ARTISAN FUNDS INC, 497, 1998-11-05

ARTISAN FUNDS INC
497, 1998-11-05

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(LOGO) ARTISAN FUNDS

INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.

PROSPECTUS

ARTISAN SMALL CAP FUND

ARTISAN INTERNATIONAL FUND
(INTERNATIONAL SHARES)

ARTISAN MID CAP FUND

ARTISAN SMALL CAP VALUE FUND

OCTOBER 30, 1998

<PAGE>

ARTISAN FUNDS
PROSPECTUS

ARTISAN SMALL CAP FUND

ARTISAN INTERNATIONAL FUND
(INTERNATIONAL SHARES)

ARTISAN MID CAP FUND

ARTISAN SMALL CAP VALUE FUND

OCTOBER 30, 1998

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.
P.O. Box 8412
Boston, MA 02266-8412

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
---------------

The Securities and Exchange Commission has not approved any fund's shares 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...

Goal, Strategy & Philosophy ............................. 2
Artisan Small Cap Fund ................................ 2
Artisan International Fund ............................ 4
Artisan Mid Cap Fund .................................. 6
Artisan Small Cap Value Fund .......................... 8
Risks You Should Consider .............................. 10
Year 2000 & Euro Information ........................... 12
Total Return for Each Calendar Year .................... 12
Average Annual Total Returns ........................... 14
Artisan Funds' Fees & Expenses ......................... 15
How Do I Know if an Artisan Fund is Right for Me? ...... 16
Artisan Funds' Financial Highlights .................... 17
Organization, Management & Management Fees ............. 21
Investing with Artisan Funds ........................... 23
How to Buy Shares ...................................... 24
Automatic Investment Plan (AIP) ...................... 25
How to Sell Shares ..................................... 26
Systematic Withdrawals ............................... 27
What Type of Account Would You Like? ................... 28
Shareholder and Account Policies ....................... 30
Statements and Reports ............................... 30
Share Price .......................................... 30
Purchases ............................................ 31
Minimum Balances ......................................33
Authorized Agents .................................... 33
Redemptions .......................................... 34
Signature Guarantees ................................. 35
Account Registration ................................. 35
Telephone Transactions ............................... 36
Telephone Exchange Plan .............................. 36
Dividends, Capital Gains & Taxes ..................... 37
Distribution Options ................................. 37
Taxes ................................................ 38

<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 & PHILOSOPHY
Under normal circumstances, the Fund invests at least 65% of its assets in the
common stocks of small companies. The Fund considers a "small" company 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.

The Fund's investment approach rests on a few basic beliefs.

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, the adviser to the Fund, 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."

<PAGE>

Under ordinary circumstances, the Fund is substantially fully invested in common
stocks. At times, however, Artisan Partners may determine that market or
economic conditions warrant a temporary defensive position. During those
periods, the Fund's assets may not be invested in accordance with its strategy
and the Fund may not achieve its investment objective. In this 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.
The Adviser makes sale determinations based on whether intrinsic value targets
are met, changing circumstances affect the original reasons for a company's
purchase, more attractive alternatives exist or a company's market cap exceeds
$1.5 billion.

<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.

<PAGE>

ARTISAN INTERNATIONAL FUND<F1>

GOAL, STRATEGY & PHILOSOPHY
- --------------------------------------------------------------------------------
GOAL
Artisan International Fund seeks maximum long-term capital growth. This goal may
be changed without the approval of shareholders.
- --------------------------------------------------------------------------------
STRATEGY & PHILOSOPHY
Under normal circumstances, the Fund invests at least 65% of its total assets in
stocks of foreign companies.

Through its own research process, the Fund invests in a broadly diversified
portfolio of international growth stocks, concentrating on industries or
investment themes that present accelerating growth prospects and companies that
capitalize on that growth. The Fund's investment strategy focuses on stock
selection.

The Fund's research method also looks at industry selection, theme selection and
country selection. 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 the economic and market conditions provide attractive
valuations, the Fund seeks companies that seem well positioned for strong,
sustainable growth. As the first step to security selection, the Fund narrows
its focus to industries or themes likely to experience meaningful growth. It
focuses on well-managed companies with above-average financial characteristics,
increasing earnings per share and dominant or increasing market

<PAGE>

share in strong industries. Having isolated promising companies, the Fund then
limits its purchases to those whose stocks are attractively valued.

- -Under ordinary circumstances, the Fund is fully invested 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. During
those periods, the Fund's assets may not be invested in accordance with its
strategy and the Fund may not achieve its investment objective. 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.

The Adviser makes sale determinations based on whether a company's valuation
approaches its growth rate, changing circumstances affect the original reasons
for a company's purchase, a company exhibits deteriorating fundamentals or more
attractive alternatives exist.

<PAGE>

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 & PHILOSOPHY
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 MidCap Index. As of October 15, 1998, this
index included companies with capitalizations between approximately $260 million
and $24 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.

- -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.

<PAGE>

The Adviser makes sale determinations based on whether intrinsic value targets
are met, changing circumstances affect the original reasons for a company's
purchase, a company exhibits deteriorating fundamentals or more attractive
alternatives exist.

<PAGE>

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 & PHILOSOPHY
The Fund invests primarily in companies with a total stock market value of less
than $1.5 billion.

- -The Fund purchases a stock only at what it considers a bargain price...a price
that - because of market forces - is greatly below the value of the business
as determined by Artisan Partners, the adviser to the Fund.

- -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 companies that have one or more of the
following characteristics:

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.

<PAGE>

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. During those
periods, the Fund's assets may not be invested in accordance with its strategy
and the Fund may not achieve its investment objective. In this case, the Fund
may hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.

The Adviser makes sale determinations based on whether target value
is realized, companies exhibit deteriorating margins of safety or more
attractive alternatives exist.

<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>

RISKS YOU SHOULD CONSIDER

- --------------------------------------------------------------------------------
RISKS APPLICABLE TO ALL FUNDS
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. When you sell your shares, they may be worth more or less than
you paid for them. You can lose money by investing in a Fund.

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
- -While over the long term small company stocks tend to outperform those of
large companies, 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.

- -Since 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. The Fund monitors each holding
closely, evaluating new information relative to the original reasons for
investing.

- --------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND
- -Foreign stocks as an asset class may underperform U.S. stocks.

- -Foreign stocks tend to be more volatile than U.S. stocks.

<PAGE>

- -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.

- -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.

- --------------------------------------------------------------------------------
ARTISAN MID CAP FUND
- -Stocks of medium-sized companies tend to be more volatile than those of large
companies.

- -Relative to large companies, medium-sized 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.

- -During some periods, stocks of mid-sized companies, as an asset class, have
underperformed the stocks of small and large companies.

- -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.

- --------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
- -During some periods, small company stocks as an asset class have
underperformed the stocks of large companies.

- -Value stocks may fall out of favor with investors.

- -Value stocks may underperform other asset types during given periods.

<PAGE>
YEAR 2000 & EURO INFORMATION
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 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 the 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.

TOTAL RETURN FOR EACH CALENDAR YEAR
The bar chart and table (right) illustrate certain risks of investing in the
Funds. As you can see, the bar chart shows the returns achieved year to year and
the table compares the Funds' average annual total returns for the periods
listed to a market index. Similar information is not available for Artisan Mid
Cap Fund or Artisan Small Cap Value Fund, as those Funds have not yet completed
a full calendar year of operations.

<PAGE>

ARTISAN SMALL CAP FUND<F1>

1996 1997
------ ------
RETURNS (%) 11.9% 22.7%

Since inception, the Fund's highest and lowest quarterly returns were 16.3% and
(26.0)%, respectively, for the quarters ended June 30, 1997, and September 30,
1998.

ARTISAN INTERNATIONAL FUND<F2>

1996 1997
------ ------
RETURNS (%) 34.4% 3.5%

Since inception, the Fund's highest and lowest quarterly returns were 20.2% and
(18.8)%, respectively, for the quarters ended March 31, 1998, and September 30,
1998.

<F1> The year to date return as of September 30, 1998, was (23.3)%.
<F2> The year to date return as of September 30, 1998, was 5.9%.

<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

- --------------------------------------------------------------------------------
FOR THE 12 MONTH PERIOD FROM INCEPTION
FUND ENDED 12/31/97 THROUGH 12/31/97
- --------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND 22.7% 24.2%
- --------------------------------------------------------------------------------
Lipper Small Cap Fund Index<F1> 15.0% 19.4%
- --------------------------------------------------------------------------------
Russell 2000 Index<F2> 22.4% 22.5%
- --------------------------------------------------------------------------------
All returns reflect reinvested dividends.

- --------------------------------------------------------------------------------
FOR THE 12 MONTH PERIOD FROM INCEPTION
FUND ENDED 12/31/97 THROUGH 12/31/97
- --------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND 3.5% 17.8%
- --------------------------------------------------------------------------------
Lipper International Fund Index<F3> 7.2% 10.8%
- --------------------------------------------------------------------------------
Morgan Stanley's Europe,
Australasia and Far East Index (EAFE)<F4> 1.8% 3.9%
- --------------------------------------------------------------------------------
All returns reflect reinvested dividends.

<F1> Lipper Small Cap Fund Index reflects the net asset value weighted return of
the 30 largest small-cap funds.

<F2> Russell 2000 Index is an unweighted index of small companies, formed by
taking the largest 3,000 companies and eliminating the largest 1,000
companies.

<F3> Lipper International Fund Index reflects the net asset value weighted
return of the 30 largest international equity funds.

<F4> EAFE is an unmanaged index of companies throughout the world in proportion
to world stock market capitalization, excluding the U.S. and Canada.

<PAGE>

ARTISAN FUNDS' FEES & EXPENSES
Below are the fees and expenses that you pay if you buy and hold shares in an
Artisan Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

Sales charge (load) on purchases........................................ None

Exchange fee............................................................ None

Redemption fee.......................................................... None

- --------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS:
- --------------------------------------------------------------------------------
EXPENSE SMALL CAP INTERNATIONAL MID CAP SMALL CAP VALUE
- --------------------------------------------------------------------------------
Management Fee 1.00% 1.00% 1.00% 1.00%
- --------------------------------------------------------------------------------
12B-1 Fee None None None None
- --------------------------------------------------------------------------------
Other Expenses 0.33% 0.45% 2.64% 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 Adviser. The
Adviser has agreed to reimburse Artisan Mid Cap Fund to the extent that the
Fund's total operating expenses exceed 2.00% of its average daily net
assets.

EXAMPLE. This example is intended to help you compare the cost of investing in
an Artisan Fund with that of investing in 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. Your actual returns and costs
may be higher or lower.

- --------------------------------------------------------------------------------
TIME PERIOD SMALL CAP INTERNATIONAL MID CAP SMALL CAP VALUE
- --------------------------------------------------------------------------------
1 Year $ 135 $ 148 $ 366 $ 196
- --------------------------------------------------------------------------------
3 Years $ 421 $ 459 $1,114 $ 606
- --------------------------------------------------------------------------------
5 Years $ 729 $ 792 $1,883 $ 1,042
- --------------------------------------------------------------------------------
10 Years $1,601 $1,735 $3,897 $ 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.

<PAGE>

HOW DO I KNOW IF AN ARTISAN FUND IS RIGHT FOR ME?
These are some of the potential rewards of investing in a Fund:

- --------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND AND ARTISAN SMALL CAP VALUE FUND
- -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.

- --------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND
- -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.

- --------------------------------------------------------------------------------
ARTISAN MID CAP FUND
- -Medium-sized 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.

- --------------------------------------------------------------------------------
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.

<PAGE>

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 has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose 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.

- --------------------------------------------------------------------------------
SMALL CAP FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>

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
net assets (0.74)% (0.73)% (0.75)% (0.59)%<F3>
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>

ARTISAN FUNDS' FINANCIAL HIGHLIGHTS (CONTINUED)

- --------------------------------------------------------------------------------
INTERNATIONAL FUND
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Year Ended Year Ended Period Ended
6/30/98 6/30/97 6/30/96
International International International
For a share outstanding throughout each period Shares Shares Shares<F1>
-------- -------- --------
<C> <C> <C>
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 3.10 2.51 2.08
-------- -------- --------
Distributions paid to shareholders:
Net investment income (0.20) (0.02) _
Net realized gains on investment transactions (1.13) (0.09) _
-------- -------- --------
Total distributions paid to shareholders (1.33) (0.11) _
-------- -------- --------
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>

</TABLE>

<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.

<PAGE>

ARTISAN FUNDS' FINANCIAL HIGHLIGHTS (CONTINUED)

- --------------------------------------------------------------------------------
MID CAP FUND
- --------------------------------------------------------------------------------

Year Period
Ended Ended
For a share outstanding 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 _
-------- --------
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> Includes fees waived by the Adviser. Absent fees waived by the Adviser, the
ratios of expenses to average net assets and net investment loss to average
net assets would have been 3.64% and (2.41%), respectively.

<PAGE>

ARTISAN FUNDS' FINANCIAL HIGHLIGHTS (CONTINUED)

- --------------------------------------------------------------------------------
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 & MANAGEMENT FEES

ORGANIZATION. Each Artisan Fund is a series of Artisan Funds, Inc. Artisan
International Fund is divided into two share classes.

MANAGEMENT. Each Artisan Fund is managed by Artisan Partners Limited Partnership
(Artisan Partners), 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, as of October 15, 1998, manages approximately $1.0
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 53202-3197.

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, Inc. Prior to assuming fund management
responsibilities, he served as an equity analyst with Waddell & Reed.

Mr. Yockey holds BA and MBA degrees 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 degree 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<F1>

To add to an account.....................$50

Minimum balance required................$500

<F1> THE FUND WILL WAIVE THE INITIAL MINIMUM OF $1,000 IF YOU INVEST THROUGH THE
AUTOMATIC INVESTMENT PLAN, EXPLAINED LATER ON PAGE 25.

<PAGE>

HOW TO BUY SHARES

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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.

TO ADD TO AN ACCOUNT:
Put your account number on a check or money order for $50 or more. Make your
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

- --------------------------------------------------------------------------------
TELEPHONE 1-800-344-1770

TO OPEN AN ACCOUNT:
You may open a new account by telephone 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.

<PAGE>

TO ADD TO AN ACCOUNT:
The telephone transaction option enables you to add from $50 to $25,000 to your
account by telephone. It also lets you exchange among Artisan Funds by
telephone.

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 telephone 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 AIP, 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 Automatic Investment 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 by the Fund or its authorized agent.

Some redemptions require SIGNATURE GUARANTEES. See page 35.

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 AND 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: FOR OVERNIGHT DELIVERY:
Artisan Funds Artisan Funds
P.O. Box 8412 c/o Boston Financial
Boston, MA 02266-8412 66 Brooks Drive
Braintree, MA 02184

ALL OTHERS
Call 1-800-344-1770 for instructions.

- --------------------------------------------------------------------------------
TELEPHONE 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.

<PAGE>

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WIRE
Available to all account types except IRAs

We will transmit payment by wire to a pre-authorized bank account. Usually, the
funds 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 per wire
transaction.

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.

<PAGE>

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 701/2 and have "earned"

<PAGE>

(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 591/2, 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 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.

<PAGE>

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.
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.
<PAGE>

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.

<PAGE>

- - 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 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.

<PAGE>

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.

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 accounts for which the authorized
agent provides services. 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.

<PAGE>

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.

<PAGE>

SIGNATURE GUARANTEES

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.

EACH OWNER'S SIGNATURE MUST BE GUARANTEED SEPARATELY. FOR EXAMPLE, A JOINT
ACCOUNT WITH TWO OWNERS WOULD REQUIRE TWO SIGNATURE GUARANTEES.

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.

<PAGE>

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.

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.

<PAGE>

- - 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 & 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 591/2, 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.

<PAGE>

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.

<PAGE>

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 this
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. 20549-6009. The telephone number there is 1-800-
SEC-0330.

You may also request Fund documents by accessing the Commission's website at:
http://www.sec.gov.

And you may obtain 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.

<PAGE>

(LOGO)
ARTISAN FUNDS

ARTISAN FUNDS, INC.
P.O. BOX 8412
BOSTON, MA 02266-8412

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BULK RATE
U.S. POSTAGE
PAID
MILWAUKEE, WI
PERMIT NO. 2855
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Prospectus

ARTISAN INTERNATIONAL FUND
(INSTITUTIONAL SHARES)

October 30, 1998

Artisan International Fund offers two classes of shares. Institutional Shares
are offered by this prospectus to institutional investors including, but not
limited to, employee benefit plans, endowments, foundations, trusts,
corporations and individuals 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.
Suite 1770
1000 North Water Street
Milwaukee, WI 53202-3197

Be sure to read this prospectus before you invest. And please keep it on file
for future reference.

This prospectus 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 this prospectus, please call the number
below. An Artisan Funds representative will be happy to help you.

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1-800-399-1770
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- ---------------------------
The Securities and Exchange Commission has not approved any fund's shares or
determined whether this prospectus is accurate or complete. Anyone who tells you
otherwise is committing a crime.

<PAGE>

TABLE OF CONTENTS

Important Legal Information.......................Cover

Goal, Strategy & Philosophy...........................2

Risks You Should Consider.............................3

Year 2000 & Euro Information..........................3

Investment Returns....................................4

Fees & Expenses.......................................5

Who is Eligible to Invest?............................6

The Fund's Financial Highlights.......................7

Organization, Management & Management Fee.............8

Investing with the Fund...............................9

Minimum Investments..............................9

How to Buy Shares....................................10

How to Sell Shares...................................12

Shareholder & Account Policies.......................14

Statements & Reports............................14

Share Price.....................................14

Dividends, Capital Gains & Taxes................15

Distribution Options............................15

Taxes...........................................15

<PAGE>

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STRATEGY & PHILOSOPHY
Under normal circumstances, the Fund invests at least 65% of its total assets in
stocks of foreign companies.

- - Through its own research process, the Fund invests in a broadly diversified
portfolio of international growth stocks, concentrating on industries or
investment themes that present accelerating growth prospects and companies
that capitalize on that growth. The Fund's investment strategy focuses on
stock selection.

The Fund's research method also looks at industry selection, theme selection
and country selection. 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 the economic and market conditions provide attractive
valuations, the Fund seeks companies that seem well positioned for strong,
sustainable growth. As the first step to security selection, the Fund
narrows its focus to industries or themes likely to experience meaningful
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.

- - Under ordinary circumstances, the Fund is fully invested 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.
During those periods, the Fund's assets may not be invested in accordance
with its strategy and the Fund may not achieve its investment objective. 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.

The Advisor makes sale determinations based on whether a company's valuation
approaches its growth rate, changing circumstances affect the original reasons
for a company's purchase, a company exhibits deteriorating fundamentals or more
attractive alternatives exist.

<PAGE>

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.
When you sell your shares, they may be worth more or less than you paid for
them. You can lose money by investing in the Fund. An investment in the Fund is
not a deposit of any bank and is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.

The Fund does not pursue income and is not a balanced investment plan. In
addition, there can be no assurance that it will achieve its investment goal.

Below are the principal investment risks of the Fund.

- - Foreign stocks as an asset class may underperform 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.

- - 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.

YEAR 2000 AND EURO INFORMATION

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 Fund's
ability to value its portfolio holdings in foreign securities and could increase
the costs associated with the Fund's 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.

<PAGE>

INVESTMENT RETURNS

The bar chart and table below illustrate certain risks of investing in the Fund.
As you can see, the bar chart shows the returns achieved year by year and the
table compares the Fund's average annual total returns for the periods listed to
a market index.

NOTE: Because Institutional Shares have not been offered for a full calendar
year, the information provided in the bar chart and table represents the
performance of International Shares, the Fund's other class of shares, which are
offered to retail investors by a separate prospectus.

TOTAL RETURN FOR EACH CALENDAR YEAR
ARTISAN INTERNATIONAL FUND - INTERNATIONAL SHARES<F1>

1996 1997
------ ------
RETURN % 34.4% 3.5%

Since inception, the Fund's highest and lowest quarterly returns were 20.2% and
(18.8)%, respectively, for the quarters ended March 31, 1998 and September 30,
1998.

<F1> The year to date return as of September 30, 1998 was 5.9%.

<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

- --------------------------------------------------------------------------------
FOR THE 12 MONTH PERIOD FROM INCEPTION
ENDED 12/31/97 THROUGH 12/31/97
- --------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND
(INTERNATIONAL SHARES) 3.5% 17.8%
- --------------------------------------------------------------------------------
Morgan Stanley's Europe, Australasia
and Far East Index (EAFE)1<F1> 1.8% 3.9%
- --------------------------------------------------------------------------------
Lipper International Fund Index<F2> 7.2% 10.8%
- --------------------------------------------------------------------------------
All returns reflect reinvested dividends.

<F1> EAFE is an unmanaged index of companies throughout the world in proportion
to world stock market capitalization, excluding the U.S. and Canada.
<F2> Lipper International Fund Index reflects the net asset value weighted
return of the 30 largest international equity funds.

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. 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.

FEES & EXPENSES

Below are the fees and expenses that you will pay if you buy and hold
Institutional Shares of the Fund.

- --------------------------------------------------------------------------------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)

Sales charge (load) on purchases......None

Exchange fee..........................None

Redemption fee........................None

<PAGE>

- -----------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
THAT ARE DEDUCTED FROM FUND ASSETS

- -----------------------------------------------------
EXPENSE INTERNATIONAL FUND
(INSTITUTIONAL SHARES)
- -----------------------------------------------------
MANAGEMENT FEE 1.00%
- -----------------------------------------------------
12B-1 FEE None
- -----------------------------------------------------
OTHER EXPENSES 0.25%
- -----------------------------------------------------
TOTAL OPERATING EXPENSES 1.25%
- -----------------------------------------------------
EXAMPLE. This example is intended to help you compare the cost of investing in
Institutional Shares of the Fund with that of investing in 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. Your actual
returns and costs may be higher or lower.

- -----------------------------------------------------
TIME PERIOD INTERNATIONAL FUND
(INSTITUTIONAL SHARES)
- -----------------------------------------------------
1 YEAR $127
- -----------------------------------------------------
3 YEARS $397
- -----------------------------------------------------
5 YEARS $686
- -----------------------------------------------------
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.

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, or to obtain an Application, call 1-800-399-1770. See "How to Buy
Shares."

<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 Institutional Shares.
Certain information reflects financial results for a single Institutional Share.
Total return represents the rate you would have earned (or lost) on an
investment, assuming reinvestment of all dividends and distributions. This
information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report which is available on request.

For a share outstanding throughout the period YEAR ENDED 6/30/98
------------------

Net asset value, beginning of period $14.48
Income from investment operations:
Net investment income 0.09<F1>
Net realized and unrealized gains on
securities and foreign currency transactions 3.04
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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<F2>
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> Computed based on average shares outstanding.
<F2> Does not include assets represented by International Shares, which are
offered to retail investors by a separate prospectus.

<PAGE>

ORGANIZATION, MANAGEMENT & MANAGEMENT FEE

ORGANIZATION. The Fund is a series of Artisan Funds, Inc. The Fund offers two
classes of shares - International Shares and Institutional Shares. This
prospectus describes Institutional Shares. International Shares are offered to
retail investors through a separate prospectus.

MANAGEMENT. The Fund is managed by Artisan Partners Limited Partnership (Artisan
Partners), 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, as of October 15, 1998, manages approximately $1.0 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
53202-3197.

Mr. Yockey holds BA and MBA degrees from Michigan State University and is a
Chartered Financial Analyst.

MANAGEMENT FEE. 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 fee paid by the Fund was at the annual rate
of 1.00%.

<PAGE>

INVESTING WITH THE FUND

THE FUND IS 100% NO-LOAD, WHICH MEANS YOU PAY NO SALES CHARGES TO BUY OR SELL
YOUR SHARES OR REINVEST YOUR DIVIDENDS. NOR DO YOU PAY A 12B-1 FEE.

RIGHT FROM THE START, YOUR ENTIRE INVESTMENT GOES TO WORK FOR YOU.

- - 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.

- --------------------------------------------------------------------------------
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

APPLICATIONS FOR INSTITUTIONAL SHARES ARE ONLY MADE AVAILABLE THROUGH ARTISAN
PARTNERS BY CALLING 1-800-399-1770. Institutional Shares may be purchased by
check or wire. There are no sales commissions or underwriting discounts.

- --------------------------------------------------------------------------------
BY WIRE
You may purchase 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 one of the following addresses with a check
for the total purchase amount payable to "Artisan Funds":

REGULAR MAIL OVERNIGHT DELIVERY
-------------------- --------------------
Artisan Funds Artisan Funds
c/o Boston Financial c/o Boston Financial
Marina Bay - Floor 3 66 Brooks Drive
500 Victory Road Braintree, MA 02184
Quincy, MA 02171

- --------------------------------------------------------------------------------
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.

<PAGE>

- --------------------------------------------------------------------------------
PURCHASE PRICE & 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.

- --------------------------------------------------------------------------------
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.

<PAGE>

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:

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 a duly authorized officer of the shareholder.

- --------------------------------------------------------------------------------
EVIDENCE OF AUTHORITY
Redemption requests by a corporation, trust, partnership or other entity must be
accompanied by evidence of 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 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, such as 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.

<PAGE>

- --------------------------------------------------------------------------------
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 & ACCOUNT POLICIES

- --------------------------------------------------------------------------------
STATEMENTS & 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.

- - 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.

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.

<PAGE>

- --------------------------------------------------------------------------------
DIVIDENDS, CAPITAL GAINS & 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 want to change your distribution option at a later
date, 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.

- --------------------------------------------------------------------------------
TAXES
As you should with any investment, consider how the return on your investment in
a Fund will be taxed. If your investment is in a tax-deferred account - an
employee benefit plan account, for example - the following tax discussion does
not apply.

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

<PAGE>

statement - called Form 1099 - showing the amount of every taxable distribution
you received in the previous calendar year.

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.

<PAGE>

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 1-800-399-1770. Also call this
number if you have a question or would like to receive other information about
an Artisan Fund.

You may also request Fund documents by accessing the Commission's Internet
website at http://www.sec.gov.

And you may obtain 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 30, 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 30, 1998 and any supplement to the
prospectus. Copies of the 1998 annual report to shareholders of Artisan Funds
and the separate annual report for Artisan International 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 (800) 344-1770 or writing to Artisan Funds.

TABLE OF CONTENTS
Page
----
Information about the Funds and Artisan Partners...................B-2
Investment Objective and Policies..................................B-2
Investment Techniques and Risks....................................B-3
Investment Restrictions...........................................B-17
Performance Information...........................................B-20
Organization......................................................B-25
Directors and Officers............................................B-27
Principal Shareholders............................................B-30
Investment Advisory Services......................................B-31
Distributor.......................................................B-32
Portfolio Transactions............................................B-32
Purchasing and Redeeming Shares...................................B-33
Additional Tax Information........................................B-35
Custodian.........................................................B-36
Independent Accountants...........................................B-37
Financial Statements..............................................B-37
Appendix - Description of Bond Ratings............................B-39

<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 $1.5 billion.

Artisan International Fund seeks to achieve its objective of long-term
capital growth 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.

Artisan Mid Cap Fund seeks long-term capital growth by investing 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 400 Index (the "MidCap Index"). As of October 15, 1998, the MidCap Index
included companies with capitalizations between approximately $260 million and
$24 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 Small Cap Value Fund seeks long-term capital growth by investing
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
$1.5 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.

B-2
<PAGE>

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 Funds 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 up to 25% of its total assets in foreign securities
(including American Depository Receipts ("ADRs") European Depositary Receipts
("EDRs"), Global Depositary 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 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 ADRs, EDRs
or GDRs. In the case of an unsponsored depositary 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

B-3
<PAGE>

communications than it would have with a sponsored depositary receipt. No Fund
intends to invest more than 5% of its net assets in unsponsored depositary
receipts.

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.

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.

B-4
<PAGE>

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. During those
periods, a Fund's assets may not be invested in accordance with its strategy and
the Fund may not achieve its investment objective.

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
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)

B-5
<PAGE>

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 may 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 at a 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 or income receivables. 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 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

B-6
<PAGE>

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.

Options on Securities and Indexes. The Funds may purchase and write (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

B-7
<PAGE>

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 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

B-8
<PAGE>

and judgment, and even a well-conceived transaction may be unsuccessful to
some degree because of market behavior or unexpected 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 (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

B-9
<PAGE>

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.

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

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<PAGE>

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.

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

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<PAGE>

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.

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

B-12
<PAGE>

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.

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 or
"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

B-13
<PAGE>

promulgate regulations that will treat as constructive sales certain
transactions that have substantially the same effect as short sales,
offsetting notional principal contracts, and 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 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.

B-14
<PAGE>

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
directors. 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.

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.

B-15
<PAGE>

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 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

B-16
<PAGE>

June 30, 1998 Artisan Small Cap Value Fund's portfolio turnover rate was 52.58%.
The future turnover rate may vary greatly from year to year. A high rate of
portfolio turnover in the Funds, if it should occur, would result in increased
transaction costs, 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);

(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

B-17
<PAGE>

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
U.S. Government 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];

(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;

B-18
<PAGE>

(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];

(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

B-19
<PAGE>

(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 $1.5 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].

<F1> A future 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.

<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.

<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 options
excludes options on broad-based stock indexes (such as the Standard &
Poor's 500 index).

<F4> A Fund will not purchase securities when total borrowings by the Fund are
greater than 5% of its net asset value.

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:
ERV = P(1 + T) n

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 Class<F1> 24.40% 24.40%

---------------------------
<F1> from the date first offered for sale (July 1, 1997)

Total return and Average Annual Total Return of Institutional Shares
are calculated in the same way as for International Shares. The performance of
Institutional Shares is different from the performance of International
Shares because the expenses allocated to the classes are 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 have been 24.40%, and the total return and average annual
total return for the life of the Fund would have been 81.71% and 26.87%,
respectively.

B-21
<PAGE>

Artisan Mid Cap Fund
--------------------
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
Consumer Digest column)
Financial World Louis Rukeyser's Mutual Fund
Forbes The San Francisco Chronicle
Fortune Smart Money
Fund Action Stranger's Investment Adviser
Investor's Business Daily 13D Opportunities Report
Kiplinger's Personal Time
Finance Magazine United Mutual Fund Selector
Knight-Ridder USA Today
Los Angeles Times U.S. News and World Report
Milwaukee Business Journal The Wall Street Journal
Milwaukee Journal Sentinel Working Woman
Money Worth
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 New York Stock Exchange Composite Index
Russell 2000 Index American Stock Exchange Composite Index
Russell 2000 Growth Index NASDAQ Composite
Russell 2000 Value Index NASDAQ Industrials
Russell Mid-Cap Stock Index (These indexes generally reflect the
Russell Mid-Cap Value Index performance of stocks traded in the
Standard & Poor's 500 Stock Index indicated markets.)
Standard & Poor's 400 Industrials
Standard & Poor's 400 Index Lipper International Index
Wilshire 5000 Lipper International & Global Funds
Wilshire 4500 Average
Wilshire 4000 Morgan Stanley Capital International Europe,
Wilshire Small-Cap Index (EAFE) Index
Wilshire Small-Cap Value Index Morningstar International Stock
(These indexes are widely Average
recognized indicators of general Financial Times-Actuaries World Index
U.S. stock market results.) (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 Cap Fund Index; Lipper
Mid Cap Fund Index; Lipper General Equity Funds Average; Lipper Equity Funds
Average; Lipper Small Company Growth Fund Index; 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 Lipper Small Cap Fund Index reflects the net asset value
weighted total return of the thirty largest small cap funds as calculated and
published by Lipper Analytical Services, Inc. ("Lipper"), an independent service
that monitors the performance of more than 1,000 funds. The Lipper Mid Cap Fund
Index reflects the net asset value weighted return of the thirty largest mid cap
funds; the Lipper International Fund reflects the net asset value weighted
average of the thirty largest international equity funds.

The Lipper 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

B-24
<PAGE>

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.

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.

B-25
<PAGE>

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.

B-26
<PAGE>

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.

DIRECTORS AND OFFICERS

POSITIONS HELD PRINCIPAL OCCUPATIONS DURING
NAME AND DATE OF BIRTH WITH REGISTRANT PAST 5 YEARS
- ---------------------- --------------- ----------------------------
<C> <C> <C>
Andrew A. Ziegler* Director, Chairman of Managing Partner of Artisan
10/7/57 the Board and Chief Partners; prior to founding Artisan
Executive Officer Partners, president and chief
operating officer of
Strong/Corneliuson Capital t
Managemen ("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.

Carlene Murphy Ziegler* Director and President Managing Partner of Artisan
6/20/56 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 Reinhart,
5/6/43 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.

B-27
<PAGE>

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 Officer, Chief financial officer, Artisan
5/6/59 Treasurer and Secretary Partners; prior to joining Artisan
Partners, senior vice president
(since 1994) and director of mutual
fund administration, Strong Capital
Management, Inc., prior thereto.

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-Reinhardt Vice President Equity trader for Artisan Partners;
3/6/64 prior to joining 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-portfolio manager at
Stein Roe & Farnham Incorporated
from 1992 until 1995, and an
analyst with OLC Corporation from
1989 to 1991.

B-28
<PAGE>

Scott C. Satterwhite Vice President Portfolio manager, Artisan Small
7/15/57 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 Mid Cap
10/31/63 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
</TABLE>

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.

B-29
<PAGE>

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(4)
NAME OF DIRECTOR FUNDS EXPENSES PAID TO DIRECTORS
- ----------------- ------- ---------- ------------------
<C> <C> <C> <C>
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

</TABLE>

At September 30, 1998, the officers and directors of Artisan Funds as a
group owned 6.3% of the outstanding shares of Artisan Mid Cap Fund and less
than 1% of the outstanding shares in the case of each other Fund.

PRINCIPAL SHAREHOLDERS

The only persons known by Artisan Funds to own of record or beneficially 5%
or more of the outstanding shares of any Fund (or class in the case of
International Fund) as of September 30, 1998 were:

PERCENTAGE OF
NAME AND ADDRESS FUND OUTSTANDING SHARES HELD
---------------- ---- -----------------------
Charles Schwab & Co. Inc. <F1> Small Cap Fund 22.66%
101 Montgomery Street Mid Cap Fund 35.29
San Francisco, CA 94104-4122 International Fund-
International Shares 54.96
Small Cap Value Fund 26.57

National Financial
Services Corp. <F1> Mid Cap Fund 10.37
P.O. Box 3908 International Fund-
Church Street Station International Shares 19.92
New York, NY 10008-3908 Small Cap Value Fund 15.26

State University of Iowa Small Cap Fund 8.25
One West Park Road International Fund-
P.O. Box 4550 Institutional Shares 30.33
Iowa City, IA 52244-4550

The Professional Golfers
Association International Fund-
P.O. Box 109601 Institutional Shares 16.64
Palm Beach, FL 33410-9601

Everett Clinic 401(k) Plan <F2> Small Cap Value Fund 6.26
P.O. Box 98000
MAC #9I39 027
Calabras, CA 91372
- -------------
<F1> Shares are held of record on behalf of customers, and not beneficially.
<F2> Shares are held of record on behalf of plan participants, and not
beneficially.

B-30

<PAGE>

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 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
2.00% 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).

B-31
<PAGE>

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
Partners. All distribution expenses relating to the Funds are paid
by Artisan Partners, including the payment or reimbursement of any expenses
incurred by Distributors. The Distribution Agreement will continue in effect
through October 30, 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 TRANSACTIONS

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

B-32
<PAGE>

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 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 on 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.

B-33
<PAGE>

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 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,

B-34
<PAGE>

exists, making disposal of portfolio securities or valuation of net assets of
the Fund not reasonably practicable.

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:

B-35
<PAGE>

- - 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;

- - The IRS informs the Fund that your tax identification number is incorrect.

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.

B-36
<PAGE>

INDEPENDENT ACCOUNTANTS

PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202 serves as the Funds' independent accountants, providing services including
(i) an 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

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
-------------------------------------------------

- 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

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Artisan International Fund - Institutional Shares
-------------------------------------------------

- 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 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 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 Year ended June 30, 1998 and
the Period ended June 30, 1997
- Notes to Financial Statements
- Report of Independent Accountants

Artisan Small Cap Value Fund
----------------------------

- 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 Period Ended June 30, 1998
(from commencement of operations on September 29, 1997)
- 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.

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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

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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.

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