ARTISAN FUNDS INC, N-30B-2, 1998-02-27

ARTISAN FUNDS INC
N-30B-2, 1998-02-27

Previous: TAX EXEMPT SECURITIES TRUST NEW JERSEY TRUST 120, 24F-2NT, 1998-02-27

Next: ARTISAN FUNDS INC, 485BPOS, 1998-02-27

(LOGO)

ARTISAN
SMALL CAP VALUE
FUND

SEMI-ANNUAL REPORT
DECEMBER 31, 1997

INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.

(LOGO)

February 20, 1998

Dear Fellow Shareholder,

Thank you for your investment in the Artisan Small Cap Value Fund (Fund). We are
pleased to send you this first semi-annual report for the Fund.

THE FUND'S PERFORMANCE
As you know, the Fund's inception date was September 29, 1997 - which means
we're reviewing just three months of performance. We believe, however, that
you'll find this report offers additional insight into your investment.

A PROMISING START
The Artisan Small Cap Value Fund completed the fourth quarter of 1997 - its
first complete quarter of operation - with a gain of 3.2%. This performance is
well ahead of the Fund's two benchmark indexes - the Russell 2000 Value Index
and Lipper Small Cap Fund Index - which returned 1.7% and -5.4%, respectively.

COMPARATIVE QUARTERLY PERFORMANCE

Artisan Small Cap Value Fund
Total Return

Since Inception: 3.1%

9/27/97 12/31/97
------- --------
ARTISAN SMALL CAP VALUE FUND $10,000 $10,310
RUSSELL 2000 VALUE INDEX $10,000 $10,220
LIPPER SMALL CAP FUND INDEX $10,000 $9,502

QUARTERLY 1997
PERFORMANCE 12/31/97
- ---------------------------- --------
ARTISAN SMALL CAP VALUE FUND 3.2%
Russell 2000 Value Index 1.7%
Lipper Small Cap Fund Index -5.4%

This graph compares the results of $10,000 invested in the Artisan Small Cap
Value Fund on September 29, 1997 (the date the Fund began operations) with the
Russell 2000 Value Index and the Lipper Small Cap Fund Index. The Russell 2000
Value Index is an unmanaged index of small companies that measures the
performance of those Russell 2000 companies with lower price-to-book ratios and
lower forecasted growth values. The Lipper Small Cap Fund Index reflects the net
asset value weighted return of the 30 largest small-cap mutual funds. All
returns include reinvested dividends. Past performance does not guarantee future
results. The investment return and principal value of an investment in the Fund
will fluctuate so that Fund shares, when redeemed, may be worth more or less
than their original cost.

1 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (CONTINUED)

OUR INVESTMENT APPROACH
It's a tradition at Artisan to review a Fund's investment approach before
discussing its investment performance in detail.

The Artisan Small Cap Value Fund invests in small companies that it considers
undervalued, concentrating on companies in solid financial condition with
favorable economics. The Fund's investment style can be characterized as
"bottom-up," meaning its focus in stock selection is on individual companies,
rather than trends in the economy or securities markets. Overall, there are two
concepts that frame our decision-making:

We purchase a stock only at what we consider a bargain price_a price that,
because of market forces, differs significantly from what we determine is the
true value of the business. We find companies selling at these types of
discounts in several categories, and many of our investments have elements of
each.

- -Turnarounds, both industry and company specific. Poor results lead to
disappointment, uncertainty and fear, which can lead to mispriced securities
and investment opportunity for patient investors.

- -Undiscovered or unsponsored stocks. Even in today's market, we are able to
find overlooked bargains where nothing is going wrong.

- -Companies with hidden assets. Undervalued real estate, fully depreciated
assets and unrecognized business lines are examples.

- -Companies in the process of major change. Stocks in the midst of major change
often inaccurately reflect the new and improved situation until it shows up in
the company's results. Early investments on conservative assumptions can
produce excellent returns.

We do not believe that bargain purchases by themselves create a sufficient
margin of safety, so there are two other attributes we look for in an investment
to provide an extra cushion.

- -Financial Strength. We emphasize unleveraged companies that are cash-flow
neutral or positive.

- -Favorable Economics. Companies and industries that are characterized by
acceptable returns on capital and produce free cash over their cycles are less
likely to experience eroding values over the long-term.

This discipline often leads us to companies with little, if any, analyst
coverage. Thus, we conduct our own research on companies' fundamentals.

Finally, we are patient. We think it is important to have a sense of why shares
are undervalued, and what is required to cause a revaluation, but don't believe
the revaluation process must be in motion before investing. We believe it is
sufficient to buy financially strong businesses with good economics at a
discount to underlying value. A portfolio of these stocks is set-up for good
things to happen.

Given the nature of this Fund, we'd like to help you keep it in perspective.
Despite our inherently cautious approach to investing in small-cap stocks, the
Fund may experience significant, short-term fluctuations. We thus urge you to
regard this investment only as a long-term holding, and to use it as part of a
diversified portfolio.

SEMI-ANNUAL REPORT 2

LETTER TO SHAREHOLDERS (CONTINUED)

A REVIEW OF THE FOURTH QUARTER 1997
Little did we know when we launched the Fund that its first three months would
be a time of exceptional turbulence. Precipitous declines in Asian markets,
severe volatility in our own markets - including a record one-day point drop in
the Dow Jones Industrials and the decimating of certain sectors - presented a
formidable set of challenges. Yet, despite these circumstances, we managed to
outperform both of our benchmark indexes. We attribute this outperformance to
our focus on value and downside protection, our broad diversification and our
modest exposure to the hard-hit sectors of energy and technology.

In addition, a number of stocks were excellent performers. Shown below are the
Fund's top gainers and losers for the period.

TOP 5 GAINERS TOP 5 LOSERS
- ----------------------------------- -------------------------------------
SECURITY % SECURITY %
- -------- ----- -------- ------
Showboat, Inc. 57.1% Ansaldo Signal -42.5%
Somerset Group, Inc. 36.3% Intelligent Systems Corp. -29.5%
Oglebay Norton Co. 36.2% Medical Resources, Inc. -20.6%
Dril-Quip 31.9% Spaghetti Warehouse, Inc. -18.6%
Mueller Industries, Inc. 30.8% American Pacific Corp. -17.2%

Our biggest gainer, Showboat, Inc., was taken over during the quarter. But
Somerset Group, which also surged, still offers the potential for further gains.
Somerset is a holding company, based in Indiana. Nearly all of Somerset's assets
are in the stock of First Indiana Bancshares, an Indianapolis thrift, of which
Somerset owns a very large portion.

As the trend to consolidation in the banking industry accelerates, First Indiana
may well be a takeover candidate. But when we invested in Somerset - at
approximately $15 per share - First Indiana's book value was only about $14. In
other words, we bought a medium-quality thrift in a highly attractive area for a
shade over book value, when many thrifts are being taken over for 3 times their
book value.

At the time of our Somerset Group purchase, First Indiana stock was selling at
$24.50 per share. As it rose to $30.00 on December 31, our Somerset stock
followed along, closing the quarter at $20.375 per share.

PORTFOLIO CHARACTERISTICS
On December 31, 1997, the Fund's net assets were $27.4 million. The Fund owned
68 stocks, with a median market cap of $196 million, an average price/book value
of 1.4X, and a median P/E - based on 1998 estimates - of 11.3X. The median
number of analysts following our stocks was only 2. The Fund was 93.6% invested
in stocks, which we consider fully invested.

3 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (CONTINUED)

TOP TEN HOLDINGS
- -------------------------------------------
COMPANY NAME %
- ------------ ---
Devon Group 2.6
Angelica Corporation 2.4
Capital Southwest Corporation 2.3
Asset Investors Corporation 2.3
Argonaut Group 2.3
Hilb, Rogal & Hamilton 2.3
Superior National Insurance Group 2.2
Dexter Corporation 2.2
Cleveland Cliffs 2.1
Dames & Moore Group 2.1
TOTAL 22.8%

As you can see, even our largest holdings represent only a minor portion of the
Fund. Note too, in the industry diversification table that follows, that our
assets are spread across 14 industries. These aspects of diversification help
reduce the Fund's overall risk, while increasing the importance of stock-
picking, where we add the most value to the process.

The relative industry weightings that follow reflect the general sense of
caution we feel toward the market. We are weighted toward Basic Industry,
Insurance and Business Services, with little or no exposure to industries that
we find overvalued or believe will experience continued volatility.

INDUSTRY DIVERSIFICATION (%)
-----------------------------------------------------------------------
WEIGHTING WEIGHTING
--------- ---------
INDUSTRY 12/31/97 INDUSTRY 12/31/97
-------- -------- -------- --------
Banks/S&Ls 0.0 Healthcare Services 0.0
Basic Industry 18.1 Insurance 16.1
Biotech/Pharmaceutical 0.0 Medical Devices 0.0
Business Services 13.2 Other Financial 10.9
Capital Spending 9.9 Paper/Packaging 1.4
Computer Related 1.6 Restaurants/Hotels 5.6
Consumer Cyclicals 0.0 Retailing 2.4
Consumer Services 3.6 Software/Telecommunications 1.9
Consumer Staples 4.8 Transportation Related 2.2
Electronics 0.0 Utilities 0.0
Energy 1.9 Other assets less liabilities 6.4
------
TOTAL 100.0%

SEMI-ANNUAL REPORT 4

LETTER TO SHAREHOLDERS (continued)

OUTLOOK AND STRATEGY
Although we monitor economic and market trends, and try to assess their likely
affects on stocks, we're not market timers. Our investment decisions, as we
stated earlier, flow from information we gather on individual companies and
their industries.

Given those qualifications, we see a mixed investing environment in 1998. On a
positive note, we see inflation remaining subdued and interest rates stable to
somewhat lower. On the flip side, we're concerned about generally inflated
valuations, economic ramifications from Asia's deep-seated problems and a
slowdown in the rapid earnings growth of recent years.

As small-cap investors, however, we have an inherent advantage. In many small
companies, growth is tied more to internal dynamics than it is to the growth of
the general economy. Two companies typify this theme: insurance broker Hilb,
Rogal & Hamilton, continuing to rationalize its cost structure from recent
acquisitions and Host Marriott, expanding its concessions to airport retail and
mall food courts. We'll continue to look for this type of company.

We'll also continue exploring the many ideas we've found among battered industry
groups like semiconductors and energy. One example of a company that fits this
strategy is the recent addition of semiconductor equipment manufacturer Silicon
Valley Group, with solid financials and a strong competitive position as a
leading U.S. supplier of three types of equipment used to fabricate
semiconductors. Another example is Patina Oil & Gas - its recent
recapitalization, combined with its sizable asset base and cash flow, along with
its low production costs and efficient operating structure, position the company
to pursue a growth strategy.

To strengthen our margin of safety, we'll emphasize stronger companies, shunning
deep-discount turnarounds where there may be a question of quality. Here we
find Italian restaurant Spaghetti Warehouse, half-way through its restaurant
reconception/reconfiguration. Also promising is defense contractor Aydin
Corporation, making in-roads with its commercial telecommunications applications
- - particularly attractive given its solid financial condition.

Once again, thank you for your investment in the Artisan Small Cap Value Fund.
We'll do our very best to reward your confidence in us.

Sincerely,

/s/ Scott C. Satterwhite

Scott C. Satterwhite
Portfolio Manager

ARTISAN SMALL CAP VALUE FUND
(A SERIES OF ARTISAN FUNDS, INC.)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)

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

COMMON AND PREFERRED STOCKS - 93.6%

BASIC INDUSTRY - 18.1%
63,200 * American Pacific Corporation - specialty chemicals
for aerospace and defense ...................... $402,900
49,100 * CFC International Inc. - specialty chemical
coatings ....................................... 576,925
12,800 Cleveland Cliffs Inc. - iron ore mines............ 586,400
14,000 Dexter Corporation - specialty industrial
materials ...................................... 604,625
24,800 * Emcor Group Inc. - mechanical and
electrical contractors ......................... 508,400
20,200 Fluke Corporation - electronic test and
measurement instruments ........................ 526,463
70,000 Insteel Industries Inc. - steel wire products..... 481,250
71,700 * L.B. Foster Company - rail and construction
supplies ....................................... 354,019
4,000 Medusa Corporation - cement operations............ 167,250
2,400 Modern Controls Inc. - quality control
testing instruments ............................ 26,400
3,500 Monarch Cement Company - cement operations........ 77,000
24,200 * Perini Corporation - general contractors/
construction ................................... 217,800
47,100 * Steel of West Virginia Inc. - steel mill.......... 429,787
----------
4,959,219

BUSINESS SERVICES - 13.2%
29,200 Angelica Corporation - textile rental and
laundry services ............................... 660,650
32,300 * Audits & Survey Worldwide Inc. - marketing
research ....................................... 88,825
24,000 Cordiant Communications Group (ADR) -
advertising/media services ..................... 228,000
43,900 Dames & Moore Group - engineering and
environmental consulting ....................... 581,675
15,500 * Devon Group Inc. - graphic arts products
and services ................................... 713,000
35,000 * Failure Group Corporation - engineering and
scientific consulting .......................... 367,500
1,200 Grey Advertising Inc. - advertising agency........ 393,600
10,000 * Harding Lawson Associates Group - engineering
and environmental consulting ................... 102,500
34,900 * Ohm Corporation - environmental services.......... 266,112
24,000 * Saatchi & Saatchi PLC (ADR) - advertising/media
services ....................................... 214,500
----------
3,616,362

SEMI-ANNUAL REPORT 6

SCHEDULE OF INVESTMENTS (CONTINUED)
- -----------------------------------------------------------------------------
Shares Market
Held Value
- -----------------------------------------------------------------------------

CAPITAL SPENDING - 9.9%
27,300 *Esco Electronics Corporation - defense systems ...... 460,687
19,600 Gleason Corporation - gear manufacturing equipment .. 527,975
8,200 *Mueller Industries Inc. - plumbing products ......... 483,800
4,500 Smith Investment Company - multi-industry ........... 490,500
14,500 Twin Disc Inc. - heavy-duty power
transmission equipment............................ 474,875
25,000 United Industrial Corporation - multi-industry ...... 271,875
---------
2,709,712

COMPUTER RELATED - 1.6%
44,300 Astro-Med Inc. - medical instrumentation/
specialty printers................................ 354,400
4,000 *Silicon Valley Group Inc. - semiconductor
equipment......................................... 91,000
-------
445,400

CONSUMER SERVICES - 3.6%
9,000 *Craig Corporation - movie theatres .................. 182,813
18,300 Craig Corporation, Preferred - movie theatres ....... 345,412
35,100 *On Command Corporation - pay-per-view movie
services.......................................... 447,525
--------
975,750

CONSUMER STAPLES - 4.8%
55,000 *M & F Worldwide Corporation - flavorings ........... 539,688
32,700 *Midwest Grain Products Inc. - wheat gluten and
wheat by-products................................ 408,750
54,600 *Pepsi Cola - Puerto Rico Bottling - soft
drink/beverage bottler/distributor............... 368,550
---------
1,316,988

ENERGY - 1.9%
4,000 *Atwood Oceanics - contract driller ................ 189,500
22,500 Patina Oil & Gas - oil and gas
exploration/production.......................... 172,969
8,000 Snyder Oil - oil and gas exploration/production ... 146,000
--------
508,469

7 SEMI-ANNUAL REPORT

SCHEDULE OF INVESTMENTS (CONTINUED)

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

INSURANCE - 16.1%
18,600 Argonaut Group Inc. - workers compensation
insurance......................................... 630,075
8,600 Capital Re Corporation - financial guaranty
reinsurance....................................... 533,737
4,500 Fund American Enterprises - mortgage
banking/property and casualty insurance........... 544,500
32,600 Hilb, Rogal & Hamilton Company - insurance brokers .. 629,587
10,800 Liberty Corporation - life insurance ................ 504,900
16,400 Merchants Group Inc. - property and
casualty insurance................................ 348,500
11,100 PXRE Corporation - property and casualty
reinsurance....................................... 368,381
11,000 *Risk Capital Holdings Inc. - reinsurance products
and services...................................... 244,750
42,300 *Superior National Insurance Group - workers
compensation insurance............................ 613,350
---------
4,417,780

OTHER FINANCIAL - 10.9%
30,000 Asset Investors Corporation - REIT investing in
manufactured housing communities.................. 631,875
6,900 Capital Southwest Corporation - closed-end venture
capital investment company........................ 634,800
6,000 *Enstar Group Inc. - financial services
holding company................................... 66,000
12,000 Getty Realty Corporation - service station real
estate company.................................... 265,500
15,700 *Lexford Inc. - multi-family residence
owner/operator.................................... 541,650
20,900 Somerset Group Inc. - investment services ........... 425,838
5,400 *White River Corporation - financial services
holding company................................... 429,300
-----------
2,994,963

PAPER AND PACKAGING - 1.4%
11,000 Greif Brothers Corporation - shipping containers
and packaging .................................... 368,500

RESTAURANTS/HOTELS - 5.6%
20,000 *Boardwalk Casino - casino operator .................. 93,125
17,500 *El Chico Restaurant Inc. - Tex-Mex
restaurant chain.................................. 215,469
36,000 *Host Marriott Services Inc. - food and
beverage concessions.............................. 535,500
12,000 Showboat Inc. - casino operator ..................... 352,500
59,400 *Spaghetti Warehouse Inc. - Italian restaurant
chain............................................. 341,550
----------
1,538,144
SEMI-ANNUAL REPORT 8

RETAILING - 2.4%
4,000 Dart Group Inc. - supermarkets, book stores, auto
parts stores...................................... 464,000
10,400 Ruddick Corporation - supermarkets .................. 181,350
--------
645,350

SOFTWARE/TELECOMMUNICATIONS - 1.9%
31,500 *Aydin Corporation - telecommunications
equipment......................................... 372,094
30,700 *Intelligent Systems Corporation - software and
healthcare services............................... 141,988
---------
514,082

TRANSPORTATION RELATED - 2.2%
69,200 * Ansaldo Signal - railroad switches and signals...... 216,250
9,600 Oglebay Norton Company - marine transportation
services............................................ 393,600
---------
609,850

TOTAL COMMON AND PREFERRED STOCKS
(Cost $24,984,759).................................... $25,620,569

- -----------------------------------------------------------------------------
Par Market
Amount Value
- -----------------------------------------------------------------------------

SHORT TERM INVESTMENTS - 6.5%
$1,780,000 Repurchase agreement with State Street Bank and
Trust Company, 5.0%, dated 12/31/97, due 1/2/98,
maturity value $1,780,494, collateralized by $1,820,000
par value U.S. Treasury Note, 5.625%, due 12/31/99
(Cost $1,780,000) .................................. $1,780,000
----------

TOTAL INVESTMENTS - 100.1% (Cost $26,764,759) ....... 27,400,569

OTHER ASSETS LESS LIABILITIES - (0.1)% .............. (11,404)

TOTAL NET ASSETS - 100.0% (**) ...................... $27,389,165

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

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

9 SEMI-ANNUAL REPORT

ARTISAN SMALL CAP VALUE FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(UNAUDITED)

ASSETS:
Investments in securities, at value (cost $26,764,759)......... $27,400,569
Cash........................................................... 538
Receivable from investments sold............................... 40,999
Receivable from fund shares sold............................... 47,507
Accrued interest............................................... 247
Accrued dividends.............................................. 22,963
Organizational costs........................................... 46,092
Receivable from Adviser........................................ 12,806
----------
Total assets................................................. 27,571,721

LIABILITIES:
Payable for investments purchased.............................. 93,685
Payable for organizational costs............................... 46,092
Payable for operating expenses................................. 33,723
Payable to Adviser............................................. 9,056
----------
Total liabilities............................................ 182,556
----------
Total net assets............................................. $27,389,165
==========

NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding............................. $26,652,503
Net unrealized appreciation on investments..................... 635,810
Accumulated undistributed net investment loss.................. (7,080)
Accumulated undistributed net realized gains on investments.... 107,932
----------
$27,389,165
===========

NET ASSET VALUE PER SHARE:
Net asset value, offering price and redemption price per share
($0.01 par value, 5,000,000,000 shares authorized,
[$27,389,165 / 2,656,362 shares outstanding]).................. $10.31
======

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

SEMI-ANNUAL REPORT 10

ARTISAN SMALL CAP VALUE FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF OPERATIONS
PERIOD ENDED DECEMBER 31, 1997*
(UNAUDITED)

INVESTMENT INCOME:
Interest....................................................... $ 40,702
Dividends...................................................... 68,795
----------
Total investment income..................................... 109,497

EXPENSES:
Advisory fees.................................................. 61,064
Transfer agent fees............................................ 27,799
Shareholder communications..................................... 6,584
Custodian fees................................................. 3,944
Accounting fees................................................ 5,265
Professional fees.............................................. 7,563
Registration fees.............................................. 10,646
Organizational costs........................................... 1,768
Other operating expenses....................................... 1,000
--------
Total expenses before amounts waived by the Adviser......... 125,633
Less amounts waived by the Adviser.......................... (9,056)
--------
Net expenses.............................................. 116,577
--------
Net investment loss....................................... (7,080)

REALIZED AND UNREALIZED GAINS
ON INVESTMENTS - NET:
Net realized gain on investments............................... 107,932
Net increase in unrealized appreciation on investments......... 635,810
---------
Net gain on investments................................... 743,742
---------
Net increase in net assets resulting from operations...... $ 736,662
=========

* For the period from commencement of operations (September 29, 1997)
to December 31, 1997

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

11 SEMI-ANNUAL REPORT

ARTISAN SMALL CAP VALUE FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF CHANGES IN NET ASSETS
(UNAUDITED)
Period Ended
December 31,
1997*
-------
OPERATIONS:
Net investment loss....................................... $ (7,080)
Net realized gain on investments.......................... 107,932
Net increase in unrealized appreciation on investments.... 635,810
---------
Net increase in net assets resulting from operations.... 736,662

FUND SHARE ACTIVITIES:
Proceeds from shares issued (2,993,974 shares)............ 30,041,562
Cost of shares redeemed (337,612 shares).................. (3,389,059)
-----------
Net increase in net assets resulting from fund
share activities........................................ 26,652,503
-----------

Total increase in net assets.............................. 27,389,165
Net assets, beginning of period......................... -
-----------
Net assets, end of period............................... $ 27,389,165
===========

*For the period from commencement of operations (September 29, 1997)
to December 31, 1997

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

SEMI-ANNUAL REPORT 12

ARTISAN SMALL CAP VALUE FUND
(A SERIES OF ARTISAN FUNDS, INC.)
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
(UNAUDITED)
Period Ended
December 31,
1997*
----------
Net asset value, beginning of period............................. $10.00
Income from investment operations:
Net investment loss............................................ (0.01)
Net realized and unrealized gains on securities................ 0.32
-----
Total from investment operations............................. 0.31
-----

Net asset value, end of period................................... $10.31
=====

Total return**................................................... 3.1%

Ratios/supplemental data:
Net assets, end of period (millions)........................... $27.4
Ratio of expenses to average net assets***..................... 1.93%
Ratio of net investment loss to average net assets***.......... (0.12)%
Portfolio turnover rate**...................................... 9.40%
Average commission rate per share.............................. $0.0438

* For the period from commencement of operations (September 29, 1997)
through December 31, 1997
** Not annualized
*** Annualized. The ratios of expenses to average net assets and net
investment loss to average net assets include 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 2.08%
and (0.27)%, respectively.

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

13 SEMI-ANNUAL REPORT

ARTISAN SMALL CAP VALUE FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)

(1)Organization:
The Artisan Small Cap Value Fund (the "Fund") is a series of Artisan Funds,
Inc. which was incorporated on January 5, 1995 as a Wisconsin corporation
and is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund commenced
operations on September 29, 1997.

(2)Summary of significant accounting policies:
The following is a summary of significant accounting policies of the Fund:
(a) Security valuation - Each security is valued at the latest sales price
reported by the principal securities exchange on which the issue is
traded, or if no sale is reported, the latest bid price reported.
Securities for which prices are not readily available, or which
management believes the latest sales or bid price is not reflective of
the fair value of the security, are valued at fair value as determined
in good faith under consistently applied procedures established by and
under the general supervision of the Board of Directors. Short-term
investments maturing within sixty days of their purchase date are valued
at amortized cost which approximates market.
(b) Income taxes - No provision has been made for federal income taxes since
the Fund intends to 1) distribute to its shareholders substantially all
of its taxable income as well as realized gains from the sale of
investment securities and
2) comply with all provisions of the Internal Revenue Code applicable to
regulated investment companies.
(c) Portfolio transactions - Security and shareholder transactions are
recorded no later than the first business day after the trade date. Net
realized gains and losses on common stocks are computed on specific
security lot identification.
(d) Use of estimates - The preparation of financial statements in accordance
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ
from those estimates.
(e) Other - Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is reported on the accrual
basis. Generally accepted accounting principles require that certain
differences between financial reporting and tax purposes be reclassified
to capital stock.

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

SEMI-ANNUAL REPORT 14

ARTISAN SMALL CAP VALUE FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)

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

The Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports.
Each director who is not an interested person of Artisan Funds, Inc. or the
Adviser receives an annual retainer fee of $5,000, plus reimbursement of
expenses related to their duties as director of the Fund. This fee will not
be paid by the Fund until the Fund's second fiscal year of operations.
The Adviser has undertaken to reimburse the Fund for any ordinary operating
expenses in excess of (a) 2.00% of average net assets annually, plus (b) for
any period during which the Fund does not pay a fee to its non-interested
directors, an amount equal to the aggregate amount the Fund would have paid
Artisan Funds' non-interested directors had the Fund been in its second or
subsequent fiscal year of operations.

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

(5)Investment transactions:
For the period ended December 31, 1997, the cost of purchases and the
proceeds from the sales of investment securities (excluding short-term
securities) were $26,611,076 and $1,734,249, respectively.

(6)Line of credit arrangements:
Artisan Funds, Inc. is party to a line of credit agreement with State Street
Bank and Trust Company, under which the Fund may borrow 10% of its net
assets up to a maximum of $30 million. Artisan Funds, Inc. pays a commitment
fee of 0.10% on the unused portion of the line of credit. This fee is
allocated to each series of Artisan Funds, Inc., including the Fund, based
on relative net assets. Interest is charged on any borrowings at the
current Federal funds rate plus 0.75%. The use of the line of credit is
generally restricted to temporary borrowing for extraordinary or emergency
purposes. The Fund made no borrowing under the line of credit during the
period.

ARTISAN SMALL CAP VALUE FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(7)Income tax information:
Aggregate gross unrealized appreciation (depreciation) on investments as of
December 31, 1997, based on investment cost of $26,777,068 for federal tax
purposes, is as follows:

Aggregate gross unrealized appreciation on investments..... $1,534,217

Aggregate gross unrealized depreciation on investments..... (910,716)
----------
Net unrealized appreciation................................ $ 623,501
==========

The difference between cost amounts for financial reporting and tax purposes
is due primarily to timing differences in recognizing certain gains and
losses on security transactions.

SEMI-ANNUAL 16

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

xxxxx

(LOGO)

ARTISAN
MID CAP
FUND

SEMI-ANNUAL REPORT
DECEMBER 31, 1997

INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.

(LOGO)

February 20, 1998
Dear Fellow Shareholder,
We're pleased to provide you with this first semi-annual report for the Artisan
Mid Cap Fund (Fund). While the report focuses on the six month period ended
December 31, 1997, it also presents our outlook as we enter 1998.

THE FUND'S PERFORMANCE
From its inception on June 27, 1997 to December 31, 1997, the Artisan Mid Cap
Fund rose 28.1%. This compares to a 15.9% increase for the Fund's benchmark
index, the S&P 400. For the six month period ending December 31, 1997, Lipper
Analytical Services ranked the Artisan Mid Cap Fund number 1 out of 271 mid-cap
funds for total return. While we believe that mutual fund performance should be
measured in years, not quarters, we are nevertheless pleased with the Fund's
early performance and believe it reflects the potential of its investment
process.
COMPARATIVE QUARTERLY PERFORMANCE

ARTISAN MID CAP FUND
TOTAL RETURN
SINCE INCEPTION 28.1%

6/27/97 9/30/97 12/31/97
------- ------- --------
ARTISAN MID CAP FUND $10,000 $12,550 $12,814
S&P 400 Index $10,000 $11,570 $11,595
Lipper Mid Cap Fund Index $10,000 $11,410 $10,910

1997
QUARTERLY ----------------------
PERFORMANCE 9/30/97 12/31/97
- ------------ ------- -------
ARTISAN MID CAP FUND 25.5% 2.1%
S&P 400 Index 15.7% 0.5%
Lipper Mid Cap Fund Index 14.1% -4.8%

This graph compares the results of $10,000 invested in the Artisan Mid Cap Fund
on June 27, 1997 (the date the Fund began operations) with the S&P 400 Index and
the Lipper Mid Cap Fund Index. The S&P 400 Index is an unmanaged, market-
weighted index of 400 mid-cap companies. The Lipper Mid Cap Fund Index reflects
the net asset value weighted return of the 30 largest mid-cap mutual funds. All
returns include reinvested dividends. Past performance does not guarantee future
results. The investment return and principal value of an investment in the Fund
will fluctuate so that Fund shares, when redeemed, may be worth more or less
than their original cost.
1 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (CONTINUED)
The Artisan Mid Cap Fund was launched at a time of high and rising valuations,
which reflected a very favorable economic environment: low and falling interest
rates, subdued inflation and strong earnings gains. Conditions changed in
October, however, when economic turmoil in Asia caused market volatility
worldwide. And later in the quarter, a rash of earnings disappointments roiled
the equity markets, as investors feared the start of a trend to slower earnings
growth. The Fund's investment approach, however, helped it navigate the
turbulent waters that equity investors periodically encounter as a matter of
course.

OUR INVESTMENT APPROACH
In the Artisan tradition, we'd like to preface our review of the Fund's
performance with an overview of our investment approach. After all, performance
numbers reflect the thinking behind investment decisions.
We seek mid-cap companies that possess "franchise characteristics" and whose
stocks are selling at compelling valuations. This focus leads us to companies
with superior business potential that are temporarily out of favor or
misunderstood by investors. We try to identify these companies when they are
experiencing a change dynamic that can leverage their inherent strengths.

This strategy rests on a few basic beliefs:
- -An established franchise can bring a company significant, long-term
competitive advantage, leading to more stable cash flow and, ultimately,
higher valuations. "Franchise characteristics" could be proprietary
technology, a leading brand or a dominant market share.
- -A franchise company selling at a significant discount to its intrinsic value
offers superior long-term investment potential. Thus, our assessment of
"intrinsic value" - the price a strategic buyer would pay to own the whole
company - is fundamental to our process. We attempt to buy stocks only at a
large discount and sell when the price approaches intrinsic value.
- -A franchise company selling at attractive valuations is typically experiencing
a major change - new management, for instance, a restructuring, an acquisition
or new product cycle. Positive change can serve as a catalyst to improved
performance, higher earnings and, often, powerful, long-term market response.
We actively seek such opportunities, hoping to identify as early as possible
the potential for positive change.
- -The mid-cap universe - where market caps range between $600 million and $6
billion - provides the most fertile ground for franchise companies trading at
attractive prices. Large-cap franchise companies, because they are heavily
followed and sponsored, tend to be priced efficiently. And small-cap companies
typically do not yet possess meaningful franchise characteristics. Thus, the
mid-cap universe is less efficient than the large-cap and more mature than the
small-cap, and is populated by many companies whose franchise characteristics
are emerging or poised to create powerful competitive advantages.

Like any equity investment, this Fund involves the risks of owning stocks. To
help reduce those risks, we employ certain strategies. One is focusing on stocks
that sell at significant discounts to their intrinsic value. Others are avoiding
industry concentration and limiting the size of any holding to 5% of assets. We
also pay strict attention to liquidity, and we continuously monitor and
reappraise our holdings.

SEMI-ANNUAL REPORT 2

LETTER TO SHAREHOLDERS (CONTINUED)

A REVIEW OF THE YEAR'S SECOND HALF
In the second half of 1997, the Artisan Mid Cap Fund outperformed the S&P 400 in
both quarters: 25.5% vs. 15.7% in the third quarter; 2.1% vs. 0.5% in the fourth
quarter.

Throughout the third quarter, mid-caps outperformed large-caps, as measured by
the S&P 400 and S&P 500, respectively. In October, however, stocks of all sizes
were jolted by the sudden emergence of deep and pervasive economic problems in
Asia. October witnessed the largest one-day point drop in the history of the Dow
Jones Industrials, and market volatility that extended throughout November. The
problems in Asia - precipitous declines in the regions markets and the possible
effects of their economic troubles on us - combined with high valuations and a
slowing of earnings growth here changed the investment environment
significantly. Despite the challenges, the Fund had a positive fourth quarter.

Shown below are our top gainers and losers for the 6-month period.

TOP 5 GAINERS TOP 5 LOSERS
--------------------------------- ----------------------------------

SECURITY % SECURITY %
-------- ------ -------- ------
@Home 119.3% Cabletron Systems -33.1%
Peritus Software 62.5% International Rectifier -30.6%
Equity Office Products 50.7% Rational Software -30.0%
Platinum Technologies 48.2% Barrick Gold -27.5%
First Security 47.8% Teradyne, Inc. -25.8%

The top five gainers in the fund included stocks from a variety of industries.
@Home is an internet provider and Peritus Software is a software firm with a
year 2000 tool. Equity Office Products is a real estate investment trust (REIT)
that owns commercial properties. Platinum Technologies provides software for
corporate infrastructure and First Security is a regional bank in the mountain
states.

Four of our bottom five performers were technology related firms as the fourth
quarter crisis in Asia raised concerns over the earnings in this sector. While
Barrick Gold, a gold mining and processing firm, fell as gold prices retreated.

3 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (CONTINUED)

PORTFOLIO CHARACTERISTICS
As of December 31, 1997, the Funds net assets were $9.7 million. The Fund held
63 stocks with a median market capitalization of $2.0 billion. On average, these
stocks are growing at 19% a year, selling at 14 times 1998 earnings estimates
and valued at 74% of our estimate of their intrinsic value. The Fund was 94.6%
invested in stocks, which we consider fully invested.

TOP TEN HOLDINGS
- ----------------------------------------
COMPANY NAME %
------------ ----
Mettler-Toledo International 2.7
Fiserv 2.5
Thermo Electron 2.5
Fortune Brands 2.4
Quorum Health Group 2.2
Knoll, Inc. 2.1
Liberty Media 2.1
Trigon Healthcare 2.0
Franchise Financial 1.9
Sybron International 1.9
TOTAL 22.3%

As shown in the following chart, the Fund's sectors are broadly diversified.
Diversification across the economy not only enhances opportunity, it also serves
to reduce investment risk.

SECTOR DIVERSIFICATION (%)
- --------------------------------------------------------------------------------
WEIGHTING WEIGHTING
---------- ----------

SECTOR 12/31/97 SECTOR 12/31/97
------------------------------------- --------------------------------------
Business Services 4.0 Materials & Processing 6.9
Conglomerate 6.5 REIT/Property 3.3
Consumer Discretionary Software/
& Services 17.7 Telecommunications 3.4
Consumer Staples 7.7 Technology 11.7
Energy 7.7 Transportation Related 6.1
Financial Services 6.2 Utilities 2.6
Healthcare 10.8 Other assets less liabilities 5.4
TOTAL 100.0%

SEMI-ANNUAL REPORT 4

LETTER TO SHAREHOLDERS (CONTINUED)

Compared to our initial portfolio composition, at year end the Fund held
increased positions in Technology, Consumer Discretionary and Services, Energy,
Transportation Related and Utilities; and decreased exposure to Healthcare,
Consumer Staples, Materials & Processing, Financial Services and REIT/property.
These changes reflect two factors: opportunistic buying in beaten down sectors
and a growing preference for companies that depend for their growth more on
internal dynamics than on general economic conditions.

The second factor mentioned above is more typical of companies at the lower end
of our capitalization range. Thus, as you'll see below, we've positioned the
Fund accordingly. Over 70% of net assets are in companies with market caps of $3
billion or less.

MARKET CAP DIVERSIFICATION
------------------------------------

Market Cap Fund S&P 400
(in $ billions) (%) (%)
------------- --- ---
0.0 to 0.5 0.0 2.2
0.5 to 1.0 16.0 9.4
1.0 to 2.0 32.3 25.5
2.0 to 3.0 22.3 19.5
3.0 to 4.0 8.4 16.3
4.0 to 5.0 6.1 9.7
5.0 to 6.0 2.8 6.7
6.0 to 7.0 5.1 2.7
7.0 to 8.0 0.0 4.1
Over 8.0 7.0 3.9
TOTAL 100.0% 100.0%

We invest in stocks, not stock markets; and we're long-term investors, not
market timers. Nonetheless, we monitor trends in the economy and interest rates,
assessing their likely effects on the equity markets.

OUTLOOK AND STRATEGY
Looking into 1998, we believe that inflation will remain subdued and that
interest rates may go somewhat lower. We expect, however, that the robust
corporate profit growth of the past three years will slow significantly. If it
does, the effect on stocks would likely be a compression of valuations. We also
expect the economies and markets of Asia to continue their destabilizing effect
on markets here. To us, this all adds up to an uncertain, volatile market - one
in which greater inefficiency will lead to greater opportunity.

5 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (CONTINUED)

As always, we will focus on companies with "franchise characteristics" that
offer significant long-term competitive advantage. And we'll seek to buy their
stocks at compelling valuations. We'll also continue adding to positions that
are depressed but still fundamentally attractive. In addition, we hope to add
new names among defensive stocks - companies that can truly grow their sales,
rather than relying on acquisitions or financial engineering for higher
earnings. This strategy will likely lead us to smaller companies, whose internal
dynamics make them less dependent on overall economic activity for their growth.

Because valuations will, as always, drive our decisions, we believe our
particular investment discipline will do well in the market we foresee. It won't
be dull, and we look forward to reporting our results.

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

SEMI-ANNUAL REPORT 6

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
Shares Market
Held Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 94.6%
BUSINESS SERVICES - 4.0%
4,300 Comdisco, Inc. - computer equipment leasing
and services...................................... $ 143,781
5,000 *Fiserv, Inc. - administrative processing for
financial institutions............................ 245,625
----------
389,406
CONGLOMERATE - 6.5%
6,300 Fortune Brands, Inc. - office supplies, golf equipment,
spirits, plumbing................................. 233,494
1,400 Loews Corporation - insurance, offshore drilling,
tobacco........................................... 148,575
5,500 Thermo Electron Corporation - develops and
commercializes technology......................... 244,750
---------
626,819
CONSUMER DISCRETIONARY
& SERVICES - 17.7%
2,000 *American Radio Systems Corporation - consolidator
of radio towers .................................. 106,625
4,700 *Autozone, Inc. - auto parts retailer ................ 136,300
7,500 *Century Communications Corporation - cable and
cellular phone operator........................... 73,125
4,500 *Fred Meyer, Inc. - western U.S. grocery stores ...... 163,687
8,000 *IMAX Corporation - developer of specialty movies
and theaters...................................... 176,000
6,400 *Knoll, Inc. - high-end office furniture systems ..... 205,600
5,500 *Liberty Media Class A - cable television programming 199,375
4,000 *Outdoor Systems, Inc. - billboard operator .......... 154,000
13,000 Shaw Industries, Inc. - carpet manufacturer
and retailer...................................... 151,125
4,000 Sinclair Broadcasting Group - radio and
television stations............................... 186,500
5,500 *U.S. West Media Group - U.S. and international
cable infrastructure.............................. 158,813
----------
1,711,150

7 SEMI-ANNUAL REPORT
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Shares Market
Held Value
- --------------------------------------------------------------------------------

CONSUMER STAPLES - 7.7%
8,500 Dial Corporation - soap and candle manufacturer ..... 176,906
6,500 First Brands Corporation - brand name
household products................................ 175,094
5,500 Gallaher Group (ADR) - United Kingdom
tobacco brands ................................... 117,219
3,000 Interstate Bakeries - bread and snack producer ...... 112,125
6,500 Whitman Corporation - soft drink/beverage bottler
and distributor................................... 169,406
---------
750,750
ENERGY - 7.7%
3,000 *EVI, Inc. - premium drill pipe manufacturer ......... 155,250
4,900 *Noble Drilling Corporation - drilling rig operator .. 150,063
4,900 *Oryx Energy Company - oil and gas
exploration/production............................ 124,950
4,000 Sonat, Inc. - oil and gas
exploration/production/distribution............... 183,000
2,400 Tidewater, Inc. - drilling rig supply boats ......... 132,300
----------
745,563

FINANCIAL SERVICES - 6.2%
2,200 First American Corporation - Tennessee bank ......... 109,450
2,625 First Commerce of Little Rock - Arkansas bank ....... 153,891
2,500 First Security Corporation - western U.S. bank ...... 104,688
1,200 ITT Hartford Group - life and property insurance .... 112,275
5,000 Pacific Century Financial Corporation -
Hawaiian bank..................................... 123,750
---------
604,054
HEALTHCARE - 10.8%
2,000 *Biochem Pharmaceutical, Inc. - AIDS and Hepatitis
drug manufacturer................................. 41,750
5,000 Dentsply International, Inc. - dental supply
holding company................................... 152,500
4,000 *North American Vaccine, Inc. - vaccines for children 99,750
8,300 *Quorum Health Group, Inc. - suburban hospital
holding company................................... 216,838
3,100 *Steris Corporation - bacterial prevention products .. 149,575
4,000 *Sybron International Corporation - dental and lab
supply holding company............................ 187,750
7,500 *Trigon Healthcare, Inc. - Blue Cross/Blue Shield managed
care company ..................................... 195,937
---------
1,044,100

SEMI-ANNUAL REPORT 8

SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Shares Market
Held Value
- --------------------------------------------------------------------------------

MATERIALS & PROCESSING - 6.9%
3,600 *Mail-Well Holdings, Inc. - commercial printing and
mailing holding company........................... 145,800
15,000 *Mettler-Toledo International, Inc. - precision
weighing instruments.............................. 258,750
3,500 Minerals Technology, Inc. - specialty chemicals for
making .............................................. 159,031
6,500 *Steel Dynamics, Inc. - steel producer ............... 104,000
--------
667,581
REIT/PROPERTY - 3.3%
3,500 Apartment Investors & Management Company -
apartment complex management...................... 128,625
7,000 Franchise Financial Corporation - franchise
restaurant lender................................. 189,000
--------
317,625
SOFTWARE/TELECOMMUNICATIONS - 3.4%
14,000 *Clearnet Communications - Canadian wireless
phone operator ................................... 159,250
8,000 *Loral Space & Communications - satellite
manufacturer and operator......................... 171,500
--------
330,750
TECHNOLOGY - 11.7%
3,500 *American Power Conversion Company -
un-interruptible power supplies................... 82,687
2,000 *Aspen Technology Inc. - software for
process manufacturing............................. 68,500
3,500 *Cadence Design Systems, Inc. - tools for designing
semi-conductors................................... 85,750
11,500 *International Rectifier - semi-conductors for
power conversion.................................. 135,844
3,300 *J.D. Edwards & Company - enterprise software ........ 97,350
5,500 *Kemet Corporation - producer of tantalum
capacitors........................................ 106,562
3,000 *Kent Electronics Corporation - distributor of passive
electronic components............................. 75,375
4,000 *Platinum Technology, Inc. - software products for
corporate computing............................... 113,000
1,500 *Sanmina Corporation - manufacturer of
backplane assemblies.............................. 101,625
4,500 *Teradyne, Inc. - semi-conductor testing
equipment manufacturer............................ 144,000
3,500 *Xilinx, Inc. - programmable semi-conductor
manufacturer...................................... 122,719
----------
1,133,412

9 SEMI-ANNUAL REPORT
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Shares Market
Held Value
- --------------------------------------------------------------------------------

TRANSPORTATION RELATED - 6.1%
6,400 C.H. Robinson World Wide - transportation and
logistics company................................. 143,200
4,900 *Hexcel Corporation - carbon graphite manufacturer
for airplanes..................................... 122,194
3,000 *Lear Corporation - interior seating systems
for automobiles................................... 142,500
,500 *Titanium Metals Corporation - supplier to
aerospace industry................................ 187,687
--------
595,581
UTILITIES - 2.6%
3,000 Idaho Power Company - producer of
electric power.................................... 112,875
5,600 Washington Water & Power Company - producer of
electric power.................................... 136,150
--------
249,025
--------

TOTAL COMMON STOCKS (Cost $8,490,933)............ $9,165,816

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

Par Market
Amount Value
- ------------------------------------------------------------------------------

SHORT TERM INVESTMENTS - 6.2%
$602,000 Repurchase agreement with State Street Bank and
Trust Company, 5.0%, dated 12/31/97, due 1/2/98,
maturity value $602,167, collateralized by $615,000
par value U.S. Treasury Note, 5.625%, due 12/31/99
(Cost $602,000) ..................................... $ 602,000
----------
Total investments - 100.8% (Cost $9,092,933) ........ 9,767,816
Other assets less liabilities - (0.8)% .............. (75,326)
----------
TOTAL NET ASSETS - 100.0% (**) ...................... $9,692,490
==========

* Non-income producing securities
** Percentages for the various classifications relate to total net assets
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.

SEMI-ANNUAL REPORT 10

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(UNAUDITED)
ASSETS:
Investments in securities, at value (cost $9,092,933).......... $9,767,816
Cash........................................................... 787
Receivable from investments sold............................... 53,758
Receivable from fund shares sold............................... 50,000
Accrued interest............................................... 83
Accrued dividends.............................................. 3,933
Organizational costs........................................... 34,026
Receivable from Adviser........................................ 68,708
---------
Total assets................................................ 9,979,111

LIABILITIES:
Payable for investments purchased............................ 170,217
Payable for organizational costs............................. 34,026
Payable to Adviser........................................... 68,708
Payable for operating expenses............................... 13,670
---------
Total liabilities.......................................... 286,621
---------
Total net assets........................................... $9,692,490
=========

NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding.......................... $8,986,969
Net unrealized appreciation on investments.................. 674,883
Accumulated undistributed net investment loss............... (16,792)
Accumulated undistributed net realized gains
on investments........................................... 47,430
---------
$9,692,490
=========
NET ASSET VALUE PER SHARE:
Net asset value, offering price and redemption price per share
($0.01 par value, 5,000,000,000 shares authorized,
[$9,692,490 / 806,700 shares outstanding]). $12.01
======

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

11 SEMI-ANNUAL REPORT

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)

INVESTMENT INCOME:
Interest.................................................. $ 18,937
Dividends................................................. 38,012
--------
Total investment income................................ 56,949

EXPENSES:
Advisory fees............................................. 36,871
Transfer agent fees....................................... 27,881
Shareholder communications................................ 4,335
Custodian fees............................................ 8,805
Accounting fees........................................... 13,178
Professional fees......................................... 14,436
Registration fees......................................... 16,089
Directors' fees........................................... 7,500
Organizational costs...................................... 11,334
Other operating expenses.................................. 2,020
--------
Total expenses before amounts waived by the Adviser.... 142,449
Less amounts waived by the Adviser..................... (68,708)
--------
Net expenses ........................................ 73,741
--------
Net investment loss ................................. (16,792)

REALIZED AND UNREALIZED GAINS
ON INVESTMENTS - NET:
Net realized gain on investments.......................... 633,389
Net increase in unrealized appreciation on investments.... 674,883
---------
Net gain on investments ............................. 1,308,272
---------
Net increase in net assets resulting from
operations........................................ $1,291,480
=========

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

SEMI-ANNUAL REPORT 12

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

Six Months Period
Ended Ended
December 31, June 30,
1997* 1997**
----- -----
OPERATIONS:
Net investment loss............................... $(16,792) $ -
Net realized gain on investments.................. 633,389 -
Net increase in unrealized
appreciation on investments..................... 674,883 -
--------- --------
Net increase in net assets resulting
from operations.............................. 1,291,480 -

DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Net realized gains on investment transactions... (585,959) -

FUND SHARE ACTIVITIES:
Proceeds from shares issued (645,938 and
181,348 shares, respectively)................. 7,434,315 1,813,477
Net asset value of shares issued from reinvestment
of distributions from net realized gains
(45,922 and 0 shares, respectively)........... 539,582 -
Cost of shares redeemed (66,508 and
0 shares, respectively)....................... (800,405) -
--------- ---------
Net increase in net assets resulting
from fund share activities.................... 7,173,492 1,813,477
--------- ---------
Total increase in net assets.................... 7,879,013 1,813,477
Net assets, beginning of period............... 1,813,477 -
--------- ---------
Net assets, end of period .................... $9,692,490 $1,813,477

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

The accompanying notes are an integral part of the financial statements.
13 SEMI-ANNUAL REPORT
14
ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

Six Period
Months Ended Ended
December 31, June 30,
1997* 1997****
----- --------

Net asset value, beginning of period.............. $10.00 $10.00
Income from investment operations:
Net investment loss............................. (0.02) -
Net realized and unrealized gains
on securities................................. 2.82 -
------ -----
Total from investment operations.............. 2.80 -
Distributions paid to shareholders:
Net realized gains on investment
transactions.................................. (0.79) -
------ -----
Net asset value, end of period.................... $12.01 $10.00
====== =====
Total return**.................................... 28.1% 0.0%
Ratios/supplemental data:
Net assets, end of period (millions)............ $ 9.7 $ 1.8
Ratio of expenses to average net assets***...... 2.00% 0.00%
Ratio of net investment loss to average
net assets***................................. (0.46)% 0.00%
Portfolio turnover rate**....................... 105.07% 0.00%
Average commission rate per share............... $ 0.0483 $ 0.0000

* Unaudited
** Not annualized
*** Annualized. The ratios of expenses to average net assets and net
investment loss to average net assets include 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 3.86%
and (2.32)%, respectively.
**** For the period from commencement of operations (June 27, 1997)
through June 30, 1997

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

SEMI-ANNUAL REPORT 14

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(1)Organization:
The Artisan Mid Cap Fund (the "Fund") is a series of Artisan Funds, Inc.
which was incorporated on January 5, 1995 as a Wisconsin corporation and is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund commenced
operations on June 27, 1997.

(2)Summary of significant accounting policies:
The following is a summary of significant accounting policies of the Fund:
(a) Security valuation - Each security is valued at the latest sales price
reported by the principal securities exchange on which the issue is
traded, or if no sale is reported, the latest bid price reported.
Securities for which prices are not readily available, or which
management believes the latest sales or bid price is not reflective of
the fair value of the security, are valued at fair value as determined
in good faith under consistently applied procedures established by and
under the general supervision of the Board of Directors. Short-term
investments maturing within sixty days of their purchase date are valued
at amortized cost which approximates market.
(b) Income taxes - No provision has been made for federal income taxes since
the Fund intends to 1) distribute to its shareholders substantially all
of its taxable income as well as realized gains from the sale of
investment securities and 2) comply with all provisions of the Internal
Revenue Code applicable to regulated investment companies.
(c) Portfolio transactions - Security and shareholder transactions are
recorded no later than the first business day after the trade date. Net
realized gains and losses on common stocks are computed on specific
security lot identification.
(d) Use of estimates - The preparation of financial statements in accordance
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ
from those estimates.
(e) Other - Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is reported on the accrual
basis. Generally accepted accounting principles require that certain
differences between financial reporting and tax purposes be reclassified
to capital stock.

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

15 SEMI-ANNUAL REPORT

ARTISAN MID CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)

The Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports. The
Adviser has undertaken to reimburse the Fund for any ordinary operating
expenses in excess of 2.00% of average net assets annually.
Each director who is not an interested person of Artisan Funds, Inc. or the
Adviser receives an annual retainer fee of $5,000, plus reimbursement of
expenses related to their duties as director of the Fund.

(5)Investment transactions:
For the six months ended December 31, 1997, the cost of purchases and the
proceeds from the sales of investment securities (excluding short-term
securities) were $14,445,195 and $6,587,651, respectively.

(6)Line of credit arrangements:
Artisan Funds, Inc. is party to a line of credit agreement with State Street
Bank and Trust Company, under which the Fund may borrow 10% of its net
assets up to a maximum of $30 million. Artisan Funds, Inc. pays a
commitment fee of 0.10% on the unused portion of the line of credit. This
fee is allocated to each Fund in the series of Artisan Funds, Inc.,
including the Fund, based on relative net assets. Interest is charged on
any borrowings at the current Federal funds rate plus 0.75%. The use of the
line of credit is generally restricted to temporary borrowing for
extraordinary or emergency purposes. The Fund made no borrowing under the
line of credit during the period.

(7)Income tax information:
Aggregate gross unrealized appreciation (depreciation) on investments as of
December 31, 1997, based on investment cost of $9,101,476 for federal tax
purposes, is as follows:

Aggregate gross unrealized appreciation on investments...... $971,139
Aggregate gross unrealized depreciation on investments ..... (304,799)
Net unrealized appreciation................................. $ 666,340

The difference between cost amounts for financial reporting and tax purposes
is due primarily to timing differences in recognizing certain gains and
losses on security transactions.

SEMI-ANNUAL REPORT 16

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

xxxxx

(LOGO)

ARTISAN
INTERNATIONAL
FUND

SEMI-ANNUAL REPORT
DECEMBER 31, 1997

INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.

<PAGE>
February 20, 1998
(LOGO)

Dear Fellow Shareholder,
We are pleased to send you this semi-annual report for the Artisan International
Fund (Fund). While the report focuses on the second half of 1997, it also
addresses the full calendar year and presents our outlook for the months ahead.

THE FUND'S PERFORMANCE
The Artisan International Fund returned -4.8% for the six-month period ended
December 31, 1997. This return exceeded those of the Fund's benchmark indexes:
the Morgan Stanley EAFE Index, which returned -8.5% and the Lipper International
Fund Index, which returned -5.9%. For calendar 1997, the Fund's return outpaced
EAFE 3.5% to 1.8%, but lagged the Lipper Index, which rose 7.3%. However, as you
can see below, the Fund's return since inception has greatly exceeded those of
both indexes.

COMPARATIVE QUARTERLY PERFORMANCE

12/28/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
<S> <C> <C> <C> <C> <C> <C> <C> <C> 2<C>
ARTISAN
INTERNATIONAL
FUND $10,000 $10,910 $12,080 $12,220 $13,437 $14,153 $14,607 $14,839 $13,902

EAFE Index $10,000 $10,289 $10,452 $10,439 $10,605 $10,439 $11,793 $11,710 $10,793

Lipper International
Fund Index $10,000 $10,441 $10,868 $10,878 $11,443 $11,730 $13,043 $13,290 $12,274

</TABLE>

<TABLE>
<CAPTION>
1996 1997
QUARTERLY ----------------------------------- ------------------------------------
PERFORMANCE 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
------- ------- ------- -------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ARTISAN
INTERNATIONAL
FUND 9.1% 10.7% 1.2% 10.0% 5.3% 3.2% 1.6% -6.3%

EAFE Index 2.9% 1.6% -0.1% 1.6% -1.6% 13.0% -0.7% -7.8%

Lipper
International
Fund Index 4.4% 4.1% 0.1% 5.2% 2.5% 11.2% 1.9% -7.6%

</TABLE>

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

1 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (continued)

OUR INVESTMENT APPROACH
As is our custom, we would like to review our investment approach before
discussing details of the Fund's recent performance. Because there are a number
of approaches to international investing, we believe investors should understand
how a fund achieves its returns.

The Artisan International Fund invests in a broadly diversified portfolio of
international growth stocks, concentrating on industries and countries that have
accelerating growth prospects and companies that can capitalize on that growth.
The Fund's style can be characterized as "top-down and bottom-up," meaning that
country selection and stock selection are both fundamental to our process.
However, country exposures are typically a residual of stock selection.

OUR APPROACH HAS FOUR BASIC ELEMENTS:
COUNTRY AND INDUSTRY FOCUS. We first search for countries and industries that
are providing a good environment for growth. This includes economies where
development is accelerating, as well as those becoming more competitive or
benefiting from economic stimulus. These countries and industries are where we
focus our search for stocks. Although the Fund holds some stocks from emerging
countries, these holdings are very modest - a minor aspect of our overall
strategy. Importantly, we do not consider the index weighting of countries as
part of our process. We will not, for example, maintain a large position in
Japan simply because it represents a large portion of the EAFE Index. This
approach differentiates the Fund from many of its peers.

BROAD THEMES. Management often identifies one or more broad themes that
influence both its country allocation and stock selection. At the moment, for
example, the Fund is positioned to benefit from the trends to deregulation in
Europe and privatization in Latin America.

STOCK SELECTION. Having identified countries, industries and themes that provide
environments for growth, we look for companies best able to capitalize on this
potential. Our portfolio management team travels widely, meeting with company
managements and conducting fundamental research. We look for well-managed
companies in good financial condition, with strong market shares and a
reputation for competence and integrity. To be considered by us, stocks must
sell at attractive prices relative to their local markets. We avoid stocks that
are trading at unsustainable or unusually high valuations. Because of this focus
on valuation analysis, our stock selection style has been characterized as
"growth at a price." Our final country weightings are a residual of our stock
selection - the number of good investments we find in a particular area
determines our exposure to that area.

RISK REDUCTION. International markets can be volatile; so the management of risk
is a major consideration in any decision. Broad diversification - across many
regions, countries, industries and companies - is a fundamental aspect of risk
management. Although diversification cannot eliminate risk, it can cushion the
impact of a decline in one or more parts of the portfolio. As further elements
of risk reduction, we monitor the size of individual positions, trading
liquidity, exposure to individual countries and emerging markets.

AS WE'VE DONE BEFORE, WE URGE YOU TO VIEW THIS FUND AS A LONG-TERM INVESTMENT.
BECAUSE FOREIGN MARKETS CAN BE VOLATILE, THE FUND MAY EXPERIENCE WIDE
PERFORMANCE SWINGS ON A SHORT-TERM BASIS. WHILE WE MANAGE THE FUND

SEMI-ANNUAL REPORT 2

LETTER TO SHAREHOLDERS (continued)

TO DAMPEN THIS VOLATILITY, WE CANNOT ELIMINATE IT. ACCORDINGLY, WE SUGGEST YOU
USE THIS FUND AS PART OF A DIVERSIFIED PORTFOLIO, AND ONLY IF YOU CAN ACCEPT THE
POSSIBILITY OF SHORT-TERM LOSS.

A REVIEW OF 1997: THE YEAR'S FIRST HALF
For the six months ending June 30, the Fund rose 8.7%, underperforming the 11.2%
gain by the EAFE Index and the 14.0% gain by the Lipper International Fund
Index. Helped by low interest rates in Europe, the Fund returned 5.3% in the
first quarter, handily beating both the EAFE and Lipper Indexes, which returned
- -1.6% and 2.5%, respectively. In the second quarter, however, the Fund trailed
both Indexes, with a 3.2% return versus 13.0% for EAFE and 11.2% for Lipper. The
second quarter's underperformance largely reflected our continued cautious
approach to Japan, whose market surged 23.5%. In previous quarters, our posture
toward Japan had benefited the Fund substantially, and the Nikkei's rise seemed
anomalous to us in light of what we regarded as an increasingly fragile economy.

THE YEAR'S SECOND HALF
For international investors, the second half of 1997 was a difficult period. The
culprit was economic and equity market turmoil throughout Asia. Currency
declines and devaluations...overextended banks and a consequent credit
crunch...major bankruptcies...intransigent governments...international
bailouts - all contributed to precipitous market declines throughout the region.

We avoided much of this carnage through our early reduction to Asian exposure.
On December 31, our Asian holdings were 11.6% of assets, down from 25.2% on June
30. We were also helped by our attention to valuation. Working against us,
however, was our exposure to smaller-cap stocks and our policy of not hedging
currencies.

REGION/COUNTRY ALLOCATION
- -------------------------------------------------------------
REGION/COUNTRY WEIGHTING REGION/COUNTRY WEIGHTING
- --------------- --------- -------------- --------
United Kingdom 12.9% Hong Kong 6.1%
Switzerland 11.8% Japan 4.0%
Germany 11.0% Singapore 0.9%
Denmark 7.3% Philippines 0.2%
Italy 4.6% Thailand 0.2%
Portugal 4.6% Indonesia 0.2%
Norway 4.4% -----
Netherlands 4.3% Asia/Pacific Total 11.6%
Finland 3.8%
<PAGE> Mexico 6.4%
Brazil 6.4%
France 3.2% -----
Spain 2.3% Latin America Total 12.8%
Ireland 0.7%
Austria 0.5% Canada 2.2%
Hungary 0.2% -----
----- North America Total 2.2%
Europe Total 71.6%
Other assets less liabilities 1.8%
TOTAL 100.0%

3 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (continued)

Fear of economic fallout from Asia caused volatility in virtually all overseas
markets. It was, however, much less severe and shorter-lived. In Europe, for
example, where we have our largest exposure, markets rebounded from double-digit
drops in a matter of weeks, enabling us to hold onto many sizeable gains.
Nonetheless, our unhedged portfolio with its meaningful small-cap exposure ran
into a headwind propelled by both a strengthening dollar and markets that
clearly favored larger companies.

As always, we emphasized stock selection and broad geographic diversification.
Our 20 top performing stocks came from 13 countries and a number of different
regions. We deliberately avoid making large, concentrated bets on certain
countries to enhance performance; that strategy would add an element of risk
that we find unacceptable. Instead, we hope to insulate the overall portfolio
from volatility in any individual market. On December 31, the Fund owned 78
stocks in 23 countries. Below are the Fund's top gainers and losers for the
period.

- -------------------------------------------------------------------------------
TOP 5 GAINERS TOP 5 LOSERS
- ----------------------------------- ---------------------------------------
SECURITY COUNTRY % SECURITY COUNTRY %
-------- ------- ----- -------- ------- ------
Colt Telecom United 85.3% Srithai Superware Thailand -95.1%
Group Kingdom

Merkantil Data Norway 59.6% Bankard, Inc. Philippines -76.2%

Credito Italiano Italy 49.0% Sona Topas Tourism Indonesia -75.8%

Sigma BCP Mexico 40.3% Engineering Philippines -71.7%
Equipment

Seguros Mexico 36.5% The Pizza PLC Thailand -65.6%
Comercial
America
- -------------------------------------------------------------------------------

Colt Telecom Group (Colt), our top gainer, exemplifies both the type of stock we
like and the vast potential we see in Europe through deregulation. Governments
in Europe are deregulating the telecommunications industry. Colt provides local
telephone service to London, Paris, Hamburg and other major European cities. The
company's primary customers are corporations and governments, and sales are
growing rapidly. As Colt expands its all-fiber network, we expect earnings to
surge, aided by a major cost advantage over the highly inefficient telecom
monopolies still operating in most European countries. Because we were
relatively early in spotting its potential, we were able to purchase Colt at a
very favorable price. This stock made a strong contribution to performance
during a difficult period. As for our top five losers, they each fell victim to
the "Asian flu" that devastated the Pacific Rim after Thailand devalued their
currency this summer.

PORTFOLIO CHARACTERISTICS
On December 31, 1997, total assets in the Fund were $322.5 million. The Fund
held 78 stocks with a median market cap of $967 million and weighted average
market cap of $9.8 billion. Based on 1998 estimates, the Fund's weighted average
P/E of 15.2X was quite modest compared to its weighted average growth rate of
22%. We believe this highly favorable comparison demonstrates our continued
attention to valuation. At year-end, we were 98.2% invested in stocks, which we
consider to be fully invested.

To enhance performance potential while reducing the overall level of risk, the
Fund is diversified across 18 industries. Our current emphasis on financial
services, particularly

SEMI-ANNUAL REPORT 4

LETTER TO SHAREHOLDERS (continued)

- -------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION (%)

WEIGHTING WEIGHTING
---------- ----------
12/31 6/30 12/31 6/30
INDUSTRY 1997 1997 INDUSTRY 1997 1997
-------- ---- ---- -------- ---- ----
Banking 24.4 17.9 Multi-Industry 3.9 6.8

Broadcast/Publishing 6.8 7.2 Retailing 2.6 6.5

Business &Public
Services 4.3 4.1 Software 5.2 4.8

Capital Spending 2.9 2.0 Special Financial 4.8 5.2

Construction/Housing 2.0 2.8 Technology 2.0 2.3

Consumer Cyclicals 3.5 8.7 Telecommunications 14.5 8.5

Consumer Staples/Service 1.4 0.9 Transportation/Distribution 4.5 1.5

Food/Restaurants 3.6 3.3 Utilities 2.8 3.7

Health Care Services 7.7 10.7

Mining/Metals 1.3 1.1 Other assets less liabilities 1.8 2.0

TOTAL 100.0%
- --------------------------------------------------------------------------------

in Europe, reflects our belief in the synergistic potential of several factors:
low interest rates throughout Europe, the emergence of a single market united by
a single currency and the consolidation of the continent's banking industry. As
you can see, we also have a large commitment to telecommunications. Throughout
the world, deregulation and privatization are transforming this industry,
creating myriad investment opportunities. As has been constant since our
inception, our top ten holdings reflect our commitment to diversification - no
single stock represents more than 3.8% of the portfolio.

-----------------------------------------------------------------
TOP TEN HOLDINGS

COMPANY NAME COUNTRY %
------------ ------- ---
Credit Suisse Group Switzerland 3.8
Union Bank of Switzerland Switzerland 3.6
CLF-Dexia France France 3.2
Colt Telecom Group United Kingdom 3.1
Novartis Switzerland 2.8
Cia Riograndense Telecom Brazil 2.7
Schibsted Norway 2.4
Bayerische Hypotheken Germany 2.4
The Corporate Services Group United Kingdom 2.3
Vest-Wood Denmark 2.3

TOTAL 28.6%
- -------------------------------------------------------------------

5 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (continued)

OUTLOOK AND STRATEGY
In 1998, we intend to maintain our fundamental strategy. From among the
economies and industries that seem most conducive to growth, we will search for
growing, well-managed companies whose stocks are selling at attractive
valuations.

We are still extremely positive on Europe, which we believe offers its greatest
investment potential in a generation. The reasons are many: broad-based
privatization and deregulation, increasing competition, merger activity and a
burgeoning commitment to enhancing shareholder value. In addition, interest
rates are low in Europe, it will soon realize the benefits of a unified market,
and equity valuations are much more reasonable than ours. Understandably, we see
the potential in European equities as similar to that of U.S. stocks fifteen
years ago.

In Asia, we still favor Hong Kong. Its strong currency and banking system, among
other factors, help to insulate Hong Kong from the region's economic problems.
And Hong Kong's deepening ties with China offer tremendous long-term potential.
We'll continue to be wary of Japan. Its fragile banking system, over-regulated
economy and sudden eruption of major bankruptcies all suggest that watching and
waiting are in order.

We'll also continue to stay away from Asia's smaller markets - Indonesia, Korea,
the Philippines and Thailand - until we've seen a durable bottoming process.
While there appears to be some attractive values, it seems too early to assess
choices based on corporate fundamentals. We prefer to wait for the second shoe
to fall. In late 1994, when Mexico's market faltered, this was the process we
followed - with good success. Thus, we'll again wait for both an end to
volatility and the renewed ability to assess investment value based on
fundamentals.

In our own hemisphere, Brazil and Mexico still look promising. In both
countries, foreign investment continues to be heavy, and privatization is
creating investment opportunity. In Mexico, moreover, the economy grew 7.3% last
year, accompanied by robust job creation and a strengthening of the country's
restructured banking system. And in Brazil, inflation remains subdued, and the
privatization process continues at a rapid rate.

Thank you for your investment in the Artisan International Fund. We will do our
best to reward your confidence in us.

Sincerely,

/S/ Mark L. Yockey

Mark L. Yockey
Portfolio Manager

Effective July 1, 1997, the Fund began offering an institutional class of shares
for institutional investors meeting certain minimum investment requirements. A
report on the institutional class is available under separate cover.

SEMI-ANNUAL REPORT 6

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)

- -------------------------------------------------------------------------------
Shares Market
Held Value
- -------------------------------------------------------------------------------
COMMON AND PREFERRED STOCKS - 98.2%
AUSTRIA - 0.5%
218,520 *Scala Business Solutions - resource
planning software................................ $1,453,167
91,050 *Scala Business Solutions Warrants
(3/31/1999) - resource planning software ...... 129,747
91,050 *Scala Business Solutions Warrants
(3/31/2001) - resource planning software ...... 81,224
---------
1,664,138

BRAZIL - 6.4%
15,490,000 Cia de Saneamento Basico de Estado de Sao Paulo -
water and sewage utility ...................... 3,678,016
7,136,100 *Cia Riograndense Telecom - Preferred -
telecommunications ............................ 8,791,844
1,010,600,000 Fertilizantes Fosfatados SA Fosfertil - Preferred -
phosphatic mining and fertilizer .............. 4,246,865

9,200,000 Light-Servicos de Electricidade S/A - electric
utility ....................................... 3,832,997
----------
20,549,722

CANADA - 2.2%
400,000 *Metronet Communications Company (ADR) -
telecommunications ............................ 6,950,000

DENMARK - 7.3%
33,694 *Jyske Bank - banking ............................ 4,106,086
8,438 NESA AS - electrical utility .................... 1,416,206
142,000 *Olicom ADR - computer network equipment ......... 3,674,250
120,000 *Sydbank A/S - banking and financial services .... 6,830,222
88,500 Vest-Wood A/S - furniture manufacturer .......... 7,426,772
----------
23,453,536
FINLAND - 3.8%
48,000 Nokia Corporation (ADR) -
telecommunications equipment .................. 3,360,000
60,000 Orion - Yhtyma Oy - pharmaceuticals ............. 1,585,045
196,800 *Silja Oy AB - passenger and cargo ship operator . 833,998
265,000 Talentum Oy - information technology publisher .. 3,257,230
28,900 TT Tieto Oy - computer data services ............ 3,250,021
----------
12,286,294
FRANCE - 3.2%
90,000 CLF-Dexia France - banking and financial
services ...................................... 10,422,863

7 SEMI-ANNUAL REPORT

SCHEDULE OF INVESTMENTS (continued)
- -------------------------------------------------------------------------------
Shares Market
Held Value
- -------------------------------------------------------------------------------
GERMANY - 11.0%
45,000 Altana AG - pharmaceuticals ..................... 3,089,302
160,000 Bayerische Hypotheken -
Und Wechselbank AG - banking .................. 7,809,000
100,000 Deutsche Bank AG - commercial banking ........... 7,059,674
75,000 *ESG RE Ltd. (ADR) - life/health insurance ....... 1,762,500
18,950 KSB AG - Vorzug - Preferred - machinery and
pump manufacturer ............................. 4,213,569
250,000 Lufthansa AG - airline .......................... 4,794,463
190,567 *Marseille-Kliniken AG - health care services .... 2,065,681
8,500 Volkswagen AG - automobile manufacturer ......... 4,781,678
----------
35,575,867
HONG KONG - 6.1%
600,000 *Beijing Enterprises Holdings Ltd. -
multi-industry ................................ 1,540,844
3,000,000 China Foods Holdings Ltd. - food processing ..... 987,224
11,462,000 Dongfang Electrical Machinery Company Ltd. -
electrical generators ......................... 1,671,449
8,961,033 Founder Hong Kong Limited - software
development ................................... 5,550,776
7,000,000 Glorious Sun Enterprises - men's and
women's apparel ............................... 1,829,268
16,000,000 Guangzhou Investment - multi-industry .......... 3,324,300
7,478,000 Harbin Power Equipment Company Ltd. - hydro and
thermal power equipment ....................... 907,126
1,380,000 Wing Hang Bank Ltd. - banking and
financial services ............................ 3,900,116
----------
19,711,103
HUNGARY - 0.2%
100,000 *Euronet Services, Inc. (ADR) - European
ATM network .................................. 775,000

INDONESIA - 0.2%
3,305,000 Sona Topas Tourism - duty free retailing 510,773

IRELAND - 0.7%
141,724 Bank of Ireland - banking and financial
services....................................... 2,182,563

ITALY - 4.6%
1,685,000 Credito Italiano SPA - banking and financial
services....................................... 5,195,972
433,100 *De Rigo SPA (ADR) - optical frames .............. 2,706,875
400,000 Telecom Italia Savings Shares SPA -
telecommunications services.................... 1,763,708
800,000 Telecom Italia SPA - telecommunications
services....................................... 5,110,232
-----------
14,776,787

SEMI-ANNUAL REPORT 8

MEXICO - 6.4%
399,300 Empresas (ICA) Sociadad Controladora S.A. de C.V
(ADR) - commercial construction.............. 6,563,494
1,676,489 Grupo Financiero Inbursa S.A. de C.V. -
brokerage, insurance and financial services.. 6,855,107
877,500 *Seguros Comercial America - insurance .......... 3,588,068
241,100 Sigma BCP - food producer ...................... 3,659,594
---------
20,666,263
NETHERLANDS - 4.3%
110,000 Bennf - Benckiser - home cleaning products...... 4,551,574
150,000 Cap Gemini NV - computer software............... 5,111,829
111,234 KLM Royal Dutch Air Lines NV - airline.......... 4,114,394
----------
13,777,797
NORWAY - 4.4%
150,000 * Computer Advances Group ASA -
hardware and software........................ 1,249,018
569,800 Radio P4 - radio stations....................... 5,014,623
460,000 Schibsted ASA - newspaper publisher............. 7,878,632
----------
14,142,273

PHILIPPINES - 0.2%
17,753,000 * Bankard, Inc. - credit card provider............ 666,285

PORTUGAL - 4.6%
130,500 * Investec Consultoria Internacional, SA -
newspaper publisher.......................... 3,864,303
100,600 Portugal Telecom SA - telecommunications........ 4,667,884
58,000 * Telecel-Comunicacaoes Pessoais, SA - cellular
phone service ............................... 6,179,734
----------
14,711,921

SINGAPORE - 0.9%
600,000 Jardine Matheson Holdings Ltd. (ADR) -
multi-industry............................... 3,060,000

SPAIN - 2.3%
300,000 Banco Central Hispanoamericano, S.A. -
banking services............................. 7,305,546

9 SEMI-ANNUAL REPORT

SWITZERLAND - 11.8%
79,500 Credit Suisse Group - banking and financial
services............................................ 12,296,058
5,500 Novartis AG - pharmaceuticals........................ 8,920,750
12,000 Publigroupe SA - advertising sales................... 2,619,764
34,000 Swisslog Holding AG - factory automation systems..... 2,501,369
8,000 Bank of Switzerland - banking and
financial services.................................. 11,563,099
----------
37,901,040

THAILAND - 0.2%
334,300 The Pizza PLC - fast food restaurant franchise....... 590,145
972,200 Srithai Superware PLC - consumer plastic products.... 107,013
-------
697,158

UNITED KINGDOM - 12.9%
989,900 * Colt Telecom Group PLC - telecommunications 9,999,351
2,125,000 The Corporate Services Group PLC -
employment services................................. 7,434,366
450,000 D.F.S. Furniture Company PLC - home furniture
manufacturer and retailer........................... 3,843,450
396,600 * Ethical Holdings PLC (ADR) - pharmaceuticals 1,239,375
3,400,000 * Freepages Group PLC - telephone classified
information services................................ 1,787,040
700,000 General Electric Company PLC -
diversified manufacturer............................ 4,535,764
300,000 Johnson Matthey PLC - electronic materials........... 2,685,487
400,000 Select Appointments Holdings PLC -
employment services................................. 3,679,200
445,000 Whitbread PLC - restaurants and brewing.............. 6,534,358
----------
41,738,391

TOTAL COMMON AND PREFERRED STOCKS
(Cost $316,661,002)................................ $316,454,247

SEMI-ANNUAL REPORT 10

SCHEDULE OF INVESTMENTS (continued)
- -------------------------------------------------------------------------------
Par Market
Amount Value
- -------------------------------------------------------------------------------
SHORT TERM INVESTMENTS - 1.6%
$5,303,000 Repurchase agreement with State Street Bank and Trust
Company, 5.0%, dated 12/31/97, due 1/2/98, maturity value
$5,304,473, collateralized by $5,420,000 par value
U.S. Treasury Note, 5.625%, due 12/31/99
(Cost $5,303,000)................................. $ 5,303,000
-----------

TOTAL INVESTMENTS - 99.8% (Cost $321,964,002)...... 321,757,247

OTHER ASSETS LESS LIABILITIES - 0.2%............... 755,653
------------
TOTAL NET ASSETS - 100.0% (**)..................... $322,512,900
============
* Non-income producing securities
** Percentages for the various classifications relate to total net
assets

ADR - American Depository Receipt

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

11 SEMI-ANNUAL REPORT

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
PORTFOLIO DIVERSIFICATION
DECEMBER 31, 1997
(UNAUDITED)

Market Value Percent
------------ ------
Banking $ 78,671,199 24.4%
Broadcast/Publishing 21,801,828 6.8
Business & Public Services 13,733,330 4.3
Capital Spending 9,293,513 2.9
Construction/Housing 6,563,494 2.0
Consumer Cyclicals 11,377,235 3.5
Consumer Staples/Service 4,551,574 1.4
Food/Restaurants 11,771,321 3.6
Health Care Services 24,700,567 7.7
Mining/Metals 4,246,865 1.3
Multi-Industry 12,460,908 3.9
Retailing 8,397,609 2.6
Software 16,825,782 5.2
Special Financial 15,424,780 4.8
Technology 6,359,737 2.0
Telecommunications 46,822,753 14.5
Transportation/Distribution 14,524,533 4.5
Utilities 8,927,219 2.8
----------- ----
Total common and preferred stocks 316,454,247 98.2
Total short term investments 5,303,000 1.6
----------- ----
Total investments 321,757,247 99.8
Other assets less liabilities 755,653 0.2
----------- ----
Total net assets $322,512,900 100.0%
=========== ====

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

SEMI-ANNUAL REPORT 12

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(UNAUDITED)

ASSETS:
Investments in securities, at value (cost $321,964,002)...... $321,757,247
Cash......................................................... 230
Receivable from investments and foreign currency sold........ 953,668
Receivable from fund shares sold............................. 890,207
Accrued interest ............................................ 737
Accrued dividends ........................................... 512,206
Organizational costs......................................... 21,960
-----------
Total assets................................................ 324,136,255

LIABILITIES:
Payable for investments and foreign currency purchased....... 1,414,553
Payable for withholding tax liability........................ 14,729
Payable for organizational costs............................. 21,960
Payable for operating expenses............................... 172,113
-----------
Total liabilities.......................................... 1,623,355
-----------
Total net assets........................................... $322,512,900
===========

NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding........................... $327,105,363
Net unrealized depreciation on investments
and foreign currency transactions.......................... (217,642)
Distributions in excess of net investment income............. (3,158,028)
Distributions in excess of net realized gains on sales of
investments and foreign currency related transactions...... (1,216,793)
-----------
$322,512,900
===========
INTERNATIONAL SHARES:
Net assets................................................... $270,613,595
Shares authorized ($0.01 par value)..........................5,000,000,000
Shares issued and outstanding................................ 21,717,177
Net asset value, offering and redemption price per share..... $12.46
=====
INSTITUTIONAL SHARES:
Net assets.................................................. $ 51,899,305
Shares authorized ($0.01 par value)......................... 5,000,000,000
Shares issued and outstanding............................... 4,168,830
Net asset value, offering and redemption price per share.... $12.45
=====

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

13 SEMI-ANNUAL REPORT

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)

INVESTMENT INCOME:
Interest....................................................... $ 136,712
Dividends (net of foreign taxes withheld of $179,364).......... 1,755,141
---------
Total investment income..................................... 1,891,853

EXPENSES:
Advisory fees.................................................. 1,995,259
Transfer agent fees:
International Shares........................................ 369,668
Institutional Shares........................................ 4,843
Custodian fees................................................. 243,996
Registration fees.............................................. 7,737
Shareholder communications:
International Shares........................................ 53,261
Institutional Shares........................................ 1,513
Professional fees.............................................. 20,058
Accounting fees................................................ 36,533
Directors' fees................................................ 7,500
Organizational costs........................................... 3,660
Other operating expenses....................................... 24,893
---------
Total expenses.............................................. 2,768,921
---------
Net investment loss......................................... (877,068)

REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS - NET:
Net realized gain (loss) on:
Investments............................................... 16,380,111
Foreign currency related transactions..................... (724,290)
----------
15,655,821
Net increase in unrealized (depreciation) appreciation on:
Investments...............................................(34,187,012)
Foreign currency related transactions..................... 31,852
-----------
(34,155,160)
------------
Net loss on investments...................................(18,499,339)
-----------
Net decrease in net assets resulting from operations.....$(19,376,407)
===========

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

SEMI-ANNUAL REPORT 14

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

Six Months Ended Year ended
December 31, June 30,
1997* 1997
----------- -----------
OPERATIONS:
Net investment (loss) income................ $ (877,068) $ 2,615,087
Net realized gain (loss) on:
Investments............................... 16,380,111 11,001,981
Foreign currency related transactions..... (724,290) (419,819)
Net increase in unrealized (depreciation)
appreciation on:
Investments............................... (34,187,012) 30,260,301
Foreign currency related transactions..... 31,852 (31,194)
----------- ----------
Net (decrease) increase in net assets
resulting from operations............... (19,376,407) 43,426,356

DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Net investment income:
International Shares...................... (4,035,316) (237,011)
Institutional Shares...................... (823,369) -
Net realized gains on investment transactions:
International Shares...................... (23,067,732) (1,238,614)
Institutional Shares...................... (4,236,936) -
------------ -----------
Total distributions paid to shareholders.. (32,163,353) (1,475,625)

FUND SHARE ACTIVITIES:
Net (decrease) increase in net assets resulting
from fund share activities................ (75,127,410) 335,717,641
------------ ------------
Total (decrease) increase in net assets... (126,667,170) 377,668,372
Net assets, beginning of period........... 449,180,070 71,511,698
------------ ------------
Net assets, end of period................. $322,512,900 $449,180,070
============ ============
* Unaudited

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

15 SEMI-ANNUAL REPORT

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)

FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD

Six months ended Year ended Period ended
December 31, June 30, June 30,
1997<F1> 1997 1996<F5>
Institutional International International International
Shares Shares Shares Shares
------ ------ ------ ------
Net asset value,
beginning of period $14.48 $14.48 $12.08 $10.00
Income from investment
operations:
Net investment (loss)
income (0.02)<F4> (0.03)<F4> 0.07 0.04
Net realized and
unrealized (losses)
gains on securities
and foreign currency
held (0.66) (0.66) 2.44 2.04
----- ----- ----- -----
Total from investment
operations (0.68) (0.69) 2.51 2.08
Distributions paid to
shareholders:
Net investment income (0.22) (0.20) (0.02) -
Net realized gains on
investment transactions (1.13) (1.13) (0.09) -
----- ----- ----- -----
Total distributions
paid to shareholders (1.35) (1.33) (0.11) -
----- ----- ----- -----
Net asset value,
end of period $12.45 $12.46 $14.48 $12.08
====== ====== ====== ======

Total Return<F2> (4.75)% (4.83)% 20.92% 20.80%
Ratios/supplemental data:
Net assets, end of
period (millions) $51.9 $270.6 $449.2 $71.5
Ratio of expenses to
average net assets<F3> 1.21% 1.42% 1.61% 2.50%
Ratio of net investment
(loss) income to average
net assets<F3> (0.29)% (0.46)% 1.07% 1.60%
Portfolio turnover
rate<F2> 39.96% 39.96% 103.66% 57.00%
Average commission
rate per share $0.0043 $0.0043 $0.0016

<F1> Unaudited
<F2> Periods less than one year, where applicable, are not annualized
<F3> Periods less than one year, where applicable, are annualized
<F4> Computed based on average shares outstanding during the period
<F5> For the period from commencement of operations (December 28, 1995)
through June 30, 1996

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

SEMI-ANNUAL REPORT 16

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)

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

Effective July 1, 1997, the Fund began offering two classes of capital
shares, International Shares and International Institutional Shares
("Institutional Shares"). The Institutional Shares are sold to
institutional investors meeting certain minimum investment requirements.
Each class of shares has equal rights with respect to portfolio assets and
voting privileges. Each class has exclusive voting rights with respect to
any matters involving only that class. Income, non-class specific expenses,
and realized and unrealized gains and losses are allocated daily to each
class of shares based upon the relative net asset value of outstanding
shares. Expenses attributable to a particular class of shares, such as
transfer agent fees and sharehold communication expenses, are allocated
directly to that class.

(2) Summary of significant accounting policies:
The following is a summary of significant accounting policies of the Fund.

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

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

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

(d)Foreign currency translation - Values of investments denominated in
foreign currencies are converted into U.S. dollars using the spot market
rate of exchange at the time of valuation. Purchases and sales of
investments and dividend and interest income are translated to U.S.
dollars using the spot market rate of exchange prevailing on the
respective dates of such transactions. The portion of security gains or
losses resulting from changes in foreign exchange rates is included with
net realized and unrealized gain or loss from investments, as
appropriate, for both financial reporting and tax purposes.

17 SEMI-ANNUAL REPORT

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)

The Fund enters into forward currency contracts to hedge the foreign
currency exposure on open payables and receivables. These forward
currency contracts are recorded at market value and any related realized
and unrealized gains and losses are reported as foreign currency related
transactions for financial reporting purposes. For tax purposes, these
foreign exchange gains and losses are treated as ordinary income. The
Fund could be exposed to loss if the counterparties fail to perform
under these contracts.

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

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

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

An affiliate, as defined by the Investment Company Act of 1940, is a
company in which the Fund directly or indirectly owns, controls, or holds
power to vote 5% or more of the outstanding voting securities. A summary
of transactions with each such affiliate for the period ended December 31,
1997 follows.

Purchases Sales
------------------ --------------- Realized Dividend
Affiliate Shares Cost Shares Cost Gain Income
--------- ------ ---- ------ ---- ---- ------
Bankard Inc. 1,309,000 $207,730 - - - -
Dongfang Electrical
Machinery
Company Ltd. 2,000,000 649,690 - - - -

SEMI-ANNUAL REPORT 18

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(4)Organizational costs:
Organizational costs are amortized over sixty months. These expenses
were paid by the Adviser and will be reimbursed by the Fund over the
same time period. The proceeds of any redemption of the initial shares
by the original shareholders will be reduced by a pro-rata portion of
any unamortized expenses at the time of redemption.

(5)Line of credit arrangements:
Artisan Funds, Inc. is party to a line of credit agreement with State
Street Bank and Trust Company, under which the Fund may borrow 10% of
its net assets up to a maximum of $30 million. Artisan Funds, Inc. pays
a commitment fee of 0.10% on the unused portion of the line of credit.
This fee is allocated to each fund in the series of Artisan Funds,
Inc., including the Fund, based on relative net assets. Interest is
charged on any borrowings at the current Federal funds rate plus 0.75%.
The use of the line of credit is generally restricted to temporary
borrowing for extraordinary or emergency purposes.

During the period ended December 31, 1997 the Fund incurred interest
charges of $12,491 related to borrowings on the line of credit.

(6)Investment transactions:
For the six months ended December 31, 1997, the cost of purchases and
the proceeds from the sales of investment securities (excluding short-
term securities) were $154,172,675 and $260,205,655 respectively.

(7)Fund share activities:
Capital share transactions for the Fund were as follows:

Six months ended
Year ended
December 31, 1997 June 30, 1997
Institutional International International
Shares Shares Shares
--------- --------- ---------
Proceeds from shares issued $57,070,260 $60,295,241 $447,478,870
Net asset value of shares
issued from reinvestment of
distributions from net
investment income and net
realized gains 4,802,555 25,959,396 1,414,826

Cost of shares redeemed (2,130,957) (221,123,905) (113,176,055)
---------- ----------- -----------
Net increase (decrease) in
net assets from fund
share activities $59,741,858 $(134,869,268) $335,717,641
========== =========== ===========

19 SEMI-ANNUAL REPORT

ARTISAN INTERNATIONAL FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)

Six months ended Year ended
December 31, 1997 June 30, 1997
Institutional International International
Shares Shares Shares
-------- -------- --------
Shares sold 3,943,694 4,323,030 33,329,489
Shares issued from reinvestment
of distributions from net
investment income and net
realized gains 383,897 2,075,078 108,735
Shares redeemed (158,761) (15,696,026) (8,344,932)
-------- ---------- ---------
Net increase (decrease) in
capital shares 4,168,830 (9,297,918) 25,093,292
========= ========= =========

(8)Income tax information:

Aggregate gross unrealized appreciation (depreciation) on investments as
of December 31, 1997, based on investment cost of $322,984,955 for
federal tax purposes, is as follows:

Aggregate gross unrealized appreciation on investments $46,954,630
Aggregate gross unrealized depreciation on investments (48,182,338)
----------
Net unrealized depreciation $(1,227,708)
==========

The difference between cost amounts for financial reporting and tax
purposes is due primarily to timing differences in recognizing certain
gains and losses on security transactions and passive foreign investment
company (PFIC) value adjustments.

SEMI-ANNUAL REPORT 20

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

xxxxx

(LOGO)
ARTISAN
SMALL CAP
FUND

SEMI-ANNUAL REPORT

DECEMBER 31, 1997

INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.

(PAGE)

February 20, 1998

Dear Fellow Shareholder,

We're pleased to send you this semi-annual report for the Artisan Small Cap Fund
(Fund). While it will deal chiefly with the six months ended December 31, 1997,
this report will also touch on calendar 1997 and our outlook going into 1998.

THE FUND'S PERFORMANCE
The Fund returned 10.7% for the six-month period ended December 31, 1997 and
gained 22.7% for calendar 1997. For these respective periods, the Fund's
benchmark index, the Russell 2000, returned 11.0% and 22.4%. Since its inception
on March 28, 1995, the Fund has returned 82.3%, versus a return of 75.4% for the
Russell 2000. This translates to an annualized return of 24.2% for the Fund and
a 22.5% return for the Russell 2000 benchmark index.

Note, too, that the Artisan Small Cap Fund has outperformed the Lipper Small Cap
Fund Index. For the six months ended December 31, 1997, the Lipper benchmark
index returned 9.0% versus the Fund's return of 10.7%.

COMPARATIVE QUARTERLY PERFORMANCE

ARTISAN SMALL RUSSELL 2000 LIPPER SMALL CAP
CAP FUND INDEX FUND INDEX
-------- ----- ----------
3/28/95 $10,000 $10,000 $10,000
6/30/95 $11,520 $10,962 $10,896
9/30/95 $12,650 $12,044 $12,258
12/31/95 $13,283 $12,305 $12,427
3/31/96 $14,059 $12,933 $13,128
6/30/96 $14,785 $13,580 $14,170
9/30/96 $14,160 $13,626 $14,349
12/31/96 $14,858 $14,335 $14,212
3/31/97 $14,150 $13,594 $12,874
6/30/97 $16,459 $15,797 $15,070
9/30/97 $18,627 $18,149 $17,368
12/31/97 $18,226 $17,541 $16,425

<TABLE>
<CAPTION>
1995 1996 1997
QUARTERLY ---------------------------- -------------------------------------- --------------------------------------
PERFORMANCE 6/30/95 9/30/95 12/31/95 3/31/96 6/30/96 9/30/96 12/31/96 3/31/97 6/30/97 9/30/97 12/31/97
------- -------- -------- ------- ------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ARTISAN SMALL
CAP FUND 15.2% 9.8% 5.0% 5.8% 5.2% -4.2% 4.9% -4.8% 16.3% 13.2% -2.2%

Russell 2000
Index 9.6% 9.9% 2.2% 5.1% 5.0% 0.3% 5.2% -5.2% 16.2% 14.9% -3.4%

Lipper Small
Cap Fund Index 9.0% 12.5% 1.4% 5.6% 7.9% 1.3% -1.0% -9.4% 17.1% 15.3% -5.4%
</TABLE>

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

1 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (CONTINUED)

During the first quarter of 1997, the small-cap market was less than congenial,
as the correction that had started months earlier continued in earnest. High
valuations and earnings shortfalls took their toll, as did the market's
unequivocal preference for earnings-driven large-caps. Nonetheless, the Fund
performed well on a relative basis, helped by our attention to valuation, our
industry exposure and a small-cap rally in the second quarter, when small-cap
earnings outpaced those of large-caps.

As we'll explain in detail later, the second half of 1997 was a mixed
environment for small-cap stocks_strong from July through September, when small-
caps finally outperformed large-caps; turbulent in October and November;
generally positive in December. We negotiated this difficult terrain quite well,
aided by our valuation discipline and our modest exposure to sectors that proved
especially vulnerable to correction.

Revealed below is an especially compelling aspect of the Fund's performance
during 1997. The year was characterized by a wide disparity in returns between
the growth and value styles of small-cap investing. As you can see, the Russell
2000 Growth Index significantly underperformed the Russell 2000 Value Index.
Nonetheless, the Artisan Small Cap Fund - with its strategy of "growth at a
reasonable price" - strongly outperformed the small-cap growth segment. Also, as
we noted before, it outperformed the broad small-cap universe represented by the
Russell 2000 Index.

COMPARATIVE 1997 PERFORMANCE OF
ARTISAN SMALL CAP FUND VS. RUSSELL 2000 INDEXES

Russell 2000 Value Index 31.8%
Artisan Small Cap Fund 22.7%
Russell 2000 Index 22.4%
Russell 2000 Growth Index 12.9%

We attribute much of this success to elements of our investment style. One is
our valuation discipline: we seek companies with strong, sustainable growth that
appear underpriced relative to our assessment of their intrinsic value. We also
maintain a commitment to broad diversification, thus limiting our exposure to
industries or companies that may prove disappointing. We believe the value we
add for you is picking stocks based on rational criteria - not in placing
outsized bets on companies, sectors or trends.

OUR INVESTMENT APPROACH
Before discussing the Fund's performance during the past year, it is important
to review our investment approach and goals. In a nutshell, we invest in
underfollowed, small-cap growth companies whose stock prices do not fully
reflect their intrinsic value.

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

SEMI-ANNUAL REPORT 2

LETTER TO SHAREHOLDERS (CONTINUED)

TRANSACTIONS. Often, there are small "jewels" within larger conglomerates which
are great investments when they are free to operate on their own. Littelfuse, a
superbly managed growth company which was spun-out of a large bankrupt defense
conglomerate, is an example of this type of investment.

INDUSTRY CONTACTS. Some of our best ideas come from company managements,
suppliers and competitors. We always ask managements about their toughest
competitors and most reliable suppliers. For example, Silicon Valley Bancshares
is the bank of choice of our West Coast technology companies and International
Comfort Products makes the air conditioners that Pameco distributes.

REGIONAL BROKERAGE FIRMS. Far away from the giant New York brokerage firms,
these smaller firms only cover companies in their own backyards. Often, they are
the first to recognize new investment opportunities. We have developed a large
network of contacts at these brokerage firms. Showbiz Pizza Time was suggested
by a small Texas-based brokerage firm and our best information on ITI
Technologies comes from a local firm in Minneapolis.

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

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

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

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

A REVIEW OF THE YEAR'S SECOND HALF
For the six-month period ended December 31, 1997, the Artisan Small Cap Fund
returned 10.7%, versus 11.0% for the Russell 2000 Index. In the third quarter,
the Fund gained 13.2%, versus 14.9% for its Index. In the fourth quarter,
returns for the Fund and the index dropped to -2.2% and -3.4%, respectively.
From July through September, the market was fueled by robust earnings gains,
especially those reported by smaller companies.

Then October reared its ugly head. Throughout Asia, plummeting currencies and
equity markets suddenly made their presence felt as symptoms of very broad and
deep eco-

3 SEMI-ANNUAL REPORT

LETTER TO SHAREHOLDERS (CONTINUED)
nomic fragility. Concern over the possible ramifications to our economy sparked
pronounced volatility in our markets. Most notable were a record one-day point
drop in the Dow Industrials and the first 10% correction in that index in over
seven years. Hit especially hard was technology, a sector where our exposure had
been modest and where we were able to pick up some bargains in November. In
December, calmer heads prevailed, as investors drove both large- and small-cap
stocks into positive territory. All things considered, we're pleased with the
Fund's performance. Through this difficult period, a number of our stocks proved
to be excellent performers.

- --------------------------------------------------------------------------------
TOP 5 GAINERS TOP 5 LOSERS
- --------------------------------------------------------------------------------
SECURITY % SECURITY %
- -------------------------------------------------------------------------------
Healthcare Financial Partners 64.5% CFM Technologies, Inc. -42.8%
Gulf South Medical Supply 63.4% Asyst Technologies, Inc. -32.8%
DH Technology, Inc. 51.0% Align-Rite International -32.6%
Oshkosh B'Gosh 48.9% Wall Data Inc. -31.1%
Telemundo Group 44.7% Helix Technology Group -28.7%

Three of the top five gainers were takeovers...Gulf South, DH Technology and
Telemundo. Gulf South is a distributor of medical supplies to nursing homes; DH
Technology manufactures printers; and Telemundo is a media company targeting the
Hispanic audience. The other top five gainers reported better-than-expected
earnings: OshKosh B'Gosh is a children's apparel company, while Healthcare
Financial Partners is a specialty commercial lender to the healthcare services
industry.

Our biggest losers, all technology stocks, reflected the punishment inflicted
upon their sector in October/November. Although none of these were large
individual holdings, collectively they took their toll on the portfolio.
Nonetheless, we are maintaining our positions in most of these companies; we
believe they will weather the temporary business slowdown caused by the Asian
crisis. The exceptions are Wall Data, which we sold because of concerns over its
fundamental business strategy, and CFM Technologies, which we replaced with
Speedfam International, based on the belief that its future prospects were more
attractive.

- ------------------------------------------------
TOP TEN HOLDINGS
- ------------------------------------------------
COMPANY NAME %
- ------------ ---
Showbiz Pizza Time 2.5
Healthcare Financial Partners 2.4
Shorewood Packaging Corporation 2.3
Penn Treaty American Corporation 2.3
The Dress Barn, Inc. 2.3
Borg-Warner Security Corporation 2.1
AptarGroup, Inc. 2.1
General Cable 2.0
Holophane Corporation 2.0
ATL Ultrasound, Inc. 1.9
TOTAL 21.9%
- ------------------------------------------------

SEMI-ANNUAL REPORT 4

LETTER TO SHAREHOLDERS (CONTINUED)

PORTFOLIO CHARACTERISTICS
On December 31, 1997, the Fund's net assets were $292.4 million. The Fund
remains closed to new investors, thus enabling our management team to focus on
the out-of-the-way companies we favor.

The Fund owned 72 stocks with a median market capitalization of $377 million. On
average, these stocks are growing at 22% per year, and - based on our 1998
estimates - selling at 16 times earnings and 71% of their intrinsic value.
Despite these attractive growth and valuation characteristics, each stock is
typically followed by only four Wall Street analysts. The Fund was 97.5%
invested in stocks, which we consider to be fully invested.

As shown in the following table, the Fund's sector weightings remain broadly
diversified. We believe that attractive investment candidates can be found in
almost any industry, and we strive to have some level of participation in almost
every sector. We believe this diversification reduces the Fund's potential
volatility, while putting more emphasis on picking stocks - the area where we
add the most value.

- -------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION (%)

WEIGHTING WEIGHTING
----------- ------------
12/31 6/30 12/31 6/30
INDUSTRY 1997 1997 INDUSTRY 1997 1997
- -------------------------------------------------------------------------------
Banks/Savings & Loans 4.7 3.0 Healthcare Services 1.6 3.1
Basic Industry 2.1 1.7 Insurance 3.4 6.2
Biotech/Pharmaceutical 0.6 1.3 Medical Devices/Supplies 5.6 4.2
Business Services 3.4 6.9 Other Financial 5.1 3.1
Capital Spending 9.9 7.2 Paper and Packaging 6.9 2.3
Computer Related 2.7 3.1 Restaurants/Hotels 8.1 5.0
<PAGE>

Consumer Cyclicals 4.8 4.0 Retailing/Apparel 3.5 7.3
Consumer Services 1.5 5.9 Software/Telecommunications 3.7 2.2
Consumer Staples 5.1 8.9 Transportation Related 7.5 3.0
Electronics 7.2 8.9 Utilities 1.5 1.5
Energy 8.6 9.1 Other assets less liabilities 2.5 2.1

TOTAL 100.0%
- -------------------------------------------------------------------------------

Since mid-year, we increased our exposure to stocks related to the Paper and
Packaging, Restaurants/Hotels and Transportation Related industries. We
decreased our participation in Business and Consumer Services, Insurance and
Retailing/Apparel stocks. These changes reflected individual stock decisions
rather than macro-economic trends or investment themes. Among our new additions
were: Fibermark, a specialty paper manufacturer; Hospitality Worldwide, which
provides consulting services to hotels; Kitty Hawk, an air transportation
logistics company; Rio Hotel, a Las Vegas hotel and casino operator; and
US Xpress, a trucking company specializing in time-sensitive cargo delivery.

5 SEMI-ANNUAL REPORT

Among our sales: Amscan, Cap Mac, CommNet Cellular, DH Technology, Gulf South
Medical, Kinetic Concepts and Telemundo were all takeovers; Expeditors
International, Express Scripts, Livent, Renaissance Re and Whole Foods Market
all hit our price targets; and CFM Technologies, Pittston Burlington, Seattle
Filmworks and Wall Data made way for more attractive alternatives.

LETTER TO SHAREHOLDERS (CONTINUED)

OUTLOOK AND STRATEGY
We believe the crisis in Asia will put the brakes on what was potentially a very
strong U.S. economy in 1998. Though we don't expect a recession, Gross Domestic
Product (GDP) is likely to slow dramatically in the year's first half. Growth in
corporate profits will slow because of lower export revenues, price competition
from cheaper imports and mounting wage pressures from our tight labor markets.
In response to this scenario - which reduces the threat of inflation - we think
the Federal Reserve may lower interest rates.

Nonetheless, the slowdown in profit growth is likely to take its toll on the
equity markets. We would not be surprised to see stock prices lower six months
from now, as investors react to the slower growth environment. Longer-term,
however, we remain quite bullish. Going into 1999, we expect the Asian situation
to stabilize and worldwide economic growth to re-accelerate. Moreover, the U.S.
continues to lead the world in technological innovation, inflation is under
control, corporations have learned the merits of improving productivity and our
aging population still needs to save a lot of money for retirement. In the long
run, all these factors are good for stocks.

In the meantime, the good news for our Fund is that the Asian turmoil and a
slowing domestic economy will negatively affect large companies more than small
ones. Almost 50% of all large companies have some Asian exposure; by contrast,
fewer than 25% of small companies do business with Asia. And the growth of large
companies is closely tied to overall economic factors, whereas small companies
can generate significant growth from dynamics related to their own businesses.

In this environment, we will focus on companies with reasonable insulation from
general economic conditions_high quality, non-cyclical companies with little
exposure to Asia, positioned to benefit from trends that should lead to
continued above-average growth rates. Examples from our current holdings are:
Borg-Warner Security, a leading provider of commercial guard and alarm services,
whose cost-cutting efforts should lead to improving margins and superior
earnings growth; Fairchild Corporation, a supplier of aerospace fasteners, which
is creating shareholder value by divesting its non-aerospace assets; Healthcare
Financial Partners, a new player in the very large market of providing financing
to healthcare service providers; and Showbiz Pizza Time, operator of Chuck E.
Cheese entertainment restaurants, whose growth will reflect store remodeling and
enhancement, rather than what's happening to economies around the world.

SEMI-ANNUAL REPORT 6

LETTER TO SHAREHOLDERS (CONTINUED)

As always, we will focus our research efforts on stocks that are selling at a
meaningful discount to our estimate of the company's intrinsic value. In the
event of a correction, this attention to valuation should help shelter us. A
correction would also lead us to look for new opportunities in depressed market
sectors that appear likely to outperform in a rebound.

Once again, thank you for your investment in the Artisan Small Cap Fund. As
always, we appreciate your confidence and support.

Sincerely,

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

7 SEMI-ANNUAL REPORT

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
Shares
Held Market Value
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.5%
BANKS/SAVINGS AND LOANS - 4.7%
73,100 Amcore Financial, Inc. - Rockford, IL based
community bank ................................. $ 1,836,637
100,900 Bay View Capital Corporation - San Francisco, CA
based community bank ........................... 3,657,625
128,705 *Columbia Banking System, Inc. - Tacoma, WA based
community bank ................................. 3,475,035
43,900 Midwest Federal Financial Corporation - Baraboo, WI
based community bank ........................... 1,234,688
63,900 *Silicon Valley Bancshares - bank holding company
serving the high technology industry ........... 3,594,375
----------
13,798,360

BASIC INDUSTRY - 2.1%
140,500 *Monaco Coach Corporation - recreational
vehicle manufacturer ........................... 3,582,750
315,150 *Southern Energy Homes, Inc. - manufactured homes. 2,521,200
----------
6,103,950

BIOTECHNOLOGY/PHARMACEUTICALS - 0.6%
105,900 *Techne Corporation - specialty manufacturer
of biological products ......................... 1,853,250

BUSINESS SERVICES - 3.4%
156,800 *Bell & Howell Holding Company - systems and services
for information access and dissemination ....... 3,792,600
351,900 *Borg-Warner Security Corporation - physical and
electronic security services ................... 6,202,238
---------
9,994,838

CAPITAL SPENDING - 9.9%
206,200 *Banner Aerospace, Inc. - aircraft parts
distributor .................................... 2,281,087
188,900 *CTB International Corporation - agricultural
equipment manufacturer ......................... 2,691,825
301,500 *Cuno, Inc. - filtration products................. 4,597,875
199,700 *Decrane Aircraft Holdings, Inc. - avionics
components ..................................... 3,394,900
185,400 *Fairchild Corporation - aircraft parts
manufacturer and distributor ................... 4,611,825
230,850 *Holophane Corporation - highly-engineered
lighting fixtures .............................. 5,713,538
308,700 *Park Ohio Industries, Inc. - multi-industry...... 5,633,775
-----------
28,924,825

SEMI-ANNUAL REPORT 8

Schedule of Investments (continued)
- --------------------------------------------------------------------------------
Shares
Held Market Value
- --------------------------------------------------------------------------------

COMPUTER RELATED - 2.7%
176,800 *Align-Rite International, Inc. - semiconductor
photomasks ..................................... 2,254,200
75,600 *Asyst Technologies, Inc. - semiconductor
manufacturing equipment ........................ 1,644,300
135,000 Helix Technology Corporation - cryogenic vacuum
pumps .......................................... 2,632,500
50,800 *Speedfam International, Inc. - semiconductor
manufacturing equipment ........................ 1,346,200
---------
7,877,200

CONSUMER CYCLICALS - 4.8%
160,300 Culp, Inc. - fabrics for home furnishings......... 3,206,000
118,500 Interface, Inc. - carpets and fabrics for
commercial interiors ........................... 3,436,500
434,400 *International Comfort Products - heating and air
conditioning systems ........................... 3,638,100
203,400 *Pameco Corporation - heating and air
conditioning distributor ....................... 3,864,600
----------
14,145,200

CONSUMER SERVICES - 1.5%
206,700 *ITI Technologies, Inc. - wireless home
security systems ............................... 4,495,725

CONSUMER STAPLES - 5.1%
114,100 *Action Performance Companies, Inc. - licensed
motorsports collectibles ....................... 4,321,537
226,100 *Ekco Group, Inc. - kitchen tools and animal
care products .................................. 1,752,275
134,400 K2, Inc. - recreational and industrial products... 3,091,200
151,900 Libbey Inc. - consumer and commercial glassware... 5,686,756
----------
14,851,768

ELECTRONICS - 7.2%
178,200 *EFTC Corporation - assembly and testing services
to electronic OEMs ............................. 2,895,750
165,300 General Cable Corporation - electrical wire and
cable products ................................. 5,981,794
189,200 *Littlefuse, Inc. - circuit protection devices.... 4,706,350
271,850 Methode Electronics, Inc. - electronic
interconnect devices ........................... 4,417,563
129,600 PCD, Inc. - electronic connectors................. 3,045,600
----------
21,047,057

9 SEMI-ANNUAL REPORT

ENERGY - 8.6%
177,600 *Callon Petroleum Company - oil and gas
exploration .................................... 2,891,550
224,000 *Core Laboratories - oil and gas field management
services ...................................... 4,046,000
129,400 *Hvide Marine Incorporated - marine
transportation services ........................ 3,332,050
196,000 *Houston Exploration Company - oil and gas
exploration .................................... 3,601,500
289,000 Lomak Petroleum Inc. - oil and gas exploration.... 4,696,250
159,200 *Tom Brown, Inc. - oil and gas exploration........ 3,064,600
158,000 Western Gas Resources, Inc. - oil and gas
processing systems ............................ 3,495,750
-----------
25,127,700

HEALTHCARE SERVICES - 1.6%
227,600 *CompDent Corporation - managed dental plan
operator ....................................... 4,616,012

INSURANCE - 3.4%
116,300 *Amerin Corporation - private mortgage insurance.. 3,256,400
211,500 *Penn Treaty American Corporation - long-term
care insurance ................................. 6,715,125
---------
9,971,525

MEDICAL DEVICES/SUPPLIES - 5.6%
134,800 *Adac Labs - medical imaging and health care
information systems ............................ 2,662,300
123,900 *ATL Ultrasound, Inc. - diagnostic medical
ultrasound systems ............................. 5,699,400
295,000 *Graham-Field Health Products - health care product
manufacturer and distributor ................... 4,922,813
214,200 *Prime Medical Services, Inc. - provider of
lithotripsy services .......................... 2,958,638
----------
16,243,151

OTHER FINANCIAL - 5.1%
88,200 *CB Commercial Real Estate Services Group -
commercial real estate services ................ 2,838,937
270,500 *Franchise Mortgage Acceptance Company - specialty
finance for franchisees ........................ 4,970,438
197,500 *Healthcare Financial Partners, Inc. - specialty finance
for health care providers ...................... 7,011,250
----------
14,820,625

SEMI-ANNUAL REPORT 10

PAPER AND PACKAGING - 6.9%
110,800 AptarGroup, Inc. - pumps, valves and closures for
consumer packaging ............................. 6,149,400
137,600 Brady, W. H. Company - specialty adhesives and
graphics ....................................... 4,265,600
141,900 *Fibermark, Inc. - specialty paperboard packaging. 3,050,850
255,100 *Shorewood Packaging Corporation - specialty
paperboard packaging ........................... 6,823,925
----------
20,289,775

RESTAURANTS/HOTELS - 8.1%
276,800 *Hospitality Worldwide Services - renovation and
maintenance services for the hotel industry .... 3,633,000
246,100 Morrison Healthcare, Inc. - food service to
healthcare institutions ........................ 4,922,000
169,500 *Rio Hotel & Casino, Inc. - Las Vegas, NV based
gaming resort owner and operator ............... 3,559,500
257,500 *Servico, Inc. - hotel owner and operator......... 4,345,313
311,500 *ShowBiz Pizza Time - Chuck E. Cheese restaurants. 7,164,500
----------
23,624,313

RETAILING/APPAREL - 3.5%
233,000 *The Dress Barn, Inc. - women's clothing retailer. 6,611,375
112,200 Oshkosh B'Gosh, Inc. - children's clothing
manufacturer ................................... 3,702,600
----------
10,313,975

SOFTWARE/TELECOMMUNICATIONS - 3.7%
84,800 *Micros Systems, Inc. - point-of-sales systems
for hospitality providers ...................... 3,816,000
206,900 *SPSS, Inc. - statistical software................ 3,982,825
177,700 *USCS International, Inc. - billing software and
services to the communications industry ........ 3,020,900
----------
10,819,725
TRANSPORTATION RELATED - 7.5%
168,500 *Aftermarket Technology Corporation - after-market
auto body parts ................................ 3,054,062
225,600 *International Total Services, Inc. - commercial
security and aviation services ................. 3,581,400
201,400 *Kitty Hawk, Inc. - time-definite air freight
services ....................................... 3,876,950
78,100 *Midwest Express Holdings, Inc. - regional
airline ........................................ 3,031,256
387,800 *Miller Industries, Inc. - tow truck
manufacturer ................................... 4,168,850
189,500 *US Xpress Enterprises, Inc. - time-definite
truckload services ............................. 4,192,687
----------
21,905,205

11 SEMI-ANNUAL REPORT

SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
Shares
Held Market Value
- --------------------------------------------------------------------------------

UTILITIES - 1.5%
92,900 WICOR, Inc. - gas utility and pump manufacturer.. 4,314,044
----------

TOTAL COMMON stocks (Cost $251,746,285).......... $285,138,223

- ------------------------------------------------------------------------------
Par Market
Amount Value
- ------------------------------------------------------------------------------
SHORT TERM INVESTMENTS - 2.6%
$7,607,000 Repurchase agreement with State Street Bank and
Trust Company, 5.0%, dated 12/31/97, due 1/2/98,
maturity value $7,609,113, collateralized by
$7,770,000 par value U.S. Treasury Note, 5.625%,
due 12/31/99 (Cost $7,607,000).................... $ 7,607,000
-----------

TOTAL INVESTMENTS - 100.1% (Cost $259,353,285) ... 292,745,223

OTHER ASSETS LESS LIABILITIES - (0.1)%............ (305,674)
------------
TOTAL NET ASSETS - 100.0% (**) ................... $292,439,549
============
* Non-income producing securities
** Percentages for the various classifications relate to total net assets

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

SEMI-ANNUAL REPORT 12

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
(UNAUDITED)
ASSETS:
Investments in securities, at value (cost $259,353,285) .. $292,745,223
Cash ..................................................... 413
Receivable from investments sold ......................... 1,382,207
Receivable from fund shares sold ......................... 96,162
Accrued interest ......................................... 1,057
Accrued dividends ........................................ 42,116
Organizational costs ..................................... 31,265
-----------
Total assets........................................... 294,298,443

LIABILITIES:
Payable for investments purchased ........................ 1,688,507
Payable for organizational costs ......................... 31,265
Payable for operating expenses ........................... 139,122
-----------
Total liabilities...................................... 1,858,894
-----------
Total net assets....................................... $292,439,549
===========

NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding ....................... $247,666,867
Net unrealized appreciation on investments ............... 33,391,938
Accumulated undistributed net investment loss ............ (934,010)
Accumulated undistributed net realized gains on
investments............................................ 12,314,754
------------
$292,439,549
<PAGE> ============

NET ASSET VALUE PER SHARE:
Net asset value, offering price and redemption price per share
($0.01 par value, 5,000,000,000 shares authorized,
[$ 292,439,549 / 20,668,040 shares outstanding]) $14.15
======

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

13 SEMI-ANNUAL REPORT

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
INVESTMENT INCOME:
Interest ................................................. $ 377,460
Dividends ................................................ 568,174
-----------
Total investment income................................ 945,634

EXPENSES:
Advisory fees ............................................ 1,456,118
Transfer agent fees ...................................... 246,705
Shareholder communications ............................... 62,288
Custodian fees ........................................... 43,799
Accounting fees .......................................... 17,092
Professional fees ........................................ 16,334
Registration fees ........................................ 9,019
Directors' fees .......................................... 7,500
Organizational costs ..................................... 7,071
Other operating expenses ................................. 13,718
----------
Total expenses......................................... 1,879,644
----------
Net investment loss.................................... (934,010)

REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS - NET:
Net realized gain on investments ......................... 31,607,478

Net decrease in unrealized appreciation on investments ... (2,403,386)
Net gain on investments................................ 29,204,092
Net increase in net assets resulting from operations... $28,270,082
==========

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

SEMI-ANNUAL REPORT 14

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

Six Months Ended Year Ended
December 31, June 30,
1997* 1997
----------- ------------
OPERATIONS:
Net investment loss ....................... $ (934,010) $(2,124,352)
Net realized gain on investments .......... 31,607,478 28,932,063
Net decrease in unrealized
appreciation on investments............. (2,403,386) (6,867,786)
---------- ----------
Net increase in net assets resulting
from operations......................... 28,270,082 19,939,925

DISTRIBUTIONS PAID TO
SHAREHOLDERS:
Net realized gains on investment
transactions............................ (45,781,748) (21,951,585)

FUND SHARE ACTIVITIES:
Proceeds from shares issued (1,241,832 and
4,247,380 shares, respectively)......... 20,251,785 58,361,524
Net asset value of shares issued in
reinvestment of distributions from net
realized gains (3,125,122 and 1,600,012
shares, respectively)................... 44,157,978 21,200,167
Cost of shares redeemed (1,421,683 and
15,384,496 shares, respectively)........ (22,278,436) (209,730,732)
---------- ----------
Net increase (decrease) in net assets
Resulting from fund share activities.... 42,131,327 (130,169,041)
---------- ----------
Total increase (decrease) in net assets ... 24,619,661 (132,180,701)
Net assets, beginning of period......... 267,819,888 400,000,589
----------- -----------
Net assets, end of period .............. $292,439,549 $267,819,888
=========== ===========
* Unaudited
The accompanying notes are an integral part of the financial statements.

15 SEMI-ANNUAL REPORT

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

Six Months Year Year Period
Ended Ended Ended Ended
Dec. 31, June 30, June 30, June 30,
1997* 1997 1996 1995****
----- ----- ----- --------
Net asset value, beginning of period.... $15.11 $14.67 $11.52 $10.00
Income from investment operations:
Net investment loss .................. (0.05) (0.04) (0.07) (0.01)
Net realized and unrealized gains
on securities...................... 1.67 1.55 3.32 1.53
----- ----- ----- -----
Total from investment operations... 1.62 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.......... $14.15 $15.11 $14.67 $11.52
===== ===== ===== =====

Total return**.......................... 10.7% 11.3% 28.3% 15.2%
Ratios/supplemental data:
Net assets, end of period (millions).. $292.4 $267.8 $400.0 $99.3
Ratio of expenses to average
net assets***...................... 1.29% 1.41% 1.52% 2.00%
Ratio of net investment loss to
average net assets***.............. (0.64)% (0.73)% (0.75)% (0.59)%
Portfolio turnover rate** ............ 71.12% 87.18% 105.19% 9.28%
Average commission rate per share .... $0.0555 $0.0527

*Unaudited
** Periods less than one year, where applicable, are not annualized
*** Periods less than one year, where applicable, are annualized
**** For the period from commencement of operations (March 28, 1995)
through June 30, 1995

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

SEMI-ANNUAL REPORT 16

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(1) Organization:
The Artisan Small Cap Fund (the "Fund") is a series of Artisan Funds, Inc.
which was incorporated on January 5, 1995 as a Wisconsin corporation and is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company.

2) Summary of significant accounting policies:
The following is a summary of significant accounting policies of the Fund:
(a) Security valuation - Each security is valued at the latest sales price
reported by the principal securities exchange on which the issue is
traded, or if no sale is reported, the latest bid price reported.
Securities for which prices are not readily available, or which
management believes that the latest sales or bid price is not
reflective of the fair value of the security, are valued at fair value
as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of
Directors. Short-term investments maturing within sixty days of their
purchase date are valued at amortized cost which approximates market.
(b) Income taxes - No provision has been made for federal income taxes
since the Fund intends to 1) distribute to its shareholders
substantially all of its taxable income as well as realized gains from
the sale of investment securities and 2) comply with all provisions of
the Internal Revenue Code applicable to regulated investment
companies.
(c) Portfolio transactions - Security and shareholder transactions are
recorded no later than the first business day after the trade date.
Net realized gains and losses on common stocks are computed on
specific security lot identification.
(d) Use of estimates - The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
(e) Other - Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is reported on the accrual
basis. Generally accepted accounting principles require that certain
differences between financial reporting and tax purposes be
reclassified to capital stock.

17 SEMI-ANNUAL REPORT

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(3) Transactions with affiliates:
Artisan Partners Limited Partnership (the "Adviser"), with which certain
officers and directors of the Fund are affiliated, provides investment
advisory and administrative services to the Fund. In exchange for these
services, the Fund pays a monthly management fee to the Adviser as follows:

(4) Organizational costs:
Organizational costs are amortized over sixty months. These expenses were
paid by the Adviser and will be reimbursed by the Fund over the same time
period. The proceeds of any redemption of the initial shares by the
original shareholders will be reduced by a pro-rata portion of any
unamortized expenses at the time of redemption.

(5) Investment transactions:
For the six months ended December 31, 1997, the cost of purchases and the
proceeds from the sales of investment securities (excluding short-term
securities) were $196,534,719 and $202,767,079, respectively.

(6) Line of credit arrangements:
Artisan Funds, Inc. is party to a line of credit agreement with State
Street Bank and Trust Company, under which the Fund may borrow 10% of net
assets up to a maximum of $30 million. Artisan Funds, Inc. pays a
commitment fee of 0.10% on the unused portion of the line of credit. This
fee is allocated to each fund in the series based on relative net assets.
Interest is charged on any borrowings at the current Federal funds rate
plus 0.75%. The use of the line of credit is generally restricted to
temporary borrowing for extraordinary or emergency purposes. The Fund made
no borrowing under the line of credit during the period.

SEMI-ANNUAL REPORT 18

ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
(UNAUDITED)
(7) Income tax information:
Aggregate gross unrealized appreciation (depreciation) on investments as of
December 31, 1997, based on investment cost of $259,893,560 for federal tax
purposes, is as follows:

Aggregate gross unrealized appreciation on investments $43,784,935
Aggregate gross unrealized depreciation on investments (10,933,272)
-----------
Net unrealized appreciation $32,851,663
===========

The difference between cost amounts for financial reporting and tax
purposes is due primarily to timing differences in recognizing certain
gains and losses on security transactions.

19 SEMI-ANNUAL REPORT

(LOGO)
ARTISAN FUNDS

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