH OPTION. We will send you a check for all distributions.
In IRA accounts, all distributions are automatically reinvested. Otherwise,
they could be subject to income tax and penalties. After you are 59 1/2, you
may request payment of distributions in cash, although these too might be
subject to income tax.
When you reinvest, the reinvestment price is the Fund's net asset value per
share at the close of business on the reinvestment date. The mailing of
distribution checks will usually begin on the payment date.
<PAGE>
TAXES
As you should with any investment, consider how the return on your investment in
a Fund will be taxed. If your investment is a tax-deferred account - an IRA,
for example - the following tax discussion does not apply.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and may
be subject to state or local taxes. If you are a U.S. citizen residing outside
the United States, your distributions may also be taxed by the country in which
you reside.
Your distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares. However, distributions declared in
October, November or December and paid in January are taxable as if you received
them on December 31.
For federal tax purposes, the Fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions are
taxed as long-term capital gains. The tax rate of a capital gain depends on the
length of time that the Fund held the asset it sold.
Given their objectives and strategies, each of the Artisan Funds will chiefly
produce capital gains distributions, as opposed to current income. Every
January, each of your Funds will send you and the IRS a statement - called Form
1099 - showing the amount of every taxable distribution you received in the
previous calendar year.
TAXES ON TRANSACTIONS. When you redeem shares, you will experience a capital
gain or loss if there is a difference between the cost of your shares and the
price you receive when you sell them. You may be subject to tax.
Whenever you sell shares of a Fund, you will receive a confirmation statement
showing how many shares you sold and at what price. You also will receive a
year-end statement every January that reports, among other things, your average
cost basis of the shares you sold. This will allow you or your tax preparer to
determine the tax consequences of each redemption. However, be sure to keep
your regular account statements; their information will be essential in
verifying the amount of your capital gains or losses.
To invest, you must be a U.S. resident with a Social Security or taxpayer
identification number. When you sign your account application, you must certify
that your Social Security or taxpayer identification number is correct and that
you are not subject to backup withholding for failing to report income to the
IRS. If you fail to comply with this procedure, the IRS can require the Fund to
withhold 31% of your taxable distributions and redemptions.
FOREIGN INCOME TAXES. Investment income received by a Fund from sources within
foreign countries may be subject to foreign income taxes withheld at the source.
However, you may be able to claim a foreign tax credit for your share of such
taxes only if your fund has more than 50% of its assets in foreign securities.
While only Artisan International Fund meets this requirement, the other Artisan
Funds expect such taxes to be deductible by them.
PLEASE NOTE
As you may be aware, some of today's computer systems cannot process date-
related
<PAGE>
information, because they are not programmed to distinguish between the year
2000 and the year 1900 (commonly referred to as the Year 2000 problem or Y2K).
In addition, effective January 1, 1999, several European countries will
convert from their current form of currency to a single, uniform currency known
as the "euro." The euro conversion could have potential adverse effects on the
Funds' ability to value their portfolio holdings in foreign securities, and
could increase the costs associated with the Funds' operations.
Artisan Partners is working closely with its service providers to ensure the
proper functioning of the computer systems on which the Funds depend for smooth
operation.
Based on review of internal and external systems to date, Artisan Partners does
not anticipate any material impact due to the Year 2000 problem or euro
conversion on the delivery of services provided. There can be no assurances,
however, that the steps taken by Artisan Partners will be sufficient to avoid
any adverse impact on the Funds.
<PAGE>
TO LEARN MORE...
For more detail on an Artisan Fund, you may request its Statement of Additional
Information, which is incorporated herein by reference.
You can find more information about a Fund's investments in its annual and semi-
annual reports to shareholders. These documents discuss the market conditions
and investment strategies that significantly affected the Fund's performance in
its most recent fiscal year.
For a free copy of any of these documents, call 1-800-344-1770. Also call thus
number if you have a question or would like to receive other information about
an Artisan Fund.
Information about the Funds, including the Statement of Additional Information,
is available to you through the Securities and Exchange Commission. You can
review and copy Fund documents at the Commission's Public Reference Room, 450
5th St., N.W., Washington, D.C. The number there is 1-800-SEC-0330.
You may also request Fund documents by E-mail at http://www.sec.gov.
And you may receive copies for a fee by writing to: Securities and Exchange
Commission, Public Reference Section, 450 5th St., N.W., Washington, D.C. 20549-
6009.
811-8932
[logo]
ARTISAN FUNDS
INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.
PROSPECTUS
October xx, 1998
ARTISAN INTERNATIONAL FUND
International Institutional Shares
Artisan International Fund offers two classes of shares. International
Institutional Shares are offered by this prospectus to institutional investors
including, but not limited to, employee benefit plans, endowments, foundations,
trusts and corporations able to meet the Fund's minimum investment requirement
of $2 million.
An investment in the Fund is 100% no-load. You pay no sales charge to purchase
or redeem your shares, and there is no annual 12b-1 fee.
ARTISAN FUNDS, INC.
1000 North Water Street
Suite 1770
Milwaukee, WI 53202
c/o Boston Financial Data Services
P.O. Box 8412
Boston, MA 02266-8412
- ------------------
The Securities and Exchange Commission has not approved any fund's shares as an
investment or determined whether this prospectus is accurate or complete. Anyone
who tells you otherwise is committing a crime.
<PAGE>
TABLE OF CONTENTS
- ---------------------------------------------------------
Topic Page
- ---------------------------------------------------------
Important Legal Information cover
- ---------------------------------------------------------
Goals, Strategies, Philosophies 1
- ---------------------------------------------------------
Investment Risks You Should Consider 2
- ---------------------------------------------------------
Who is Eligible to Invest 2
- ---------------------------------------------------------
Investment Returns 3
- ---------------------------------------------------------
Fees and Expenses 5
- ---------------------------------------------------------
Financial Highlights 6
- ---------------------------------------------------------
Organization, Management and Management Fees 7
- ---------------------------------------------------------
Investing with the Fund 7
- ---------------------------------------------------------
Minimum Investments 8
- ---------------------------------------------------------
How to Buy Shares 8
- ---------------------------------------------------------
How to Sell Shares 9
- ---------------------------------------------------------
Shareholders and Account Policies 11
- ---------------------------------------------------------
Statements and Reports 11
- ---------------------------------------------------------
Share Price 11
- ---------------------------------------------------------
Dividends, Capital Gains, and Taxes 12
- ---------------------------------------------------------
Distribution Options 12
- ---------------------------------------------------------
Taxes 12
- ---------------------------------------------------------
For More Information 14
- ---------------------------------------------------------
Please Note:
Be sure to read this prospectus before you invest. And please keep it on file
for future reference.
It presents essential facts about the Fund, including investment strategies,
management fees, and services available to you as an investor.
If you have a question about any part of the prospectus, please call the number
below. An Artisan Funds representative will be happy to help you.
1-800-399-1770
<PAGE>
GOAL, STRATEGY, PHILOSOPHY
GOAL. Artisan International Fund seeks maximum long-term capital growth. This
goal may be changed without the approval of shareholders.
STRATEGY. Under normal circumstances, the Fund invests at least 65% of its
total assets in stocks of foreign companies.
PHILOSOPHY.
- - From time to time, many foreign economies have grown faster than our own
(though some have not), and the returns on investments in these countries
have exceeded those of similar U.S. investments.
- - Foreign markets can offer opportunities that are unavailable domestically.
Thus, international investing brings you greater diversification and enables
you to take advantage of changes in foreign economies and equity markets.
- - Through its own research process, the Fund seeks to identify promising
investment opportunities.
The Fund's research method is both "top-down" and "bottom-up." This means
that country selection and stock selection are equally important parts of the
investment process. The Fund favors countries and regions with improving or
rapidly expanding economies. To determine economic growth, it assesses
factors such as gross domestic product growth, corporate profitability,
current account and currency issues, interest rates, economic climate and
social change. Having identified favorable areas, the Fund eliminates those
whose stock markets appear to be overvalued.
In countries where economic and market conditions appear to be attractive,
the Fund seeks companies that seem well positioned for strong, sustainable
growth. It focuses on well-managed companies with above-average financial
characteristics, increasing earnings per share and dominant or increasing
market share in strong industries. Having isolated promising companies, the
Fund then limits its purchases to those whose stocks are attractively valued.
- - The Fund tries to lower the risks inherent in foreign investing through a
highly selective investment strategy and broad diversification by country,
industry and company.
- - Under ordinary circumstances, the Fund is substantially fully invested fully
in common stocks. At times, however, Artisan Partners, the adviser to the
Fund, may determine that market or economic conditions warrant a temporary
defensive position. In this case, the Fund may hold up to 100% of its
assets in cash, cash equivalents, or short-term government or corporate
obligations.
<PAGE>
- - Changes in security prices, currency exchange rates and other factors can
affect the portfolio's value. To increase or decrease its exposure to the
effects of possible changes, the Fund may use various techniques, including
currency exchange transactions.
INVESTMENT RISKS YOU SHOULD CONSIDER
The Fund invests primarily in common stocks. Over time, stocks have shown
greater growth than other types of securities. In the short-term, however,
stock prices may fluctuate widely in response to company, market or economic
news. The value of a Fund's investments and the returns it generates vary from
day to day. Performance depends on Artisan Partners' skills in identifying
trends and picking stocks, as well as on general market and economic conditions.
When you sell your shares, they may be worth more or less than you paid for
them.
The Fund is not a balanced investment plan, and there can be no assurance that
they will achieve their investment goals.
Below are the principal investment risks of the Fund.
- - Foreign stocks as an asset class may under-perform U.S. stocks.
- - Foreign stocks tend to be more volatile than U.S. stocks.
- - Investments in foreign securities (including American Depository Receipts, or
"ADRs") are subject to risks. These risks include currency exchange rate
fluctuation; less available public information about the issuers of
securities; less stringent regulatory standards; lack of uniform accounting,
auditing and financial reporting standards; and country risks including less
liquidity, high inflation rates, unfavorable economic practices, and
political instability.
WHO IS ELIGIBLE TO INVEST
Institutional Shares are designed for institutional investors who are able to
meet the high minimum investment requirements, who want maximum long-term
capital growth rather than income and who have the long-term investment outlook
needed for investing in the stocks of foreign companies. To reduce costs,
Institutional Shares are not available for sale in all states. To find out if
Institutional Shares are available, or can be made available, in your state,
call 1-800-399-1770 before sending an Application to open a new account. See
"How to Buy Shares."
INVESTMENT RETURNS
<PAGE>
The Fund's returns vary both day-to-day and over the long term. Each return
measure below reflects this variability.
- - TOTAL RETURN is the actual change in the value of an investment over a given
period. It includes the reinvestment of dividends and capital gains
distributions.
- - AVERAGE ANNUAL TOTAL RETURN does not represent actual year-by-year results.
Instead, it is a hypothetical figure. For periods of more than one year, it
indicates what would have been constant annual performance. In other words,
average annual total return is a way to "smooth out" variations in
performance over time.
- - Returns are based on PAST RESULTS; they do not predict future performance.
Nor do they include the effect of income taxes paid by investors.
- - The Fund may sometimes COMPARE PERFORMANCE with certain rankings, averages
or, as shown below, benchmark indexes.
The bar chart and tables below illustrate certain risks of investing in the
Fund. As you can see, the returns achieved by the Fund vary from year to year,
as does its performance relative to the market in which it invests.
In the bar chart and tables below, the Fund's average annual returns are
compared to the returns of the following market indexes:
- -----------------------------------------------------------------------------
FUND INDEX<F1>
- -----------------------------------------------------------------------------
Artisan - Morgan Stanley's Europe, Australasia and Far East
International (EAFE) index is an unmanaged index of companies
Fund throughout the world in proportion to world stock
market capitalization, excluding the U.S. and Canada.
- Lipper International Fund index reflects the net asset
value weighted return of the 30 largest international
equity funds.
- -----------------------------------------------------------------------------
<F1> An additional index is included to compare the Fund's performance with
funds that have similar investment objectives. All returns reflect
reinvested dividends.
TOTAL RETURN FOR EACH CALENDAR YEAR SINCE INCEPTION
ARTISAN LIPPER
INTERNATIONAL FUND INTERNATIONAL
(INSTITUTIONAL SHARES) EAFE INDEX FUND INDEX
---------------------- ---------- ------------
-4.75% -8.48% -5.88%
<PAGE>
Average Annual Total Returns
- -----------------------------------------------------------------------------
For the 12 month period From inception through
ending 12/31/97 12/31/97
- -------------------------===============----------------========-------------
International
Institutional -4.8%% -4.8%%
Shares
(12/28/95 inception)
- -----------------------------------------------------------------------------
EAFE Index
(from 7/1/97) -8.5% -8.5%
- -----------------------------------------------------------------------------
ADDITIONAL PERFORMANCE INFORMATION
- -----------------------------------------------------------------------------
1998 Performance Best Quarter Worst Quarter
through Return Return
6/30/98 Since Since
Inception Inception
- -----------------------------------------------------------------------------
International 30.6% 20.2% -6.3%
Institutional Shares 1st Quarter 4th Quarter
(12/28/95 inception) 1998 1997
- -----------------------------------------------------------------------------
FUND EXPENSES
Below are the fees and expenses that you pay if you buy and hold shares in the
Fund.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT<F1>)
Sales charge (load) on purchases None
Exchange fee None
Redemption fee None
<F1> A shareholder requesting payment of redemption proceeds by wire must pay
the cost of the wire (currently $5).
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS) AND
ARE EXPRESSED AS A PERCENTAGE OF AVERAGE NET ASSETS.
- --------------------------------------
INTERNATIONAL
EXPENSE INSTITUTIONAL
- ------- -------------
- --------------------------------------
Management Fee 1.00%
- --------------------------------------
12b-1 Fee None
- --------------------------------------
<PAGE>
Other Expenses 0.25%
- --------------------------------------
Total Operating
Expenses 1.25%
- --------------------------------------
EXAMPLE. This example is intended to help you compare the cost of investing in
the Fund with that of investing other mutual funds. The example assumes you
invest $10,000 for the time periods indicated, earn a 5% return each year, and
that operating expenses remain constant.
- --------------------------------------
TIME INTERNATIONAL
PERIOD INSTITUTIONAL
- ------ -------------
- --------------------------------------
After 1 year $127
- --------------------------------------
After 3 years $397
- --------------------------------------
After 5 years $686
- --------------------------------------
After 10 years $1,511
- --------------------------------------
This example is for illustration only. It is not meant to suggest actual or
expected costs or returns, which may be more or less than the amounts shown.
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following table is intended to help you understand the Fund's financial
performance since it began operations as it relates to the International
Institutional Shares. Certain information reflects financial results for a
single Institutional Share. Total returns represent the rate you would have
earned [or lost] on an investment, assuming reinvestment of all dividends and
distributions. This information was audited by PricewaterhouseCoopers LLP,
independent accountants. Their unqualified report, along with the Fund's
financial statements, is included in the annual report, which is available on
request. For each year shown, all information is for the fiscal year ended June
30, 1998.
Year ended
For a share outstanding throughout the period 6/30/98<F1>
-----------
Net asset value, beginning of period $14.48
Income from investment operations:
Net investment income 0.09<F2>
Net realized and unrealized gains on
securities and foreign currency transactions 3.04
-----------
Total from investment operations 3.13
-----------
Distributions paid to shareholders:
Net investment income (0.22)
Net realized gains on investment
transactions (1.13)
-----------
Total distributions paid to shareholders (1.35)
-----------
Net asset value, end of period $16.26
===========
Total return 24.4%
Ratios/supplemental data:
Net assets, end of period (millions) $82.6
Ratio of expenses to average net assets 1.25%
Ratio of net investment income to average net assets 0.68%
Portfolio turnover rate 109.42%
<F1> For the period from commencement of operations (July 1, 1997)
through June 30, 1998.
<F2> Computed based on average shares outstanding during the period.
<F3> Not annualized.
<F3> Annualized.
<PAGE>
ORGANIZATION, MANAGEMENT and MANAGEMENT FEES
ORGANIZATION. The Fund is a series of Artisan Funds, Inc. The Fund offers two
classes of shares, Artisan International Shares and Artisan Institutional
Shares. International Shares are offered to retail investors through a separate
prospectus. This prospectus describes Institutional Shares.
MANAGEMENT. The Fund is managed by Artisan Partners Limited Partnership, which
selects the Fund's investments and handles its business affairs under the
direction of the board of directors. Artisan Partners was organized in 1994 and
currently manages over $1.3 billion for Artisan Funds and institutional clients.
Artisan Partners is a limited partnership managed by its general partner,
Artisan Investment Corporation. The address is: Artisan Partners, 1000 North
Water Street, Suite 1770, Milwaukee, Wisconsin 53202.
MARK L. YOCKEY, portfolio manager, is a Partner of Artisan Partners and a Vice
President of Artisan Funds. He joined Artisan Partners in 1995. From 1990-1995,
Mr. Yockey was portfolio manager of United International Growth Fund and a Vice
President of Waddell & Reed. Prior to assuming fund management
responsibilities, he served as an equity analyst with Waddell & Reed.
Mr. Yockey holds a BA and MBA from Michigan State University and is a Chartered
Financial Analyst.
MANAGEMENT FEES
The Fund pays a management fee to Artisan Partners for serving as its investment
adviser and providing administrative services. The fee is determined as a
percentage of average daily net assets. For the fiscal year ended June 30,
1998, the management fees paid by the Fund was at the annual rate of 1.00%.
<PAGE>
INVESTING WITH THE FUND
The Fund is 100% no-load.
This means you pay no sales charges to buy or sell your shares, to reinvest your
dividends or to exchange from one Artisan Fund to another. Nor do you pay a
12b-1 fee.
Right from the start, your entire investment goes to work for you.
MINIMUM INVESTMENTS
- ----------------------------------------
To open an account $2,000,000
- ----------------------------------------
To add to an account $100,000
- ----------------------------------------
Minimum balance required $2,000,000
- ----------------------------------------
Each account must separately meet the minimum investment requirements applicable
to Institutional Shares. The Fund reserves the right to close your account if
the value is less than $2 million, unless the reduction in value is due solely
to market depreciation. Before closing an account below this level, the Fund
will notify you and allow you at least 30 days to bring the value of the account
up to the minimum.
<PAGE>
HOW TO BUY SHARES
You may purchase Institutional Shares by check, wire or exchange. There are no
sales commissions or underwriting discounts.
BY WIRE. You may pay for shares by instructing your bank to wire money to
Artisan Funds' custodian bank. Your bank may charge you a fee for sending the
wire. IF YOU ARE OPENING A NEW ACCOUNT BY WIRE TRANSFER, YOU MUST FIRST
TELEPHONE ARTISAN PARTNERS AT 1-800-399-1770 TO REQUEST AN ACCOUNT NUMBER AND
FURNISH YOUR TAX IDENTIFICATION NUMBER. Artisan Funds will not be responsible
for the consequences of delays, including delays in the banking or Federal
Reserve wire systems. Wire transfer instructions are:
State Street Bank and Trust Company
Attn: Mutual Funds
Boston, MA 02110
Routing #0110-0002-8
Credit to Artisan International Institutional Fund 662
Deposit DDA 9905-088-2
BY CHECK. To make an initial purchase of shares by check, complete and sign the
Share Purchase Application and send it to the following address with a check for
the total purchase amount payable to "Artisan Funds":
REGULAR MAIL OR
OVERNIGHT DELIVERY
Artisan Funds
c/o Boston Financial Data Services
500 Victory Road
Marina Bay, 3rd floor
N. Quincy, Massachusetts 02171
BY EXCHANGE. You may purchase International Shares by exchanging $1,000 or more
from your existing account with another of the Artisan Funds.
SUBSEQUENT INVESTMENTS. You may make subsequent investments by wire transfer,
using the instructions given above, or by submitting a check along with either
the stub from your Fund account confirmation statement or a note indicating the
amount of the purchase, your account number, and the name in which your account
is registered. ARTISAN FUNDS WILL NOT ACCEPT CASH, DRAFTS, THIRD PARTY CHECKS,
OR CHECKS DRAWN ON BANKS OUTSIDE OF THE UNITED STATES. If your order to
purchase Institutional Shares is canceled because your check does not clear, you
will be responsible for any resulting loss incurred by the Fund.
PURCHASE PRICE AND EFFECTIVE DATE. Each purchase of Institutional Shares is
made at the net asset value applicable to Institutional Shares (see "Share
Price") next determined after receipt by the Fund of the check or wire transfer
of funds in payment of the purchase.
<PAGE>
PURCHASES THROUGH DEALERS. You may purchase or redeem Institutional Shares
through certain investment dealers, banks or other institutions. Any such
purchase or redemption generally will not be effective until the order or
request is received by Artisan Funds' transfer agent; it is the responsibility
of the dealer to transmit your order or request promptly. These institutions
may impose charges for their services. You may purchase or redeem Institutional
Shares directly from Artisan Funds without imposition of any charges other than
those described in this prospectus. ARTISAN FUNDS WILL NOT ACCEPT PURCHASES
THROUGH DEALERS MAINTAINING OMNIBUS ACCOUNTS FOR THEIR CLIENTS. EACH INVESTOR
MUST MEET THE MINIMUM INVESTMENT REQUIREMENTS APPLICABLE TO INSTITUTIONAL
SHARES.
GENERAL. Artisan Funds cannot accept a purchase order specifying a particular
purchase date or price per share. Each purchase order must be accepted by an
authorized officer of Artisan Funds or its transfer agent and is not binding
until accepted and entered on the books of the Fund. Once your purchase order
has been accepted, you may not cancel or revoke it; however, you may redeem the
shares. Artisan Funds reserves the right not to accept any purchase order that
it determines not to be in the best interest of the Fund or the Fund's
shareholders.
HOW TO SELL SHARES
You may redeem all or any part of your Institutional Shares upon your written
request delivered to Artisan Funds' transfer agent at one of the following
addresses:
REGULAR MAIL OR
OVERNIGHT DELIVERY
Artisan Funds
c/o Boston Financial Data Services
500 Victory Road
Marina Bay, 3rd floor
N. Quincy, Massachusetts 02171
Your redemption request must:
- - identify the Fund and give your account number;
- - specify the number of shares or dollar amount to be redeemed;
- - be accompanied by a corporate or other authorization in the case of a
redemption by a corporation, trust, partnership or other entity, as
described below; and
- - be signed in ink by duly authorized officers of the shareholder.
EVIDENCE OF AUTHORITY. Redemption requests by a corporation, trust, partnership
or other entity must be accompanied by evidence of the authority of the person
or persons signing the redemption request to so act. In the case of a
corporation, the request must be signed in the name of the corporation by an
officer whose title must be stated, and must be accompanied by a bylaw
<PAGE>
provision or resolution of the board of directors, certified within 60 days,
authorizing the officer to so act. A redemption request from a partnership or
a trust must be signed in the name of the partnership or trust by a general
partner or a trustee and include a signature guarantee. If the trustee is not
named in the account registration, a redemption request by a trust must also
include evidence of the trustee's appointment as such (e.g., a certified copy
of the relevant portions of the trust instrument). Under certain
circumstances, before the shares can be redeemed, additional documents may be
required in order to verify the authority of the person seeking to redeem.
GENERAL REDEMPTION POLICIES. You may not cancel or revoke your redemption order
once your instructions have been received and accepted. Artisan Funds cannot
accept a redemption request that specifies a particular date or price for
redemption or any special conditions. PLEASE CALL 1-800-399-1770 IF YOU HAVE
ANY QUESTIONS ABOUT REQUIREMENTS FOR A REDEMPTION BEFORE SUBMITTING YOUR
REQUEST. Artisan Funds reserves the right to require a properly completed
Application before making payment for shares redeemed.
The price at which your redemption order will be executed is the net asset value
next determined after proper redemption instructions are received. See "Share
Price." Because the redemption price you receive depends upon the net asset
value per share of Institutional Shares at the time of redemption, it may be
more or less than the price you originally paid for the shares and may result in
a realized capital gain or loss.
Artisan Funds will generally wire transfer the proceeds of your redemption to
the bank account designated in your purchase application. If you attempt to
redeem shares within 15 days after they have been purchased by check, Artisan
Funds may delay payment of the redemption proceeds to you until it can verify
that payment for the purchase of those shares has been (or will be) collected.
To reduce such delays, Artisan Funds recommends that your purchase be made by
Federal funds wire through your bank.
Shares in any account you maintain with Artisan Funds may be redeemed to the
extent necessary to reimburse Artisan Funds for any loss it sustains that is
caused by you (such as losses from uncollected checks or any Fund liability
under the Internal Revenue Code provisions on backup withholding relating to
your account).
<PAGE>
SHAREHOLDER AND ACCOUNT POLICIES
STATEMENTS AND REPORTS
As a Fund investor, you will receive:
- - Confirmation statements - after every transaction in your account or change
in your account registration.
- - Quarterly account statements.
<PAGE>
- - Annual and semi-annual reports with financial statements.
- - Year-end tax statements.
We suggest you keep each quarterly and year-end account statement with your
other important financial papers. You may need them for tax purposes.
If you need copies of statements, call 1-800-399-1770. Copies of this year's or
last year's statements are free of charge; for earlier years, there is a $10
processing fee.
SHARE PRICE
The Fund is open for business every day the New York Stock Exchange ("NYSE") is
open. Institutional Shares will not be priced on days when the NYSE is closed.
The Fund buys and sells Institutional Shares each day, at the net asset value
per Institutional Share.
The NET ASSET VALUE PER INSTITUTIONAL SHARE is the value of a single
Institutional Share. It is computed by totaling the Institutional Shares' pro
rata share of the value of the Fund's investments, cash, and other assets,
subtracting the Institutional Shares' pro rata share of the value of the Fund's
liabilities and the liabilities specifically allocated to Institutional Shares,
then dividing the result by the number of Institutional Shares outstanding.
The net asset value is computed daily at the NYSE closing time - usually 3:00
p.m. Central time, but sometimes earlier.
Fund securities and assets are valued chiefly by quotations from the primary
market in which they are traded. If quotations are not readily available, they
are valued by a method that the board of directors believes reflects a fair
value.
Values of foreign securities are translated from local currencies into U.S.
dollars using current exchange rates. With respect to foreign securities _
traded primarily on foreign exchanges - the price of Institutional Shares may
change on days when the Fund is not open for purchase or sale.
DIVIDENDS, CAPITAL GAINS, AND TAXES
As a shareholder in the Fund, you are entitled to your share of its net income
and any gains realized on its investments. THE FUND INTENDS TO DISTRIBUTE
SUBSTANTIALLY ALL OF ITS NET INCOME AND NET REALIZED CAPITAL GAINS TO INVESTORS
AT LEAST ANNUALLY.
DISTRIBUTION OPTIONS
When you open an account, specify on your Application how you want to receive
your distributions. If you later want to change, you may either submit a
written request or call us at 1-800-399-1770.
The Fund offers three options:
REINVESTMENT OPTION. Your dividends and capital gain distributions will be
reinvested in additional shares of the Fund. If you do not indicate a choice on
your Application, we will automatically reinvest your distributions.
INCOME-ONLY OPTION. We will automatically reinvest your capital gain
distributions but send you a check for dividends.
CASH OPTION. We will send you a check for all distributions.
When you reinvest, the reinvestment price is the Fund's net asset value per
share at the close of business on the reinvestment date. The mailing of
distribution checks will usually begin on the payment date.
TAXES
As you should with any investment, consider how the return on your investment in
a Fund will be taxed. If your account is tax-deferred _ for example, an
employee benefit
<PAGE>
plan account _ the following tax discussion does not apply.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and may
be subject to state or local taxes. If you are a U.S. citizen residing outside
the United States, your distributions may also be taxed by the country in which
you reside.
Your distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares. However, distributions declared in
October, November or December and paid in January are taxable as if you received
them on December 31.
For federal tax purposes, the Fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions are
taxed as long-term capital gains. The tax rate of a capital gain depends on the
length of time that the Fund held the asset it sold.
Given its objective and strategy, the Fund will chiefly produce capital gains
distributions, as opposed to current income. Every January, the Fund will send
you and the IRS a statement - called Form 1099 - showing the amount of every
taxable distribution you received in the previous calendar year.
TAXES ON TRANSACTIONS. When you redeem shares, you will experience a capital
gain or loss if there is a difference between the cost of your shares and the
price you receive when you sell them. You may be subject to tax.
Whenever you sell shares of the Fund, you will receive a confirmation statement
showing how many shares you sold and at what price. You also will receive a
year-end statement every January that reports, among other things, your average
cost basis of the shares you sold. This will allow you or your tax preparer to
determine the tax consequences of each redemption. However, be sure to keep
your regular account statements; their information will be essential in
verifying the amount of your capital gains or losses.
To invest, you must be a U.S. resident with a Social Security or taxpayer
identification number. When you sign your account Application, you must certify
that your Social Security or taxpayer identification number is correct and that
you are not subject to backup withholding for failing to report income to the
IRS. If you fail to comply with this procedure, the IRS can require the Fund to
withhold 31% of your taxable distributions and redemptions.
FOREIGN INCOME TAXES. Investment income received by the Fund from sources within
foreign countries may be subject to foreign income taxes withheld at the source.
However, you may be able to claim a foreign tax credit for your share of such
taxes only if your fund has more than 50% of its assets in foreign securities.
<PAGE>
PLEASE NOTE
As you may be aware, some of today's computer systems cannot process date-
related information, because they are not programmed to distinguish between the
year 2000 and the year 1900 (commonly referred to as the Year 2000 problem or
Y2K). In addition, effective January 1, 1999, several European countries will
convert from their current form of currency to a single, uniform currency
known as the "euro." The euro conversion could have potential adverse effects
on the Funds' ability to value their portfolio holdings in foreign securities,
and could increase the costs associated with the Funds' operations.
Artisan Partners is working closely with its service providers to ensure the
proper functioning of the computer systems on which the Fund depends for smooth
operation.
Based on review of internal and external systems to date, Artisan Partners does
not anticipate any material impact due to the Year 2000 problem or euro
conversion on the delivery of services provided. There can be no assurances,
however, that the steps taken by Artisan Partners will be sufficient to avoid
any adverse impact on the Fund.
Questions? Call 1-800-344-1770
<PAGE>
TO LEARN MORE-
For more detail on the Fund, you may request its Statement of Additional
Information, which is incorporated herein by reference.
You can find more information about the Fund's investments in its annual and
semi-annual reports to shareholders. These documents discuss the market
conditions and investment strategies that significantly affected the Fund's
performance in its most recent fiscal year.
For a free copy of any of these documents, call 1-800-344-1770. Also call thus
number if you have a question or would like to receive other information about
an Artisan Fund.
Information about the Funds, including the Statement of Additional Information,
is available to you through the Securities and Exchange Commission. You can
review and copy Fund documents at the Commission's Public Reference Room, 450
5th St., N.W., Washington, D.C. The number there is 1-800-SEC-0330.
You may also request Fund documents by E-mail at http://www.sec.gov
And you may receive copies for a fee by writing to: Securities and Exchange
Commission, Public Reference Section, 450 5th St., N.W., Washington, D.C. 20549-
6009. 811-8932
[logo]
ARTISAN FUNDS
INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.
ARTISAN FUNDS, INC.
ARTISAN SMALL CAP FUND
ARTISAN INTERNATIONAL FUND
ARTISAN MID CAP FUND
ARTISAN SMALL CAP VALUE FUND
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
(414) 390-6100 (800) 344-1770
STATEMENT OF ADDITIONAL INFORMATION
October ___, 1998
- -------------------------------------------------------------------------------
Artisan Small Cap Fund, Artisan International Fund, Artisan Mid Cap Fund
and Artisan Small Cap Value Fund (each, a "Fund," together, the "Funds") are
series of Artisan Funds, Inc. ("Artisan Funds"). This Statement of Additional
Information is not a prospectus. It should be read in conjunction with the
prospectus of the Funds dated October ___, 1998 and any supplement to the
prospectus. Copies of the 1998 annual report to shareholders of the Artisan
Funds and the separate annual report for Artisan International Fund,
Institutional Shares accompany this Statement of Additional Information.
Each report contains financial statements, notes thereto, supplementary
information entitled "Financial Highlights," and a report of independent
accountants, all of which (but no other part of the annual report) are
incorporated herein by reference. A copy of the prospectus and additional
copies of the annual reports can be obtained without charge by calling or
writing to Artisan Funds.
TABLE OF CONTENTS
Page
Information about the Funds and Artisan Partners................2
Investment Objective and Policies...............................2
Investment Techniques and Risks.................................3
Investment Restrictions........................................17
Performance Information........................................20
Organization...................................................25
Directors and Officers.........................................26
Principal Shareholders.........................................29
Investment Advisory Services...................................29
Distributor....................................................30
Portfolio Transactions.........................................31
Purchasing and Redeeming Shares................................32
Additional Tax Information.....................................34
Custodian......................................................35
Independent Accountants........................................35
Financial Statements...........................................35
Appendix - Description of Bond Ratings.........................37
<PAGE>
INFORMATION ABOUT THE FUNDS AND ARTISAN PARTNERS
Each Fund is a series of Artisan Funds, Inc. ("Artisan Funds"). Artisan
Partners Limited Partnership ("Artisan Partners") provides investment advisory
services to the Funds.
Artisan Funds strives to offer distinctive, high-value-added investment
opportunities. Artisan Funds is not a "family" of indistinguishable products
devised by marketers in a financial services conglomerate. Rather, Artisan
Partners is a small partnership of investment professionals, focused on a
limited number of distinct investment strategies, each of which is offered as a
series of Artisan Funds. The portfolio manager of each Fund is a specialist in
his or her market, with an investment process created and refined through years
of experience - an artisan. At Artisan Funds, we believe that experienced,
active managers investing in inefficient markets can produce superior returns
over time. The Artisan Funds are intended for long-term investors who share
that belief.
Artisan Partners believes that there are two distinct approaches to
investing in stocks: growth and value. Artisan Small Cap Value Fund follows a
value approach. Artisan Small Cap Fund, another series of Artisan Funds,
follows a growth approach. Each of these two complementary investment
approaches has proven its merit over time, and each can play a significant role
in a well-crafted equity portfolio. For example, growth investors look for
companies with above-average rates of earnings growth, while value investors
look for companies whose stocks appear temporarily depressed; many growth
investors pay a premium for stocks, while value investors look for bargains;
growth stocks tend to be more volatile than value stocks; and growth stocks
typically outperform value stocks in strong markets, but underperform them in
weak markets.
The discussion below supplements the description in the prospectus of each
Fund's investment objectives, policies and restrictions.
INVESTMENT OBJECTIVE AND POLICIES
Artisan Small Cap Fund invests for maximum long-term capital growth
primarily in the common stocks of small companies whose outstanding shares have
an aggregate market value of less than $1 billion.
Artisan Mid Cap Fund invests primarily in the common stocks of medium-sized
companies. Medium-sized companies are those whose market capitalizations fall
within the range of companies in the S&P MidCap 400 Index (the "MidCap Index").
As of August 19, 1998, the MidCap Index included companies with capitalizations
between approximately $356 million and $24.5 billion. The market capitalization
range in which Artisan Mid Cap Fund invests will change as the range of the
companies included in the MidCap Index changes.
Artisan International Fund seeks to achieve its objective by investing
primarily in the stocks of foreign companies. Artisan International Fund offers
two classes of shares: Artisan International Shares ("International Shares")
and Artisan International Institutional Shares ("Institutional Shares"). As
described more fully in the prospectus, Institutional Shares are offered to
certain institutional investors with a minimum initial investment of $2 million.
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<PAGE>
Artisan Small Cap Value Fund invests primarily in common stocks that appear
undervalued relative to earnings, book value, cash flows or potential earnings
growth, and that are issued by small companies whose outstanding shares have an
aggregate market value of less than $1 billion. It attempts to manage
investment risk in the stocks it purchases by emphasizing investments in
businesses that have positive cash flow, strong balance sheets, and business
strategies that are economically sound under ordinary circumstances. Stocks are
generally sold when they approach the Fund's estimate of their enterprise value.
Because Artisan Small Cap Value Fund typically invests in companies that
are characterized by sparse Wall Street research coverage, it uses its own
detailed screening and research process. Companies in which the Fund invests
usually appear undervalued because they fall into one of the following general
categories:
- The company operates in an industry category that is cyclical in
nature and is presently out of favor.
- The company has assets which are not adequately reflected in its
market value.
- The company has experienced problems leading to a depressed stock
price, but is undergoing or is likely to undergo some change which the
Fund believes will improve its operations.
- The company is undiscovered or misunderstood by Wall Street analysts.
In addition to emphasizing investments in companies that are undervalued
and represent acceptable investment risks, Artisan Small Cap Value Fund attempts
to manage portfolio risk by diversifying its holdings to avoid concentration in
any one stock or industry sector.
The Funds invest primarily in equity securities, including common and
preferred stocks, warrants or other similar rights, and convertible securities.
While Artisan International Fund invests mostly in the securities of foreign
issuers, each other Artisan Fund may from time to time have significant portions
of its portfolio invested in foreign securities. The Fund also may invest in
any other type of security, including debt securities.
The investment objective of each Fund may be changed by the board of
directors without the approval of a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the Fund.
INVESTMENT TECHNIQUES AND RISKS
Foreign Securities
Each Fund may invest in foreign securities (including American Depository
Receipts ("ADRs") European Depository Receipts ("EDRs"), Global Depository
Receipts ("GDRs"), or other securities representing underlying shares of
foreign issuers), which may entail a greater degree of risk (including risks
relating to exchange rate fluctuations, tax provisions, or expropriation of
assets) than does investment in securities of domestic issuers. Under
normal market conditions, Artisan
B-3
<PAGE>
International Fund invests at least 65% of its total assets in foreign
securities; each of Artisan Small Cap Fund, Artisan Mid Cap Fund and Artisan
Small Cap Value Fund may invest up to 25% of its total assets in foreign
securities. ADRs are receipts typically issued by an American bank or trust
company evidencing ownership of the underlying securities. EDRs are European
receipts evidencing a similar arrangement. GDRs are receipts that may trade
in U.S. or non-U.S. markets. The Funds may invest in sponsored or unsponsored
depository receipt. In the case of an unsponsored depository receipt, a Fund
is likely to bear its proportionate share of the expenses of the depository
and it may have greater difficulty in receiving shareholder communications
than it would have with a sponsored depository receipt. No Fund intends to
invest more than 5% of its net assets in unsponsored depository receipt.
With respect to portfolio securities that are issued by foreign issuers or
denominated in foreign currencies, a Fund's investment performance is affected
by the strength or weakness of the U.S. dollar against these currencies. For
example, if the dollar falls in value relative to the Japanese yen, the dollar
value of a yen-denominated stock held in the portfolio will rise even though the
price of the stock remains unchanged. Conversely, if the dollar rises in value
relative to the yen, the dollar value of the yen-denominated stock will fall.
(See discussion of transaction hedging and portfolio hedging under "Managing
Investment Exposure.")
Investors should understand and consider carefully the risks involved in
foreign investing. Investing in foreign securities, positions in which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts involve certain considerations comprising both risks
and opportunities not typically associated with investing in U.S. securities.
These considerations include: fluctuations in exchange rates of foreign
currencies; possible imposition of exchange control regulation or currency
restrictions that would prevent cash from being brought back to the United
States; less public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers, and issuers of
securities; lack of uniform accounting, auditing, and financial reporting
standards; lack of uniform settlement periods and trading practices; less
liquidity and frequently greater price volatility in foreign markets than in the
United States; possible imposition of foreign taxes; possible investment in
securities of companies in developing as well as developed countries; and
sometimes less advantageous legal, operational, and financial protections
applicable to foreign sub-custodial arrangements.
Although the Funds will try to invest in companies and governments of
countries having stable political environments, there is the possibility of
expropriation or confiscatory taxation, seizure or nationalization of foreign
bank deposits or other assets, establishment of exchange controls, the adoption
of foreign government restrictions, or other adverse political, social or
diplomatic developments that could affect investment in these nations.
Debt Securities
In pursuing its investment objective, a Fund may invest in debt securities
of corporate and governmental issuers. The risks inherent in debt securities
depend primarily on the term and quality of the obligations in the Fund's
portfolio as well as on market conditions. A decline in the prevailing levels
of interest rates generally increases the value of debt securities, while an
increase in rates usually reduces the value of those securities.
B-4
<PAGE>
Investments in debt securities by the Funds may be in those that are within
the four highest ratings categories of Standard & Poor's Corporation ("S&P") or
Moody's Investors Services, Inc. ("Moody's") (generally referred to as
"investment grade") or, if unrated, deemed to be of comparable quality by
Artisan Partners. However, each Fund may invest up to 35% of its net assets in
debt securities that are rated below investment grade. No Fund currently
intends to invest more than 5% of its net assets in securities rated below
investment grade.
Debt securities in the fourth highest grade may possess speculative
characteristics, and changes in economic conditions are more likely to affect
the issuer's capacity to pay interest and repay principal. If the rating of a
security held by a Fund is lost or reduced below investment grade, the Fund is
not required to dispose of the security, but Artisan Partners will consider that
fact in determining whether the Fund should continue to hold the security.
Securities that are rated below investment grade are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and therefore carry
greater investment risk, including the possibility of issuer default and
bankruptcy.
Defensive Investments
Each Fund intends to be substantially fully invested in equity securities
in ordinary circumstances, although a Fund may invest without limit in corporate
or government obligations (U.S. or non-U.S., in the case of Artisan
International Fund) or hold cash or cash equivalents if Artisan Partners
determines that a temporary defensive position is advisable.
Convertible Securities
Convertible securities include any corporate debt security or preferred
stock that may be converted into underlying shares of common stock. The common
stock underlying convertible securities may be issued by a different entity than
the issuer of the convertible securities. Convertible securities entitle the
holder to receive interest payments paid on corporate debt securities or the
dividend preference on a preferred stock until such time as the convertible
security matures or is redeemed or until the holder elects to exercise the
conversion privilege.
The value of convertible securities is influenced by both the yield of non-
convertible securities of comparable issuers and by the value of a convertible
security viewed without regard to its conversion feature (i.e., strictly on the
basis of its yield) is sometimes referred to as its "investment value." The
investment value of the convertible security will typically fluctuate inversely
with changes in prevailing interest rates. However, at the same time, the
convertible security will be influenced by its "conversion value," which is the
market value of the underlying common stock that would be obtained if the
convertible security were converted. Conversion value fluctuates directly with
the price of the underlying common stock.
By investing in convertible securities, a Fund obtains the right to benefit
from the capital appreciation potential in the underlying stock upon exercise of
the conversion right, while earning higher current income than would be
available if the stock were purchased directly. In determining whether to
purchase a convertible security, Artisan Partners will consider the same
B-5
<PAGE>
criteria that would be considered in purchasing the underlying stock. Although
convertible securities purchased by a Fund are frequently rated investment
grade, the Fund also may purchase unrated securities or securities rated below
investment grade if the securities meet Artisan Partners' other investment
criteria. Convertible securities rated below investment grade (a) tend to be
more sensitive to interest rate and economic changes, (b) may be obligations of
issuers who are less creditworthy than issuers of higher quality convertible
securities, and (c) may be more thinly traded due to such securities being less
well known to investors than either common stock or conventional debt
securities. As a result, Artisan Partners' own investment research and analysis
tends to be more important in the purchase of such securities than other
factors.
Managing Investment Exposure
The Funds use various techniques to increase or decrease their exposure to
the effects of possible changes in security prices, currency exchange rates or
other factors that affect the value of their portfolios. These techniques
include buying and selling options, futures contracts, or options on futures
contracts, or entering into currency exchange contracts.
These techniques are used by Artisan Partners to adjust the risk and return
characteristics of a Fund's portfolio. If Artisan Partners judges market
conditions incorrectly or employs a strategy that does not correlate well with a
particular Fund's investments, or if the counterparty to the transaction does
not perform as promised, the transaction could result in a loss. Use of these
techniques may increase the volatility of that Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. These
techniques are used by the Funds for hedging, risk management or portfolio
management purposes and not for speculation.
Currency Exchange Transactions. Currency exchange transactions may be
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through forward
currency exchange contracts ("forward contracts"). Forward contracts are
contractual agreements to purchase or sell a specified currency at a specified
future date (or within a specified time period) and price set at the time of the
contract. Forward contracts are usually entered into with banks and broker-
dealers, are not exchange traded, and are usually for less than one year, but
may be renewed.
Forward currency transactions may involve currencies of the different
countries in which a Fund may invest, and serve as hedges against possible
variations in the exchange rate between these currencies. Currency transactions
are limited to transaction hedging and portfolio hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of forward contracts with respect to specific receivables or
payables of a Fund accruing in connection with the purchase and sale of its
portfolio securities. Portfolio hedging is the use of forward contracts with
respect to portfolio security positions denominated or quoted in a particular
currency. Portfolio hedging allows a Fund to limit or reduce exposure in a
foreign currency by entering into a forward contract to sell or buy such foreign
currency (or another foreign currency that acts as a proxy for that currency) so
that the U.S. dollar value of certain underlying foreign portfolio securities
can be approximately matched by an equivalent U.S. dollar liability. A Fund may
not engage in portfolio hedging with respect to the currency of a particular
country to an extent greater than the aggregate market value (at the time of
making
B-6
<PAGE>
such sale) of the securities held in its portfolio denominated or quoted in that
particular currency, except that the Fund may hedge all or part of its foreign
currency exposure through the use of a basket of currencies or a proxy currency
where such currencies or currency act as an effective proxy for other
currencies. In such a case, the Fund may enter into a forward contract where
the amount of the foreign currency to be sold exceeds the value of the
securities denominated in such currency. The use of this basket hedging
technique may be more efficient and economical than entering into separate
forward contracts for each currency held in the portfolio of a particular Fund.
The Funds may not engage in "speculative" currency exchange transactions.
At the maturity of a forward contract to deliver a particular currency, a
Fund may either sell the portfolio security related to such contract and make
delivery of the currency, or it may retain the security and either acquire the
currency on the spot market or terminate its contractual obligation to deliver
the currency by purchasing an offsetting contract with the same currency trader
obligating it to purchase on the same maturity date the same amount of the
currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a forward contract. Accordingly, it
may be necessary for a Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between the Fund's
entering into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to the Fund of
engaging in currency exchange transactions varies with such factors as the
currency involved, the length of the contract period, and prevailing market
conditions. Because currency exchange transactions are usually conducted on a
principal basis, no fees or commissions are involved.
B-7
<PAGE>
Options on Securities and Indexes. The Funds may purchase and sell put
options and call options on securities, indexes or foreign currencies in
standardized contracts traded on recognized securities exchanges, boards of
trade, or similar entities, or quoted on NASDAQ. The Funds may purchase
agreements, sometimes called cash puts, that may accompany the purchase of a new
issue of bonds from a dealer.
An option on a security (or index) is a contract that gives the purchaser
(holder) of the option, in return for a premium, the right to buy from (call) or
sell to (put) the seller (writer) of the option the security underlying the
option (or the cash value of the index) at a specified exercise price at any
time during the term of the option (normally not exceeding nine months). The
writer of an option on an individual security or on a foreign currency has the
obligation upon exercise of the option to deliver the underlying security or
foreign currency upon payment of the exercise price or to pay the exercise price
upon delivery of the underlying security or foreign currency. Upon exercise,
the writer of an option on an index is obligated to pay the difference between
the cash value of the index and the exercise price multiplied by the specified
multiplier for the index option. (An index is designed to reflect specified
facets of a particular financial or securities market, a specific group of
financial instruments or securities, or certain economic indicators.)
The Fund will write call options and put options only if they are
"covered." For example, in the case of a call option on a security, the option
is "covered" if a Fund owns the security underlying the call or has an absolute
and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, cash or cash
equivalents in such amount are held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio.
If an option written by a Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an option
purchased by a Fund expires, the Fund realizes a capital loss equal to the
premium paid.
Prior to the earlier of exercise or expiration, an option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when a Fund desires.
A Fund will realize a capital gain from a closing purchase transaction if
the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain or, if it is less,
the Fund will realize a capital loss. The principal factors affecting the
market value of a put or a call option include supply and demand, interest
rates, the current market price of the underlying security or index in relation
to the exercise price of the option, the volatility of the underlying security
or index, and the time remaining until the expiration date.
A put or call option purchased by a Fund is an asset of the Fund, valued
initially at the premium paid for the option. The premium received for an
option written by the Fund is
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<PAGE>
recorded as a deferred credit. The value of an option purchased or written is
marked-to-market daily and is valued at the closing price on the exchange on
which it is traded or, if not traded on an exchange or no closing price is
available, at the mean between the last bid and asked prices.
Risks Associated with Options on Securities and Indexes. There are several
risks associated with transactions in options. For example, there are
significant differences between the securities markets, the currency markets,
and the options markets that could result in an imperfect correlation between
these markets, causing a given transaction not to achieve its objectives. A
decision as to whether, when and how to use options involves the exercise of
skill and judgment, and even a well-conceived transaction may be unsuccessful to
some degree because of market behavior or expected events.
There can be no assurance that a liquid market will exist when Fund seeks
to close out an option position. If a Fund were unable to close out an option
that it had purchased on a security, it would have to exercise the option in
order to realize any profit or the option would expire and become worthless. If
a Fund were unable to close out a covered call option that it had written on a
security, it would not be able to sell the underlying security until the option
expired. As the writer of a covered call option on a security, a Fund foregoes,
during the option's life, the opportunity to profit from increases in the market
value of the security covering the call option above the sum of the premium and
the exercise price of the call.
If trading were suspended in an option purchased or written by a Fund, the
Fund would not be able to close out the option. If restrictions on exercise
were imposed, the Fund might be unable to exercise an option it has purchased.
Futures Contracts and Options on Futures Contracts. The Funds may use
interest rate futures contracts, index futures contracts, and foreign currency
futures contracts. An interest rate, index or foreign currency futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a financial instrument or the cash value of an index<F1>
at a specified price and time. A public market exists in futures contracts
covering a number of indexes (including, but not limited to: the Standard &
Poor's 500 Index, the Value Line Composite Index, the Russell 2000 Index and the
New York Stock Exchange Composite Index) as well as financial instruments
(including, but not limited to: U.S. Treasury bonds, U.S. Treasury notes,
Eurodollar certificates of deposit, and foreign currencies). Other index and
financial instrument futures contracts are available and it is expected that
additional futures contracts will be developed and traded.
The Funds may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities,
indexes and foreign currencies
- ------------------------------
<F1> A futures contract on an index is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading
day of the contract and the price at which the index contract was
originally written. Although the value of a securities index is a function
of the value of certain specified securities, no physical delivery of those
securities is made.
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(discussed above). A futures option gives the holder the right, in return for
the premium paid, to assume a long position (call) or short position (put) in a
futures contract at a specified exercise price at any time during the period of
the option. Upon exercise of a call option, the holder acquires a long position
in the futures contract and the writer is assigned the opposite short position.
In the case of a put option, the opposite is true. A Fund might, for example,
use futures contracts to hedge against or gain exposure to fluctuations in the
general level of stock prices, anticipated changes in interest rates or currency
fluctuations that might adversely affect either the value of the Fund's
securities or the price of the securities that the Fund intends to purchase.
Although other techniques could be used to reduce or increase the Fund's
exposure to stock price, interest rate and currency fluctuations, the Fund may
be able to achieve its exposure more effectively and perhaps at a lower cost by
using futures contracts and futures options.
The Funds will only enter into futures contracts and futures options that
are standardized and traded on an exchange, board of trade, or similar entity,
or quoted on an automated quotation system.
The success of any futures transaction depends on Artisan Partners
correctly predicting changes in the level and direction of stock prices,
interest rates, currency exchange rates and other factors. Should those
predictions be incorrect, a Fund's return might have been better had the
transaction not been attempted; however, in the absence of the ability to use
futures contracts, Artisan Partners might have taken portfolio actions in
anticipation of the same market movements with similar investment results but,
presumably, at greater transaction costs.
When a purchase or sale of a futures contract is made by a Fund, the Fund
is required to deposit with its custodian or broker a specified amount of cash
or U.S. Government securities or other securities acceptable to the broker
("initial margin"). The margin required for a futures contract is generally set
by the exchange on which the contract is traded, although the margin requirement
may be modified during the term of the contract and the Fund's broker may
require margin deposits in excess of the minimum required by the exchange. The
initial margin is in the nature of a performance bond or good faith deposit on
the futures contract, which is returned to the Fund upon termination of the
contract, assuming all contractual obligations have been satisfied. Each Fund
expects to earn interest income on its initial margin deposits. A futures
contract held by a Fund is valued daily at the official settlement price of the
exchange on which it is traded. Each day the Fund pays or receives cash, called
"variation margin," equal to the daily change in value of the futures contract.
This process is known as "marking-to-market." Variation margin paid or received
by a Fund does not represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract had expired at the close of the previous day. In
computing daily net asset value, each Fund will mark-to-market its open futures
positions.
Each Fund is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option,
and other futures positions held by that Fund.
B-10
<PAGE>
Although some futures contracts call for making or taking delivery of the
underlying securities, usually these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund engaging in the
transaction realizes a capital gain, or if it is more, the Fund realizes a
capital loss. Conversely, if an offsetting sale price is more than the original
purchase price, the Fund engaging in the transaction realizes a capital gain, or
if it is less, the Fund realizes a capital loss. The transaction costs must
also be included in these calculations.
Risks Associated with Futures. There are several risks associated with the
use of futures contracts and futures options. A purchase or sale of a futures
contract may result in losses in excess of the amount invested in the futures
contract. In trying to increase or reduce market exposure, there can be no
guarantee that there will be a correlation between price movements in the
futures contract and in the portfolio exposure sought. In addition, there are
significant differences between the securities and futures markets that could
result in an imperfect correlation between the markets, causing a given
transaction not to achieve its objectives. The degree of imperfection of
correlation depends on circumstances such as: variations in speculative market
demand for futures, futures options and the related securities, including
technical influences in futures and futures options trading and differences
between the securities market and the securities underlying the standard
contracts available for trading. For example, in the case of index futures
contracts, the composition of the index, including the issuers and the weighting
of each issue, may differ from the composition of a Fund's portfolio, and, in
the case of interest rate futures contracts, the interest rate levels,
maturities, and creditworthiness of the issues underlying the futures contract
may differ from the financial instruments held in a Fund's portfolio. A
decision as to whether, when and how to use futures contracts involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected stock price
or interest rate trends.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses. Stock index futures contracts are not normally subject to
such daily price change limitations.
There can be no assurance that a liquid market will exist at a time when a
Fund seeks to close out a futures or futures option position. The Fund would be
exposed to possible loss on the position during the interval of inability to
close, and would continue to be required to meet margin requirements until the
position is closed. In addition, many of the contracts discussed above are
relatively new instruments without a significant trading history. As a result,
there can be no assurance that an active secondary market will develop or
continue to exist.
B-11
<PAGE>
Limitations on Options and Futures. If other options, futures contracts,
or futures options of types other than those described herein are traded in the
future, a Fund also may use those investment vehicles, provided the board of
directors determines that their use is consistent with that Fund's investment
objective.
A Fund will not enter into a futures contract or purchase an option thereon
if, immediately thereafter, the initial margin deposits for futures contracts
held by the Fund plus premiums paid by it for open futures option positions,
less the amount by which any such positions are "in-the-money,"<F2> would exceed
5% of the Fund's total assets.
When purchasing a futures contract or writing a put option on a futures
contract, a Fund must maintain with its custodian (or broker, if legally
permitted) assets (including any margin) equal to the market value of such
contract. When writing a call option on a futures contract, a Fund similarly
will maintain with its custodian assets (including any margin) equal to the
amount by which such option is in-the-money until the option expires or is
closed out by the Fund.
The Fund may not maintain open short positions in futures contracts, call
options written on futures contracts or call options written on indexes if, in
the aggregate, the market value of all such open positions exceeds the current
value of the securities in its portfolio, plus or minus unrealized gains and
losses on the open positions, adjusted for the historical relative volatility of
the relationship between the portfolio and the positions. For this purpose, to
the extent a Fund has written call options on specific securities in its
portfolio, the value of those securities will be deducted from the current
market value of the securities portfolio.
In order to comply with Commodity Futures Trading Commission Regulation 4.5
and thereby avoid being deemed a "commodity pool operator," each Fund will use
commodity futures or commodity options contracts solely for bona fide hedging
purposes within the meaning and intent of Regulation 1.3(z), or, with respect to
positions in commodity futures and commodity options contracts that do not come
within the meaning and intent of Regulation 1.3(z), the aggregate initial margin
and premiums required to establish such positions will not exceed 5% of the fair
market value of the assets of each Fund, after taking into account unrealized
profits and unrealized losses on any such contracts it has entered into (in the
case of an option that is in-the-money at the time of purchase, the in-the-money
amount (as defined in Section 190.01(x) of the Commission Regulations) may be
excluded in computing such 5%).
Taxation of Options and Futures. If a Fund exercises a call or put option
that it holds, the premium paid for the option is added to the cost basis of the
security purchased (call) or deducted from the proceeds of the security sold
(put). For cash settlement options and futures options exercised by a Fund, the
difference between the cash received at exercise and the premium paid is a
capital gain or loss.
- ------------------------------
<F2> A call option is "in-the-money" if the value of the futures contract that
is the subject of the option exceeds the exercise price. A put option is
"in-the-money" if the exercise price exceeds the value of the futures
contract that is the subject of the option.
B-12
<PAGE>
If a call or put option written by a Fund is exercised, the premium is
included in the proceeds of the sale of the underlying security (call) or
reduces the cost basis of the security purchased (put). For cash settlement
options and futures options written by a Fund, the difference between the cash
paid at exercise and the premium received is a capital gain or loss.
Entry into a closing purchase transaction will result in capital gain or
loss. If an option written by a Fund is in-the-money at the time it was written
and the security covering the option was held for more than the long-term
holding period prior to the writing of the option, any loss realized as a result
of a closing purchase transaction will be long-term. The holding period of the
securities covering an in-the-money option will not include the period of time
the option is outstanding.
If a Fund writes an equity call option<F3> other than a "qualified covered
call option," as defined in the Internal Revenue Code, any loss on such option
transaction, to the extent it does not exceed the unrealized gains on the
securities covering the option, may be subject to deferral until the securities
covering the option have been sold.
A futures contract held until delivery results in capital gain or loss
equal to the difference between the price at which the futures contract was
entered into and the settlement price on the earlier of delivery notice date or
expiration date. If a Fund delivers securities under a futures contract, the
Fund also realizes a capital gain or loss on those securities.
For federal income tax purposes, a Fund generally is required to recognize
for each taxable year its net unrealized gains and losses as of the end of the
year on futures, futures options and non-equity options positions ("year-end
mark-to-market"). Generally, any gain or loss recognized with respect to such
positions (either by year-end mark-to-market or by actual closing of the
positions) is considered to be 60% long-term and 40% short-term, without regard
to the holding periods of the contracts. However, in the case of positions
classified as part of a "mixed straddle," the recognition of losses on certain
positions (including options, futures and futures options positions, the related
securities and certain successor positions thereto) may be deferred to a later
taxable year. Sale of futures contracts or writing of call options (or futures
call options) or buying put options (or futures put options) that are intended
to hedge against a change in the value of securities held by a Fund may affect
the holding period of the hedged securities.
If a Fund were to enter into a short index future, short index futures
option or short index option position and the Fund's portfolio were deemed to
"mimic" the performance of the index underlying such contract, the option or
futures contract position and the Fund's stock positions may be deemed to be
positions in a mixed straddle, subject to the above-mentioned loss deferral
rules.
- ------------------------------
<F3> An equity option is defined to mean any option to buy or sell stock, and
any other option the value of which is determined by reference to an index
of stocks of the type that is ineligible to be traded on a commodity
futures exchange (e.g., an option contract on a sub-index based on the
price of nine hotel-casino stocks). The definition of equity option
excludes options on broad-based stock indexes (such as the Standard &
Poor's 500 index).
B-13
<PAGE>
The Taxpayer Relief Act of 1997 (the "Act") imposed constructive sale
treatment for federal income tax purposes on certain hedging strategies with
respect to appreciated securities. Under these rules taxpayers will recognize
gain, but not loss, with respect to securities if they enter into short sales,
"offsetting notional principal contracts" (as defined by the Act) with respect
to, or futures or "forward contracts" (as defined by the Act) to deliver
the same or substantially identical property, or if they enter into such
transactions and then acquire the same or substantially identical property.
Furthermore, the Secretary of the Treasury is authorized to promulgate
regulations that will treat as constructive sales certain transactions that have
substantially the same effect as short sales, offsetting notional principal
contracts, or futures or forward contracts to deliver the same or substantially
similar property.
In order for each Fund to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities or foreign currencies, or other income (including but not limited to
gains from options, futures, or forward contracts). Any net gain realized from
futures (or futures options) contracts will be considered gain from the sale of
securities and therefore be qualifying income for purposes of the 90%
requirement.
Each Fund intends to distribute to shareholders at least annually any
capital gains that have been recognized for federal income tax purposes
(including year-end mark-to-market gains) on options and futures transactions,
together with gains on other Fund investments, to the extent such gains exceed
recognized capital losses and any net capital loss carryovers of a Fund.
Shareholders will be advised of the nature of such capital gain distributions.
Rule 144A Securities
The Funds may purchase securities that have been privately placed but that
are eligible for purchase and sale under Rule 144A under the 1933 Act ("Rule
144A securities"). That Rule permits certain qualified institutional buyers,
including investment companies that own and invest at least $100 million in
securities, to trade in privately placed securities that have not been
registered for sale under the 1933 Act. Artisan Partners, under the supervision
of the board of directors, will consider whether Rule 144A securities are
illiquid and thus subject to each Fund's restriction of investing no more than
10% of its net assets in illiquid securities. A determination of whether a Rule
144A security is liquid or not is a question of fact. In making this
determination, Artisan Partners will consider the trading markets for the
specific security, taking into account the unregistered nature of a Rule 144A
security. In addition, Artisan Partners could consider the (1) frequency of
trades and quotes, (2) number of dealers and potential purchasers, (3) dealer
undertakings to make a market, and (4) nature of the security and of marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers, and the mechanics of transfer). The liquidity of Rule 144A
securities would be monitored and, if as a result of changed conditions, Artisan
Partners determined that a Rule 144A security is no longer liquid, a Fund's
holdings of illiquid securities would be reviewed to determine what, if any,
steps are required to assure that the Fund does not invest more than 10% of its
assets in illiquid securities. Investing in Rule 144A securities could have the
effect of increasing the amount of a
B-14
<PAGE>
Fund's assets invested in illiquid securities if qualified institutional buyers
are unwilling to purchase such securities.
Lending of Portfolio Securities
Subject to restriction (3) under "Investment Restrictions" in this
statement of additional information, each Fund may lend its portfolio securities
to broker-dealers and banks. Any such loan must be continuously secured by
collateral in cash or cash equivalents maintained on a current basis in an
amount at least equal to the market value of the securities loaned by the Fund.
The Fund would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned, and also would receive an
additional return that may be in the form of a fixed fee or a percentage of the
collateral. The Fund would have the right to call the loan and obtain the
securities loaned at any time on notice of not more than five business days.
The Fund would not have the right to vote the securities during the existence of
the loan but would call the loan to permit voting of the securities if, in
Artisan Partners' judgment, a material event requiring a shareholder vote would
otherwise occur before the loan was repaid. In the event of bankruptcy or other
default of the borrower, the Fund could experience both delays in liquidating
the loan collateral or recovering the loaned securities and losses, including
(a) possible decline in the value of the collateral or in the value of the
securities loaned during the period while the Fund seeks to enforce its rights
thereto, (b) possible subnormal levels of income and lack of access to income
during this period, and (c) expenses of enforcing its rights. No Fund currently
intends to loan more than 5% of its net assets.
Repurchase Agreements
Repurchase agreements are transactions in which a Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated
with direct investments in securities, a Fund will enter into repurchase
agreements only with banks and dealers believed by Artisan Partners to present
minimum credit risks in accordance with guidelines approved by the board of
trustees. Artisan Partners will review and monitor the creditworthiness of such
institutions, and will consider the capitalization of the institution, Artisan
Partners' prior dealings with the institution, any rating of the institution's
senior long-term debt by independent rating agencies, and other relevant
factors.
A Fund will invest only in repurchase agreements collateralized at all
times in an amount at least equal to the repurchase price plus accrued interest.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase were less than the repurchase price, the Fund
would suffer a loss. If the financial institution which is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings there may be restrictions on the
Fund's ability to sell the collateral and the Fund could suffer a loss.
However, with respect to financial institutions whose bankruptcy or liquidation
proceedings are subject to the U.S. Bankruptcy Code, each Fund intends to comply
with provisions under such Code that would allow it immediately to resell such
collateral.
B-15
<PAGE>
When-Issued and Delayed-Delivery Securities; Reverse Repurchase Agreements
Each Fund may purchase securities on a when-issued or delayed-delivery
basis. Although the payment and interest terms of these securities are
established at a time the Fund enters into the commitment, the securities may be
delivered and paid for a month or more after the date of purchase, when their
value may have changed. A Fund makes such commitments only with the intention
of actually acquiring the securities, but may sell the securities before
settlement date if Artisan Partners deems it advisable for investment reasons.
No Fund currently intends to have commitments to purchase when-issued securities
in excess of 5% of its net assets.
A Fund may enter into reverse repurchase agreements with banks and
securities dealers. A reverse repurchase agreement is a repurchase agreement in
which a Fund is the seller of, rather than the investor in, securities and
agrees to repurchase them at an agreed-upon time and price. Use of a reverse
repurchase agreement may be preferable to a regular sale and later repurchase of
securities because it avoids certain market risks and transaction costs.
However, reverse repurchase agreements will be treated as borrowing and subject
to the Artisan Funds' fundamental limitation on borrowing.
At the time a Fund enters into a binding obligation to purchase securities
on a when-issued or delayed-delivery basis or enters into a reverse repurchase
agreement, assets of the Fund having a value at least as great as the purchase
price of the securities to be purchased will be segregated on the books of the
Fund and held by the custodian throughout the period of the obligation. The use
of these investment strategies, as well as borrowing under a line of credit as
described below, may increase net asset value fluctuation.
Short Sales
Each Fund may make short sales "against the box." In a short sale, a Fund
sells a borrowed security and is required to return the identical security to
the lender. A short sale "against the box" involves the sale of a security with
respect to which the Fund already owns an equivalent security in kind and
amount. A short sale "against the box" enables a Fund to obtain the current
market price of a security which it desires to sell but is unavailable for
settlement. No Fund currently intends to have commitments to make short sales
"against the box" in excess of 5% of its net assets.
Line of Credit
Artisan Funds maintains a line of credit with a bank in order to permit
borrowing on a temporary basis to meet share redemption requests in
circumstances in which temporary borrowing may be preferable to liquidation of
portfolio securities. Any borrowings under that line of credit by a Fund would
be subject to restriction (4) under "Investment Restrictions" in this Statement
of Additional Information.
Portfolio Turnover
Although the Funds do not purchase securities with a view to rapid
turnover, there are no limitations on the length of time that portfolio
securities must be held. At times, the Funds may
B-16
<PAGE>
invest for short-term capital appreciation. Portfolio turnover can occur for a
number of reasons such as general conditions in the securities markets, more
favorable investment opportunities in other securities, or other factors
relating to the desirability of holding or changing a portfolio investment.
Because of each Fund's flexibility of investment and emphasis on growth of
capital, it may have greater portfolio turnover than that of mutual funds that
have primary objectives of income or maintenance of a balanced investment
position. For the years ended June 30, 1998 and 1997, each Fund's portfolio
turnover rates were as follows: Artisan Small Cap Fund, 134.67% and 87.18%;
Artisan International Fund, 109.42% and 103.66%; and Artisan Mid Cap Fund,
235.65% and 0.00% (for the period from commencement of operations on June 27,
1997 through June 30, 1997). From commencement of operations on September 29,
1997 through June 30, 1998 Artisan Small Cap Value Fund's portfolio turnover
rate was 52.58%. Future turnover rates may vary greatly from year to year.
A high rate of portfolio turnover in a Fund, if it should occur, would result
in increased transaction expense, which must be borne by that Fund. High
portfolio turnover also may result in the realization of capital gains or
losses and, to the extent net short-term capital gains are realized, any
distributions resulting from such gains will be considered ordinary income for
federal income tax purposes. (See "Dividends, Capital Gains, and Taxes" in the
prospectus, and "Additional Tax Information" in this Statement of Additional
Information.)
INVESTMENT RESTRICTIONS
Fundamental Restrictions
Artisan Funds has adopted the following investment restrictions which may
not be changed without the approval of the lesser of (i) 67% of each Fund's
shares present at a meeting if more than 50% of the shares outstanding are
present or (ii) more than 50% of each Fund's outstanding shares, under which a
Fund may not:
(1) act as an underwriter of securities, except insofar as it may be
deemed an underwriter for purposes of the Securities Act of 1933 on disposition
of securities acquired subject to legal or contractual restrictions on resale;
(2) purchase or sell real estate (although it may purchase securities
secured by real estate or interests therein, or securities issued by companies
which invest in real estate or interests therein), commodities, or commodity
contracts, except that it may enter into (a) futures and options on futures and
(b) forward contracts;
(3) make loans, but this restriction shall not prevent a Fund from (a)
buying a part of an issue of bonds, debentures, or other obligations which are
publicly distributed, or from investing up to an aggregate of 15% of its total
assets (taken at market value at the time of each purchase) in parts of issues
of bonds, debentures or other obligations of a type privately placed with
financial institutions, (b) investing in repurchase agreements, or (c) lending
portfolio securities, provided that it may not lend securities if, as a result,
the aggregate value of all securities loaned would exceed 33% of its total
assets (taken at market value at the time of such loan);
B-17
<PAGE>
(4) borrow (including entering into reverse repurchase agreements), except
that it may (a) borrow up to 33 1/3% of its total assets, taken at market value
at the time of such borrowing, as a temporary measure for extraordinary or
emergency purposes, but not to increase portfolio income and (b) enter into
transactions in options, futures, and options on futures;<F4>
(5) invest in a security if more than 25% of its total assets (taken at
market value at the time of a particular purchase) would be invested in the
securities of issuers in any particular industry, except that this restriction
does not apply to securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities;
(6) issue any senior security except to the extent permitted under the
Investment Company Act of 1940;
(7) with respect to 75% of its total assets, invest more than 5% of its
total assets, taken at market value at the time of a particular purchase, in the
securities of a single issuer, except for securities issued or guaranteed by the
Government of the U.S. or any of its agencies or instrumentalities or repurchase
agreements for such securities;
(8) acquire more than 10%, taken at the time of a particular purchase, of
the outstanding voting securities of any one issuer.
A Fund's investment objective is not a fundamental restriction and,
therefore, a change in the objective is not subject to shareholder approval.
However, investors in a Fund will receive written notification at least 30 days'
prior to any change in that Fund's investment objective.
Non-Fundamental Restrictions
The Funds also are subject to the following non-fundamental restrictions
and policies, which may be changed by the board of directors. Many of these
restrictions were formerly required by law or regulation of one or more states
in which shares of a Fund are offered for sale. It is expected that certain of
the following restrictions, with respect to Artisan Small Cap Fund and Artisan
International Fund, (including restrictions (a), (d) through (g), and (i)
through (k)) will be revised or eliminated, although no change in the Fund's
operations is expected to result. A Fund may not:
(a) invest in any of the following: (i) interests in oil, gas, or other
mineral leases or exploration or development programs (except readily marketable
securities, including but not limited to master limited partnership interests,
that may represent indirect interests in oil, gas, or other mineral exploration
or development programs); (ii) puts, calls, straddles, spreads, or any
combination thereof if by reason thereof the value of the Fund's aggregate
investment in such securities exceed 5% of its total assets (except that the
Fund may enter into transactions in options, futures, and options on futures);
and (iii) limited partnerships in real estate unless they are readily marketable
[Artisan Small Cap Fund and Artisan International Fund only];
- ------------------------------
<F4> A Fund will not purchase securities when total borrowings by the Fund are
greater than 5% of its net asset value.
B-18
<PAGE>
(b) invest in companies for the purpose of exercising control or
management;
(c) purchase more than 3% of the stock of another investment company or
purchase stock of other investment companies equal to more than 5% of the Fund's
total assets (valued at time of purchase) in the case of any one other
investment company and 10% of such assets (valued at time of purchase) in the
case of all other investment companies in the aggregate; any such purchases are
to be made in the open market where no profit to a sponsor or dealer results
from the purchase, other than the customary broker's commission, except for
securities acquired as part of a merger, consolidation, acquisition or
reorganization;
(d) purchase or hold securities of an issuer if 5% of the securities of
such issuer are owned by those officers, directors or partners of the Fund or of
its investment adviser, who each own beneficially more than 1/2 of 1% of the
securities of that issuer [Artisan Small Cap Fund and Artisan International Fund
only];
(e) purchase securities of issuers (other than issuers of Federal agency
obligations or securities issued or guaranteed by any foreign country or asset-
backed securities) that, including their predecessors or unconditional
guarantors, have been in operation for less than three years, if by reason of
such purchase the value of the Fund's investment in all such securities will
exceed 5% of its total assets (valued at time of purchase) [Artisan Small Cap
Fund and Artisan International Fund only];
(f) mortgage, pledge, or hypothecate its assets, except as may be
necessary in connection with permitted borrowings or in connection with options,
futures, and options on futures [Artisan Small Cap Fund and Artisan
International Fund only];
(g) invest more than 5% of its net assets (valued at time of purchase) in
warrants, nor more than 2% of its net assets in warrants that are not listed on
the New York or American stock exchange [Artisan Small Cap Fund and Artisan
International Fund only];
(h) invest more than 25% of its total assets (valued at time of purchase)
in securities of foreign issuers [Artisan Small Cap Fund, Artisan Mid Cap Fund
and Artisan Small Cap Value Fund only];
(i) buy or sell an option on a security, a futures contract, or an option
on a futures contract unless the option, the futures contract, or the option on
the futures contract is offered through the facilities of a recognized
securities association or listed on a recognized exchange or similar entity
[Artisan Small Cap Fund and Artisan International Fund only];
(j) purchase a put or call option if the aggregate premiums paid for all
put and call options exceed (i) 20% of its net assets [for Artisan Small Cap
Fund only] or (ii) 5% of its net assets [for Artisan International Fund only]
(less the amount by which any such positions are in-the-money), excluding put
and call options purchased as closing transactions;
(k) invest more than 5% of its net assets in restricted securities, other
than securities eligible for resale pursuant to Rule 144A of the Securities Act
of 1933 [Artisan Small Cap Fund and Artisan International Fund only];
B-19
<PAGE>
(l) purchase securities on margin (except for use of short-term credits as
are necessary for the clearance of transactions), or sell securities short
unless (i) the Fund owns or has the right to obtain securities equivalent in
kind and amount to those sold short at no added cost or (ii) the securities sold
are "when issued" or "when distributed" securities which the Fund expects to
receive in recapitalization, reorganization, or other exchange for securities
the Fund contemporaneously owns or has the right to obtain and provided that
transactions in options, futures, and options on futures are not treated as
short sales; or
(m) invest more than 10% of its net assets (taken at market value at the
time of each purchase) in illiquid securities, including repurchase agreements
maturing in more than seven days.
(n) under normal market conditions, invest less than 65% of its total
assets in securities of issuers having aggregate common stock market
capitalizations within the range of the aggregate common stock market
capitalizations of issuers included in the S&P MidCap 400 Index, in each case
at the time of investment [Artisan Mid Cap Fund only]; or
(o) under normal market conditions, invest less than 65% of its total
assets in securities of issuers having aggregate common stock market
capitalizations of less than $1 billion, in each case taken at the time of
investment ] approval of the lesser of (i) 67% of each fund's shares present at
a meeting if more than 50% of the shares outstanding are present or (ii) more
than 50% of each fund's outstanding shares [Artisan Small Cap Value Fund only].
PERFORMANCE INFORMATION
From time to time the Funds may quote total return figures. "Total Return"
for a period is the percentage change in value during the period of an
investment in shares of a fund, including the value of shares acquired through
reinvestment of all dividends and capital gains distributions. "Average Annual
Total Return" is the average annual compounded rate of change in value
represented by the Total Return for the period.
Average Annual Total Return is computed as follows:
n
ERV = P(l+T)
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the period, at the
end of the period (or fractional portion thereof)
B-20
<PAGE>
Each Fund's Total Return and Average Total Return for various periods ended June
30, 1998 is shown below:
Artisan Small Cap Fund
----------------------
Average Annual
Total Return Total Return
------------ -------------
1 year 14.73% 14.73%
Life of Fund<F1> 88.83% 21.51%
-------------------------
<F1>from March 28, 1995 (commencement of operations)
Artisan International Fund
--------------------------
International Shares
--------------------
Average Annual
Total Return Total Return
------------ --------------
1 year 24.12% 24.12%
Life of Fund<F1> 81.31% 26.76%
-------------------------
<F1>from December 28, 1995 (commencement of operations)
Institutional Shares
--------------------
Average Annual
Total Return Total Return
------------ --------------
1 year 24.40% 24.40%
Life of Fund<F1> 24.40% 24.40%
-------------------------
<F1>from the date first offered for sale [date]
Total Return and Average Annual Total Return of Institutional Shares will
be calculated in the same way as for International Shares. The performance of
Institutional Shares will be different from the performance of International
Shares because the expenses allocated to the classes will be different and their
expense reimbursement or waiver arrangements may be different. Because the
expense ratio for Institutional Shares is expected to be lower, the Total Return
and Average Annual Total Return of Institutional Shares are expected to be
greater than for International Shares. If you were a shareholder of
international shares prior to July 1, 1997, and your shares were transferred
to Institutional Shares, the total return and average annual total return
shown above for 1 year would each have been 24.40%, and the total return and
average total return for Life of Fund would have been 81.7& and 26.9%,
respectively.
Artisan Mid Cap Fund
--------------------
B-21
<PAGE>
Average Annual
Total Return Total Return
------------ --------------
1 year 46.07% 46.07%
Life of Fund<F1> 46.07% 45.47%
-------------------------
<F1>from June 27, 1997 (commencement of operations)
Artisan Small Cap Value Fund
----------------------------
Average Annual
Total Return Total Return
------------ --------------
Life of Fund<F1> 13.70% <F2>%
-------------------------
<F1> from September 29, 1997 (commencement of operations)
<F2> Not meaningful
The Funds impose no sales charges and pay no distribution expenses. Income
taxes are not taken into consideration. Performance figures quoted by the
Funds are not necessarily indicative of future results. Each Fund's
performance is a function of conditions in the securities markets, portfolio
management, and operating expenses. Although information about past
performance is useful in reviewing a Fund's performance and in providing
some basis for comparison with other investment alternatives, it should not
be used for comparison with other investments using different reinvestment
assumptions or time periods.
In advertising and sales literature, the performance of a Fund may be
compared with that of other mutual funds, indexes or averages of other mutual
funds, indexes of related financial assets or data, other accounts or
partnerships managed by Artisan Partners, and other competing investment and
deposit products available from or through other financial institutions. The
composition of these indexes, averages or accounts differs from those of the
Funds. Comparison of a Fund to an alternative investment should consider
differences in features and expected performance.
All of the indexes and averages noted below will be obtained from the
indicated sources or reporting services, which Artisan Funds generally believe
to be accurate. The Funds also may note their mention (including performance or
other comparative rankings) in newspapers, magazines, or other media from time
to time. However, Artisan Funds assumes no responsibility for the accuracy of
such data. Newspapers and magazines and other media which might mention the
Funds include, but are not limited to, the following:
B-22
<PAGE>
Atlanta Constitution Mutual Fund Letter
Barron's Mutual Fund News Service
Boston Herald Mutual Fund Values
Business Week Morningstar Publications
Chicago Tribune Newsweek
Chicago Sun-Times The New York Times
Cleveland Plain Dealer No-Load Fund Investor
CNBC Outstanding Investor Digest
CNN Pension World
Crain's Chicago Pensions and Investments
Business Personal Investor
Consumer Reports Jane Bryant Quinn (syndicated column)
Consumer Digest Louis Rukeyser's Mutual Fund
Financial World The San Francisco Chronicle
Forbes Smart Money
Fortune Stranger's Investment Adviser
Fund Action 13D Opportunities Report
Investor's Business Daily Time
Kiplinger's Personal United Mutual Fund Selector
Finance Magazine USA Today
Knight-Ridder U.S. News and World Report
Los Angeles Times The Wall Street Journal
Milwaukee Business Journal Working Woman
Milwaukee Journal Sentinel Worth
Money Your Money
When a newspaper, magazine or other publication mentions a Fund, such
mention may include: (i) listings of some or all of the Fund's holdings, (ii)
descriptions of characteristics of some or all of the securities held by the
Fund, including price-earnings ratios, earnings, growth rates and other
statistical information, and comparisons of that information to similar
statistics for the securities comprising any of the indexes or averages listed
above; and (iii) descriptions of the Fund's or a portfolio manager's economic
and market outlook, generally and for the Fund.
A Fund may compare its performance to the Consumer Price Index (All Urban),
a widely recognized measure of inflation.
B-23
<PAGE>
The performance of a Fund may be compared to the following indexes or
averages:
Dow-Jones Industrial Average
Russell 2000 Small Stock Index New York Stock Exchange
Russell Mid-Cap Stock Index Composite Index
Russell Mid-Cap Value Index American Stock Exchange
Standard & Poor's 500 Stock Index Composite Index
Standard & Poor's 400 Industrials NASDAQ Composite
Standard & Poor's Mid-Cap 400 Index NASDAQ Industrials
Wilshire 5000 (These indexes generally
Wilshire 4500 reflect the performance of
Wilshire 4000 stocks traded in the
Wilshire Small-Cap Index indicated markets.)
Wilshire Small-Cap Value Index
(These indexes are widely recognized ICD International Equity and
indicators of general U.S. stock Global Equity Funds Average
market results.) ICD Foreign Securities Index
Lipper International Index
Lipper International & Global Funds
Average
Morgan Stanley Capital International
Europe, Australasia and Far East
(EAFE) Index
Morningstar International Stock
Average
Financial Times-Actuaries World Index
(Ex-U.S.)
Morgan Stanley Capital International
World Index
(These indexes are widely recognized
indicators of the international
markets)
The performance of a Fund also may be compared to the following mutual fund
industry indexes or averages: Value Line Index; Lipper Capital Appreciation
Fund Average; Lipper Growth Funds Average; Lipper Small Company Growth Funds
Average; Lipper General Equity Funds Average; Lipper Equity Funds Average;
Lipper Small Company Growth Fund Index; ICD Aggressive Growth and Long Term
Growth Funds Average; ICD Aggressive Growth Fund Large Index; ICD Aggressive
Growth Fund Small Index; ICD Aggressive Growth Funds Average; ICD All Equity
Funds Average; Morningstar Growth Average; Morningstar Small-Cap Funds Average;
Morningstar Aggressive Growth Average; Morningstar U.S. Diversified Average;
Morningstar Equity Fund Average; Morningstar Hybrid Fund Average; Morningstar
All Equity Funds Average; and Morningstar General Equity Average.
The ICD Indexes reflect the unweighted average total return of the largest
twenty four funds within their respective category as calculated and published
by ICD.
The Lipper Small Company Growth Fund Index reflects the net asset value
weighted total return of the largest thirty growth funds as calculated and
published by Lipper Analytical
B-24
<PAGE>
Services, Inc. ("Lipper"), an independent service that monitors the performance
of more than 1,000 funds.
The Lipper, ICD and Morningstar averages are unweighted averages of total
return performance of mutual funds as classified, calculated and published by
these independent services that monitor the performance of mutual funds. The
Funds also may use comparative performance as computed in a ranking by Lipper or
category averages and rankings provided by another independent service. Should
Lipper or another service reclassify a Fund to a different category or develop
(and place that Fund into) a new category, the Fund may compare its performance
or ranking against other funds in the newly assigned category, as published by
the service. A Fund may also compare its performance or ranking against all
funds tracked by Lipper or another independent service.
A Fund may cite its rating, recognition or other mention by Morningstar,
Inc. ("Morningstar") or any other entity. Morningstar's rating system is based
on risk-adjusted total return performance and is expressed in a star-rating
format. The risk-adjusted number is computed by subtracting a Fund's risk score
(which is a function of the Fund's monthly returns less the 3-month Treasury
bill return) from the Fund's load-adjusted total return score. This numerical
score is then translated into rating categories, with the top 10% labeled five
star, the next 22.5% labeled four star, the next 35% labeled three star, the
next 22.5% labeled two star and the bottom 10% one star. A high rating reflects
either above-average returns or below-average risk, or both.
To illustrate the historical returns on various types of financial assets,
Artisan Funds may use historical data provided by Ibbotson Associates, Inc.
("Ibbotson"), a Chicago-based investment firm. Ibbotson constructs (or obtains)
very long-term (since 1926) total return data (including, for example, total
return indexes, total return percentages, average annual total returns and
standard deviations of such returns) for the following asset types: common
stocks, small company stocks, long-term corporate bonds, long-term government
bonds, intermediate-term government bonds, U.S. Treasury bills and Consumer
Price Index. The Funds also may use historical data compiled by Prudential
Securities, Inc., or by other similar sources believed by Artisan Funds to be
accurate, illustrating the past performance of small-capitalization stocks,
large-capitalization stocks, common stocks, equity securities, growth stocks
(small-capitalization, large-capitalization, or both) and value stocks (small-
capitalization, large-capitalization, or both).
ORGANIZATION
The Funds are series of Artisan Funds, Inc. ("Artisan Funds"), an open-end,
diversified management investment company which was incorporated under Wisconsin
law on January 5, 1995.
Each share of a Fund has one vote. All shares participate equally in
dividends and other distributions declared by the board of directors, and all
shares of a Fund have equal rights in the event of liquidation of that Fund.
Shares of the Funds have no preemptive, conversion or subscription rights.
B-25
<PAGE>
Artisan Funds is governed by a board of directors which is responsible for
protecting the interests of the shareholders of the Funds. The directors are
experienced executives and professionals who meet at regular intervals to
oversee the activities of the Funds, review contractual arrangements with
companies that provide services to the Funds and review performance. A majority
of directors are not otherwise affiliated with Artisan Funds or Artisan
Partners.
The Wisconsin Business Corporation Law permits registered investment
companies to operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the Investment Company Act
of 1940 (the federal securities law that governs the regulation of investment
companies). Artisan Funds has adopted the appropriate provisions in its bylaws
and does not expect to hold an annual meeting in any year in which the election
of directors is not required to be acted on by shareholders. Artisan Funds
believes that not holding shareholder meetings except as otherwise required
reduces each Fund's expenses and enhances shareholder return.
The Funds may hold special meetings of shareholders to elect or remove
directors, change fundamental policies, approve a management contract, or for
other purposes. The Funds will mail proxy materials in advance, including a
voting card and information about the proposals to be voted on. You are
entitled to one vote for each share of any Fund that you own. Shareholders not
attending these meetings are encouraged to vote by proxy.
Directors and officers of Artisan Funds, and their principal business
occupations during at least the last five (5) years, are shown below. Directors
deemed to be "interested persons" of Artisan Funds for purposes of the 1940 Act
are indicated with an asterisk.
POSITIONS HELD PRINCIPAL OCCUPATIONS DURING
NAME AND DATE OF BIRTH WITH REGISTRANT PAST 5 YEARS
- ---------------------- --------------- ----------------------------
Andrew A. Ziegler* Director, Chairman of Managing Partner of Artisan
10/7/57 the Board and Chief Partners; prior to founding
Executive Officer Artisan Partners, president
and chief operating officer of
Strong/Corneliuson Capital
Management ("Strong") and
president of the Strong Funds
from 1990 to 1994; prior
thereto, attorney with the law
firm of Godfrey & Kahn, S.C.,
Milwaukee, WI.
B-26
<PAGE>
Carlene Murphy Ziegler* Director and Managing Partner of Artisan
6/20/56 President Partners; co-manager of
Artisan Small Cap Fund;
prior to founding Artisan
Partners, a co-portfolio
manager of the Strong
Common Stock Fund,
Strong Opportunity Fund and
numerous institutional small-
capitalization equity
portfolios at Strong since
March 1991; prior thereto, a
co-portfolio manager of the
Stein Roe Special Fund.
David A. Erne Director Partner of the law firm
5/6/43 Reinhart, Boerner, Van
Deuren, Norris & Rieselbach,
S.C., Milwaukee, WI.
Thomas R. Hefty Director President of United Wisconsin
6/9/47 Services, Inc. (a provider of
managed care and specialty
business services) since 1986
and chairman of the board and
chief executive officer since
1991; and chairman of the
board of Blue Cross & Blue
Shield United of Wisconsin
(parent company of United
Wisconsin Services, Inc.)
since 1988 and president
since 1982.
Howard B. Witt Director President and chief executive
5/17/40 officer of Littelfuse, Inc.
(a manufacturer of advanced
circuit protection devices)
since 1990 and chairman of the
board of Littelfuse since
1993; prior thereto executive
vice president of Littelfuse;
and director of Franklin
Electric Co., Inc. (a
manufacturer of electronic
motors) since 1994.
Lawrence A. Totsky Chief Financial Chief financial officer,
5/6/59 Officer,Treasurer Artisan Partners; prior to
and Secretary joining Artisan Partners,
senior vice president
(since 1994) and director
of mutual fund administration,
Strong Capital Management,
Inc.
B-27
<PAGE>
Mark L. Yockey Vice President Partner of Artisan Partners;
6/5/56 portfolio manager of Artisan
International Fund; prior
to joining Artisan Partners,
portfolio manager of the
United International
Growth Fund and vice president
of Waddell & Reed (investment
management firm) since January
1990; prior thereto, equity
analyst for Waddell & Reed.
Sandra Jean Voss- Vice President Equity trader for Artisan
Reinhardt Partners; prior to joining
3/6/64 Artisan Partners, equity
trader with Northwestern
Mutual since January 1989,
prior thereto, sales associate
with Dean Witter Reynolds.
Millie Adams Hurwitz Vice President Co-manager of Artisan Small
12/16/62 Cap Fund; prior to joining
Artisan Partners, co-port-
folio manager at Stein Roe
& Farnham Incorporated from
1992 until 1995, and an
analyst with OLC Corporation
from 1989 to 1991.
Scott C. Satterwhite Vice President Portfolio manager, Artisan
7/15/57 Small Cap Value Fund; prior to
joining Artisan Partners in
June 1997, portfolio manager
of the Biltmore Special Values
Fund from August 1, 1993
through May 31, 1997 and
Senior Vice President and
Manager of Personal Trust
Portfolio Management for the
Personal Financial Services
Group of Wachovia Bank of
North Carolina, N.A.
Andrew C. Stephens Vice President Portfolio manager, Artisan
10/31/63 Mid Cap Fund; co-manager of
Strong Asset Allocation Fund
at Strong, February 1993
through March 1997, and senior
research analyst for Strong
Common Stock Fund and Strong
Opportunity Fund, September
1994 through March 1996; prior
to February 1933, head trader,
Strong.
B-28
<PAGE>
The business address of the officers and directors affiliated with Artisan
Partners is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202.
The addresses of the other directors are: Mr. Erne - 1000 N. Water Street,
Milwaukee, Wisconsin 53202; Mr. Hefty - 401 W. Michigan Street, Milwaukee,
Wisconsin 53203; and Mr. Witt - 800 E. Northwest Highway, Des Plaines, Illinois
60016.
Mr. Ziegler and Ms. Ziegler are married to each other.
Mr. Ziegler and Ms. Ziegler serve as members of the Executive Committee of
the Board of Directors. The Executive Committee, which meets between regular
meetings of the Board, is authorized to exercise all of the powers of the Board
of Directors.
The only compensation paid to directors and officers of Artisan Funds for
their services as such consists of an annual $5,000 retainer fee (per series of
Artisan Funds) paid to directors who are not interested persons of Artisan Funds
or Artisan Partners. Artisan Funds has no retirement or pension plans.
The following table sets forth compensation paid by Artisan Funds, Inc.
during the fiscal year ended June 30, 1998 to each of the directors of the Fund.
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT FROM ARTISAN FUND
COMPENSATION BENEFITS ACCRUED AND FUND
FROM ARTISAN AS PART OF FUND COMPLEX<F4>
NAME OF DIRECTOR FUNDS EXPENSES PAID TO DIRECTORS
- ---------------- ----------------- ----------------- -----------------
Andrew A. Ziegler $ 0 $ 0 $ 0
Carlene Murphy Ziegler 0 0 0
David A. Erne $15,000 0 $15,000
Thomas R. Hefty $15,000 0 $15,000
Howard B. Witt $15,000 0 $15,000
[At September 30, 1998, the officers and directors of Artisan Funds as a
group owned less than 1% of the outstanding shares of the Fund and less than 1%
of the outstanding shares of Artisan Funds.]
PRINCIPAL SHAREHOLDERS
[No person was known by Artisan Funds to own of record or beneficially 5%
or more of the outstanding shares of the Fund at September 30, 1998 except
for persons acting as nominees for their clients, without the power to vote
or dispose of Fund shares.]
INVESTMENT ADVISORY SERVICES
Artisan Partners Limited Partnership ("Artisan Partners") provides
investment advisory services to each Fund pursuant to each Fund's Investment
Advisory Agreement dated March 27, 1995 (the "Advisory Agreements"). Artisan
Partners is a Delaware limited partnership. Artisan
B-29
<PAGE>
Investment Corporation was incorporated on December 7, 1994 for the sole purpose
of acting as general partner of Artisan Partners. Mr. Ziegler and Ms. Ziegler,
as officers of Artisan Investment Corporation, manage Artisan Partners. The
principal address of Artisan Partners is 1000 North Water Street, Suite 1770,
Milwaukee, Wisconsin 53202. Artisan Partners also has offices at 100 Pine
Street, Suite 3250, San Francisco, California, and Five Concourse Parkway, Suite
208, Atlanta, Georgia 30328.
In return for its services, each Fund pays Artisan Partners a monthly fee
at the annual rate of 1% of the Fund's average daily net assets up to $500
million; .975 of 1% of average daily net assets from $500 million up to $750
million; .950 of 1% of average daily net assets from $750 million to $1 billion;
and .925 of 1% of average daily net assets over $1 billion. In addition Artisan
Partners has undertaken to reimburse Artisan International Fund for any ordinary
operating expenses in excess of 2.50% of average net assets annually, and has
undertaken to reimburse each of Artisan Small Cap Fund, Artisan Mid Cap Fund and
Artisan Small Cap Value Fund for any ordinary operating expenses in excess of
2.0% of average net assets over each fiscal year.
The advisory fees paid by Artisan Small Cap Fund for the fiscal years ended
June 30, 1998, 1997 and 1996 were $2,900,335, $2,906,791 and $2,734,855. The
investment advisory fees paid by Artisan International Fund for the fiscal years
ended June 30, 1998 and 1997, and for the period from December 28, 1995 through
June 30, 1996 were $3,923,189, $2,444,080 and $133,215. For the fiscal year
ended June 30, 1998, Artisan Mid Cap Fund would have paid investment advisory
fees of $93,853 if not for expense fee waivers; from its inception on June 27,
1997 through June 30, 1997, Artisan Mid Cap Fund did not pay any investment
advisory fees. From its inception on September 29, 1997 through June 30,
1998, Artisan Small Cap Value Fund paid investment advisory fees of $252,397.
Each Advisory Agreement provides that Artisan Partners shall not be liable
for any loss suffered by a Fund or its shareholders as a consequence of any act
of omission in connection with investment advisory or portfolio services under
the agreement, except by reason of willful misfeasance, bad faith or gross
negligence on the part of Artisan Partners in the performance of its duties or
from reckless disregard by Artisan Partners of its obligations and duties under
the Advisory Agreement.
Each Advisory Agreement may be continued from year to year only so long as
the continuance is approved annually (a) by the vote of a majority of the
directors of each Fund who are not "interested persons" of the Fund or Artisan
Partners cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the board of directors or by the vote of a majority (as
defined in the 1940 Act) of the outstanding shares of the portfolio. Each
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
DISTRIBUTOR
Shares of the Funds are offered for sale by Artisan Distributors LLC
("Distributors") without any sales commissions, 12b-1 fees, or other charges to
the Funds or their shareholders. Distributors is wholly-owned by Artisan Funds
and Artisan Partners. All distribution expenses relating to the Funds are paid
by Artisan Partners, including the payment or reimbursement of
B-30
<PAGE>
any expenses incurred by Distributors. The Distribution Agreement will continue
in effect through [_________, 2000] and thereafter from year to year provided
such continuance is approved annually (i) by a majority of the directors or by a
majority of the outstanding voting securities of the Funds and (ii) by a
majority of the directors who are not parties to the Agreement or interested
persons of any such party.
Artisan Funds has agreed to pay all expenses in connection with
registration of its shares with the Securities and Exchange Commission and any
auditing and filing fees required in compliance with various state securities
laws. Artisan Partners bears all sales and promotional expenses, including the
cost of prospectuses and other materials used for sales and promotional purposes
by Distributors. Distributors offers the Funds' shares only on a best efforts
basis. Distributors is located at 1000 North Water Street, Suite 1770,
Milwaukee, Wisconsin 53202.
PORTFOLIO TRANSACTION
Artisan Partners places the orders for the purchase and sale of each Fund's
portfolio securities and options and futures contracts. Artisan Partners'
overriding objective in effecting portfolio transactions is to seek to obtain
the best combination of price and execution. The best net price, giving effect
to brokerage commissions, if any, and other transaction costs, normally is an
important factor in this decision, but a number of other judgmental factors also
may enter into the decision. These include: Artisan Partners' knowledge of
negotiated commission rates currently available and other current transaction
costs; the nature of the security being traded; the size of the transaction; the
desired timing of the trade; the activity existing and expected in the market
for the particular security; confidentiality; the execution, clearance and
settlement capabilities of the broker or dealer selected and others which are
considered; Artisan Partners' knowledge of the financial stability of the broker
or dealer selected and such other problems of any broker or dealer. Recognizing
the value of these factors, a Fund may pay a brokerage commission in excess of
that which another broker or dealer may have charged for effecting the same
transaction. Evaluations of the reasonableness of brokerage commissions, based
on the foregoing factors, are made on an ongoing basis by Artisan Partners'
staff while effecting portfolio transactions. The general level of brokerage
commissions paid is reviewed by Artisan Partners, and reports are made annually
to the board of directors.
With respect to issues of securities involving brokerage commissions, when
more than one broker or dealer is believed to be capable of providing the best
combination of price and execution with respect to a particular portfolio
transaction for a Fund, Artisan Partners often selects a broker or dealer that
has furnished it with research products or services such as research reports,
subscriptions to financial publications and research compilations, compilations
of securities prices, earnings, dividends, and similar data, and computer data
bases, quotation equipment and services, research-oriented computer software and
services, and services of economic and other consultants. Selection of brokers
or dealers is not made pursuant to an agreement or understanding with any of the
brokers or dealers; however, Artisan Partners uses internal allocation
procedures to identify those brokers or dealers who provide it with research
products or services and the amount of research products or services they
provide, and endeavors to direct sufficient commissions generated by its
clients' accounts in the aggregate, including
B-31
<PAGE>
Artisan Funds, to such brokers or dealers to ensure the continued receipt of
research products or services Artisan Partners feels are useful. In certain
instances, Artisan Partners receives from brokers and dealers products or
services that are used both as investment research and for administrative,
marketing, or other non-research purposes. In such instances, Artisan Partners
makes a good faith effort to determine the relative proportions of such products
or services which may be considered as investment research. The portion of the
costs of such products or services attributable to research usage may be
defrayed by Artisan Partners (without prior agreement or understanding, as noted
above) through brokerage commissions generated by transactions by clients
(including Artisan Funds), while the portions of the costs attributable to non-
research usage of such products or services is paid by Artisan Partners in cash.
No person acting on behalf of Artisan Funds is authorized, in recognition of the
value of research products or services, to pay a commission in excess of that
which another broker or dealer might have charged for effecting the same
transaction. Research products or services furnished by brokers and dealers may
be used in servicing any or all of the clients of Artisan Partners and not all
such research products or services are used in connection with the management of
Artisan Funds.
With respect to each Fund's purchases and sales of portfolio securities
transacted with a broker or dealer of a net basis, Artisan Partners also may
consider the part, if any, played by the broker or dealer in bringing the
security involved to Artisan Partners' attention, including investment research
related to the security and provided to the Artisan Funds. During fiscal years
1998, 1997, and 1996, Artisan Small Cap Fund paid brokerage commissions of
$1,866,349, $1,877,158 and $2,220,846, respectively, to brokers who furnished
research services to the Fund or Artisan Partners on purchases and sales
aggregating $762,845,329, $637,608,952 and $775,778,115, respectively. During
fiscal years 1998 and 1997, and from the period from December 28, 1995 through
June 30, 1996, Artisan International Fund paid brokerage commissions of
$2,893,523, $2,960,678 and $425,266 to brokers who furnished research services
to the Fund or Artisan Partners on purchases and sales aggregating $885,882,850,
$824,170,635 and $97,912,681. For the fiscal year ended June 30, 1998 Artisan
Mid Cap Fund paid brokerage commissions of $72,800 to brokers who
furnished research services to the Fund or Artisan Partners on purchases and
sales aggregating and $50,307,734 (from its inception on June 27, 1997 through
June 30, 1997, Artisan Mid Cap Fund had no purchases or sales of its portfolio
securities). From its inception on September 29, 1997 through June 30, 1998,
Artisan Small Cap Value Fund paid brokerage commissions of $184,278 to
brokers who furnished research services to the Fund or Artisan Partners on
purchases and sales aggregating $70,354,053.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the prospectus under the
headings "How to Buy Shares," and "How to Sell Shares." All of that information
is incorporated herein by reference.
Shares of each Fund may be purchased or redeemed through certain financial
services companies, some of which may charge a transaction fee. Each Fund may
authorize from time to time certain financial services companies, broker-dealers
or their designees ("authorized agents") to accept share purchase and redemption
orders on its behalf. For purchase orders placed through
B-32
<PAGE>
an authorized agent, a shareholder will pay a Fund's NAV per share (see "Net
Asset Value," below) next computed after the receipt by the authorized agent of
such purchase order, plus any applicable transaction charge imposed by the
agent. For redemption orders placed through an authorized agent, a shareholder
will receive redemption proceeds which reflect the NAV per share next computed
after the receipt by the authorized agent of the redemption order, less any
redemption fees imposed by the agent.
In some instances, an authorized agent or other financial services company
may not charge any transaction fees directly to investors in a Fund. However,
accounting and shareholder servicing services provided by such a company with
respect to Fund shares held by that company for its customers, the company may
charge a fee based on a percentage of the annual average value of those
accounts. A Fund pays a portion of those fees not to exceed the estimated fees
and expenses that the Fund would pay to its own transfer agent if the shares of
the Fund held by such customers of the company were registered directly in their
names on the books of the Fund's transfer agent. The balance of those fees is
paid by Artisan Partners.
Net Asset Value. Share purchase and redemption orders will be priced at a
Fund's net asset value next computed after such orders are received and accepted
by: (i) the Fund; (ii) a broker-dealer or other financial services company
authorized by the Fund to accept purchase and redemption orders on the Fund's
behalf; or (iii) such authorized broker-dealer's designee. The net asset value
of the shares of the Fund is determined as of the close of regular session
trading on the New York Stock Exchange ("NYSE") (currently 3:00 p.m., Central
time) each day the NYSE is open for trading. The NYSE is regularly closed on
Saturdays and Sundays and on New Year's Day, the third Monday in January, the
third Monday in February, Good Friday, the last Monday in May, Independence Day,
Labor Day, Thanksgiving, and Christmas. If one of these holidays falls on a
Saturday or Sunday, the NYSE will be closed on the preceding Friday or the
following Monday, respectively. Net asset value will not be determined on days
when the NYSE is closed unless, in the judgment of the board of directors, net
asset value of the Fund should be determined on any such day, in which case the
determination will be made at 3:00 p.m., Central time. The net asset value per
share of the Fund is determined by dividing the value of all its securities and
other assets, less its liabilities, by the number of shares of the Fund
outstanding.
A Fund intends to pay all redemptions in cash and is obligated to redeem
shares solely in cash up to the lesser of $250,000 or one percent of the net
assets of the Fund during any 90-day period for any one shareholder. However,
redemptions in excess of such limit may be paid wholly or partly by a
distribution in kind of readily marketable securities. If redemptions are made
in kind, the redeeming shareholders might incur transaction costs in selling the
securities received in the redemptions.
Each Fund reserves the right to suspend or postpone redemptions of its
shares during any period when: (a) trading on the NYSE is restricted, as
determined by the Commission, if the NYSE is closed for other than customary
weekend and holiday closings; (b) the Commission has by order permitted such
suspension; or (c) an emergency, as determined by the Commission, exists, making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable.
B-33
<PAGE>
Artisan Funds and Artisan Partners each have adopted a code of ethics that,
among other things, regulates the personal transactions in securities of certain
officers, directors, partners and employees of Artisan Funds and Artisan
Partners.
ADDITIONAL TAX INFORMATION
Artisan Funds intends for each Fund to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and thus not be subject to federal income taxes on amounts
which it distributes to shareholders. If Artisan Funds should fail to qualify
for pass-through tax treatment under Subchapter M, then it would be required to
pay tax on any income and realized capital gains, reducing the amount of income
and realized capital gains that would otherwise be available for distribution to
shareholders of the Funds.
Your distributions will be taxable to you, under income tax law, whether
received in cash or reinvested in additional shares. For federal income tax
purposes, any distribution that is paid in January but was declared in October,
November or December of the prior calendar year is deemed paid in the prior
calendar year.
The Internal Revenue Service Restructuring and Reform Act of 1998
eliminated the requirement that capital assets be held for more than 18 months
in order to be taxed at the lowest rate in effect under current law, and instead
permits capital assets to be so taxed if held for more than one year. This
change applies generally to sales transactions which occur during taxable years
ending after December 31, 1997. Distributions of long-term capital gains
declared prior to that date will be taxed at the rate of 28%, which was in
effect prior to the enactment of the new legislation. You will be subject to
income tax at ordinary rates on income dividends and distributions of net
short-term capital gain. Distributions of net long-term capital gains are
taxable to you as long-term capital gains (currently taxed at a maximum rate
of 20%) regardless of the length of time you have held your shares. Long-
term gains are those derived from securities held by the fund for more than
one year. You are urged to consult your tax advisor to assess the impact of
the new legislation on your individual circumstances.
You will be advised annually as to the source of distributions for tax
purposes. If you are not subject to tax on your income, you will not be
required to pay tax on these amounts.
If you realize a loss on the sale of Fund shares held for six months or
less, your short-term loss is recharacterized as long-term to the extent of any
long-term capital gain distributions you have received with respect to those
shares.
A Fund may be required to withhold federal income tax ("backup
withholding") from certain payments to you, generally redemption proceeds.
Backup withholding may be required if:
- You fail to furnish your properly certified social security or other
tax identification number;
- You fail to certify that your tax identification number is correct or
that you are not subject to backup withholding due to the
underreporting of certain income; or
- The IRS informs the Fund that your tax identification number is
incorrect.
B-34
<PAGE>
These certifications are contained in the application that you complete
when you open your Fund account. Artisan Funds must promptly pay the IRS all
amounts withheld. Therefore, it is not usually possible for Artisan Funds to
reimburse you for amounts withheld. You may, however, claim the amount withheld
as a credit on your federal income tax return.
The Funds may purchase the securities of certain foreign investment funds
or trusts called passive foreign investment companies ("PFICs"). In addition to
bearing their proportionate share of a Fund's expenses (management fees and
operating expenses), shareholders will also indirectly bear similar expenses of
PFICs. Capital gains on the sale of PFIC holdings will be deemed to be ordinary
income regardless of how long the Fund holds its investment. In addition, a
Fund may be subject to corporate income tax and an interest charge on certain
dividends and capital gains earned from PFICs, regardless of whether such income
and gains are distributed to shareholders.
In accordance with tax laws, each Fund intends to treat securities
in PFICs as sold on the last day of the Fund's fiscal year and recognize any
gains for tax purposes at that time; losses may be recognized to the extent of
any gains recognized. Such gains will be considered ordinary income which the
Fund will be required to distribute even though it has not sold the security
and received cash to pay such distributions.
The discussion of taxation above is not intended to be a full discussion of
income tax laws and their effect on shareholders. You are encouraged to consult
your own tax advisor. The foregoing information applies to U.S. shareholders.
U.S. citizens residing in a foreign country should consult their tax advisors
as to the tax consequences of ownership of Fund shares.
CUSTODIAN
State Street Bank & Trust Company ("State Street"), 66 Brooks Drive,
Braintree, MA 02184, acts as custodian of the securities and other assets of the
Fund. State Street is responsible for, among other things, safeguarding and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on the Fund's investments.
State Street also performs portfolio accounting services for the Fund. State
Street is not an affiliate of Artisan Partners or its affiliates. State Street
is authorized to deposit securities in securities depositories for the use of
services of sub-custodians.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202 serves as the Funds' independent accountants, providing services including
(i) audit of the annual financial statements; (ii) assistance and consultation
in connection with Securities and Exchange Commission filings; and (iii)
review of the annual income tax returns filed on behalf of the Funds.
FINANCIAL STATEMENTS
B-35
<PAGE>
The 1998 annual report to shareholders of Artisan Funds, a copy of which
accompanies this Statement of Additional Information, contains financial
statements, notes thereto, supplementary information entitled "Financial
Highlights," and a report of independent accountants, all of which (but no other
part of the annual report) are incorporated herein by reference.
Financial Statements incorporated by reference into this Statement of
Additional Information include the following:
Artisan Small Cap Fund
----------------------
The following financial statements, but no other part of the report, are
incorporated by reference to the following portions of Registrant's
annual report to shareholders for the fiscal year ended June 30, 1998,
which was filed with the Commission on August 28, 1998:
- Schedule of Investments at June 30, 1998
- Statement of Assets and Liabilities at June 30, 1998
- Statement of Operations for the Year Ended June 30, 1998
- Statement of Changes in Net Assets for the Years Ended June 30, 1998
and June 30, 1997
- Notes to Financial Statements
- Report of Independent Accountants
Artisan International Fund - International Shares
-------------------------------------------------
The following financial statements, but no other part of the report, are
incorporated by reference to the following portions of Registrant's
annual report to shareholders for the fiscal year ended June 30, 1998,
which was filed with the Commission on August 28, 1998:
- Schedule of Investments at June 30, 1998
- Statement of Assets and Liabilities at June 30, 1998
- Statement of Operations for the Year ended June 30, 1998
- Statement of Changes in Net Assets for the Years ended June 30, 1998
and June 30, 1997
- Notes to Financial Statements
- Report of Independent Accountants
B-36
Artisan International Fund - Institutional Shares
-------------------------------------------------
The following financial statements, but no other part of the report, are
incorporated by reference to the following portions of Registrant's
annual report to shareholders for the fiscal year ended June 30, 1998,
which was filed with the Commission on August 28, 1998:
- Schedule of Investments at June 30, 1998
- Statement of Assets and Liabilities at June 30, 1998
- Statement of Operations for the Year ended June 30, 1998
- Statement of Changes in Net Assets for the Years ended June 30, 1998
and June 30, 1997
- Notes to Financial Statements
- Report of Independent Accountants
<PAGE>
Artisan Mid Cap Fund
--------------------
The following financial statements, but no other part of the report, are
incorporated by reference to the following portions of Registrant's
annual report to shareholders for the fiscal year ended June 30,
1998,which was filed with the Commission on August 28, 1998:
-Schedule of Investments at June 30, 1998
-Statement of Operations for the Year ended June 30, 1998
-Statement of Assets and Liabilities at June 30, 1998 and the
Period ended June 30, 1997
-Statement of Changes in Net Assets for the Years ended June 30, 1998
and June 30, 1997
-Notes to Financial Statements
-Report of Independent Accountants
Artisan Small Cap Value Fund
----------------------------
The following financial statements, but no other part of the report, are
incorporated by reference to the following portions of Registrant's
annual report to shareholders for the fiscal year ended June 30, 1997
and the Year ended June 30, 1998 which was filed with the Commission
on August 28, 1998:
-Schedule of Investments at June 30, 1998
-Statement of Assets and Liabilities at June 30, 1998
-Statement of Operations for the Period Ended June 30, 1998 (from
commencement of operations on September 29, 1997)
-Statement of Changes in Net Assets for the Year ended
June 30, 1998
-Notes to Financial Statements
-Report of Independent Accountants
The following schedules have been omitted for the following reasons:
Schedule I - The required information is presented in the Schedules of
Investments at June 30, 1998.
Schedules II, III, IV and V - the required information is not present.
B-37
<PAGE>
APPENDIX
---------
DESCRIPTION OF BOND RATINGS
A rating of a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Fund's investment adviser believes that the quality of
debt securities in which the Fund invests should be continuously reviewed and
that individual analysts give different weightings to the various factors
involved in credit analysis. A rating is not a recommendation to purchase, sell
or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating should be evaluated independently.
Ratings are based on current information furnished by the issuer or obtained by
the ratings services from other sources which they consider reliable. Ratings
may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
The following is a description of the characteristics of rating used by Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P").
RATINGS BY MOODY'S
Aaa--Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt-edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa bonds.
A--Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba--Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and
B-38
<PAGE>
thereby not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high degree.
Such bonds are often in default or have other marked shortcomings.
S&P RATINGS
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and interest and
differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation among such bonds and CC the highest
degree of speculation. Although such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
B-39
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. Exhibits
EXHIBIT
NUMBER DESCRIPTION
23(a)(1) Amended and Restated Articles of Incorporation of the Registrant.
<F1>
23(a)(2) Articles of Amendment dated October 12, 1995. <F1>
23(a)(3) Articles of Amendment dated January 16, 1997. <F2>
23(a)(4) Articles of Amendment dated April 10, 1997. <F3>
23(a)(5) Articles of Amendment dated June 5, 1997. <F4>
23(b) Bylaws, as amended. <F1>
23(c) None (Registrant does not issue share certificates.)
23(d)(1) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan Small Cap Fund.
<F1>
23(d)(2) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan International
Fund. <F1>
23(d)(3) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan Mid Cap Fund.
<F3>
23(d)(4) Form of Investment Advisory Agreement between the Registrant and
Artisan Partners Limited Partnership relating to Artisan Small
Cap Value Fund. <F4>
23(e) Form of Distribution Agreement between the Registrant and Artisan
Distributors LLC.
23(f) None.
23(g)(1) Custodian Agreement and Accounting Services Agreement between the
Registrant and State Street Bank and Trust Company. <F1>
23(g)(2) Notification to custodian regarding addition of Artisan Mid Cap
Fund <F3>.
23(g)(3) Notification to custodian regarding addition of Artisan Small Cap
Value Fund. <F4>
23(h)(1) Transfer Agency Agreement between the Registrant and State Street
C-1
<PAGE>
Bank and Trust Company. <F1>
23(h)(2) Amendment No. 1 to Transfer Agency Agreement. <F2>
C-2
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
23(h)(3) Notification to transfer agent regarding addition of
Artisan Mid Cap Fund. <F3>.
23(h)(4) Notification to transfer agent regarding addition of Artisan
Small Cap Value Fund. <F4>
23(i) Consent of Bell, Boyd & Lloyd.
23(j) Consent of Independent Accountants.
23(k) None.
23(l) Subscription Agreement between the Registrant and Andrew A.
Ziegler and Carlene Murphy Ziegler relating to Artisan Small Cap
Fund. <F1>
23(m) None.
23(n)(1) Financial Data Schedule of Artisan Small Cap Fund.
23(n)(2) Financial Data Schedule of Artisan International Fund.
23(n)(3) Financial Data Schedule of Artisan Mid Cap Fund.
23(n)(4) Financial Data Schedule of Artisan Small Cap Value Fund
23(o) Multiple Class Plan pursuant to Rule 18f-3 for Artisan
International Fund.<F2>
- -------------------------
<F1> Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 3 to Registrant's
registration statement, Securities Act file number 33-88316 (the
"Registration Statement"), filed on November 27, 1995.
<F2> Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 5 to the Registration
Statement, filed on January 21, 1997.
<F3> Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 6 to the Registration
Statement, filed on April 11, 1997.
<F4> Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 7 to the Registration
Statement, filed on June 6, 1997.
ITEM 24. Persons Controlled by or Under Common Control With Registrant.
The Registrant does not consider that there are any persons directly or
indirectly controlling, controlled by, or under common control with, the
Registrant within the meaning of this item. The information in the statement of
additional information under the caption "Principal Shareholders" is
incorporated herein by reference.
C-3
<PAGE>
ITEM 25. Indemnification.
Article VIII of Registrant's Amended Articles of Incorporation (Exhibits
1.1, 1.2, 1.3, 1.4 and 1.5, which are incorporated herein by reference) provides
that the Registrant shall indemnify and advance expenses to its currently acting
and its former directors and officers to the fullest extent that indemnification
of directors and officers is permitted by the Wisconsin Statutes, and the Board
of Directors may by bylaw, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents to the fullest
extent permitted by the Wisconsin Statutes; provided however, that nothing
therein shall be construed to protect any director or officer of the Registrant
against any liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Registrant will not advance attorneys' fees or other expenses incurred
by the person to be indemnified unless the Registrant shall have received an
undertaking by or on behalf of such person to repay the advance unless it is
ultimately determined that such person is entitled to indemnification and one of
the following conditions shall have occurred: (i) such person shall provide
security for his undertaking, (ii) the Registrant shall be insured against
losses arising by reason of any lawful advances, or (iii) a majority of the
disinterested, non-party directors of the Registrant, or an independent legal
counsel in a written opinion, shall have determined that based on a review of
readily available facts there is reason to believe that such person ultimately
will be found entitled to indemnification.
Registrant and its directors and officers are insured under a policy of
insurance maintained by Registrant, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities that might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such directors or officers. The
policy expressly excludes coverage for any director or officer whose personal
dishonesty, fraudulent breach of trust, lack of good faith, or intention to
deceive or defraud has been finally adjudicated or may be established or who
willfully fails to act prudently.
C-4
<PAGE>
ITEM 26. Business and Other Connections of Investment Adviser.
The information in each prospectus under the caption "The Fund in Detail -
Organization - Management" is incorporated herein by reference. For a
description of other business, profession, vocation or employment of a
substantial nature in which any general partner, managing general partner,
director or officer of Artisan Partners Limited Partnership has engaged during
the last two years for his account or in the capacity of director, officer,
employee, partner or trustee, see the information under the caption "Directors
and Officers" in the statement of additional information.
ITEM 27. Principal Underwriters.
Artisan Distributors LLC acts as principal underwriter for Artisan Funds.
NAME POSITIONS AND OFFICES POSITIONS AND OFFICES WITH
WITH UNDERWRITER REGISTRANT
Andrew A. Ziegler Chairman and Principal Chairman, Director and
Chief Executive Officer
Michael C. Roos President and Principal None
Lawrence A. Totsky Chief Financial Officer, Chief Financial Officer,
Treasurer and Secretary Treasurer and Secretary
Carlene Murphy Ziegler Managing Director Director and President
Robert M. Clark Managing Director None
Millie Adams Hurwitz Managing Director Vice President
Scott C. Satterwhite Managing Director Vice President
Andrew C. Stephens Managing Director Vice President
Mark L. Yockey Managing Director Vice President
The principal business address of each officer of Artisan Distributors
LLC is 1000 North Market Street, Suite 1770, Milwaukee, Wisconsin
53202.
ITEM 28. Location of Accounts and Records.
Lawrence A. Totsky
Artisan Partners Limited Partnership
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
ITEM 29. Management Services.
C-5
<PAGE>
Not applicable.
ITEM 30. Undertakings.
Not applicable.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly
caused this amendment to the registration statement be signed on its behalf
by the undersigned, thereunto duly authorized, in the city of Milwaukee and
state of Wisconsin on August 31, 1998.
ARTISAN FUNDS, INC.
By /s/ Andrew A. Ziegler
Andrew A. Ziegler
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following person
in the capacities and on the date indicated.
Name Title Date
/s/ Andrew A. Ziegler Director, Chief Executive )
Andrew A. Ziegler Officer (principal executive )
officer) )
)
)
/s/ Carlene Murphy Ziegler Director and President )
Carlene Murphy Ziegler )
)
)
/s/ David A. Erne Director )
David A. Erne ) August 31, 1998
)
)
/s/ Thomas R. Hefty Director )
Thomas R. Hefty )
)
)
/s/ Howard B. Witt Director )
Howard B. Witt )
)
)
/s/ Lawrence A. Totsky Chief Financial Officer, )
Lawrence A. Totsky Treasurer and Secretary )
(principal financial and )
accounting officer) )
Index of Exhibits Filed with this Registration Statement
-------------------------------------------------------
Exhibit Number EDGAR Exhibit Number Exhibit
-------------- -------------------- ---------------------------------
23(e) EX-99.23E Form of Distribution Agreement
between the Registrant and Artisan
Distributors LLC
23(i) EX-99.23I Consent of Bell, Boyd & Lloyd
23(j) EX-99.23J Consent of Independent Accountants.
23(n)(1) EX-23N-1 Financial Data Schedule of Artisan
Small Cap Fund.
23(n)(2) EX-23N-2 Financial Data Schedule of Artisan
International Fund, International
Shares
23(n)(3) EX-23N-3 Financial Data Schedule of Artisan
International Fund, Institutional
Shares
23(n)(4) EX-23N-4 Financial Data Schedule of Artisan
Mid Cap Fund.
23(n)(5) EX-23N-5 Financial Data Schedule of Artisan
Small Cap Value Fund
<PAGE>
DISTRIBUTION AGREEMENT
BETWEEN
ARTISAN FUNDS, INC.
AND
ARTISAN DISTRIBUTORS LLC
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made as of this ____ day
of [October], 1998 by and between ARTISAN FUNDS, INC., a corporation organized
and existing under the laws of the State of Wisconsin ("Artisan Funds"), and
ARTISAN DISTRIBUTORS LLC, a limited liability company organized and existing
under the laws of the State of Wisconsin ("Distributor").
RECITALS:
WHEREAS, Artisan Funds is engaged in business as an open-end management
investment company registered under the Investment Company Act of 1940, as
amended ("1940 Act");
WHEREAS, Distributor is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended ("1934 Act"), and the laws of each state
(including the District of Columbia and Puerto Rico) in which it engages in
business to the extent such law requires, and is a member of the National
Association of Securities Dealers, Inc. ("NASD") (such registrations and
membership are referred to collectively as the "Registrations");
WHEREAS, Artisan Funds desires Distributor to act as the distributor in the
public offering of its shares of common stock (hereinafter called "Shares")
which currently are divided into four series designated Artisan Small Cap Fund,
Artisan International Fund, Artisan Mid Cap Fund and Artisan Small Cap Value
Fund, and including shares of any additional series which may from time to time
be offered for sale to the public (hereinafter called, collectively, the "Funds"
and, individually, the "Fund");
WHEREAS, Artisan Funds has entered into an investment advisory agreement
with Artisan Partners Limited Partnership ("Artisan Partners"), an affiliate of
Distributor, pursuant to which Artisan Partners has agreed to pay all expenses
incurred in the sale and promotion of shares of Artisan Funds;
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment. Artisan Funds appoints Distributor to act as principal
underwriter (as such term is defined in Section 2(a)(29) of the 1940 Act) of its
Shares.
2. Delivery of Artisan Funds Documents. Artisan Funds has furnished
Distributor with properly certified or authenticated copies of each of the
following in effect on the date hereof
<PAGE>
and shall furnish Distributor from time to time properly certified or
authenticated copies of all amendments or supplements thereto:
(a) Articles of Incorporation;
(b) Bylaws;
(c) Resolutions of its Board of Directors (hereinafter referred to as
the "Board") selecting Distributor as distributor and approving
this form of agreement and authorizing its execution.
Artisan Funds shall furnish Distributor promptly with copies of any
registration statements filed by it with the Securities and Exchange Commission
("SEC") under the Securities Act of 1933 (the "1933 Act") or the 1940 Act,
together with any financial statements and exhibits included therein, and all
amendments or supplements thereto hereafter filed.
Artisan Funds also shall furnish Distributor such other certificates or
documents which Distributor may from time to time, in its discretion, reasonably
deem necessary or appropriate in the proper performance of its duties.
3. Solicitation of Orders for Purchase of Shares
(a) Subject to the provisions of Paragraph 5,6 and 8 hereof, and to such
minimum purchase requirements as may from time to time be indicated in
the prospectus of each Fund, Distributor is authorized to solicit, as
agent on behalf of Artisan Funds, unconditional orders for purchases
of Shares authorized for issuance and registered under the 1933 Act,
provided that:
(1) Distributor shall act solely as a disclosed agent on behalf of
and for the account of Artisan Funds;
(2) Artisan Funds' transfer agent shall receive directly from
investors all payments for the purchase of Shares and also shall
pay directly to shareholders amounts due to them for the
redemption or repurchase of all Shares, with Distributor having
no rights or duties to accept such payment or to effect such
redemptions or repurchases; if a payment for the purchase of
Shares is delivered to Distributor, such payment shall not be
negotiated by Distributor but shall be delivered as soon as
reasonably practicable to Artisan Funds' transfer agent; and
(3) Distributor shall have no liability for payment for purchases of
Shares it sells as agent.
The purchase price to the public of Shares shall be the public offering
price as defined in Paragraph 7 hereof.
(b) In consideration of the rights granted to Distributor under this
Agreement, Distributor will use its best efforts (but only in states in which
Distributor may lawfully do so) to
<PAGE>
solicit from investors unconditional orders to purchase Shares. Artisan Funds
shall make available to Distributor, at no cost to Distributor, such number of
copies of the currently effective prospectus and Statement of Additional
Information of each Fund and copies of all information, financial statements
and other papers which Distributor may reasonably request for use in connection
with the distribution of Shares.
4. Selling Agreements. Distributor is authorized, as agent on behalf of
Artisan Funds, to enter into agreements with other broker-dealers providing for
the solicitation of unconditional orders for purchases of Shares authorized for
issuance and registered under the 1933 Act. All such agreements shall be in a
form as may be approved by the officers of Artisan Funds ("Selling Agreement").
All solicitations made by other broker-dealers pursuant to a Selling Agreement
shall be subject to the same terms as are applied by this Agreement to
solicitations made by Distributor.
5. Solicitation of Orders to Purchase Shares by Artisan Funds. The
rights granted to Distributor shall be non-exclusive in that Artisan Funds
reserves the right to solicit purchases from, and sell its Shares to, investors.
Further, Artisan Funds reserves the right to issue Shares in connection with the
merger or consolidation of any other investment company, trust or personal
holding company with Artisan Funds, or Artisan Funds' acquisition, by the
purchase or otherwise, of all or substantially all of the assets of an
investment company, trust or personal holding company, or substantially all of
the outstanding shares or interests of any such entity. Any right granted to
Distributor to solicit purchases of Shares will not apply to Shares that may be
offered by Artisan Funds to shareholders by virtue of their being shareholders
of Artisan Funds.
6. Shares Covered by this Agreement. This Agreement relates to the
solicitation of orders to purchase Shares that are duly authorized and
registered and available for sale by Artisan Funds, including redeemed or
repurchased Shares if and to the extent that they may be legally sold and if,
but only if, Artisan Funds authorizes Distributor to sell them. If Artisan
Funds establishes one or more series in addition to Artisan Small Cap Fund,
Artisan International Fund, Artisan Mid Cap Fund and Artisan Small Cap Value
Fund and wishes to appoint Distributor as principal underwriter of the shares of
beneficial interest of such series, Artisan Funds shall so notify Distributor in
writing, and if Distributor agrees in writing to provide such services and
Artisan Partners acknowledges that agreement by Distributor, the shares of
common stock of such series shall become Shares under the Agreement.
7. Public Offering Price. All solicitations by Distributor pursuant to
this Agreement shall be for orders to purchase Shares through Artisan Funds'
transfer agent at the public offering price. The public offering price for each
accepted subscription for Shares will be the net asset value per share of the
particular Fund subscribed for calculated by Artisan Funds at the next close of
regular session trading on the New York Stock Exchange after such subscription
is accepted by Artisan Funds or by a person authorized by Artisan Funds to
accept such subscriptions. The net asset value per share shall be determined in
the manner provided in Artisan Funds' Articles of Incorporation as now in effect
or as they may be amended, and as reflected in the then current prospectus and
Statement of Additional Information of each Fund.
<PAGE>
8. Suspension of Sales. If and whenever the determination of a Fund's
net asset value is suspended and until such suspension is terminated, no further
orders for Shares of such Fund shall be accepted by Artisan Funds except such
unconditional orders placed with Artisan Funds and accepted by it before the
suspension. In addition, Artisan Funds reserves the right to suspend sales of
Shares if, in the judgment of the Board of Artisan Funds, it is in the best
interest of Artisan Funds to do so, such suspension to continue for such period
as may be determined by Artisan Funds' Board; and in that event, (i) at the
direction of Artisan Funds, Distributor shall suspend its solicitation of orders
to purchase Shares until otherwise instructed by Artisan Funds and (ii) no
orders to purchase Shares shall be accepted by Artisan Funds while such
suspension remains in effect unless otherwise directed by its Board.
9. Authorized Representations. Distributor is not authorized by Artisan
Funds to give on behalf of Artisan Funds or any Fund any information or to make
any representations in connection with the sale of Shares other than information
and representations which are consistent with Artisan Funds' registration
statement filed with the SEC under the 1933 Act and/or the 1940 Act, covering
Shares, as such registration statement or Artisan Funds' prospectus may be
amended or supplemented from time to time, or contained in shareholder reports
or other material that may be prepared by or on behalf of Artisan Funds or
approved by Artisan Funds for Distributor's use. No person other than
Distributor is authorized to act as principal underwriter (as such term is
defined in the 1940 Act, as amended) for Artisan Funds.
10. Registration of Additional Shares. Artisan Funds hereby agrees to
register an indefinite number of Shares pursuant to Rule 24f-2 under the 1940
Act, as amended. Artisan Funds will, in cooperation with Distributor, take such
action as may be necessary from time to time to permit such Shares (so
registered or otherwise qualified for sale under the 1933 Act) to be sold in any
state mutually agreeable to Distributor and Artisan Funds, and to maintain such
qualification; provided, however, that nothing herein shall be deemed to prevent
Artisan Funds from taking action, without approval of Distributor, to permit its
Shares to be sold in any state it deems appropriate.
11. Conformity With Law. Distributor agrees that in soliciting orders to
purchase Shares it shall duly conform in all respects with applicable federal
and state laws and the rules and regulations of the NASD. Distributor will use
its best efforts to maintain its Registrations in good standing during the term
of this Agreement and will promptly notify Artisan Funds and Artisan Partners in
the event of the suspension or termination of any of the Registrations.
12. Independent Contractor. Distributor shall be an independent
contractor and neither Distributor, nor any of its members, managers, officers,
directors, employees or representatives is or shall be an employee of Artisan
Funds in the performance of Distributor's duties hereunder. Distributor shall
be responsible for its own conduct and the employment, control and conduct of
its agents and employees and for injury to such agents or employees or to others
through its agents and employees and agrees to pay all employee taxes
thereunder.
13. Indemnification. Distributor agrees to indemnify and hold harmless
Artisan Funds and each of the members of its Board and its officers, employees
and representatives and each person, if any, who controls Artisan Funds within
the meaning of Section 15 of the 1933
<PAGE>
Act against any and all losses, liabilities, damages, claims and expenses
(including the reasonable costs of investigating or defending any alleged loss,
liability, damage, claim or expense and reasonable legal counsel fees incurred
in connection therewith) to which Artisan Funds or such of the members of its
Board and of its officers, employees, representatives, or controlling person or
persons may become subject under the 1933 Act, under any other statute, at
common law, or otherwise, arising out of the acquisition or sale of any Shares
by any person which (i) may be based upon any wrongful act by Distributor or
any of Distributor's members, managers, directors, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, Statement of Additional Information, shareholder report or other
information covering Shares filed or made public by Artisan Funds or any
amendment thereof or supplement thereto or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading if such statement or omission was
made in reliance upon information furnished to Artisan Funds by Distributor in
writing. In no case (i) is Distributor's indemnity in favor of Artisan Funds,
or any person indemnified, to be deemed to protect Artisan Funds or such
indemnified person against any liability to which Artisan Funds or such person
would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of its or his duties or by reason of its or his
reckless disregard of its or his obligations and duties under this Agreement,
or (ii) is Distributor to be liable under its indemnity agreement contained in
this paragraph with respect to any claim made against Artisan Funds or any
person indemnified unless Artisan Funds or such person, as the case may be,
shall have notified Distributor in writing of the claim within a reasonable
time after the summons, or other first written notification, giving information
of the nature of the claim served upon Artisan Funds or upon such person (or
after Artisan Funds or such person shall have received notice of such service
on any designated agent). However, failure to notify Distributor of any such
claim shall not relieve Distributor from any liability which Distributor may
have to Artisan Funds or any person against whom such action is brought
otherwise than on account of Distributor's indemnity agreement contained in this
paragraph.
Distributor shall be entitled to participate, at its own expense, in the
defense, or, if Distributor so elects, to assume the defense of any suit brought
to enforce any such claim but, if Distributor elects to assume that defense,
such defense shall be conducted by legal counsel chosen by Distributor and
satisfactory to the persons indemnified who are defendants in the suit. In the
event that Distributor elects to assume the defense of any such suit and retain
such legal counsel, persons indemnified who are defendants in the suit shall
bear the fees and expenses of any additional legal counsel retained by them. If
Distributor does not elect to assume the defense of any such suit, Distributor
will reimburse persons indemnified who are defendants in such suit for the
reasonable fees of any legal counsel retained by them in such litigation.
Artisan Funds agrees to indemnify and hold harmless Distributor and each of
its members, managers, directors, officers, employees, and representatives and
each person, if any, who controls Distributor within the meaning of Section 15
of the 1933 Act against any and all losses, liabilities, damages, claims or
expenses (including the damage, claim or expense and reasonable legal counsel
fees incurred in connection therewith) to which Distributor or such of its
members, managers, directors, officers, employees, representatives or
controlling person or persons may otherwise become subject under the 1933 Act,
under any other statute, at common
<PAGE>
law, or otherwise arising out of the acquisition of any Shares by any person
which (i) may be based upon any wrongful act by Artisan Funds or any of the
members of Artisan Funds' Board, or Artisan Funds' officers, employees or
representatives other than Distributor, or (ii) may be based upon any untrue
statement or alleged untrue statement of a material fact contained in a
registration statement, prospectus, Statement of Additional Information,
shareholder report or other information covering Shares filed or made public by
Artisan Funds or any amendment thereof or supplement thereto, or the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading unless such
statement or omission was made in reliance upon information furnished by
Distributor to Artisan Funds. In no case (i) is Artisan Funds' indemnity in
favor of Distributor or any person indemnified to be deemed to protect
Distributor or such indemnified person against any liability to which
Distributor or such indemnified person would otherwise be subject by reason of
willful misfeasance, bad faith, or negligence in the performance of its or his
duties or by reason of its or his reckless disregard of its or his obligations
and duties under this Agreement, or (ii) is Artisan Funds to be liable under
its indemnity agreement contained in this Paragraph with respect to any claim
made against Distributor or any person indemnified unless Distributor, or such
person, as the case may be, shall have notified Artisan Funds in writing of the
claim within a reasonable time after the summons, or other first written
notification, giving information of the nature of the claim served upon
Distributor or upon such person (or after Distributor or such person shall have
received notice of such service on any designated agent). However, failure to
notify Artisan Funds of any such claim shall not relieve Artisan Funds from any
liability which Artisan Funds may have to Distributor or any person against whom
such action is brought otherwise than on account of Artisan Funds' indemnity
agreement contained in this paragraph.
Artisan Funds shall be entitled to participate, at its own expense, in the
defense or, if Artisan Funds so elects, to assume the defense of any suit
brought to enforce such claim but, if Artisan Funds elects to assume the
defense, such defense shall be conducted by legal counsel chosen by Artisan
Funds and satisfactory to the persons indemnified who are defendants in the
suit. In the event that Artisan Funds elects to assume the defense of any such
suit and retain such legal counsel, the persons indemnified who are defendants
in the suit shall bear the fees and expenses of any additional legal counsel
retained by them. If Artisan Funds does not elect to assume the defense of any
such suit, Artisan Funds will reimburse the persons indemnified who are
defendants in such suit for the reasonable fees and expenses of any legal
counsel retained by them in such litigation.
14. Duration and Termination of this Agreement. This Agreement shall
become effective upon its execution ("Effective Date") and unless terminated as
provided herein, shall remain in effect through ___________, and from year to
year thereafter, but only so long as such continuance is specifically approved
at least annually by (a) a vote of majority of the members of the Board of
Artisan Funds who are not interested persons of Distributor or Artisan Funds,
voting in person at a meeting called for the purpose of voting on such approval,
and (b) the vote of either the Board of Artisan Funds or a majority of the
outstanding Shares of Artisan Funds. This Agreement may be terminated at any
time, without the payment of any penalty (a) on 60 days' written notice, by the
Board of Artisan Funds or by a vote of a majority of the outstanding Shares of
Artisan Funds, or by Distributor, or (b) immediately, on written notice by the
Board of Artisan Funds, in the event of termination or suspension of any of the
Registrations.
<PAGE>
This Agreement will automatically terminate in the event of its assignment. In
interpreting the provisions of this Paragraph 14, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of "interested
person," "assignment" and "majority of the outstanding shares") shall be
applied.
15. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by each party against which enforcement of the change, waiver,
discharge or termination is sought. If Artisan Funds should at any time deem it
necessary or advisable in the best interests of Artisan Funds that any amendment
of this Agreement be made in order to comply with the recommendations or
requirements of the SEC or any other governmental authority or to obtain any
advantage under state or federal tax laws and notifies Distributor of the form
of such amendment and the reasons therefore, and if Distributor should decline
to assent to such amendment, Artisan Funds may terminate this Agreement
forthwith. If Distributor should at any time request that a change be made in
Artisan Funds' Articles of Incorporation, Bylaws or its methods of doing
business, in order to comply with any requirements of federal law or regulations
of the SEC, or of a national securities association of which Distributor is or
may be a member, relating to the sale of Shares, and Artisan Funds should not
make such necessary changes within a reasonable time, Distributor may terminate
this Agreement forthwith.
16. Liability. It is understood and expressly stipulated that neither the
shareholders of Artisan Funds nor the members of the Board of Artisan Funds
shall be personally liable hereunder. The obligations of Artisan Funds are not
personally binding upon, nor shall resort to the private property of, any of the
members of the Board of Artisan Funds nor of the shareholders, officers,
employees or agents of Artisan Funds, but only Artisan Funds' property shall be
bound.
17. Miscellaneous. The captions in this Agreement are included for
convenience or reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
18. Notice. Any notice required or permitted to be given by a party to
this Agreement or to any other party hereunder shall be deemed sufficient if
delivered in person or sent by registered or certified mail, postage prepaid,
addressed by the party giving notice to each such other party at the address
provided below or to the last address furnished by each such other party to the
party giving notice.
If to Artisan Funds: 1000 N. Water Street
Suite 1770
Milwaukee, Wisconsin 53202
Attn: Andrew A. Ziegler
<PAGE>
If to Distributor: 1000 N. Water Street
Suite 1770
Milwaukee, Wisconsin 53202
Attn: Lawrence A. Totsky
If to Artisan Partners: 1000 N. Water Street
Suite 1770
Milwaukee, Wisconsin 53202
Attn: Andrew A. Ziegler
ARTISAN DISTRIBUTORS LLC
By:
ARTISAN FUNDS, INC.
By:
ACKNOWLEDGED:
ARTISAN PARTNERS LIMITED PARTNERSHIP
By:
Exhibit 23 (i)
BELL, BOYD & LLOYD
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-5046
312 372-1121
Fax 312 372-2098
August 31, 1998
As counsel for Artisan Funds, Inc. (the "Registrant"), we consent to the
incorporation by reference of our opinion for each of the Registrant's series,
filed with the Registrant's registration statement on Form N-1A, Securities Act
File No. 33-88316 on each of the dates listed below:
Series Date of Opinion Date of Filing
- ------ --------------- --------------
Artisan Small Cap Fund March 8, 1995 November 27, 1995
Artisan International Fund October 13, 1995 November 27, 1995
Artisan Mid Cap Fund April 10, 1997 April 11, 1997
Artisan Small Cap Value Fund June 6, 1997 June 6, 1997
In giving this consent we do not admit that we are in the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
/s/ Bell, Boyd & Lloyd
<PAGE>
Exhibit 23 (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 10 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated July 31, 1998, relating to the financial
statements and financial highlights appearing in the June 30, 1998 Annual
Reports of Artisan Small Cap Fund, Artisan International Fund, Artisan Mid Cap
Fund and Artisan Small Cap Value Fund (constituting the four portfolios of
Artisan Funds, Inc.), which are also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
heading "Financial Highlights" in the Prospectuses and under the heading
"Independent Accountants" in the Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
August 28, 1998
<PAGE>
NSAR FINANCIAL DATA SCHEDULE
AS OF JUNE 30,1998
ARTISAN SMALL CAP FUND
<PERIOD TYPE> 12 MOS
<FISCAL YEAR END> JUN-30-1998
<PERIOD START> JUL-01-1997
<PERIOD END> JUN-30-1998
[MULTIPLIER] 1
<INVESTMENTS AT COST> 277,392,587
<INVESTMENTS AT VALUE> 312,280,355
[RECEIVABLES] 723,163
[ASSETS-OTHER] 25,124
<OTHER ITEMS ASSETS>
<TOTAL ASSETS> 313,028,642
<PAYABLE FOR SECURITIES> 8,388,297
<SENIOR LONG TERM DEBT>
<OTHER ITEMS LIABILITIES> 498,184
<TOTAL LIABLITIES> 8,886,481
<SENIOR EQUITY>
<PAID IN CAPITAL COMMON> 248,569,027
<SHARES COMMON STOCK> 20,742,487
<SHARES COMMON PRIOR> 17,722,769
<ACCUMULATED NII CURRENT> -
<OVERDISTRIBUTION NII> -
<ACCUMULATED NET GAINS> 20,685,366
<OVERDISTRIBUTION GAINS> -
<ACCUM APPREC OR DEPREC> 34,887,768
<NET ASSETS> 304,142,161
<DIVIDEND INCOME> 1,057,997
<INTEREST INCOME> 668,064
<OTHER INCOME> -
<EXPENSES NET> 3,865,850
<NET INVESTMENT INCOME> (2,139,789)
<REALIZED GAINS CURRENT> 42,066,239
<APPREC INCREASE CURRENT> (907,556)
<NET CHANGE FROM OPS> 39,018,894
[EQUALIZATION] -
<DISTRIBUTIONS OF INCOM > -
<DISTRIBUTIONS OF GAINS> (45,736,543)
<DISTRIBUTION OTHER> -
<NUMBER OF SHARES SOLD> 4,616,498
<NUMBER OF SHARES REDEEMED> 4,721,885
<SHARES REINVESTED> 3,125,105
<NET CHANGE IN ASSETS> 36,322,273
<ACCUMULATED NII PRIOR> -
<ACCUMULATED GAINS PRIOR> 26,489,024
<OVERDISTRIB NII PRIOR> -
<OVERDISTRIB NET GAINS PRIOR> -
<GROSS ADVISORY FEES> 2,900,335
<INTEREST EXPENSE> 181
<GROSS EXPENSE> 3,865,850
<AVERAGE NET ASSETS> 290,057,545
<PER SHARE NAVE BEGIN> 15.11
<PER SHARE NII> (0.10)
<PER SHARE GAIN APPREC> 2.23
<PER SHARE DIVIDEND> -
<PER SHARE DISTRIBUTIONS> (2.58)
<RETURNS OF CAPITAL> -
<PER SHARE NAV END> 14.66
<EXPENSE RATIO> 1.33
<AVG DEBT OUTSTANDING> -
<AVG DEBT PER SHARE> -
FINANCIAL DATA SCHEDULE
AS OF JUNE 30,1998
ARTISAN INTERNATIONAL FUND - INTERNATIONAL SHARES
<PERIOD TYPE> 12 MOS
<FISCAL YEAR END> JUN-30-1998
<PERIOD START> JUL-01-1997
<PERIOD END> JUN-30-1998
[MULTIPLIER] 1
<INVESTMENTS AT COST> 412,353,181
<INVESTMENTS AT VALUE> 493,740,609
[RECEIVABLES] 27,515,093
[ASSETS-OTHER] 956,187
<OTHER ITEMS ASSETS>
<TOTAL ASSETS> 522,211,889
<PAYABLE FOR SECURITIES> 24,383,095
<SENIOR LONG TERM DEBT>
<OTHER ITEMS LIABILITIES> 649,179
<TOTAL LIABLITIES> 25,032,274
<SENIOR EQUITY>
<PAID IN CAPITAL COMMON> 405,388,668
<SHARES COMMON STOCK> 25,502,751
<SHARES COMMON PRIOR> 31,015,095
<ACCUMULATED NII CURRENT> 309,643
<OVERDISTRIBUTION NII> -
<ACCUMULATED NET GAINS> 10,098,557
<OVERDISTRIBUTION GAINS> -
<ACCUM APPREC OR DEPREC> 81,382,747
<NET ASSETS> 497,179,615
<DIVIDEND INCOME> 6,832,557
<INTEREST INCOME> 392,119
<OTHER INCOME> -
<EXPENSES NET> 5,588,969
<NET INVESTMENT INCOME> 1,635,707
<REALIZED GAINS CURRENT> 27,904,667
<APPREC INCREASE CURRENT> 47,445,228
<NET CHANGE FROM OPS> 76,985,602
[EQUALIZATION] -
<DISTRIBUTIONS OF INCOME> (4,035,316)
<DISTRIBUTIONS OF GAINS> (23,067,732)
<DISTRIBUTION OTHER> -
<NUMBER OF SHARES SOLD> 15,876,987
<NUMBER OF SHARES REDEEMED> 23,464,441
<SHARES REINVESTED> 2,075,110
<NET CHANGE IN ASSETS> 47,999,545
<ACCUMULATED NII PRIOR> 2,577,725
<ACCUMULATED GAINS PRIOR> 10,432,054
<OVERDISTRIB NII PRIOR> -
<OVERDISTRIB NET GAINS PRIOR> -
<GROSS ADVISORY FEES> 3,923,189
<INTEREST EXPENSE> 14,468
<GROSS EXPENSE> 5,588,969
<AVERAGE NET ASSETS> 392,591,022
<PER SHARE NAVE BEGIN> 14.48
<PER SHARE NII> 0.06
<PER SHARE GAIN APPREC> 3.04
<PER SHARE DIVIDEND> (0.20)
<PER SHARE DISTRIBUTIONS> (1.13)
<RETURNS OF CAPITAL> -
<PER SHARE NAV END> 16.25
<EXPENSE RATIO> 1.45
<AVG DEBT OUTSTANDING> -
<AVG DEBT PER SHARE> -
FINANCIAL DATA SCHEDULE
AS OF JUNE 30,1998
ARTISAN INTERNATIONAL FUND - INSTITUTIONAL SHARES
<PERIOD TYPE> 12 MOS
<FISCAL YEAR END> JUN-30-1998
<PERIOD START> JUL-01-1997
<PERIOD END> JUN-30-1998
[MULTIPLIER] 1
<INVESTMENTS AT COST> 412,353,181
<INVESTMENTS AT VALUE> 493,740,609
[RECEIVABLES] 27,515,093
[ASSETS-OTHER] 956,187
<OTHER ITEMS ASSETS>
<TOTAL ASSETS> 522,211,889
<PAYABLE FOR SECURITIES> 24,383,095
<SENIOR LONG TERM DEBT>
<OTHER ITEMS LIABILITIES> 649,179
<TOTAL LIABLITIES> 25,032,274
<SENIOR EQUITY>
<PAID IN CAPITAL COMMON> 405,388,668
<SHARES COMMON STOCK> 5,083,604
<SHARES COMMON PRIOR> -
<ACCUMULATED NII CURRENT> 309,643
<OVERDISTRIBUTION NII> -
<ACCUMULATED NET GAINS> 10,098,557
<OVERDISTRIBUTION GAINS> -
<ACCUM APPREC OR DEPREC> 81,382,747
<NET ASSETS> 497,179,615
<DIVIDEND INCOME> 6,832,557
<INTEREST INCOME> 392,119
<OTHER INCOME> -
<EXPENSES NET> 5,588,969
<NET INVESTMENT INCOME> 1,635,707
<REALIZED GAINS CURRENT> 27,904,667
<APPREC INCREASE CURRENT> 47,445,228
<NET CHANGE FROM OPS> 76,985,602
[EQUALIZATION] -
<DISTRIBUTIONS OF INCOME> (823,369)
<DISTRIBUTIONS OF GAINS> (4,236,936)
<DISTRIBUTION OTHER> -
<NUMBER OF SHARES SOLD> 4,907,306
<NUMBER OF SHARES REDEEMED> 207,599
<SHARES REINVESTED> 383,897
<NET CHANGE IN ASSETS> 47,999,545
<ACCUMULATED NII PRIOR> 2,577,725
<ACCUMULATED GAINS PRIOR> 10,432,054
<OVERDISTRIB NII PRIOR> -
<OVERDISTRIB NET GAINS PRIOR> -
<GROSS ADVISORY FEES> 3,923,189
<INTEREST EXPENSE> 14,468
<GROSS EXPENSE> 5,588,969
<AVERAGE NET ASSETS> 392,591,022
<PER SHARE NAVE BEGIN> 14.48
<PER SHARE NII> 0.09
<PER SHARE GAIN APPREC> 3.04
<PER SHARE DIVIDEND> (0.22)
<PER SHARE DISTRIBUTIONS> (1.13)
<RETURNS OF CAPITAL> -
<PER SHARE NAV END> 16.26
<EXPENSE RATIO> 1.25
<AVG DEBT OUTSTANDING> -
<AVG DEBT PER SHARE> -
FINANCIAL DATA SCHEDULE
AS OF JUNE 30,1998
ARTISAN MID-CAP FUND
<PERIOD TYPE> 12 MOS
<FISCAL YEAR END> JUN-30-1998
<PERIOD START> JUL-01-1997
<PERIOD END> JUN-30-1998
[MULTIPLIER] 1
<INVESTMENTS AT COST> 12,195,353
<INVESTMENTS AT VALUE> 12,977,028
[RECEIVABLES] 342,484
[ASSETS-OTHER] 183,346
<OTHER ITEMS ASSETS>
<TOTAL ASSETS> 13,502,858
<PAYABLE FOR SECURITIES> 489,798
<SENIOR LONG TERM DEBT>
<OTHER ITEMS LIABILITIES> 232,124
<TOTAL LIABLITIES> 721,922
<SENIOR EQUITY>
<PAID IN CAPITAL COMMON> 10,727,864
<SHARES COMMON STOCK> 933,285
<SHARES COMMON PRIOR> 181,348
<ACCUMULATED NII CURRENT> -
<OVERDISTRIBUTION NII> -
<ACCUMULATED NET GAINS> 1,271,397
<OVERDISTRIBUTION GAINS> -
<ACCUM APPREC OR DEPREC> 781,675
<NET ASSETS> 12,780,936
<DIVIDEND INCOME> 76,523
<INTEREST INCOME> 38,536
<OTHER INCOME> -
<EXPENSES NET> 187,705
<NET INVESTMENT INCOME> (72,646)
<REALIZED GAINS CURRENT> 1,907,453
<APPREC INCREASE CURRENT> 781,675
<NET CHANGE FROM OPS> 2,616,482
[EQUALIZATION] -
<DISTRIBUTIONS OF INCOME> -
<DISTRIBUTIONS OF GAINS> (586,078)
<DISTRIBUTION OTHER> -
<NUMBER OF SHARES SOLD> 912,840
<NUMBER OF SHARES REDEEMED> 206,835
<SHARES REINVESTED> 45,932
<NET CHANGE IN ASSETS> 10,967,459
<ACCUMULATED NII PRIOR> -
<ACCUMULATED GAINS PRIOR> -
<OVERDISTRIB NII PRIOR> -
<OVERDISTRIB NET GAINS PRIOR> -
<GROSS ADVISORY FEES> 93,853
<INTEREST EXPENSE> 8
<GROSS EXPENSE> 343,239
<AVERAGE NET ASSETS> 9,427,217
<PER SHARE NAVE BEGIN> 10.00
<PER SHARE NII> (0.08)
<PER SHARE GAIN APPREC> 4.56
<PER SHARE DIVIDEND> -
<PER SHARE DISTRIBUTIONS> (0.79)
<RETURNS OF CAPITAL> -
<PER SHARE NAV END> 13.69
<EXPENSE RATIO> 2.00
<AVG DEBT OUTSTANDING> -
<AVG DEBT PER SHARE> -
FINANCIAL DATA SCHEDULE
AS OF JUNE 30,1998
ARTISAN SMALL CAP VALUE FUND
<PERIOD TYPE> 9 MOS
<FISCAL YEAR END> JUN-30-1998
<PERIOD START> SEP-29-1997
<PERIOD END> JUN-30-1998
[MULTIPLIER] 1
<INVESTMENTS AT COST> 45,402,048
<INVESTMENTS AT VALUE> 47,078,138
[RECEIVABLES] 834,942
[ASSETS-OTHER] 34,826
<OTHER ITEMS ASSETS>
<TOTAL ASSETS> 47,947,906
<PAYABLE FOR SECURITIES> 560,176
<SENIOR LONG TERM DEBT>
<OTHER ITEMS LIABILITIES> 157,902
<TOTAL LIABLITIES> 718,078
<SENIOR EQUITY>
<PAID IN CAPITAL COMMON> 43,033,921
<SHARES COMMON STOCK> 4,153,366
<SHARES COMMON PRIOR> -
<ACCUMULATED NII CURRENT> -
<OVERDISTRIBUTION NII> -
<ACCUMULATED NET GAINS> 2,519,817
<OVERDISTRIBUTION GAINS> -
<ACCUM APPREC OR DEPREC> 1,676,090
<NET ASSETS> 47,229,828
<DIVIDEND INCOME> 232,533
<INTEREST INCOME> 130,204
<OTHER INCOME> -
<EXPENSES NET> 490,115
<NET INVESTMENT INCOME> (127,378)
<REALIZED GAINS CURRENT> 2,628,786
<APPREC INCREASE CURRENT> 1,676,090
<NET CHANGE FROM OPS> 4,177,498
[EQUALIZATION] -
<DISTRIBUTIONS OF INCOME> -
<DISTRIBUTIONS OF GAINS> -
<DISTRIBUTION OTHER> -
<NUMBER OF SHARES SOLD> 5,232,019
<NUMBER OF SHARES REDEEMED> 1,078,653
<SHARES REINVESTED> -
<NET CHANGE IN ASSETS> 47,229,828
<ACCUMULATED NII PRIOR> -
<ACCUMULATED GAINS PRIOR> -
<OVERDISTRIB NII PRIOR> -
<OVERDISTRIB NET GAINS PRIOR> -
<GROSS ADVISORY FEES> 252,397
<INTEREST EXPENSE> -
<GROSS EXPENSE> 490,115
<AVERAGE NET ASSETS> 33,713,303
<PER SHARE NAVE BEGIN> 10.00
<PER SHARE NII> (0.03)
<PER SHARE GAIN APPREC> 1.40
<PER SHARE DIVIDEND> -
<PER SHARE DISTRIBUTIONS> -
<RETURNS OF CAPITAL> -
<PER SHARE NAV END> 11.37
<EXPENSE RATIO> 1.93
<AVG DEBT OUTSTANDING> -
<AVG DEBT PER SHARE> -
