ANNUAL
REPORT
SMALL CAP FUND (LOGO) MID CAP FUND
INTERNATIONAL FUND SMALL CAP VALUE FUND
ARTISAN FUNDS
JUNE 30, 1999
<PAGE>
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Dear Fellow Shareholders,
Thank you for investing with Artisan Funds. We're pleased to send you this
annual report, covering the Funds' activities for our fiscal year, July 1, 1998
through June 30, 1999.
The resourcefulness of our portfolio managers was rewarded as our fiscal year
ended. Congratulations to Mark Yockey and the Artisan International Fund team as
the Fund achieved the highest rating awarded by Morningstar, a 5-star (*****)
rating, for the overall and 3-year periods ended June 30, 1999 among the 987
funds in its foreign stock fund category. Andy Stephens, our Mid Cap Fund
manager, produced impressive actual and relative returns. Small Cap Value Fund,
led by Scott Satterwhite, garnered attractive relative results. And, Artisan
Small Cap Fund was bolstered when Marina Carlson joined Carlene Murphy Ziegler
as co-manager.
We note that the markets broadened as our fiscal year was ending, affirming, we
believe, that market cycles haven't disappeared. Whatever the investing
environment, our portfolio managers have proven themselves very capable. As
we've stated many times, "We believe that experienced, active managers employing
high-value-added strategies can provide outstanding returns over time."
If you have questions about this report, or need additional information on our
Funds, please call us at 1-800-344-1770. An Artisan Funds representative will be
happy to help you.
Again, thank you for investing with Artisan Funds. We value your confidence in
us.
Sincerely,
/s/Andrew A. Ziegler
Andrew A. Ziegler
Chairman
Performance information is historical and does not guarantee future results.
International, small-cap and mid-cap investments involve special risks, which
are discussed in the prospectus. Please read the prospectus carefully before you
invest or send money. Investment return and principal value of an investment in
the Funds will fluctuate and on redemption may be worth more or less than an
investor's cost. The average annual total return of Artisan International's
International Shares for the one-year period ended June 30, 1999, and for the
life of the Fund (December 28, 1995) through June 30, 1999, was 17.38% and
24.01%, respectively. Morningstar proprietary ratings reflect historical risk-
adjusted performance as of 6/30/99. The ratings are subject to change every
month. Morningstar ratings are calculated from the fund's 3-, 5-, and 10-year
average annual returns (if applicable) in excess of 90-day T-bill returns with
appropriate fee adjustments, and a risk factor that reflects fund performance
below 90-day T-bill returns. The top 10% of the funds in an investment class
receives 5 stars.
<PAGE>
ARTISAN
FUNDS
Table of Contents
LETTERS TO SHAREHOLDERS
Small Cap Fund 2
International Fund 8
Mid Cap Fund 14
Small Cap Value Fund 20
SCHEDULES OF INVESTMENTS
Small Cap Fund 26
International Fund 30
Mid Cap Fund 35
Small Cap Value Fund 39
STATEMENTS OF
ASSETS AND LIABILITIES 44
STATEMENTS OF OPERATIONS 45
STATEMENTS OF
CHANGES IN NET ASSETS 46
FINANCIAL HIGHLIGHTS 48
NOTES TO
FINANCIAL STATEMENTS 50
INDEPENDENT
ACCOUNTANT'S REPORT 57
ARTISAN FUNDS
C/O BOSTON FINANCIAL DATA SERVICES
P.O. BOX 8412
BOSTON, MA 02266-8412
(800) 344-1770
This report and the financial statements contained herein are provided for the
general information of the shareholders of Artisan Funds. This report is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. For more information on any Fund,
including fees and expenses, please call (800) 344-1770 for a free prospectus.
Read it carefully before you invest or send money.
Artisan Funds offered through Artisan Distributors LLC, 1000 North Water Street,
Milwaukee, WI 53202, member NASD.
<PAGE>
ARTISAN
SMALL CAP FUND
Letter to Shareholders - August 20, 1999
THE FUND'S PERFORMANCE
Artisan Small Cap Fund's fiscal year concluded positively as the Fund gained
12.8% for the quarter ending June 30, 1999, benefiting, we believe, from our
repositioning of the Fund's portfolio. This repositioning began in 1998 and in
March the portfolio was reviewed again when Marina Carlson joined the team as
co-manager of the Fund.
COMPARATIVE QUARTERLY PERFORMANCE
ARTISAN RUSSELL LIPPER SMALL
SMALL CAP FUND 2000 INDEX CAP FUND INDEX
03/28/95 $10,000.00 $10,000.00 $10,000.00
06/30/95 $11,520.00 $10,961.79 $10,895.63
09/30/95 $12,650.00 $12,044.36 $12,257.69
12/31/95 $13,283.00 $12,305.44 $12,427.03
03/31/96 $14,059.02 $12,933.35 $13,128.04
06/30/96 $14,784.64 $13,580.30 $14,170.31
09/30/96 $14,159.80 $13,626.24 $14,348.86
12/31/96 $14,857.94 $14,335.13 $14,212.19
03/31/97 $14,149.90 $13,593.88 $12,873.76
06/30/97 $16,459.20 $15,797.49 $15,062.56
09/30/97 $18,626.89 $18,148.64 $17,359.24
12/31/97 $18,226.31 $17,540.90 $16,346.52
03/31/98 $19,565.91 $19,305.30 $18,098.56
06/30/98 $18,883.22 $18,405.28 $17,400.24
09/30/98 $13,976.03 $14,697.40 $13,677.49
12/31/98 $15,770.73 $17,094.44 $16,206.75
03/31/99 $13,891.24 $16,167.17 $15,441.44
06/30/99 $15,671.81 $18,681.40 $17,734.25
ARTISAN SMALL CAP FUND
AVERAGE ANNUAL TOTAL RETURNS
One Year: -17.01%
Since Inception: 11.11%
<TABLE>
<CAPTION>
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1995 1996 1997 1998 1999
QUARTERLY --------------------------------------------------------------------------------------------------------------------
PERFORMANCE 6/95 9/95 12/95 3/96 6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <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% 7.3% -3.5% -26.0% 12.8% -11.9% 12.8%
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Russell
2000 Index 9.6% 9.9% 2.2% 5.1% 5.0% 0.3% 5.2% -5.2% 16.2% 14.9% -3.3% 10.1% -4.7% -20.1% 16.3% -5.4% 15.6%
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Lipper Small
Cap Fund Index 9.0% 12.5% 1.4% 5.6% 7.9% 1.3% -1.0% -9.4% 17.0% 15.2% -5.8% 10.7% -3.9% -21.4% 18.5% -4.7% 14.8%
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</TABLE>
PERFORMANCE DATA REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
AN INVESTMENT IN A MUTUAL FUND THAT CONCENTRATES ITS PORTFOLIO IN THE STOCKS OF
SMALLER COMPANIES MAY PRESENT ADDITIONAL RISKS INCLUDING A SHORTER HISTORY OF
OPERATION, HIGHER VOLATILITY AND LESS LIQUIDITY, ALL OF WHICH ARE DISCUSSED IN
THE PROSPECTUS. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
Investment return and principal value will fluctuate so that an investor's
shares in the Fund, when redeemed, may be worth more or less than their original
cost. The graph compares the results of $10,000 invested in Artisan Small Cap
Fund on March 28, 1995 (the date the Fund began operations) with the Russell
2000 Index and the Lipper Small Cap Fund Index. The Russell 2000 Index is an
unmanaged, market-weighted index of 2000 small companies. The Lipper Small Cap
Fund Index reflects the net asset weighted return of the 30 largest small-cap
funds. All index returns include reinvested dividends but do not include the
payment of sales commissions or other expenses incurred in the purchase of the
securities included in the index.
<PAGE>
The Fund also posted an identical 12.8% gain for the quarter ending December 31,
1998. However, these double-digit gains and a positive trend weren't enough to
overcome the substantial discounting of small-caps by the markets that for the
12-month period left the Fund with a decline of 17.01%.
For the fiscal year, the Fund's benchmark, the Russell 2000 Index, gained 1.50%,
and its peer group, the Lipper Small Cap Fund Index, gained 1.92%. In contrast,
the market's unequivocal preference for large, liquid companies pushed the S&P
500 Index to gain 22.77% over the same period.<F1>
TWELVE MONTH REVIEW
We attribute our under-performance to several factors. One was our bias toward
smaller market caps. The markets did not favor them. The markets favored large-
caps as shown by a comparison of the S&P 500 Index return to the return of the
Russell and Lipper indexes discussed earlier. The capitalization size
relationship even was evident in the small-cap universe. As tracked through the
Russell 2000, the companies with the index's larger capitalizations performed
better. We responded by increasing the Fund's median market cap during the year.
It moved from $333 million on June 30, 1998, to $656 million on June 30, 1999.
However, we have limits. Our process allows us to purchase companies with
capitalizations up to $1 billion only, and mandates a sale when they reach $1.5
billion.
Our lack of exposure to internet stocks also hurt us. This small group of
companies - 52 of the 2000 stocks in our index - rose meteorically during the
year. If the gains from these securities were removed from the Russell Index,
the index's performance would have declined 1.49% for the year ended June 30,
1999, instead of being up 1.50%. The Internet is exciting and viable. However,
with few exceptions, Internet companies, particularly the highly publicized
firms, do not fit our growth-at-a-reasonable-price model.
Internet issues aside, our growth-at-a-reasonable-price strategy was not
rewarded during much of the fiscal year. The market continually displayed a
fascination for rapidly growing companies trading at very high valuations, and
with investors consistently paying a premium for predictable earnings growth.
Moreover, our search for attractive valuations resulted in the purchase of some
lower quality companies that failed to meet our earnings expectations. In our
opinion, this situation was exacerbated because of the market prejudice against
small-caps. When they failed to meet market earnings expectations, these small-
cap companies were punished more severely than we would have expected.
<F1>The S&P 500 Index, an unmanaged index of common stocks with dividends
reinvested, is a market-weighted average of 500 large companies.
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP FUND
<PAGE>
Historically, our valuation discipline has enabled us to hold onto our gains in
down markets, like the third quarter of `98, but this particular decline was
liquidity-driven, and our relatively small market cap holdings hurt us. In the
first quarter of `99, small-caps in general declined again, and the Internet
stocks in our index accounted for most of its out-performance vs. our portfolio.
The second quarter of `99 was quite a different story. After the Internet stocks
reached their peak on April 13, our Fund outperformed the Russell 2000, rising
14.92% vs. 10.09%, through the period ending June 30, 1999.
As the Fund's relative weaknesses revealed themselves during the year, we took
steps to strengthen and restructure the portfolio. To help reduce volatility, we
sold characteristically small, less liquid and leveraged holdings. Conversely,
we added larger companies with more predictability in their earnings growth. And
we increased our focus on managements' ability to enhance shareholder value. An
especially critical element in the mix was Marina Carlson, who joined the Fund
as co-manager in March. Marina's focus on sustainable growth and return on
invested capital, as well as her strong valuation discipline, proved invaluable
in raising the quality of our holdings.
In the quarter ended June 30, we began to reap the rewards of this
restructuring. Our restructuring efforts, coupled with a broadening in the
market, resulted in much stronger fund performance. A number of our tech
holdings rose over 20%. And takeover proposals increased, as strategic investors
recognized the value we placed on these stocks. Most were taken over at
significant premiums to their prevailing prices.
For the year as a whole, many of our stocks generated sizeable gains. The
biggest winners are shown below, along with the stocks that most hurt our
performance.
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TOP 5 GAINERS<F1> TOP 5 LOSERS<F1>
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SECURITY % SECURITY %
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Fingerhut 142.9 Franchise Mortgage -64.4
Jefferies Group 72.2 Tokheim -59.1
Galileo Technology 66.8 General Cable -42.1
Medical Manager 66.5 Healthcare Recoveries -40.4
Talbots 39.3 HealthCare Financial Partners -26.5
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<F1> For the year ended June 30, 1999, these are the holdings that made the
largest dollar difference in the portfolio. While some minor holdings
experienced greater percentage changes in price, the change in their dollar
value, did not, on an individual basis, have as meaningful an effect on the
Fund's net assets.
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP FUND
<PAGE>
We purchased each of the Top 5 Gainers at significant discounts to the highs
they had reached in early `98. Fingerhut was later taken over by Federated at a
premium. Brokerage stocks, including Jefferies Group, rallied from their very
depressed levels of last summer. Galileo Technology rode the communications wave
with its Ethernet switches. Medical Manager rose on a takeover by Synetic. And
Talbots' sales improved thanks to renewed focus on its core customer.
Among our losers, Franchise Mortgage was a victim of the securitization market's
collapse in 1998. Tokheim fell after making a very dilutive acquisition. General
Cable was hurt by pricing pressure in the building wire market. And Healthcare
Recoveries felt the increasing competitiveness of the subrogation business. All
of these losses were exacerbated by the generally weak market for small-caps.
We added a number of new holdings, most notably in technology, energy and
consumer services. The Sector Diversification chart on page 6 shows the changes
between December 31, 1998 and June 30, 1999. One of the largest increases in
weighting from 14.9% to 20.9% came in technology, where we focused on a few
broad themes, including communications equipment and contract manufacturing. In
energy, our weighting increased from 3.6% to 6.4%, as industry fundamentals
improved. Consumer services, which grew to 24.2%, is a growing part of the
economy and offers many above-average growth companies with attractive
valuations. By our definition, consumer services encompass a range of
industries, including retailing, restaurants, media, entertainment, lodging,
education and personal care services.
A number of our sales for the year were related to repositioning the portfolio
with larger, more liquid, and what we considered more stable holdings. Among the
smaller, less-liquid holdings we sold were CTB International, Southern Energy
Homes, PCD, International Comfort Products and Hastings Entertainment. We also
reduced our exposure to financial and healthcare stocks because of deteriorating
fundamentals and more attractive opportunities elsewhere. Among these sales were
Silicon Valley Bancshares, Franchise Mortgage, Prime Medical Services and
Healthcare Recoveries.
Though relieved that this year is finally behind us, we're greatly encouraged by
the most recent quarter. We believe that the broadening out of the market after
April 13 bodes well for small-caps in general and for our portfolio in
particular. We're confident that our restructuring efforts will continue to
serve us well, with a portfolio that's well positioned for the growth we hope to
achieve.
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP FUND
<PAGE>
PORTFOLIO CHARACTERISTICS
On June 30, 1999, the Fund held 83 stocks diversified across virtually all major
sectors of the economy. Our Top Ten holdings represented 18.3% of net assets,
and our median market capitalization was $656 million up from $333 million last
year. Based on 1999 estimates, our holdings had a median projected annual growth
rate of 24%, well above their median P/E of 19x. In other words, we owned these
stocks at a significant discount to the growth rate of the underlying companies.
Moreover, the median price of our stocks was just 77% of our assessment of their
intrinsic value.
- ----------------------------------------------------------------------------
TOP TEN HOLDINGS<F1>
- ----------------------------------------------------------------------------
COMPANY NAME % %
- ----------------------------------------------------------------------------
HealthCare Financial
Partners REIT, 144A 2.4 Penton Media 1.7
- ----------------------------------------------------------------------------
CEC Entertainment 2.0 ShopKo Stores 1.6
- ----------------------------------------------------------------------------
Wild Oats Markets 2.0 Morrison Health Care 1.6
- ----------------------------------------------------------------------------
AptarGroup 2.0 ChoicePoint 1.6
- ----------------------------------------------------------------------------
Community First Bankshares 1.8 Midwest Express Holdings 1.6
- ----------------------------------------------------------------------------
TOTAL 18.3%
- ----------------------------------------------------------------------------
<F1> As a percentage of total net assets as of June 30, 1999.
As you can see in the table below, the Fund's holdings on June 30, 1999,
remained broadly diversified by economic sector. We attempt to have exposure to
all industry sectors, and our research typically enables us to do so. We believe
this approach helps to reduce volatility, yet places emphasis on picking stocks,
which is where we seek to add the most value. As noted, our largest commitments
are in consumer services and technology.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION (%)<F2>
- --------------------------------------------------------------------------------
WEIGHTING WEIGHTING
- --------------------------------------------------------------------------------
SECTOR 6/30/99 12/31/98 SECTOR 6/30/99 12/31/98
- --------------------------------------------------------------------------------
Basic Materials 7.4 6.6 Real Estate
Investment Trusts 3.4 2.9
- --------------------------------------------------------------------------------
Capital Goods 3.2 2.0 Services
- -------------------------------------- Business Services 10.2 10.3
Consumer Cyclical 0.0 1.5 Consumer Services 24.2 21.7
- --------------------------------------------------------------------------------
Consumer Non-Cyclical 3.9 2.7 Technology 20.9 14.9
- --------------------------------------------------------------------------------
Energy 6.4 3.6 Transportation 3.8 1.8
- --------------------------------------------------------------------------------
Financial 6.3 9.5 Utilities 1.2 1.6
- --------------------------------------------------------------------------------
Healthcare 7.8 12.9 Other assets
less liabilities 1.3 8.0
- --------------------------------------------------------------------------------
TOTAL 100.0%
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<F2> As a percentage of total net assets as of June 30, 1999, and December 31,
1998, respectively.
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP FUND
<PAGE>
OUTLOOK AND STRATEGY
Looking ahead, we see reasons for optimism.
- - On a macro level, the economy continues to be strong, inflation and interest
rates are still low, although they are beginning to move upward, and the
economies of Asia and Latin America appear to be on the mend.
- - The sustained strength of small-cap stocks in the most recent quarter might,
at last, signal the end of market dominance by large-caps. To us, it would
make sense. Relative to large-caps, small-caps are more attractively valued
than they've been in a very long time.
- - We wouldn't be at all surprised to see additional and perhaps accelerated
takeover activity in the small-cap sector.
- - On June 30, a number of Internet stocks were deleted from the Russell 2000
Index, our performance benchmark, because their market value grew beyond the
index's capitalization parameters. We believe the Russell will now more
accurately reflect a larger universe of small-cap securities because these
stocks benefited from momentum investing that has cooled with the markets
rotating to into more small- and mid-cap securities.
- - The companies in our reconfigured portfolio offer better visibility of
earnings, thus refining our research efforts and raising our comfort level.
As we start the new fiscal year, we're pleased with managements' earnings
projections.
We're also pleased with the results of our portfolio restructuring efforts.
Nonetheless, we'll monitor closely, fine-tune as necessary and make those
changes we believe will help to adapt and strengthen the Fund for better
investment performance.
Thank you for your confidence.
Sincerely,
/s/Carlene Murphy Ziegler /s/Marina T. Carlson
Carlene Murphy Ziegler Marina T. Carlson
Portfolio Manager Portfolio Manager
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP FUND
<PAGE>
ARTISAN
INTERNATIONAL FUND
Letter to Shareholders - August 20, 1999
THE FUND'S PERFORMANCE
The Fund rose 17.38% for the twelve months ended June 30, 1999. The Fund's
performance benchmark, the Morgan Stanley EAFE Index (EAFE) rose 7.62%; and its
peer group, the Lipper International Fund Index (Lipper), returned 4.00%. Since
inception, December 28, 1995, the Fund has an average annual return of 24.01%
compared to 8.87% and 11.86% for EAFE and Lipper, respectively, through June 30,
1999. For the periods ended June 30, 1999, the Fund ranked #1 since inception
(December 28, 1995) and #30 for one year, based on total return, out of 306 and
570 international funds, respectively, as tracked by Lipper Inc.
COMPARATIVE QUARTERLY PERFORMANCE
ARTISAN LIPPER
INTERNATIONAL FUND EAFE INDEX INTERNATIONAL FUND INDEX
12/28/95 $10,000.00 $10,000.00 $10,025.37
03/31/96 $10,910.00 $10,288.95 $10,467.28
06/30/96 $12,080.00 $10,451.74 $10,894.57
09/30/96 $12,220.00 $10,438.63 $10,902.89
12/31/96 $13,437.23 $10,604.70 $11,471.87
03/31/97 $14,153.48 $10,438.60 $11,756.05
06/30/97 $14,607.44 $11,793.25 $13,071.82
09/30/97 $14,839.46 $11,710.22 $13,322.30
12/31/97 $13,902.49 $10,793.24 $12,303.30
03/31/98 $16,714.22 $12,380.92 $14,128.57
06/30/98 $18,131.25 $12,512.37 $14,248.54
09/30/98 $14,716.77 $10,733.87 $12,000.45
12/31/98 $18,376.02 $12,951.55 $13,861.03
03/31/99 $20,439.33 $13,131.73 $14,038.65
06/30/99 $21,282.89 $13,465.42 $14,817.92
ARTISAN INTERNATIONAL FUND
AVERAGE ANNUAL TOTAL RETURNS
One Year: 17.38%
Since Inception: 24.01%
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
1996 1997 1998 1999
QUARTERLY ---------------------------------------------------------------------------------------------------------------
PERFORMANCE 3/96 6/96 9/96 12/96 3/97 6/97 9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <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% 20.2% 8.5% -18.8% 24.9% 11.2% 4.1%
- -----------------------------------------------------------------------------------------------------------------------------------
EAFE Index 2.9% 1.6% -0.1% 1.6% -1.6% 13.0% -0.7% -7.8% 14.7% 1.1% -14.2% 20.7% 1.4% 2.5%
- -----------------------------------------------------------------------------------------------------------------------------------
Lipper International
Fund Index 4.4% 4.1% 0.1% 5.2% 2.5% 11.2% 1.9% -7.6% 14.8% 0.8% -15.8% 15.5% 1.3% 5.6%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE DATA REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
INTERNATIONAL INVESTMENTS INVOLVE SPECIAL RISK CONSIDERATIONS, INCLUDING
CURRENCY FLUCTUATION, SOMETIMES LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS,
AND DIFFERENT ACCOUNTING METHODS, WHICH ARE DISCUSSED IN THE PROSPECTUS. PLEASE
READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. Investment return and
principal value will fluctuate so that an investor's shares in the Fund, when
redeemed, may be worth more or less than their original cost. The graph
compares the results of $10,000 invested in the Artisan International Fund on
December 28, 1995 (the date the Fund began operations) with the Morgan Stanley
Capital International Europe, Australasia and Far East (EAFE) Index and the
Lipper International Fund Index. EAFE performance, when used in comparison to
the Fund's inception date, is calculated starting 12/31/95. The EAFE Index 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 weighted return of the 30 largest
international funds including Artisan International Fund. All index returns
include reinvested dividends but do not include the payment of sales commissions
or other expenses incurred in the purchase of the securities included in the
index. All information on performance of the Artisan International Fund included
in this report is for its International (retail) shares.
<PAGE>
OUR INVESTMENT APPROACH
Before we review the fiscal year, let's briefly touch on our investment
approach. International markets can provide investors with growth opportunities
that are distinct from those available in the U.S. Some are created by political
or economic change; others by business trends such as deregulation and
privatization, corporate restructuring and consolidation or technological
expansion.
The Fund looks to identify these attractive growth themes. The management team
combines intensive fundamental analysis with extensive international travel to
identify those companies that appear best positioned to capitalize on the
identified themes. Among the criteria that management seeks to identify are:
- Sustainable growth - 10% to 40% annually
- Reasonable valuation - often defined as a P/E ratio at a discount to the
expected growth rate
- Strong industry presence - a dominant or accelerating position
- Effective management - with a focus on shareholder value
TWELVE MONTH REVIEW
The Fund's fiscal year performance was gratifying, especially when we review
some of the developments in the international markets. For example, during the
fiscal year the Fund was proportionally more heavily weighted in Europe than in
Asia when compared to EAFE. As it turned out, these relative weightings were
hardly in our favor. Consider the following:
- As we commented in our July 1999 Quarterly Update, individual Asian
markets, Indonesia, Korea and Malaysia for example, outpaced many others
in continental Europe such as the United Kingdom, Italy, France and
Germany, during the past 12 months. One reason Europe trailed those
markets was the moderate slowing in the rate of economic growth the
region experienced throughout the year.
- The Euro, Europe's new common currency, persistently declined in value
relative to the U.S. dollar following its launch on January 1, 1999.
Because we typically do not hedge currencies, a declining Euro had an
unfavorable effect on Fund holdings.
Although these events were unfavorable to performance, the Fund was able to
significantly outperform its index for the fiscal year through good stock-
picking. As we've said in other reports, we're bottom-up investors and our
country allocations are a residual of stock selection. Stock picking is where we
add value and the foundation of stock selection is our own research.
Our research efforts paid off during the volatile periods. Unsettled conditions
in emerging markets, primarily Russia, created turmoil in markets worldwide. So
we reviewed our research and assessed our positions, replacing some of our less
favored holdings such as Credit Suisse, and its exposure to Russia, with quality
companies that had been beaten down. For example, we added companies such as
Global Crossing, an international telecommunications company, and Axa, a
financial
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
services provider which were on our "Watch List" but had been priced too high.
As the international markets rallied during the final quarter of 1998, we took
profits selectively. The rapidity of the international market rebound that
followed the sharp correction confirmed once again the futility of trying to
time the markets in the short-term.
The international markets were mixed in early 1999 and the Fund benefited from
its positions in telecom and financial services stocks. Also, the introduction
of the Euro gave European markets a brief bounce as portfolio managers increased
trading activity to rebalance their holdings. In March, the Fund's European
holdings fared quite well even as European markets gave back some gains on news
of slower European GNP growth rates and rising unemployment levels.
In April we added new positions in European telecom, banking and media companies
despite reports of a macro-economic slowdown. We believe the markets are
underestimating the ability of these and other European companies to grow their
margins, such as U.S. companies did in the 1980's. Also, we took advantage of
the weakness in Brazil to add to our Brazilian telecom holdings and increased
our exposure in Asia.
Our stock selection process goes beyond the essential review of statistics and
data when we review a security for the portfolio. Vital to our process are face-
to-face meetings with company management, as well as their bankers, suppliers,
customers and competitors. Such meetings are especially revealing in periods of
uncertainty.
During the fiscal year, we made numerous trips to both Europe and Asia. We
wanted first-hand confirmation that our investments were sound and that names on
our prospect list deserved to be there. We were reassured by the information we
gathered.
- --------------------------------------------------------------------------------
REGION/COUNTRY ALLOCATION (%)<F1>
- --------------------------------------------------------------------------------
REGION/COUNTRY WEIGHTING REGION/COUNTRY WEIGHTING
- --------------------------------------------------------------------------------
United Kingdom 21.4 Japan 4.9
France 8.1 Australia 2.3
Switzerland 7.7 Singapore 0.8
Italy 7.6 New Zealand 0.4
Netherlands 6.0 -------
Germany 5.5 ASIA/PACIFIC TOTAL 8.4%
Sweden 3.6 Brazil 3.5
Spain 2.7 Mexico 2.3
Finland 2.2 -------
Austria 0.7 LATIN AMERICA TOTAL 5.8%
Norway 0.4 Canada 13.1
Ireland 0.3 Bermuda 2.6
Portugal 0.3 -------
Luxembourg 0.2 NORTH AMERICA TOTAL 15.7%
Poland 0.2
Denmark 0.1
------
EUROPE TOTAL 67.0% OTHER ASSETS LESS LIABILITIES 3.1%
- --------------------------------------------------------------------------------
TOTAL 100.0%
- --------------------------------------------------------------------------------
<F1> As a percentage of total net assets as of June 30, 1999
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
Trips to assess the post-Euro landscape in early 1999 re-affirmed our belief in
the region's enormous potential. The trends that had attracted us to European
companies remained fully in force, including deregulation and privatization,
consolidation and restructuring, a growing commitment to shareholder value and
an emerging equity culture. Also, the January 1, 1999, introduction of the
European common currency should integrate the European markets in the long-term.
In our opinion, the current European economic environment of low inflation, low
interest rates and strengthening consumer spending appears to be positive for
equities, despite earlier concerns about slower economic growth in the region.
Asia was an entirely different story. Despite the apparent bottoming of Asia's
battered economies and the recent strength of its equity markets, we continue to
be wary. We fail to see concrete evidence of the broad structural change we
believe is needed and remain highly selective about our purchases in this
region.
PORTFOLIO CHARACTERISTICS
On June 30, 1999, total net assets in the Fund were $1,123.5 million, the median
market cap of the Fund's holdings was $3.7 billion, and its weighted average
market cap was $17.6 billion. Based on 1999 estimates, our weighted average P/E
is 25x. On June 30, we were 96.9% invested in equities, which we consider fully
invested.
Our sector holdings remain broadly diversified. We continue to favor
telecommunications. Deregulation, privatization, technological advances and the
growing acceptance of the Internet continue to create exceptional opportunities
in this sector. Also, we hold numerous companies in Europe's banking and
insurance sectors, which we still consider in the early stages of consolidation.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION (%)<F1>
- --------------------------------------------------------------------------------
SECTOR 6/30/99 12/31/98
- --------------------------------------------------------------------------------
Basic Materials 0.0 0.4
- --------------------------------------------------------------------------------
Consumer Cyclical 17.9 13.2
- --------------------------------------------------------------------------------
Consumer Non-Cyclical 11.5 14.4
- --------------------------------------------------------------------------------
Energy 0.0 0.1
- --------------------------------------------------------------------------------
Financial 21.8 25.3
- --------------------------------------------------------------------------------
Industrial 5.9 7.8
- --------------------------------------------------------------------------------
Technology 6.2 5.5
- --------------------------------------------------------------------------------
Telecommunications Equipment and Services 25.1 23.5
- --------------------------------------------------------------------------------
Utilities 8.5 6.2
- --------------------------------------------------------------------------------
TOTAL COMMON AND PREFERRED STOCKS 96.9 96.4
- --------------------------------------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS 3.0 9.9
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS 99.9 106.3
- --------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES 0.1 (6.3)
- --------------------------------------------------------------------------------
TOTAL 100.0% 100.0%
- --------------------------------------------------------------------------------
<F1> As a percentage of total net assets as of June 30, 1999, and December 31,
1998, respectively
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
Yet, in these sectors, only one stock represents more than 3% of net assets.
- ------------------------------------------------------------------------------
TOP TEN HOLDINGS (%)<F1>
- ------------------------------------------------------------------------------
COMPANY NAME COUNTRY %
- ------------------------------------------------------------------------------
AT&T Canada, Inc.<F2> Canada 5.3
- ------------------------------------------------------------------------------
Colt Telecom Group PLC United Kingdom 2.9
- ------------------------------------------------------------------------------
Securicor PLC United Kingdom 2.8
- ------------------------------------------------------------------------------
UBS AG Switzerland 2.6
- ------------------------------------------------------------------------------
Global Telesystems Group, Inc. Bermuda 2.6
- ------------------------------------------------------------------------------
Nortel Networks Corporation Canada 2.1
- ------------------------------------------------------------------------------
Telewest Communications PLC United Kingdom 2.1
- ------------------------------------------------------------------------------
Racal Electronics PLC United Kingdom 2.1
- ------------------------------------------------------------------------------
BIPOP SPA Italy 2.1
- ------------------------------------------------------------------------------
BCE Inc. Canada 1.9
- ------------------------------------------------------------------------------
TOTAL 26.5%
- ------------------------------------------------------------------------------
<F1> As a percentage of total net assets as of June 30, 1999
<F2> Formerly MetroNet Communications Corp.
- ------------------------------------------------------------------------------
TOP5 GAINERS<F3> TOP5 LOSERS<F3>
- ------------------------------------------------------------------------------
SECURITY % SECURITY %
- ------------------------------------------------------------------------------
AT&T Canada, Inc. 128.8 Cap Gemini NV -89.5
Nokia Corporation 113.6 Brunel International NV -53.3
Colt Telecom Group PLC 89.3 Dresdner Bank AG -21.2
Telewest Communications PLC 86.0 Roche Holding AG -15.0
Global Telesystems Group, Inc. 67.3 UBS AG -11.3
- ------------------------------------------------------------------------------
<F3> For the year ended June 30, 1999, these are the holdings that made the
largest dollar difference in the portfolio. While some smaller holdings
experienced greater percentage changes in price, the change in their dollar
value, did not, on an individual basis, have as meaningful an effect on the
Fund's net assets.
Telecommunications stocks accounted for some of the Fund's top performance for
the fiscal year. One example that doesn't appear on the Top Gainer list is
Energis PLC. This London-based company has performed well. Energis provides
telecom services, chiefly for the U.K. business market, including basic and
advanced telephony, data communications and connectivity, and customized
packages for business-critical applications.
Energis is growing rapidly. In its most recent fiscal year, revenues soared by
70%, helped by an impressive roster of high-profile clients. In 1998, Energis
received an award for excellence in service quality and customer care from the
Telecoms Managers Association. We believe this recognition enhances the
potential to continue attracting and retaining top-quality clients. Also, we see
potential for contracts elsewhere in Europe through recently announced joint
ventures with Deutsche Telecom, France Telecom and Viridian Group in Northern
Ireland. The possibility of an acquisition enhances our view of the company.<F1>
<F1> The profile of Energis PLC is for illustration only and is not intended as
a recommendation.
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
OUTLOOK AND STRATEGY
Looking ahead to the next twelve months, we see no reason to change our
fundamental strategy. We expect to maintain our commitment to Europe where the
convergence of a number of major trends points to extraordinary short- and long-
term opportunities.
We can't deny the exceptional long-term potential of Asia and while it's equity
markets have exhibited strength in recent months, we're not convinced that the
region's underlying problems have been addressed. Weak currencies, fragile
banking systems and irresolute governments are hardly the formula for sustained
economic recovery. On a highly selective basis, we raised our exposure to Asia
from 3.2% to 8.4% during the year. We'll continue to limit our investments to
those which meet our growth and valuation parameters.
Ditto for Latin America. Its long-term potential is evident, but for now, many
uncertainties persist. While Brazil and Mexico both seem on the mend in recent
months, they haven't yet shown the political will for consistent economic
change.
As you may have noticed, we ended the year with 15.7% of net assets in Canada
and Bermuda. We've found some dynamic companies - chiefly telecom - in these
countries, and intend to keep digging for more opportunities.
As always, wherever we invest, we'll stay focused on the strategy that has
served us well: to seek high-quality, well-managed growth companies selling at
attractive valuations. Thank you for your support of Artisan International Fund.
We will continue doing our very best to justify your confidence.
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.
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
ARTISAN
MID CAP FUND
Letter to Shareholders - August 20, 1999
THE FUND'S PERFORMANCE
Artisan Mid Cap Fund marked its second anniversary on June 27, 1999, and three
days later ended the fiscal year in celebratory fashion by outperforming both
its index and peer group for the 12-month period. Since inception the Fund has
outperformed its index every quarter.
The Fund returned 35.82% for the 12-month period ended June 30, 1999,
outdistancing its benchmark, the S&P 400 MidCap Index and its peer group as
measured by the Lipper Mid Cap Index, which rose 17.18% and 13.61%,
respectively.
COMPARATIVE QUARTERLY PERFORMANCE CHART
ARTISAN S&P 400 LIPPER
MID CAP FUND MID CAP INDEX MID CAP FUND INDEX
6/27/97 $10,000.00 $10,000.00 $10,000.00
6/30/97 $10,000.00 $9,969.74 $10,040.41
9/30/97 $12,550.00 $11,572.54 $11,455.41
12/31/97 $12,814.41 $11,669.02 $10,912.68
3/31/98 $14,713.64 $12,954.34 $12,293.70
6/30/98 $14,606.94 $12,676.83 $12,244.32
9/30/98 $13,067.61 $10,842.65 $10,046.77
12/31/98 $17,090.24 $13,899.40 $12,431.68
3/31/99 $17,161.65 $13,012.51 $12,529.08
6/30/99 $19,839.44 $14,854.65 $13,910.76
ARTISON MID CAP FUND
AVERAGE ANNUAL TOTAL RETURNS:
One Year: 35.82%
Since Inception: 40.59%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
1997 1998 1999
QUARTERLY -----------------------------------------------------------------------------------------------
PERFORMANCE 9/97 12/97 3/98 6/98 9/98 12/98 3/99 6/99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
ARTISAN MID CAP FUND 25.5% 2.1% 14.8% -0.7% -10.5% 30.8% 0.4% 15.6%
- ------------------------------------------------------------------------------------------------------------------------------
S&P 400 MidCap Index 16.1% 0.8% 11.0% -2.1% -14.5% 28.2% -6.4% 14.2%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper Mid Cap Fund Index 14.1% -4.7% 12.7% -0.4% -17.9% 23.7% 0.8% 11.0%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE DATA REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. Investment
return and principal value will fluctuate so that an investor's shares in the
Fund, when redeemed, may be worth more or less than their original cost. The
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 MidCap Index
and the Lipper Mid Cap Fund Index. The S&P 400 MidCap Index is an unmanaged,
market-weighted index of 400 mid-cap companies. The Lipper Mid Cap Fund Index
reflects the net asset weighted return of the 30 largest mid-cap funds. All
index returns include reinvested dividends but do not include the payment of
sales commissions or other expenses incurred in the purchase of the securities
included in the index.
<PAGE>
Also, for the periods ended June 30, 1999, Artisan Mid Cap Fund ranked #9 since
inception (June 27, 1997) and #28 for one year, based on total return out of 283
and 361 mid-cap funds, respectively, as tracked by Lipper Inc. Put another way,
since its inception, the Fund outperformed 96% of its peers.
Two themes emerge from the Fund's successful performance for the fiscal year.
One is the sometimes erratic, yet consistently narrow focus of the markets over
the past 12 months. The second is how our process held up in response to the
investment environment.
First we'll review our security selection process. Then, we'll examine how we
fared based on the challenges of the fiscal year, when markets expressed a taste
for securities typically not found in the Fund's portfolio.
OUR INVESTMENT APPROACH
We believe the mid-cap universe which we define as stocks we can purchase with
market caps of $600 million to $6 billion provides compelling investment
opportunities. While mid-caps involve more risk than large-caps, and small-caps
offer the potential for greater return than mid-caps, historical performance has
shown that mid-caps have provided higher returns than large-caps with less risk
than small-caps.<F1>
Because we consider ourselves stock pickers and not momentum players, we assess
values of individual companies. We do not seek to predict the direction of the
markets as a major element of our process. As we begin our evaluation process we
are looking for these attributes.
- We concentrate on COMPANIES WITH FRANCHISE CHARACTERISTICS. An
established franchise can bring a company a major competitive advantage and
protect it from some of the effects of competition. Over time, this feature can
lead to more stable cash flow and, ultimately, to higher valuations. Examples of
"franchise characteristics" are proprietary technology, a leading brand,
dominant market share or the position of low-cost producer.
- A franchise company SELLING AT A MEANINGFUL DISCOUNT TO ITS INTRINSIC
VALUE may offer superior long-term investment potential. We define "intrinsic
value" as the price a knowledgeable or strategic buyer would pay to own a
company's cash flow. Our estimate of this price guides our buying and selling
decisions, and we believe, helps to lower overall portfolio risk. We seek to buy
at an attractive discount and sell when the stock approaches intrinsic value.
- A company with franchise characteristics and an attractive valuation may
also be EXPERIENCING ACCELERATION IN ITS PROFIT CYCLE. This trend can be driven
by an internal catalyst such as restructuring or a new product launch or
external factors such as technical innovation or economic change. We try to spot
this trend early to achieve better perspective and anticipate consensus opinion,
thus investing with greater conviction.
<F1>Performance Numbers Make the Case for Mid-Caps, Journal of Investing, Spring
1994, pages 30-35, by Claudia E. Mott & Michele C. Eschert of Prudential
Securities
LETTER TO SHAREHOLDERS
ARTISAN MID CAP FUND
<PAGE>
We believe the mid-cap universe - generally less efficient than large-caps, and
more mature than small-caps - offers many established companies featuring
emerging franchise characteristics or poised to create powerful competitive
advantages. Our process often leads us to companies with solid long-term
business potential that may be temporarily out-of-favor or misunderstood by
the market.
TWELVE MONTH REVIEW
During our fiscal year, the market went through periods of significant
volatility. From Russia's meltdown to a decline in U.S. interest rates, there
was no lack of events to either spook or spark the markets. One consistent theme
throughout most of the period was a preference for large-cap companies and
Internet offerings, two factors that created challenges for the Artisan Mid Cap
Fund.
As discussed in the Semi-Annual Report dated December 31, 1998, the fiscal year
opened in July and August with economic and currency dislocations in emerging
markets. The U.S. equity markets responded with a serious decline. We couldn't
avoid the retreat, yet managed to outperform our index. We ended our first
fiscal quarter with a rally and continued to replace less favored positions with
companies that had valuations decline to what we consider an attractive level
because of the market drop.
Mid-caps continued to rally through our second fiscal quarter. In October,
November and December, investors experienced a sudden return of confidence, as
the Federal Reserve took a leadership role in shoring up the markets through
monetary policy. Cash flowed into the market, prices surged and our valuation
discipline compelled us to take some money off the table and begin to look at
cyclical industries.
During the first three months of 1999, strong economic growth created market
obsession with accelerated earnings prospects, most notably for large-cap
technology stocks and Internet-related issues. In general, neither group is
compatible with our investment discipline; however, our focus on accelerating
profit cycles enabled us to capture some of the action in the soaring technology
sector. Century Communications and Media One are both in the path of burgeoning
demand for broadband Internet access. Western Wireless and Centennial Cellular
are driven by innovations in wireless communications. Additionally, we
experienced some acquisition activity among our holdings, each at a price very
close to our assessment of their private market values.
The fiscal year ended with broader participation in the markets. In April,
strong earnings reports and indications of economic revival in Asia and Latin
America moved the market off its narrow focus on large-caps and the Internet to
include mid-caps, small-caps and long-dormant cyclicals. The markets continued
to broaden, though somewhat erratically, in May and June.
During the quarter, the Federal Reserve's concern with the inflationary impact
of profit growth caused the markets to rotate into economically sensitive
industries. The portfolio was well positioned as our investment criteria had led
us to a number of companies that benefited.
LETTER TO SHAREHOLDERS
ARTISAN MID CAP FUND
<PAGE>
Our buyouts deserve a special mention. During the fiscal year, our investment
process led us to own 10 companies that were bought out, or announced they would
be bought out, at premiums to their then-current market values. It was here that
our valuation discipline paid off, as strategic buyers confirmed the value that
we had identified in these companies. Takeovers help to provide validation that
our valuation models are working as expected.
Overall, we were pleased with the fiscal year's results. Our investment
discipline was clearly put to the test throughout the 12 months, and it served
us well. During the year it provided the Fund with a cushion in down markets,
while enabling participation in rallies.
- ------------------------------------------------------------------------------
TOP 5 GAINERS<F1> TOP 5 LOSERS<F1>
- ------------------------------------------------------------------------------
SECURITY % SECURITY %
- ------------------------------------------------------------------------------
Omnipoint Corporation 93.9 Sirrom Capital Corporation -43.0
Western Wireless Corporation 66.5 Safety-Kleen Corporation -37.9
Electronics for Imaging, Inc. 54.2 Cadence Design Systems, Inc. -24.6
Century Communication Corp. 46.0 Whitman Corporation -17.3
American Power Conversion Corp.18.9 Autodesk, Inc. -11.7
- ------------------------------------------------------------------------------
<F1> For the year ended June 30, 1999, these are the holdings that made the
largest dollar difference in the portfolio. While some minor holdings
experienced greater percentage changes in price, the change in their dollar
value, did not, on an individual basis, have as meaningful an effect on the
Fund's net assets.
Some of the best illustrations of our investment discipline don't make the Top 5
Gainer list. An example is OUTDOOR SYSTEMS, a solid performer we've owned since
the Fund's inception.<F1>
FRANCHISE. Outdoor Systems is the largest operator of billboards in North
America. Moreover, precious little new billboard capacity is emerging because of
state and local zoning regulations making the company's billboards a scarce
asset.
TRENDS. The company's profits accelerated because of several powerful trends in
its industry. The consolidation of the billboard industry - driven very much by
Outdoor Systems - enabled the company to gain scale in local markets and to
offer nationwide exposure and rates, particularly in the top 30 cities. In
recent years the industry attracted more business by substituting vinyl for
paper which dramatically raised the attractiveness and durability of signage.
Finally, Outdoor Systems was able to raise prices. Historically, billboard
advertising was priced at a significant discount to newspaper and radio
advertising. However, research revealed that billboard ads were seen at least
as frequently and carried at least as much impact as other media.
VALUATION. We've always been impressed with this company's management. Early on,
they were able to articulate their very clear vision for growth. In laying out
their plans for building the company, they enabled us to see real value based on
long-term cash flows.
Sad to say, this old friend will be leaving us. In May, Outdoor Systems agreed
to be purchased by Infinity Broadcasting, a company that is beyond our
investment focus because of its size. So we'd like to give a special thanks to
the company's President/CEO, Arturo (Arte) Moreno, for accomplishing what he
said he would. His leadership helped the Fund to prosper for two years.
<F1>The profile of Outdoor Systems is for illustration only and is not intended
as a recommendation.
LETTER TO SHAREHOLDERS
ARTISAN MID CAP FUND
<PAGE>
PORTFOLIO CHARACTERISTICS
We ended the fiscal year with 61 holdings spread across most major areas of the
economy. Our Top Ten holdings represented 27.4% of net assets. Our median market
cap of $2.3 billion, though higher than the June 30, 1998 median of $1.5
billion, was still near the low end of our capitalization range. Based on our
1999 estimates, our weighted average P/E of 12.5x was a bit above our weighted
average growth rate of 11.4%. And our median price/intrinsic value was 76%.
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (%)<F1>
- --------------------------------------------------------------------------------
COMPANY NAME % %
- --------------------------------------------------------------------------------
American Power Conversion Corp. 5.0 Zebra Technologies Corporation 2.4
- --------------------------------------------------------------------------------
Sybron International Corporation 2.9 Charter One Financial, Inc. 2.4
- --------------------------------------------------------------------------------
Mettler-Toledo International, Inc.2.8 Millipore Corporation 2.3
- --------------------------------------------------------------------------------
SunGard Data Systems, Inc. 2.5 Omnipoint Corporation 2.3
- --------------------------------------------------------------------------------
Universal Foods Corporation 2.5 SPX Corporation 2.3
- --------------------------------------------------------------------------------
TOTAL 27.4%
- --------------------------------------------------------------------------------
<F1> As a percentage of total net assets as of June 30, 1999
On June 30, 1999, the Fund remained broadly diversified by economic sector. We
regard it as strategically sound to participate in virtually every aspect of the
economy. Doing so also helps to reduce investment risk and to emphasize the area
where we add most value...picking stocks.
As we've stressed, attention to valuation is fundamental to our strategy. Given
investors' continued passion for large-caps during the year, our discipline led
us to opportunities at the smaller end of our cap range. That's where we were
able to find the most compelling values.
- -----------------------------------------------------------
SECTOR DIVERSIFICATION (%)<F2>
- -----------------------------------------------------------
WEIGHTING WEIGHTING
- -----------------------------------------------------------
INDUSTRY 6/30/99 12/31/98
- -----------------------------------------------------------
Basic Materials 6.5 4.0
- -----------------------------------------------------------
Capital Goods 8.9 4.6
- -----------------------------------------------------------
Conglomerates 1.3 0.0
- -----------------------------------------------------------
Consumer Cyclical 5.1 6.3
- -----------------------------------------------------------
Consumer Non-Cyclical 4.6 8.9
- -----------------------------------------------------------
Energy 5.3 2.0
- -----------------------------------------------------------
Financial 10.0 8.1
- -----------------------------------------------------------
Healthcare 5.4 9.3
- -----------------------------------------------------------
Real Estate Investment Trusts 2.2 6.7
- -----------------------------------------------------------
Services 17.7 10.4
- -----------------------------------------------------------
Technology 17.5 22.3
- -----------------------------------------------------------
Telecommunications 11.6 10.9
- -----------------------------------------------------------
Transportation 1.2 1.6
- -----------------------------------------------------------
Utilities 0.0 0.0
- -----------------------------------------------------------
Other assets less liabilities 2.7 4.9
- -----------------------------------------------------------
TOTAL 100.0% 100.0%
- -----------------------------------------------------------
<F2> As a percentage of total net assets as of June 30, 1999
and December 31, 1998, respectively
- ------------------------------------------------------
MARKET CAP DISTRIBUTION<F3>
- ------------------------------------------------------
MARKET ARTISAN S&P 400
CAP MID CAP FUND MIDCAP INDEX
(in $ billions) (%) (%)
- ------------------------------------------------------
$0.0 to 0.5 3.3 0.9
0.5 to 1.0 16.3 5.7
1.0 to 2.0 20.3 23.2
2.0 to 3.0 19.9 20.7
3.0 to 4.0 13.9 17.4
4.0 to 5.0 11.8 10.0
5.0 to 6.0 4.1 7.8
6.0 to 7.0 3.3 3.5
7.0 to 8.0 0.0 1.6
8.0+ 7.1 9.2
- ------------------------------------------------------
TOTAL 100.0% 100.0%
- ------------------------------------------------------
<F3> As a percentage of portfolio equities as of June 30, 1999
LETTER TO SHAREHOLDERS
ARTISAN MID CAP FUND
<PAGE>
LOOKING FORWARD
We see a number of reasons to be optimistic. The domestic economy is very
healthy, inflation and interest rates are still low, and many of Asia's
economies seem to be on the mend. We believe, too, that the markets - as
they did during the second quarter of 1999 should continue their renewed
interest in small- and mid-cap stocks.
For our part, we'll continue to follow our investment discipline to seek out
long-term growth opportunities. As always, we'll focus on well-managed companies
with good franchises, accelerating profit trends and attractive valuations. As
we mentioned in our July 1999 Quarterly Update for the Fund, we're pursuing
appropriate opportunities among technology companies. We are exploring the
telecommunications landscape. The expansion of its infrastructure and the
convergence of TV, computers and telephony via broadband intrigue us. And, we
believe the deregulation movement in the utilities sector will create compelling
opportunities among providers of water, natural gas and electricity.
However, as we've noted before, we're not thematic investors. We're stock
pickers. And we choose our stocks within a discipline that we're confident will
continue to serve us well. It's a balanced, long-term approach that enables us
to be prudently opportunistic in our decisions. This, we believe, is how we can
best help your assets grow.
Thank you for investing in Artisan Mid Cap Fund. We'll do our utmost to earn
your continued confidence.
Sincerely,
/s/Andrew C. Stephens
Andrew C. Stephens
Portfolio Manager
LETTER TO SHAREHOLDERS
ARTISAN MID CAP FUND
<PAGE>
ARTISAN
SMALL CAP VALUE FUND
LETTER TO SHAREHOLDERS - August 20, 1999
THE FUND'S PERFORMANCE
For Artisan Small Cap Value Fund, the fiscal year that concluded June 30, 1999,
ended far better than it started. Small-cap securities seized the attention of
the market during the fiscal year's final quarter and the Fund rose 21.4%, its
best performance for any quarter since its inception.
COMPARATIVE QUARTERLY PERFORMANCE CHART
Small Cap Russell 2000
Value Index Lipper SC Russell 2000
09/29/97 $10,000.00 $10,000.00 $10,000.00 $10,000.00
09/30/97 $9,990.00 $10,058.46 $10,050.73 $10,047.08
12/31/97 $10,310.00 $9,721.63 $10,219.65 $9,460.95
03/31/98 $11,220.00 $10,699.51 $11,073.02 $10,475.12
06/30/98 $11,370.00 $10,200.70 $10,673.17 $10,070.87
09/30/98 $9,078.70 $8,145.69 $8,765.13 $7,916.22
12/31/98 $9,716.55 $9,474.19 $9,560.36 $9,380.10
03/31/99 $9,270.05 $8,960.27 $8,633.62 $8,937.16
6/30/99 $11,258.01 $10,353.73 $10,063.01 $10,264.18
ARTISAN SMALL CAP VALUE FUND
AVERAGE ANNUAL TOTAL RETURNS:
One Year -0.98%
Since Inception 6.99%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
1997 1998 1999
QUARTERLY -------------------------------------------------------------------------------------
PERFORMANCE 12/97 3/98 6/98 9/98 12/98 3/99 6/99
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND 3.2% 8.8% 1.3% -20.2% 7.0% -4.6% 21.4%
- --------------------------------------------------------------------------------------------------------------------------------
Russell 2000 Index -3.3% 10.1% -4.7% -20.1% 16.3% -5.4% 15.6%
- --------------------------------------------------------------------------------------------------------------------------------
Lipper Small Cap Fund Index -5.8% 10.7% -3.9% -21.4% 18.5% -4.7% 14.8%
- --------------------------------------------------------------------------------------------------------------------------------
Russell 2000 Value Index 1.7% 8.4% -3.6% -17.9% 9.1% -9.7% 16.6%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE DATA REPRESENT PAST PERFORMANCE AND DO NOT GUARANTEE FUTURE RESULTS.
AN INVESTMENT IN A MUTUAL FUND THAT CONCENTRATES ITS PORTFOLIO IN THE STOCKS OF
SMALLER COMPANIES MAY PRESENT ADDITIONAL RISKS INCLUDING A SHORTER HISTORY OF
OPERATIONS, HIGHER VOLATILITY AND LESS LIQUIDITY, ALL OF WHICH ARE DISCUSSED IN
THE PROSPECTUS. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY.
Investment return and principal value will fluctuate so that an investor's
shares in the Fund, when redeemed, may be worth more or less than their original
cost. The 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 Index, the Russell 2000 Value Index and the Lipper Small Cap
Fund Index. The Russell 2000 Index is an unmanaged, market-weighted index of
2000 small companies. The Russell 2000 Value Index 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
weighted return of the 30 largest small-cap funds. All index returns include
reinvested dividends but do not include the payment of sales commissions or
other expenses incurred in the purchase of the securities included in the index.
<PAGE>
As we review the past 12 months, three themes emerge that are central in
discussing the Fund's performance.
- The preference of the financial markets for large-cap, liquid securities
and their avoidance of small-cap issues, especially small-cap securities
considered part of the value sector, causing the valuations of many small-caps
to plummet seemingly without regard to their earnings performance or intrinsic
value.
- Balancing the review of absolute performance with a discussion of
relative results to maintain a long-term perspective on the Fund's investment
objective.
- The significant efforts we made during the second half of the fiscal year
to reposition and upgrade the portfolio, and the results of those strategic
moves.
In the Semi-Annual Report dated December 31, 1998, we discussed the market's
enormous preference for large-caps over small-caps, growth stocks over value,
and Internet stocks over just about everything else. This narrow focus on large-
caps lasted well into 1999 creating a performance gulf that small-caps were not
able to erase in the short-term. As a result, absolute performance for the
fiscal year wasn't impressive for the Fund or the small-cap indexes.
For the twelve months ended June 30, 1999, the Russell 2000 Index and Lipper
Small Cap Index gained 1.50% and 1.92%, respectively. Artisan Small Cap Value
Fund declined 0.98%; however, the Russell 2000 Value Index declined 5.72%. In
contrast, for the 12 months ended June 30, 1999, the S&P 500 Index gained
22.77%.<F1>
Several factors led to the market's emphasis on large-caps. For example, many
investors feared the economies in the U.S. and Europe would fall into recession
because of the continuing financial troubles in many emerging economies.
Instead, both showed continued strength, which fueled a rally in cyclical shares
late in 1998, profoundly affecting capital goods and commodity-related stocks.
Also, the speculative bubble in Internets drained investment assets from small-
cap stocks, as did the continued strength of large-cap growth stocks in spite of
sluggish earnings, rising interest rate concerns and, in our view, stretched
valuations.
Despite an environment generally unfavorable to small-cap value securities, the
Fund delivered results. For the first two quarters of 1999, the Fund returned
15.86%, while the Russell 2000 Value Index and the Russell 2000 index posted
gains of 5.26% and 9.28%, respectively.
<F1> The S&P 500 Index, an unmanaged index of common stocks with dividends
reinvested, is a market-weighted average of 500 large companies.
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
TWELVE MONTH REVIEW
In last year's Annual Report, we suggested the coming year could provide a less
friendly environment for our investment style. Indeed, for most of the period
the market continued to ignore many small-cap securities until the rally that
began in April 1999. Nonetheless, the weaker periods offered us recurring
opportunities to invest in attractive companies at bargain prices.
July and August of 1998 proved particularly difficult markets for small-caps.
Liquidity concerns surfaced as the primary force driving down small-cap
valuations, and would remain the governing factor in segment performance through
March 1999. We became active buyers and sellers in the fall of 1998, removing
holdings in which we lost conviction and adding positions as opportunities
emerged in the areas most affected by the problems abroad. These included
energy, steel and other commodity-oriented companies, as well as capital goods
manufacturers. In both areas, we made new investments and added to existing
positions. The large-cap markets rallied as 1998 ended, with small-cap value
securities lagging well behind the already beaten down small-cap sector.
From January through March of 1999, the market continued to favor large-caps,
with many less visible small-cap companies suffering valuation declines despite
what we considered respectable earnings reports. However, the quarter saw merger
and acquisition activity in the small-cap sector, an action we identify as a
catalyst to potentially energize interest in small-caps. For example,
Pinkertons, a Top Ten holding in January agreed to be purchased by a British
concern. We sold it for a premium over the pre-announcement price.
- ------------------------------------------------------------------------------
TOP 5 GAINERS<F1> TOP 5 LOSERS<F1>
- ------------------------------------------------------------------------------
SECURITY % SECURITY %
- ------------------------------------------------------------------------------
Varlen Corporation 81.6 Esco Electronics Corp. -47.2
Pinkertons, Inc. 47.6 Risk Capital Holdings, Inc.-42.7
EMCOR Group, Inc. 45.6 R.G. Barry Corporation -38.7
Hilb, Rogal & Hamilton Co. 44.7 Host Marriott Services -37.8
Superior National Insurance Group 30.8 Gleason Corporation -21.7
- ------------------------------------------------------------------------------
<F1> For the year ended June 30, 1999, these are the holdings that made the
largest dollar difference in the portfolio. While some minor holdings
experienced greater percentage changes in price, the change in their dollar
value, did not, on an individual basis, have as meaningful an effect on the
Fund's net assets.
We continued our effort to upgrade the portfolio on a selective basis. We were
able again to move into title insurance companies, a sector we favor at
particular prices, as fears of rising interest rates bit into their valuations.
Other insurance stocks were also hit hard, enabling us to add to existing
holdings.
April brought broader market participation beyond the large-cap and Internet
focus. Even long-dormant cyclical securities came to life. The value segment of
the small-cap market, companies that we consider undervalued or selling at a
discount to the true value of the business, rebounded. The market's interest was
sparked by a strengthening domestic economy, the beginnings of economic recovery
in emerging markets, and earnings reports - even in small-caps - that were
generally better-than-expected.
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
The broadening continued through the end of June as the value camp continued to
hold its own with respect to the broader markets. The technical factors that had
dominated the return recipe all year - size, liquidity, momentum, sponsorship
and industry identification - finally gave way to long-term, fundamental
investment factors.
This shift in market taste suits us. It also gives us optimism that the markets'
valuation structure which we considered out of whack for some time - may be
returning to an emphasis on fundamental factors, an approach that could prove
beneficial to our investing style.
We believe the changes we made helped to strengthen the portfolio and better
position it for positive long-term growth. As the markets continued to discount
significantly the small-cap sector, we detected opportunities to add what we
considered higher-quality positions to the portfolio. At the same time, some
sectors received a short-term bounce in performance that provided us with
opportunities to sell positions that achieved their price objectives. Here are a
couple of examples.
An addition to the portfolio was CLARCOR, a company that manufactures filtration
and packaging products. It has a history of high returns and strong free cash
flow. We expect CLARCOR to continue its strategy of acquiring underperforming
companies, and to benefit from significant capital spending efforts.
In April the rising prices in energy stocks caused us to eliminate our positions
in UTI Energy and Atwood Oceanics when they attained our price objectives. We
bought them last winter, when the energy sector was out of favor.
Since December 31, 1998 our sector weightings changed because of realignment
activity. We significantly increased our weighting in Consumer Cyclicals, with
more modest increases in Basic Materials and Capital Goods. Our heaviest
weighting remains Financial, chiefly in the insurance industry. As was true six
months ago, we have little exposure to Healthcare, Consumer Non-Cyclical and
other sectors where we have difficulty finding companies that met our valuation
discipline.
The relative industry weighting reflects our inherent sense of caution. We
continue exposure to undervalued sectors of opportunity and are cautious in
areas we view as overvalued or likely to be volatile.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION (%)<F1>
- --------------------------------------------------------------------------------
WEIGHTING WEIGHTING
- --------------------------------------------------------------------------------
INDUSTRY 6/30/99 12/31/98 INDUSTRY 6/30/99 12/31/98
- --------------------------------------------------------------------------------
Basic Materials 15.0 12.4 Services
- ------------------------------------------ Business Services 5.5 5.7
Capital Goods 14.6 13.5 Consumer Services 8.1 10.5
- ------------------------------------------
Consumer Cyclical 10.4 6.1
- --------------------------------------------------------------------------------
Consumer Non-Cyclical 1.5 2.5 Technology 7.8 9.7
- --------------------------------------------------------------------------------
Energy 5.5 6.0 Transportation 2.1 1.4
- --------------------------------------------------------------------------------
Financial 22.2 21.8 Utilities 1.7 0.0
- --------------------------------------------------------------------------------
Healthcare 1.0 1.0 Other assets
- ------------------------------------------ less liabilities 2.3 6.5
Real Estate Investment
Trusts 2.3 2.9
- --------------------------------------------------------------------------------
TOTAL 100.0%
- --------------------------------------------------------------------------------
<F1> As a percentage of total net assets as of June 30, 1999, and December 31,
1998, respectively.
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
As shown in the prior table, the Fund typically invests its assets broadly
across the nation's economy and makes only a commitment it considers appropriate
to any individual holding. These aspects of diversification are intended to help
reduce the Fund's overall risk, while increasing the importance of stock-
picking, where we seek to add the most value to the process.
- --------------------------------------------------------------------------------
TOP TEN HOLDINGS (%)<F1>
- --------------------------------------------------------------------------------
COMPANY NAME
- --------------------------------------------------------------------------------
Mueller Industries, Inc. 2.9 Lone Star Industries, Inc. 2.2
- --------------------------------------------------------------------------------
Hilb, Rogal & Hamilton Co. 2.7 White Mountains Insurance Group 2.2
- --------------------------------------------------------------------------------
Gleason Corporation 2.6 Midas, Inc. 2.2
- --------------------------------------------------------------------------------
EMCOR Group, Inc. 2.4 Giant Cement Holding, Inc. 2.2
- --------------------------------------------------------------------------------
Stewart Information Services Corp. 2.3 Acceptance Insurance Companies 2.1
- --------------------------------------------------------------------------------
TOTAL 23.8%
- --------------------------------------------------------------------------------
<F1> As a percentage of total net assets as of June 30, 1999.
Varlen Corporation, one of our largest holdings during the year, was not only
our biggest percentage gainer but also the biggest contributor to returns.
Varlen manufactures railcars and locomotives, as well as components for trucks.
We bought this stock in the fall. In early June, Amsted Industries, a private
company, made a cash takeover offer of $35. But the market regarded this offer
as low and pushed the stock price up over $40. From a risk control standpoint,
there was the possibility that no higher offer would be made, and that Amsted
would simply back out. So, after considering our price objective and our average
cost, we decided to begin reducing our position. Between May 31 and June 30 we
reduced our position in Varlen Corporation from 2.6% to 1.1% of total net
assets.
PORTFOLIO CHARACTERISTICS
On June 30, 1999, the Fund's net assets were $77.8 million. The portfolio held
79 stocks spread across most economic sectors, and its Top Ten Holdings
represented 23.8% of net assets. Based on our 1999 estimates, the Fund's median
P/E was 12x and its median price/book value was 1.3x. On average, each holding
is followed by only three Wall Street analysts.
INVESTMENT STRATEGY AND OUTLOOK
We're enthusiastic about the upcoming fiscal year. Our optimism is based on our
opinions about the resiliency of our investment strategy and recent developments
in the market. Let's talk about both.
The Fund invests chiefly in companies with a market capitalization of less than
$1.5 billion. From among them, we look for stocks that are significantly
underpriced in the marketplace. We generally finds such opportunities in:
- Turnarounds - companies that appear capable of substantially improving
earnings
- Undiscovered or unsponsored stocks - companies that are not widely followed
by analysts
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
- Companies with hidden assets - undervalued real estate, for example, or
unrecognized business lines
- Companies in the process of change - examples may include new management,
new product lines or a cyclical uptrend in its industry
From among these undervalued companies, we look for those firms that provide an
additional margin of safety. We undertake in-depth financial analysis, looking
for two major attributes:
- Financial strength - little debt and positive cash flow
- Favorable economics - good returns on capital and free cash flow
To further limit risk, the portfolio is normally diversified among 60 to 85
stocks, with no individual holding typically exceeding 5% of net assets.
Our recent quarterly performance leads us to believe we are finally being
rewarded for remaining true to our strategy of seeking individual companies that
we believe the market has discounted. The recent broadening of the market makes
us more optimistic about investing in small-caps we consider part of the value
sector. That's because we believe the fundamental valuation imbalance between
large-caps and small-caps continues to exist. This spread may provide investors
with a superior risk/return tradeoff in small-caps, whether the market goes up
or down. It wouldn't surprise us to see small-caps continue their outperformance
over large-caps that began last quarter. But, fear of inflation accompanied by
rising interest rates may be an event that could dampen recent small-cap
momentum.Whatever circumstances prevail in the economy or markets, we'll
continue to pursue our basic strategy. We'll seek financially sound companies
with good economics that are attractively valued.
We're confident in the portfolio we have assembled. Though priced above the
giveaway levels of this past March, our stocks are still modestly valued. And,
we believe, their underlying companies are good businesses that are financially
fit and structured to push values forward over time. We believe that a portfolio
of companies like these is set up for good things to happen, and is shielded to
a degree from negative developments. In this pursuit, we'll do our best to be
nimble, resourceful and prudent.
Thank you for your confidence.
/s/Scott C. Satterwhite
Scott C. Satterwhite
Portfolio Manager
LETTER TO SHAREHOLDERS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
ARTISAN
SMALL CAP FUND
SCHEDULE OF INVESTMENTS - June 30, 1999
SHARES MARKET
HELD VALUE
====== =======
COMMON STOCKS - 98.7%
BASIC MATERIALS - 7.4%
CHEMICAL MANUFACTURING - 1.5%
MacDermid, Inc. - specialty chemical manufacturer 54,400 $2,529,600
CONTAINERS & PACKAGING - 2.6%
AptarGroup, Inc. - pumps, valves and closures
for consumer packaging 114,500 3,435,000
<F1> Gaylord Container Corporation - container
board manufacturer 146,300 1,161,256
----------
4,596,256
IRON & STEEL _ 1.2%
<F1> Steel Dynamics, Inc. - specialty steel producer 139,800 2,162,531
MISCELLANEOUS FABRICATED PRODUCTS - 2.1%
Belden, Inc. - manufacturer of specialty
wire and cable 58,500 1,400,344
<F1> Park-Ohio Holdings Corporation - industrial
products distribution 127,500 2,159,531
----------
3,559,875
CAPITAL GOODS - 3.2%
MISCELLANEOUS CAPITAL GOODS - 3.2%
Hussmann International, Inc. - commercial
food service equipment 158,000 2,616,875
<F1> Ritchie Bros. Auctioneers, Inc. - used industrial
equipment auctions 47,800 1,822,375
<F1> Service Experts, Inc. - residential heating and
air conditioning service provider 48,400 1,061,775
----------
5,501,025
CONSUMER NON-CYCLICAL - 3.9%
BEVERAGES (ALCOHOLIC) - 1.3%
<F1> Beringer Wine Estates Holdings,
Inc. - wine producer 53,200 2,222,763
FOOD PROCESSING - 1.1%
<F1> Celestial Seasonings, Inc. - specialty teas
and herbal supplements 90,900 1,954,350
PERSONAL & HOUSEHOLD PRODUCTS - 1.5%
<F1> Playtex Products, Inc. - personal care products 171,900 2,675,194
ENERGY - 6.4%
OIL & GAS OPERATIONS - 2.6%
<F1> Houston Exploration Company - oil and
gas exploration 112,900 2,138,044
<F1> Newfield Exploration Company - oil and
gas exploration and production 85,900 2,442,781
----------
4,580,825
OIL WELL SERVICES & EQUIPMENT - 3.8%
<F1> Core Laboratories N.V. - oil field
analytical services 132,600 1,848,113
<F1> Marine Drilling Companies, Inc. - offshore
contract drilling 186,900 2,558,194
<F1> Precision Drilling Corporation - integrated
oilfield service contractor 111,600 2,127,375
----------
6,533,682
<PAGE>
SHARES MARKET
HELD VALUE
====== ======
FINANCIAL - 6.3%
INSURANCE (LIFE) - 2.7%
<F1> Penn Treaty American Corporation - long-term
care insurance 86,800 $2,088,625
<F1> StanCorp Financial Group, Inc. - group disability
and life insurance 86,000 2,580,000
----------
4,668,625
MISCELLANEOUS FINANCIAL SERVICES - 0.2%
<F1> HealthCare Financial Partners, Inc. -
specialty finance for healthcare providers 12,000 411,000
REGIONAL BANKS - 2.4%
Community First Bankshares, Inc. -
North Dakota based bank holding company 134,600 3,213,575
Riggs National Corporation -
Washington D. C. based bank holding company 48,500 997,281
----------
4,210,856
S&LS/SAVINGS BANKS - 1.0%
MAF Bancorp, Inc. - suburban Chicago based
savings and loan association 73,100 1,772,675
HEALTHCARE - 7.8%
BIOTECHNOLOGY & DRUGS - 5.3%
Dexter Corporation - specialty chemicals 57,600 2,350,800
<F1> King Pharmaceuticals, Inc. - branded
and generic prescription pharmaceutical products 86,800 2,245,950
<F1> Pharmaceutical Product Development, Inc. -
outsourced drug research 74,300 2,033,963
<F1> Techne Corporation - specialty manufacturer
of biological products 104,300 2,646,612
----------
9,277,325
HEALTHCARE FACILITIES - 2.5%
<F1> Alterra Healthcare Corporation - assisted living
facilities 125,400 1,724,250
<F1> Res-Care, Inc. - facilities for mentally
retarded and disabled persons 116,100 2,641,275
----------
4,365,525
REAL ESTATE INVESTMENT TRUSTS - 3.4%
Fortress Investment Corporation, 144A -
specialty real estate investments 107,625 1,816,172
HealthCare Financial Partners REIT, Inc.,
144A - healthcare related real estate investments 228,500 4,113,000
----------
5,929,172
SERVICES - 34.4%
BROADCASTING & CABLE TV - 2.7%
<F1> Emmis Communications Corporation - radio and
television broadcasting 43,500 2,147,813
<F1> Young Broadcasting, Inc. - television broadcasting 58,900 2,506,931
----------
4,654,744
BUSINESS SERVICES - 6.3%
<F1> Bell & Howell Company - imaging and information
services and systems 49,100 1,856,594
<F1> ChoicePoint, Inc. - risk management services to
the insurance industry 41,100 2,758,837
<F1> F.Y.I. Inc. - document management services 38,300 1,201,662
<F1> Getty Images, Inc. - digital photographic images 83,200 1,570,400
<F1> Heidrick & Struggles International, Inc. -
executive recruiters 37,700 716,300
Penton Media, Inc. - trade publications and
trade shows 120,900 2,931,825
----------
11,035,618
HOTELS & MOTELS - 1.3%
<F1> Sunterra Corporation - timeshare resorts 157,800 2,199,338
MOTION PICTURES - 1.0%
<F1> IMAX Corporation - theater projection and
sound systems 81,500 1,833,750
PERSONAL SERVICES - 2.3%
<F1> Carriage Services, Inc. - funeral homes
and cemeteries 92,700 1,738,125
Regis Corporation - hair salon operator 121,950 2,339,916
----------
4,078,041
SCHEDULE OF INVESTMENTS
ARTISAN SMALL CAP FUND
<PAGE>
SHARES MARKET
HELD VALUE
===== ======
SERVICES (CONTINUED)
RESTAURANTS - 4.5%
<F1> CEC Entertainment, Inc. - Chuck E.
Cheese restaurants 83,100 $3,510,975
Morrison Health Care, Inc. - food service to
healthcare institutions 111,600 2,790,000
<F1> NPC International, Inc. - Pizza Hut franchisee 95,700 1,471,387
----------
7,772,362
RETAIL (APPAREL) - 3.9%
<F1> Buckle, Inc. - teen fashion retailer 30,500 876,875
<F1> Gymboree Corporation - children's fashion retailer 168,600 1,770,300
<F1> Men's Wearhouse, Inc. - men's fashion retailer 80,000 2,040,000
<F1> Wet Seal, Inc. - teen fashion retailer 73,400 2,101,075
----------
6,788,250
RETAIL (GROCERY) - 3.2%
Richfood Holdings, Inc. - food distribution
and supermarkets 121,300 2,137,912
<F1> Wild Oats Markets, Inc. - natural
foods supermarkets 115,700 3,510,772
----------
5,648,684
RETAIL (HOME IMPROVEMENT) - 1.2%
<F1> Tractor Supply Company - farm supplies retailer 79,100 2,160,419
RETAIL (SPECIALTY) - 1.6%
<F1> ShopKo Stores, Inc. - discount department stores 77,880 2,823,150
SCHOOLS - 2.5%
<F1> Bright Horizons Family Solutions, Inc. -
corporate day-care centers 110,400 2,083,800
<F1> ITT Educational Services, Inc. - technical
colleges 89,400 2,329,987
----------
4,413,787
SECURITY SYSTEMS & SERVICES - 2.4%
<F1> Borg-Warner Security Corporation - physical
and electronic security services 81,000 1,645,312
<F1> ITI Technologies, Inc. - wireless home
security systems 109,100 2,468,388
----------
4,113,700
WASTE MANAGEMENT SERVICES - 1.5%
<F1> Tetra Tech, Inc. - environmental
consulting services 156,250 2,578,125
TECHNOLOGY - 20.9%
COMMUNICATIONS EQUIPMENT - 5.9%
<F1> Com21, Inc. - cable modems 76,400 1,303,575
<F1> Digital Microwave Corporation - wireless
components 126,500 1,612,875
<F1> DSP Communications, Inc. - wireless
communications chip sets 54,800 1,582,350
<F1> Excel Switching Corporation - telecommunications
switching platforms 71,030 2,126,461
<F1> PairGain Technologies, Inc. - high speed digital
subscriber line technology 150,400 1,729,600
<F1> TEKELEC - data network switching and
diagnostic systems 160,400 1,954,875
----------
10,309,736
COMPUTER PERIPHERALS - 1.2%
<F1> Apex PC Solutions, Inc. - manufacturer of
switching systems for client/server computing 99,000 2,029,500
COMPUTER SERVICES - 1.3%
<F1> Diamond Technology Partners, Inc. - technology
management consulting 100,200 2,241,975
ELECTRONIC INSTRUMENTS & CONTROLS - 4.7%
Applied Power, Inc. - contract manufacturer 87,300 2,384,381
<F1> Littelfuse, Inc. - circuit protection devices 111,800 2,152,150
Methode Electronics, Inc. - electrical
connector technology 56,400 1,290,150
<F1> Plexus Corporation - contract manufacturer 76,800 2,313,600
----------
8,140,281
SCHEDULE OF INVESTMENTS
ARTISAN SMALL CAP FUND
<PAGE>
SHARES MARKET
HELD VALUE
====== ======
TECHNOLOGY (CONTINUED)
SCIENTIFIC & TECHNICAL INSTRUMENTS - 2.4%
<F1> Electro Scientific Industries, Inc. - lasers
and components for semiconductor manufacturing 53,200 $2,222,762
<F1> Photronics, Inc. - photomasks for semiconductor
manufacturing 79,600 1,950,200
----------
4,172,962
SEMICONDUCTORS - 4.0%
<F1> Actel Corporation - field programmable
logic devices for semiconductor manufacturing 99,700 1,470,575
<F1> Burr-Brown Corporation - analog and mixed
signal circuits 36,100 1,322,163
<F1> Galileo Technology Limited - digital
semiconductor devices 46,800 2,120,625
<F1> SMART Modular Technologies, Inc. - memory
module assembly 124,400 2,161,450
----------
7,074,813
SOFTWARE & PROGRAMMING - 1.4%
<F1> AVT Corporation - software based
computer-telephony solutions 67,100 2,541,412
TRANSPORTATION - 3.8%
AIRLINE - 1.6%
<F1> Midwest Express Holdings, Inc. - regional airline 79,600 2,706,400
RAILROADS - 0.9%
<F1> MotivePower Industries, Inc. - manufacturer
and contract service for rail and power
related industries 85,300 1,514,075
TRUCKING - 1.3%
USFreightways Corporation - less than
truckload carrier 50,400 2,334,150
UTILITIES - 1.2%
NATURAL GAS UTILITIES - 1.2%
WICOR, Inc. - gas utility and pump manufacturer 76,000 2,123,250
TOTAL COMMON STOCKS (Cost $152,533,057) 172,239,801
WARRANTS - 0.0%
Healthcare Financial Partners REIT,
expires 4/28/01 (Cost $0) 91,400 -
Par Market
Amount Value
======= ======
SHORT TERM INVESTMENTS - 1.3%
Repurchase agreement with State Street Bank
and Trust Company, 4.0%, dated 6/30/99, due
7/1/99, maturity value $2,296,255, collateralized
by $2,347,438 market value U.S. Treasury Bond,
8.5%, due 2/15/20 (Cost $2,296,000) $2,296,000 2,296,000
----------
TOTAL INVESTMENTS - 100.0% (Cost $154,829,057) 174,535,801
OTHER ASSETS LESS LIABILITIES - 0.0%<F2> 20,074
----------
TOTAL NET ASSETS - 100.0%<F3> $174,555,875
============
<F1> Non-income producing securities
<F2> Represents less than 0.1% of total net assets
<F3> Percentages for the various classifications relate to total net assets
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SCHEDULE OF INVESTMENTS
ARTISAN SMALL CAP FUND
<PAGE>
ARTISAN
INTERNATIONAL FUND
SCHEDULE OF INVESTMENTS - June 30, 1999
SHARES MARKET
HELD VALUE
======= ======
COMMON AND PREFERRED STOCKS - 96.9%
AUSTRALIA - 2.3%
Colonial Limited - diversified financial services 2,330,382 $8,303,289
<F1> Cable & Wireless Optus Limited -
telecommunication services 600,000 1,360,441
<F1> LibertyOne Limited - internet content provider 15,500,000 8,811,796
St. George Bank Limited - commercial bank 1,100,000 7,635,127
-----------
26,110,653
AUSTRIA - 0.7%
Erste Bank Der Oesterreichischen Sparkassen AG -
commercial bank 130,000 7,409,442
BERMUDA - 2.6%
<F1> Global Telesystems Group, Inc.<F3> -
telecommunication services 360,000 29,160,000
BRAZIL - 3.5%
<F1> Celular CRT Participacoes SA -
telecommunication services 38,644,300 5,238,425
Cia de Saneamento Basico de Estado de
Sao Paulo - water and sewage utility 40,890,000 3,348,800
Cia Riograndense Telecomunicacoes -
Preferred - telecommunication services 29,922,700 7,106,747
Embraer-Empresa Brasileira Aeronautica SA -
aircraft manufacturer 1,941,000 3,234,086
Telecomunicacoes Brasileiras SA (ADR) -
Preferred - telecommunication services 135,000 12,175,313
Telesp Celular Participacoes SA (ADR) -
telecommunication services 170,000 4,547,500
<F1> Telesp Participacoes SA (ADR) -
telecommunication services 175,000 4,003,125
-----------
39,653,996
CANADA - 13.1%
<F1> AT&T Canada, Inc.<F3> - telecommunication services 938,000 60,090,628
BCE, Inc. - telecommunication services 435,000 21,196,095
<F1> Call-Net Enterprises, Inc. - Class B -
telecommunication services 1,764,200 11,142,316
<F1> Clearnet Communications, Inc. - Class A<F3> -
telecommunication services 825,000 11,498,438
Nortel Networks Corporation<F3> -
telecommunications equipment 278,000 24,133,875
Shaw Communications Inc. - Class B -
cable television 200,000 7,918,506
<F1> Telesystem International Wireless, Inc. -
telecommunication services 135,000 2,439,954
Toronto-Dominion Bank<F3> - commercial bank 200,000 9,066,214
-----------
147,486,026
DENMARK - 0.1%
NESA AS - electric utility 8,438 1,091,575
<PAGE>
SHARES MARKET
HELD VALUE
====== ======
FINLAND - 2.2%
Helsingin Puhelin Oyj - telecommunication
services 100,000 $4,741,911
HPY Holding - HTF Holding Oyj -
telecommunication services 145,071 3,140,476
Nokia Corporation (ADR) -
telecommunication equipment 100,000 9,156,250
Sonera Group Oyj - telecommunication services 340,000 7,430,369
-----------
24,469,006
FRANCE - 8.1%
Axa - multi-line insurance 80,000 9,755,967
Canal Plus - television broadcasting 39,000 10,939,280
Cap Gemini SA - information technology services 42,840 6,730,232
Dexia France - special purpose bank 60,000 8,028,262
Groupe Danone - food and beverage producer 58,200 14,998,871
Havas Advertising SA - advertising 60,000 12,920,677
Sopra SA - information technology services 83,555 4,306,635
Suez-Lyonnaise des Eaux - building and construction 70,000 12,620,700
Unilog SA - information technology services 21,380 10,863,308
-----------
91,163,932
GERMANY - 5.5%
<F1> 1&1 Aktiengesellschaft & Co. - advertising services 50,265 5,917,352
Altana AG - pharmaceuticals 50,000 2,814,221
Deutsche Bank AG - money center bank 261,111 15,921,189
Dresdner Bank AG - money center bank 242,000 9,454,752
KSB AG - Preferred - machinery and pump manufacturer 19,450 2,716,780
Mannesmann AG - machinery/general industry 118,000 17,601,356
Marschollek, Lautenschlaeger and Partner AG -
Preferred - financial services 4,200 2,000,262
Marseille-Kliniken AG - healthcare services 193,067 2,666,910
<F1> PrimaCom AG - cable television 65,000 2,948,232
-----------
62,041,054
IRELAND - 0.3%
Ryanair Holdings PLC (ADR) - airline 56,600 2,999,800
ITALY - 7.6%
Autogrill SPA - restaurants 1,558,000 16,044,586
Autostrade Concessioni e Construzioni
Autostrade SPA, Roma - transportation services 1,260,000 9,027,156
Banca Intesa SPA - commercial bank 1,463,636 7,030,959
BIPOP SPA - financial services 540,000 23,129,187
Class Editori SPA - publishing 475,000 3,794,818
Gucci Group NV<F3> - apparel manufacturer 81,000 5,670,000
Seat Pagine Gialle Saving Shares SPA -
publishing/advertising company 8,000,000 6,803,612
<F1> Seat Pagine Gialle SPA - publishing/advertising
company 10,480,790 14,315,466
-----------
85,815,784
JAPAN - 4.9%
Fancl Corporation - cosmetics retailer 18,000 3,273,539
NTT Mobile Communications Network, Inc. -
telecommunications services 1,225 16,445,400
Promise Co. Ltd. - consumer finance 165,000 9,752,418
Takefuji Corporation - consumer finance 117,000 12,099,446
Trans Cosmos, Inc. - outsourcing/information
technology services 180,000 13,094,156
-----------
54,664,959
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
<PAGE>
SHARES MARKET
HELD VALUE
LUXEMBOURG - 0.2% ====== =======
Societe Europeenne des Satellites -
satellite operator 19,600 $2,838,755
MEXICO - 2.3%
<F1> Cifra SA de C.V. Series V - department stores 6,505,000 12,967,236
Grupo Financiero Inbursa SA de C.V. -
Class O - brokerage, insurance and
financial services 1,826,489 5,810,059
<F1> Seguros Comercial America - Class B -
multi-line insurance 927,500 3,491,279
Sigma Alimentos SA - Class B - food producer 1,270,077 3,097,420
-----------
25,365,994
NETHERLANDS - 6.0%
ASR Verzekeringsgroep NV - multi-line
insurance company 130,000 8,569,974
Athlon Groep NV - automobile leasing 310,425 7,520,040
Benckiser NV - Class B - home cleaning products 120,000 6,401,580
Cap Gemini NV - information technology services 125,000 8,530,286
Koninklijke KPN NV - telecommunications services 222,500 10,436,070
<F1> MIH Ltd.<F3>- cable television 241,000 6,386,500
<F1> United International Holdings, Inc. - Class A<F3> -
cable television 292,000 19,746,500
-----------
67,590,950
NEW ZEALAND - 0.4%
<F1> Contact Energy Limited - electric utility 2,725,000 4,414,820
NORWAY - 0.4%
P4 Radio Hele Norge ASA - radio stations 1,139,600 4,555,219
POLAND - 0.2%
Elektrim Spolka Akcyjna SA - electrical products 124,354 1,757,710
PORTUGAL - 0.3%
<F1> Companhia de Seguros Mundial Confianca SA -
multi-line insurance company 75,000 2,958,025
SINGAPORE - 0.8%
Development Bank of Singapore Limited -
money center bank 764,000 9,336,780
SPAIN - 2.7%
Argentaria, Caja Postal y Banco Hipotecario
de Espana SA - commercial bank 348,000 7,924,476
Banco Santander Central Hispano SA - money
center bank 1,060,000 11,036,283
Fomento de Construccciones y Contratas SA -
construction company 188,000 10,755,892
<F1> Telefonica Publicidad e Informacion SA -
advertising 11,000 219,416
-----------
29,936,067
SWEDEN - 3.6%
Celsius AB - Class B - aerospace and defense
product manufacturer 330,000 4,159,501
<F1> Icon Medialab International AB - information
technology services 80,000 2,902,580
Pharmacia & Upjohn, Inc.<F3>- pharmaceuticals 186,000 10,567,125
Sigma AB - Class B - information technology
services 137,050 1,065,532
Skandinaviska Enskilda Banken - money center bank 885,000 10,321,004
Telefonaktiebolaget LM Ericsson - Class B -
telecommunictions equipment 350,000 11,235,128
-----------
40,250,870
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
<PAGE>
SHARES MARKET
HELD VALUE
SWITZERLAND - 7.7% ====== ======
<F1> ABB Limited - engineering services 119,954 $11,300,406
Julius Baer Holding AG - Class B - commercial bank 4,700 13,388,850
Nestle SA - diversified foods 7,550 13,598,836
Roche Holding AG - pharmaceutical company 1,875 19,267,250
UBS AG - money center bank 98,000 29,240,563
-----------
86,795,905
UNITED KINGDOM - 21.4%
<F1> Cable & Wireless Communications PLC -
cable television 1,120,000 10,768,942
Cable & Wireless PLC - telecommunication
services 800,000 10,188,882
<F1> Colt Telecom Group PLC - telecommunication
services 1,559,600 32,720,239
<F1> Easynet Group PLC - internet service provider 765,000 6,511,490
<F1> Energis PLC - telecommunication services 615,000 14,696,012
<F1> Future Network PLC - publisher 1,145,000 7,580,188
<F1> ITG Group PLC - telecommunication equipment 70,300 390,053
<F1> NTL Incorporated*** - cable television 200,500 17,280,594
Pearson PLC - publisher 300,000 6,095,360
Racal Electronics PLC - telecommunication
equipment 3,885,000 23,453,895
Reckitt & Colman PLC - household products 300,000 3,174,789
Saatchi & Saatchi PLC - advertising/media
services 2,750,000 9,302,241
Sainsbury (J) PLC - food retailer 1,325,000 8,354,127
Schroders PLC - international merchant
banking group 628,000 12,670,531
Securicor PLC - security and recruitment
services 3,612,907 31,805,714
<F1> Select Appointments Holdings PLC - employment
services 736,860 8,792,372
<F1> Telewest Communications PLC - cable television 5,235,422 23,457,264
United News & Media PLC - publisher 750,000 7,211,345
WPP Group PLC - advertising agency 700,000 5,958,226
-----------
240,412,264
TOTAL COMMON AND PREFERRED STOCKS (Cost $927,136,938) 1,088,279,586
PAR MARKET
AMOUNT VALUE
====== =======
SHORT TERM INVESTMENTS - 3.0%
Repurchase agreement with State Street Bank
and Trust Company, 4.0%, dated 6/30/99, due
7/1/99, maturity value $33,545,727,
collateralized by $34,219,154 market value
U.S. Treasury Bond, 8.500%, due 2/15/20
(Cost $33,542,000) $33,542,000 33,542,000
------------
TOTAL INVESTMENTS - 99.9% (Cost $960,678,938) 1,121,821,586
OTHER ASSETS LESS LIABILITIES - 0.1% 1,683,013
------------
TOTAL NET ASSETS - 100.0%<F2> $1,123,504,599
==============
<F1> Non-income producing security
<F2> Percentages for the various classifications relate to total net assets
<F3> Principally traded in the United States
(ADR) American Depository Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
<PAGE>
ARTISAN
INTERNATIONAL FUND
PORTFOLIO DIVERSIFICATION - June 30, 1999
MARKET VALUE PERCENTAGE
------------- ----------
Consumer Cyclical $201,271,862 17.9%
Consumer Non-Cyclical 128,812,754 11.5%
Financial 244,334,337 21.8%
Industrial 65,779,998 5.9%
Technology 70,209,600 6.2%
Telecommunications
(Equipment and Services) 281,871,458 25.1%
Utilities 95,999,577 8.5%
------------- ------
TOTAL COMMON AND PREFERRED STOCKS 1,088,279,586 96.9%
Total short-term investments 33,542,000 3.0%
------------- ------
TOTAL INVESTMENTS 1,121,821,586 99.9%
OTHER ASSETS LESS LIABILITIES 1,683,013 0.1%
------------- ------
TOTAL NET ASSETS $1,123,504,599 100.0%
============== ======
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN
MID CAP FUND
SCHEDULE OF INVESTMENTS - June 30, 1999
SHARES MARKET
HELD VALUE
====== ======
COMMON STOCKS - 97.3%
BASIC MATERIALS - 6.5%
CHEMICAL MANUFACTURING - 1.3%
Sigma-Aldrich Corporation - specialty
chemical company 16,000 $551,000
CONTAINERS & PACKAGING - 2.7%
<F1> Owens-Illinois, Inc. - beverage packaging
company 18,000 588,375
<F1> Sealed-Air Corporation - specialty
packaging company 9,000 583,875
----------
1,172,250
MISCELLANEOUS FABRICATED PRODUCTS - 1.1%
<F1> SLI, Inc. - lighting products company 17,500 472,500
PAPER & PAPER PRODUCTS - 1.4%
Albany International Corporation - paper machine
clothing manufacturer 29,000 603,353
CAPITAL GOODS - 8.9%
MISCELLANEOUS CAPITAL GOODS - 8.9%
<F1> Mettler-Toledo International, Inc. - precision
weighing instruments 48,000 1,191,833
Millipore Corporation - commercial
filtration equipment 25,000 1,014,062
<F1> Zebra Technologies Corporation - thermal bar code
printer manufacturer 27,000 1,035,876
Symbol Technologies, Inc. - manufacturer and
marketer of scanning products 16,500 608,438
----------
3,850,209
CONGLOMERATES - 1.3%
Fortune Brands, Inc. - home and office supplies,
golf equipment, spirits 13,500 558,562
CONSUMER CYCLICAL - 5.1%
APPLIANCE & TOOL - 1.0%
Danaher Corporation - industrial tools and
process/environmental controls 7,500 434,698
AUTO & TRUCK PARTS - 4.1%
Federal-Mogul Corporation - auto
parts manufacturer 14,500 754,000
<F1> SPX Corporation - diversified industrial
electrical systems 12,000 1,002,000
----------
1,756,000
CONSUMER NON-CYCLICAL - 4.6%
FOOD PROCESSING - 2.5%
Universal Foods Corporation - diversified color
and flavor producer 52,000 1,100,145
OFFICE PRODUCTS - 2.1%
<F1> Mail-Well, Inc. - commercial printing and
mailing holding company 55,000 891,921
<PAGE>
SHARES MARKET
HELD VALUE
====== =======
ENERGY - 5.3%
OIL & GAS OPERATIONS - 2.4%
Devon Energy Corporation - natural gas and
exploration company 13,000 $465,020
Dynegy, Inc. - independent power producer
and energy marketer 27,500 560,717
----------
1,025,737
OIL WELL SERVICES & EQUIPMENT - 2.9%
Halliburton Company - diversified energy services 11,500 520,375
<F1> Weatherford International, Inc. - diversified
energy services 20,500 750,812
----------
1,271,187
FINANCIAL - 10.0%
INSURANCE (ACCIDENT & HEALTH) - 2.0%
<F1> Provident Companies, Inc. - disability insurance 22,000 880,000
INSURANCE (LIFE) - 0.8%
American Bankers Insurance Group, Inc. -
life insurance 6,500 353,844
INSURANCE (MISCELLANEOUS) - 1.7%
ITT Hartford Group, Inc. - life and
property insurance 12,500 729,276
INSURANCE (PROPERTY & CASUALTY) - 1.8%
Ace Limited, Inc. - property and casualty insurance 27,500 777,332
REGIONAL BANKS - 1.3%
FirstMerit Corporation - regional bank 20,000 561,250
S&LS/SAVINGS BANKS - 2.4%
Charter One Financial, Inc. - savings and loan 37,000 1,028,512
HEALTHCARE - 5.4%
BIOTECHNOLOGY & DRUGS - 2.5%
<F1> Centocor, Inc. - drugs for heart care 14,000 655,250
<F1> Covance, Inc. - contract research for
pharmaceutical industry 19,000 454,813
----------
1,110,063
MEDICAL EQUIPMENT & SUPPLIES - 2.9%
<F1> Sybron International Corporation - dental
supplies manufacturer 45,500 1,254,218
REAL ESTATE INVESTMENT TRUSTS - 2.2%
Apartment Investment & Management Company -
apartment owner and operator 18,000 769,500
HealthCare Financial Partners REIT, Inc., 144A -
healthcare related real estate investments 10,500 189,000
----------
958,500
SERVICES - 17.7%
ADVERTISING - 1.5%
<F1> Outdoor Systems, Inc. - billboard operator 18,000 657,000
BROADCASTING & CABLE TV - 4.7%
<F1> Century Communication Corporation - cable
systems operator 15,500 713,625
<F1> Liberty Media, Class A - cable television
programming 17,000 624,750
<F1> Media One Group, Inc. - cable systems operator 7,000 520,625
<F1> Univision Communications, Inc. - Spanish
television broadcaster 3,000 198,000
----------
2,057,000
SCHEDULE OF INVESTMENTS
ARTISAN MID CAP FUND
<PAGE>
SHARES MARKET
HELD VALUE
====== =======
SERVICES (CONTINUED)
BUSINESS SERVICES - 4.4%
<F1> A.C. Nielsen Corporation - consumer market
research 27,000 $815,721
<F1> Convergys Corporation - billing systems for
communications companies 44,000 847,000
<F1> Portal Software, Inc. - billing systems for
communications companies 5,000 231,063
----------
1,893,784
MOTION PICTURES - 1.9%
<F1> IMAX Corporation - developer of specialty movies
and theaters 37,000 833,975
PRINTING & PUBLISHING - 1.6%
<F1> Primedia, Inc. - niche magazines and trade
journals 40,000 677,455
RECREATIONAL ACTIVITIES - 1.9%
<F1> SFX Entertainment, Inc. - venue operator
and promotor 13,000 832,000
RETAIL (GROCERY) - 1.7%
Great Atlantic and Pacific Tea, Inc. -
grocery store chain 22,000 743,590
TECHNOLOGY - 17.5%
COMPUTER PERIPHERALS - 1.4%
<F1> National Instruments Corporation - industrial
automation software 15,000 605,575
COMPUTER SERVICES - 4.4%
<F1> NCR Corporation - systems applications 16,000 780,957
<F1> SunGard Data Systems, Inc. - recordkeeping
software and systems for investment management
companies 32,000 1,102,415
----------
1,883,372
ELECTRONIC INSTRUMENTS & CONTROLS - 6.3%
<F1> American Power Conversion Corporation -
uninterruptible power supplies 108,000 2,173,500
<F1> Sanmina Corporation - contract manufacturer for
electronics industry 7,500 569,063
----------
2,742,563
SOFTWARE & PROGRAMMING - 5.4%
<F1> Electronics For Imaging, Inc. - products for
digital color printing 16,500 847,687
<F1> InterVu, Inc. - network for streaming
video/audio delivery 15,000 574,688
<F1> Transaction Systems Architects, Inc. - develops,
markets, installs and supports software
for e-commerce 24,000 936,000
----------
2,358,375
TELECOMMUNICATIONS - 11.6%
COMMUNICATIONS SERVICES - 10.3%
<F1> Citizens Utilities Company - local wireline
telephone operator 20,000 226,538
<F1> Clearnet Communications, Inc. - digital wireless
telephone operator 66,000 919,875
<F1> Covad Communications Group, Inc. - digital
subscriber line provider 11,500 606,657
<F1> Nextlink Communications, Inc. - diversified
telecommunications 3,000 211,473
<F1> Omnipoint Corporation - digital wireless
telephone operator 35,000 1,012,812
<F1> Voicestream Wireless Corporation - digital
wireless telephone operator 18,500 526,094
<F1> Western Wireless Corporation - cellular
phone operator 15,500 418,500
<F1> Winstar Communications Company - fixed wireless
voice and data 11,000 536,125
----------
4,458,074
SCHEDULE OF INVESTMENTS
ARTISAN MID CAP FUND
<PAGE>
SHARES MARKET
HELD VALUE
====== =======
TELECOMMUNICATIONS (CONTINUED)
COMMUNICATIONS EQUIPMENT - 1.3%
<F1> PowerWave Technologies, Inc. - wireless base
station amplifiers 17,000 $547,375
TRANSPORTATION - 1.2%
MISCELLANEOUS TRANSPORTATION - 1.2%
CH Robinson Worldwide, Inc. - third party
logistics provider 14,500 532,875
TOTAL COMMON STOCKS (Cost $33,912,820) 42,163,570
WARRANTS - 0.0%
Healthcare Financial Partners REIT, expires 4/28/01
(Cost $0) 4,200 -
PAR MARKET
AMOUNT VALUE
====== ======
SHORT TERM INVESTMENTS - 8.4%
Repurchase agreement with State Street Bank
and Trust Company, 4.0%, dated 6/30/99,
due 7/1/99, maturity value $3,633,404,
collateralized by $3,708,824 market value
U.S. Treasury Bond, 8.500%, due 02/15/20,
(Cost $3,633,000) $3,633,000 3,633,000
----------
TOTAL INVESTMENTS - 105.7% (Cost $37,545,820) 45,796,570
OTHER ASSETS LESS LIABILITIES - (5.7)% (2,476,952)
----------
TOTAL NET ASSETS - 100.0%<F2> $43,319,618
===========
<F1> Non-income producing securities
<F2> Percentages for the various classifications relate to total net assets
SCHEDULE OF INVESTMENTS
ARTISAN MID CAP FUND
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN
SMALL CAP VALUE FUND
Schedule of Investments - June 30, 1999
SHARES MARKET
HELD VALUE
COMMON STOCKS - 97.7% ====== ======
BASIC MATERIALS - 15.0%
CHEMICAL MANUFACTURING - 3.5%
<F1> American Pacific Corporation - specialty
chemicals for aerospace and defense 101,000 $852,188
<F1> CFC International, Inc. - specialty
chemical coatings 100,100 1,076,075
Terra Industries, Inc. - agricultural chemicals 197,800 791,200
----------
2,719,463
CONTAINERS & PACKAGING - 1.6%
Greif Brothers Corporation, Class A -
shipping containers and packaging manufacturer 48,900 1,246,950
FABRICATED PLASTIC & RUBBER - 0.8%
<F1> Gundle SLT/Environmental, Inc. - landfill
lining systems 137,900 586,075
IRON & STEEL - 3.7%
LTV Corporation - integrated steel manufacturer 137,300 918,194
Roanoke Electronic Steel Corporation - fabricated
steel products 59,400 1,032,075
Schnitzer Steel Industries, Inc., Class A - steel
scrap processor
and minimill operation 42,900 962,569
----------
2,912,838
METAL MINING - 1.6%
Cleveland Cliffs, Inc. - iron ore supplier 37,900 1,227,013
MISCELLANEOUS FABRICATED PRODUCTS - 3.8%
<F1> L.B. Foster Company, Class A - rail and
construction supplies manufacturer 127,200 747,300
<F1> Mueller Industries, Inc. - plumbing
products manufacturer 66,200 2,246,662
----------
2,993,962
CAPITAL GOODS - 14.6%
AEROSPACE & DEFENSE - 0.6%
<F1> Tristar Aerospace Company - aerospace
products distributor 56,000 462,000
CONSTRUCTION - FIXTURES & SUPPLIES - 1.8%
Insteel Industries, Inc. - steel wire products
manufacturer 159,800 1,438,200
CONSTRUCTION - RAW MATERIALS - 4.4%
<F1> Giant Cement Holding, Inc. - cement operations 74,300 1,699,612
Lone Star Industries, Inc. - cement operations 45,900 1,724,119
----------
3,423,731
<PAGE>
SHARES MARKET
HELD VALUE
====== ======
CAPITAL GOODS (CONTINUED)
CONSTRUCTION SERVICES - 2.4%
Chicago Bridge & Iron Company NV - engineering
and construction 1,500 $20,906
<F1> EMCOR Group, Inc. - mechanical and electrical
contractor 73,000 1,838,688
----------
1,859,594
MISCELLANEOUS CAPITAL GOODS - 5.4%
Gleason Corporation - gear manufacturing
equipment producer 118,600 1,993,963
Lincoln Electric Holdings, Inc. - welding products 5,100 104,550
Regal Beloit Corporation - electrical equipment
manufacturer 34,400 812,700
Smith Investment Company - multi-industry
holding company 15,600 780,000
Twin Disc, Inc. - heavy-duty power transmission
equipment manufacturer 25,500 511,594
----------
4,202,807
CONSUMER CYCLICAL - 10.4%
APPAREL/ACCESSORIES - 1.4%
Delta Woodside Industries, Inc. - apparel and
textiles manufacturer 45,900 275,400
Guilford Mills, Inc. - knit textile fabrics
producer 78,400 813,400
----------
1,088,800
AUTO & TRUCK PARTS - 2.7%
CLARCOR, Inc. - filtration products 62,400 1,197,300
Varlen Corporation - railroad equipment 21,900 886,950
----------
2,084,250
FOOTWEAR - 2.1%
Justin Industries, Inc. - western wear and building
products 28,300 394,431
<F1> R.G. Barry Corporation - specialized comfort
footwear manufacturer 150,200 1,239,150
----------
1,633,581
FURNITURE & FIXTURES - 1.1%
<F1> Winsloew Furniture, Inc. - casual furniture
manufacturer 25,000 840,625
JEWELRY & SILVERWARE - 1.5%
Jostens, Inc. - manufacturer of recognition products 54,300 1,143,694
RECREATIONAL PRODUCTS - 1.6%
Arctic Cat, Inc. - snowmobile and all-terrain
vehicle manufacturer 137,000 1,224,438
CONSUMER NON-CYCLICAL - 1.5%
TOBACCO - 1.5%
<F1> M&F Worldwide Corporation - flavorings producer 143,200 1,136,650
ENERGY - 5.5%
OIL & GAS OPERATIONS - 5.5%
Cabot Oil & Gas Corporation, Class A - natural
gas exploration/production 53,500 996,438
<F1> Forest Oil Corporation - oil and natural gas
exploration/production 68,017 854,464
Patina Oil & Gas Corporation - oil and natural
gas exploration/production 172,800 1,090,800
Santa Fe Snyder - oil and natural gas
exploration/production 151,800 1,157,475
<F1> Tom Brown, Inc. - oil and natural gas exploration 10,100 157,181
----------
4,256,358
SCHEDULE OF INVESTMENTS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
SHARES MARKET
HELD VALUE
====== =======
FINANCIAL - 22.2%
CONSUMER FINANCIAL SERVICES - 2.2%
White Mountains Insurance Group, Inc. - insurance
and mortgage banking 12,200 $1,720,200
INSURANCE (LIFE) - 3.1%
Annuity and Life Re (Holdings) - life and
annuity reinsurance 72,700 1,631,206
Scottish Annuity & Life Holdings - life and
annuity reinsurance 70,400 756,800
----------
2,388,006
INSURANCE (MISCELLANEOUS) - 4.7%
Hilb, Rogal & Hamilton Company - insurance broker 95,000 2,125,625
<F1> Superior National Insurance Group - workers
compensation insurance 55,900 1,523,275
----------
3,648,900
INSURANCE (PROPERTY & CASUALTY) - 7.6%
<F1> Acceptance Insurance Companies - crop insurance 108,500 1,634,281
Capital Re Corporation - financial guaranty
reinsurance 47,600 764,575
Chicago Title Corporation - property title insurer 12,900 460,369
Merchants Group, Inc. - property and casualty
insurance 23,800 532,525
<F1> Risk Capital Holdings, Inc. - reinsurance products
and services 55,500 749,250
Stewart Information Services Corporation - property
title insurer 85,800 1,812,525
----------
5,953,525
MISCELLANEOUS FINANCIAL SERVICES - 2.5%
Capital Southwest Corporation - closed-end
venture capital investment company 15,800 1,264,000
<F1> Enstar Group, Inc. - financial services
holding company 41,200 643,750
----------
1,907,750
S&LS/SAVINGS BANKS - 2.1%
John Hancock Bank & Thrift Opportunity -
closed-end investment company 132,200 1,255,900
The Somerset Group, Inc. - investment services 20,900 418,000
----------
1,673,900
HEALTHCARE - 1.0%
BIOTECHNOLOGY & DRUGS - 1.0%
<F1> Quest Diagnostics, Inc. - diagnostic testing
services 29,700 813,037
REAL ESTATE INVESTMENT TRUSTS - 2.3%
Asset Investors Corporation - manufactured
housing communities 56,500 843,969
Fortress Investment Corporation, 144A - specialty
real estate investments 17,300 291,938
Healthcare Financial Partners REIT, 144A -
healthcare related real estate investments 36,000 648,000
----------
1,783,907
SERVICES - 13.6%
ADVERTISING - 4.1%
<F1> Advo, Inc. - direct mail marketing services 78,100 1,620,575
Grey Advertising, Inc. - advertising agency 4,700 1,565,100
----------
3,185,675
BROADCASTING & CABLE TV - 1.9%
<F1> On Command Corporation - pay-per-view movie services 84,600 1,491,075
SCHEDULE OF INVESTMENTS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
SHARES MARKET
HELD VALUE
SERVICES (CONTINUED) ====== ======
BUSINESS SERVICES - 3.2%
<F1> Craig Corporation, Class A Preference - movie
theatre owner/operator 81,200 $573,475
Duff & Phelps Credit Rating Company - credit
rating agency 3,900 260,813
Midas, Inc. - automotive repair services 60,000 1,702,500
----------
2,536,788
HOTELS & MOTELS - 0.9%
<F1> Supertel Hospitality, Inc. - economy hotels
owner/operator 58,900 725,206
PRINTING & PUBLISHING - 0.0%<F3>
Courier Corporation - book manufacturer 1,300 29,900
RESTAURANTS - 1.2%
<F1> Host Marriott Services - food and beverage
concessions operator 105,300 855,562
<F1> Vicorp Restaurants, Inc. - casual dining
restaurant operator 1,100 19,112
----------
874,674
WASTE MANAGEMENT SERVICES - 2.3%
<F1> Harding Lawson Associates Group - environmental
and engineering consultants 105,600 897,600
Sevenson Environmental Services, Inc. - hazardous
waste remediation 76,000 883,500
----------
1,781,100
TECHNOLOGY - 7.8%
COMPUTER PERIPHERALS - 0.8%
Astro-Med Inc. - medical instrumentation/specialty
printers 96,800 665,500
ELECTRONIC INSTRUMENTS & CONTROLS - 2.8%
<F1> Genlyte Group, Inc. - commercial, industrial
and residential lighting 59,800 1,341,762
<F1> Powell Industries, Inc. - electrical equipment
manufacturer 89,700 829,725
----------
2,171,487
SCIENTIFIC & TECHNICAL INSTRUMENTS - 0.7%
Moore Products Company - measurement and
control instruments 24,000 550,500
SEMICONDUCTORS - 3.1%
<F1> Electroglas, Inc. - semiconductor wafer
probing equipment 39,900 798,000
<F1> FSI International, Inc. - semiconductor
equipment manufacturer 98,700 820,444
<F1> Silicon Valley Group, Inc. - semiconductor
equipment manufacturer 47,200 793,550
----------
2,411,994
SOFTWARE & PROGRAMMING - 0.4%
<F1>Intelligent Systems Corporation - software and
healthcare services 95,300 297,812
TRANSPORTATION - 2.1%
MISCELLANEOUS TRANSPORTATION - 2.1%
<F1> Aviall, Inc. - aviation parts distributor 86,030 1,618,439
SCHEDULE OF INVESTMENTS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
SHARES MARKET
HELD VALUE
====== =======
UTILITIES - 1.7%
NATURAL GAS UTILITIES - 1.7%
UGI Corporation - propane and natural gas supplier 64,500 1,302,094
TOTAL COMMON STOCKS (Cost $73,684,541) 76,012,498
WARRANTS - 0.0%
Healthcare Financial Partners REIT, expires 4/28/01
(Cost $0) 14,400 $--
Par Market
Amount Value
======= ======
SHORT TERM INVESTMENTS - 3.1%
Repurchase agreement with State Street Bank and
Trust Company, 4.0%, dated 6/30/99, due 7/1/99,
maturity value $2,407,267, collateralized
by $2,455,585 market value U.S. Treasury Bond,
8.500% due 12/15/20 (Cost $2,407,000) $2,407,000 2,407,000
----------
TOTAL INVESTMENTS - 100.8% (Cost $76,091,541) 78,419,498
OTHER ASSETS LESS LIABILITIES - (0.8)% (619,476)
----------
TOTAL NET ASSETS - 100.0%<F2> $77,800,022
===========
<F1> Non-income producing securities
<F2> Percentages for the various classifications relate to total net assets.
<F3> Represents less than 0.1% of total net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SCHEDULE OF INVESTMENTS
ARTISAN SMALL CAP VALUE FUND
<PAGE>
ARTISAN FUNDS, INC.
Statements of Assets and Liabilities - June 30, 1999
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL MID CAP SMALL CAP
FUND FUND FUND VALUE FUND
========= ============= ======= ==========
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value $174,535,801 $1,121,821,586 $45,796,570 $78,419,498
Cash 160 613,654 760 443
Receivable from investments sold 4,044,925 32,824,911 689,161 301,071
Receivable from forward currency contracts - 25,384,553 - -
Receivable from fund shares sold 8,142 8,268,389 1,051,047 155,364
Interest receivable 255 3,727 404 268
Dividends receivable 88,354 2,121,737 9,057 60,131
Organizational costs 10,396 10,980 17,019 22,988
Receivable from Adviser - - 29,152 -
Other assets - 2,005 - 1,022
------------ --------------- ------------ ------------
TOTAL ASSETS 178,688,033 1,191,051,542 47,593,170 78,960,785
LIABILITIES:
Payable for investments purchased 3,923,672 40,996,522 4,113,713 1,031,041
Payable for forward currency contracts - 25,333,558 - -
Payable for fund shares redeemed 25,600 283,328 834 78
Payable for organizational costs 10,396 10,980 17,019 22,988
Payable for operating expenses 172,490 805,929 141,986 106,656
Other liabilities - 116,626 - -
------------ --------------- ------------ ------------
TOTAL LIABILITIES 4,132,158 67,546,943 4,273,552 1,160,763
------------ --------------- ------------ ------------
TOTAL NET ASSETS $174,555,875 $1,123,504,599 $43,319,618 $77,800,022
============ =============== =========== ===========
NET ASSETS CONSIST OF:
Fund shares issued and outstanding $195,135,595 $927,059,446 $33,834,096 $74,305,579
Net unrealized appreciation (depreciation)
on investments and foreign currency
related transactions 19,706,744 161,028,212 8,250,750 2,327,957
Accumulated undistributed net
investment income (loss) - 1,876,177 - -
Accumulated undistributed net realized
gains (losses) on investments and foreign
currency related transactions (40,286,464) 33,540,764 1,234,772 1,166,486
------------ --------------- ------------ ------------
$174,555,875 $1,123,504,599 $43,319,618 $77,800,022
============= =============== =========== ===========
SUPPLEMENTARY
INFORMATION:
Net assets $174,555,875 $43,319,618 $77,800,022
International Shares $943,941,134
Institutional Shares $179,563,465
Number of shares outstanding 15,740,076 2,598,115 7,345,039
International Shares 50,561,875
Institutional Shares 9,602,774
Net asset value, offering price
and redemption price per share $11.09 $16.67 $10.59
International Shares $18.67
Institutional Shares $18.70
Cost of securities held $154,829,057 $960,678,938 $37,545,820 $76,091,541
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN FUNDS, INC.
Statements of Operations - For the Year Ended June 30, 1999
<TABLE>
<CAPTION>
SMALL CAP INTERNATIONAL MID CAP SMALL CAP
FUND FUND FUND VALUE FUND
========= ============= ======= ===========
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $490,934 $885,548 $82,956 $139,073
Dividends 897,185 12,395,675<F1> 114,629 481,8240
------------ --------------- ------------ ------------
TOTAL INVESTMENT INCOME 1,388,119 13,281,223 197,585 620,897
EXPENSES:
Advisory fees 1,980,620 6,718,770 229,384 511,680
Transfer agent fees 366,340 105,815 151,991
International Shares 1,208,884
Institutional Shares 21,460
Shareholder communications 108,994 14,293 37,380
International Shares 171,859
Institutional Shares 8,351
Custodian fees 77,618 577,023 27,304 21,516
Accounting fees 44,948 79,271 44,514 45,315
Professional fees 49,568 91,085 17,976 19,152
Registration fees 35,448 216,993 23,914 36,394
Directors' fees 15,000 15,000 15,000 15,000
Organizational costs 13,951 7,320 5,673 11,235
Other operating expenses 25,751 55,424 1,796 4,416
------------ --------------- ------------ ------------
TOTAL OPERATING EXPENSES BEFORE
AMOUNTS PAID BY THE ADVISER 2,718,238 9,171,440 485,669 854,079
LESS AMOUNTS PAID BY THE ADVISER - - (29,152) -
------------ --------------- ------------ ------------
NET EXPENSES 2,718,238 9,171,440 456,517 854,079
------------ --------------- ------------ ------------
NET INVESTMENT INCOME (LOSS) (1,330,119) 4,109,783 (258,932) (233,182)
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:
Net realized gain (loss) on:
Investments (40,422,189) 38,449,100 1,711,886 1,468,035
Foreign currency related transactions - (677,233) - -
Futures contracts 645,230 - - -
------------ --------------- ------------ ------------
(39,776,959) 37,771,867 1,711,886 1,468,035
Net increase (decrease) in unrealized
appreciation on:
Investments (15,181,024) 79,783,283 7,469,075 651,867
Foreign currency related transactions - (137,818) - -
------------ --------------- ------------ ------------
(15,181,024) 79,645,465 7,469,075 651,867
------------ --------------- ------------ ------------
NET GAIN (LOSS) ON INVESTMENTS (54,957,983) 117,417,332 9,180,961 2,119,902
------------ --------------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(56,288,102) $121,527,115 $8,922,029 $1,886,720
============= ============= =========== ===========
<F1> Net of foreign taxes withheld of $1,526,314.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP FUND INTERNATIONAL FUND
============================ ============================
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/99 6/30/98 6/30/99 6/30/98
========== ========== ========== ============
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(1,330,119) $(2,139,789) $4,109,783 $1,635,707
Net realized gain (loss) on:
Investments (40,422,189) 42,066,239 38,449,100 28,895,798
Foreign currency related transactions - - (677,233) (991,131)
Futures contracts 645,230 - - -
Net increase (decrease) in unrealized
appreciation on:
Investments (15,181,024) (907,556) 79,783,283 47,423,084
Foreign currency related transactions - - (137,818) 22,144
------------ ------------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (56,288,102) 39,018,894 121,527,115 76,985,602
DISTRIBUTIONS PAID
TO SHAREHOLDERS:
Net investment income: - -
International Shares (944,186) (4,035,316)
Institutional Shares (257,100) (823,369)
Net realized gains on investment transactions: (17,843,098) (45,736,543)
International Shares (6,509,837) (23,067,732)
Institutional Shares (1,271,446) (4,236,936)
------------ ------------- ------------ ------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS (17,843,098) (45,736,543) (8,982,569) (32,163,353)
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES (55,455,086) 43,039,922 513,780,438 3,177,296
------------ ------------- ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (129,586,286) 36,322,273 626,324,984 47,999,545
Net assets, beginning of period 304,142,161 267,819,888 497,179,615 449,180,070
------------ ------------- ------------ ------------
NET ASSETS, END OF PERIOD $174,555,875 $304,142,161 $1,123,504,599 $497,179,615
============ ============ ============= ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS - Continued
<TABLE>
<CAPTION>
MID CAP FUND SMALL CAP VALUE FUND
=========================== =============================
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
6/30/99 6/30/98 6/30/99 6/30/98<F1>
========= ========== ========= ============
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(258,932) $(72,646) $(233,182) $(127,378)
Net realized gain (loss) on investments 1,711,886 1,907,453 1,468,035 2,628,786
Net increase (decrease) in unrealized
appreciation on investments 7,469,075 781,675 651,867 1,676,090
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 8,922,029 2,616,482 1,886,720 4,177,498
DISTRIBUTIONS PAID
TO SHAREHOLDERS:
NET REALIZED GAINS ON INVESTMENT TRANSACTIONS (1,185,407) (586,078) (2,325,801) -
FUND SHARE ACTIVITIES:
NET INCREASE IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES 22,802,060 8,937,055 31,009,275 43,052,330
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET ASSETS 30,538,682 10,967,459 30,570,194 47,229,828
Net assets, beginning of period 12,780,936 1,813,477 47,229,828 -
------------ ------------ ------------ ------------
NET ASSETS, END OF PERIOD $43,319,618 $12,780,936 $77,800,022 $47,229,828
============ ============ ============ ============
<F1> For the period from commencement of operations (September 29,1997) through
June 30,1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN FUNDS, INC.
FINANCIAL HIGHLIGHTS - For a share outstanding throughout each period
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED TOTAL INCOME DIVIDENDS
YEAR OR VALUE INVESTMENT AND UNREALIZED (LOSS) FROM FROM NET
PERIOD BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT
ENDED OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ARTISAN SMALL CAP FUND
---------------------------------------------------------------------------------------------------------
6/30/99 $14.66 $(0.08) $(2.53) $(2.61) -
---------------------------------------------------------------------------------------------------------
6/30/98 15.11 (0.10) 2.23 2.13 -
---------------------------------------------------------------------------------------------------------
6/30/97 14.67 (0.04) 1.55 1.51 -
---------------------------------------------------------------------------------------------------------
6/30/96 11.52 (0.07) 3.32 3.25 -
---------------------------------------------------------------------------------------------------------
6/30/95<F1> 10.00 (0.01) 1.53 1.52 -
---------------------------------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND
---------------------------------------------------------------------------------------------------------
INTERNATIONAL 6/30/99 $16.25 $0.08<F4> $2.62 $2.70 $(0.04)
SHARES ---------------------------------------------------------------------------------------------------------
6/30/98 14.48 0.06<F4> 3.04 3.10 (0.20)
---------------------------------------------------------------------------------------------------------
6/30/97 12.08 0.07 2.44 2.51 (0.02)
---------------------------------------------------------------------------------------------------------
6/30/96<F5> 10.00 0.04 2.04 2.08 -
---------------------------------------------------------------------------------------------------------
INSTITUTIONAL 6/30/99 $16.26 $0.11<F4> $2.62 $2.73 $(0.05)
SHARES ---------------------------------------------------------------------------------------------------------
6/30/98 14.48 0.09<F4> 3.04 3.13 (0.22)
ARTISAN MID CAP FUND
---------------------------------------------------------------------------------------------------------
6/30/99 $13.69 $(0.16)<F4> $4.41 $4.25 -
---------------------------------------------------------------------------------------------------------
6/30/98 10.00 (0.08) 4.56 4.48 -
---------------------------------------------------------------------------------------------------------
6/30/97<F7> 10.00 - - - -
---------------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
---------------------------------------------------------------------------------------------------------
6/30/99 $11.37 $(0.03) $(0.21)<F8> $(0.24) -
---------------------------------------------------------------------------------------------------------
6/30/98<F9> 10.00 (0.03) 1.40 1.37 -
<F1> For the period from commencement of operations (March 28, 1995) through
June 30, 1995.
<F2> Not annualized.
<F3> Annualized.
<F4> Computed based on average shares outstanding.
<F5> For the period from commencement of operations (December 28, 1995) through
June 30, 1996.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
RATIO OF NET
DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INVESTMENT
FROM NET VALUE END OF EXPENSES INCOME (LOSS) PORTFOLIO
REALIZED TOTAL END TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
GAINS DISTRIBUTIONS OF PERIOD RETURN (MILLIONS) NET ASSETS NET ASSETS RATE
- -----------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
ARTISAN SMALL CAP FUND
- -----------------------------------------------------------------------------------------------------------------------------
$(0.96) $(0.96) $11.09 (17.0%) $174.6 1.37% (0.67%) 155.38%
- -----------------------------------------------------------------------------------------------------------------------------
(2.58) (2.58) 14.66 14.7 304.1 1.33 (0.74) 134.67
- -----------------------------------------------------------------------------------------------------------------------------
(1.07) (1.07) 15.11 11.3 267.8 1.41 (0.73) 87.18
- -----------------------------------------------------------------------------------------------------------------------------
(0.10) (0.10) 14.67 28.3 400.0 1.52 (0.75) 105.19
- -----------------------------------------------------------------------------------------------------------------------------
- - 11.52 15.2<F2> 99.3 2.00<F3> (0.59)<F3> 9.28<F2>
- -----------------------------------------------------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND
- -----------------------------------------------------------------------------------------------------------------------------
$(0.24) $(0.28) $18.67 17.4% $943.9 1.38% 0.59% 79.41%
- -----------------------------------------------------------------------------------------------------------------------------
(1.13) (1.33) 16.25 24.1 414.5 1.45 0.37 109.42
- -----------------------------------------------------------------------------------------------------------------------------
(0.09) (0.11) 14.48 20.9 449.2 1.61 1.07 103.66
- -----------------------------------------------------------------------------------------------------------------------------
- - 12.08 20.8<F2> 71.5 2.50<F3> 1.60<F3> 57.00<F2>
- -----------------------------------------------------------------------------------------------------------------------------
$(0.24) $(0.29) $18.70 17.6% $179.6 1.17% 0.68% 79.41%
- -----------------------------------------------------------------------------------------------------------------------------
(1.13) (1.35) 16.26 24.4 82.6 1.25 0.68 109.42
ARTISAN MID CAP FUND
- -----------------------------------------------------------------------------------------------------------------------------
$(1.27) $(1.27) $16.67 35.8% $43.3 2.00%<F6> (1.13%)<F6> 202.84%
- -----------------------------------------------------------------------------------------------------------------------------
(0.79) (0.79) 13.69 46.1 12.8 2.00<F6> (0.77)<F6> 235.65
- -----------------------------------------------------------------------------------------------------------------------------
- - 10.00 0.0<F2> 1.8 0.00<F3> 0.00<F3> 0.00<F2>
- -----------------------------------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
- -----------------------------------------------------------------------------------------------------------------------------
$(0.54) $(0.54) $10.59 (1.0%) $77.8 1.66% (0.45%) 49.29%
- -----------------------------------------------------------------------------------------------------------------------------
- - 11.37 13.7<F2> 47.2 1.93<F3> (0.50)<F3> 52.58<F2>
<F6> The ratios of expenses to average net assets and net investment loss to
average net assets exclude fees paid by the Adviser. Absent fees paid by the
Adviser, the ratios of expenses to average net assets and net investment loss to
average net assets would have been 2.12% and (1.25%) for the year ended June
30,1999 and 3.64% and (2.41%) for the year ended June 30, 1998, respectively.
<F7> For the period from commencement of operations (June 27, 1997) through June
30, 1997.
<F8> The amount shown may not correlate with the aggregate gains and losses of
portfolio securities due to the timing of subscriptions and redemptions of fund
shares.
<F9> For the period from commencement of operations (September 29, 1997) through
June 30, 1998.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - June 30, 1999
(1) ORGANIZATION:
Artisan Funds, Inc. ("Artisan Funds") was incorporated on January 5, 1995,
as a Wisconsin corporation and is registered under the Investment Company Act of
1940, as amended. Artisan Funds is a series comprised of four open-end,
diversified mutual funds (each a "Fund" and collectively the "Funds"): Artisan
Small Cap Fund ("Small Cap Fund"), Artisan International Fund ("International
Fund"), Artisan Mid Cap Fund ("Mid Cap Fund"), and Artisan Small Cap Value Fund
("Small Cap Value Fund"). Small Cap Fund, International Fund, Mid Cap Fund and
Small Cap Value Fund commenced operations on March 28, 1995, December 28, 1995,
June 27, 1997 and September 29, 1997, respectively.
Effective July 1, 1997, the International Fund began offering two classes
of capital shares, International Shares and International Institutional Shares
(Institutional Shares). 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, 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 agency fees and shareholder communication expenses, are
allocated directly to that class. On July 1, 1997, 3,071,672 shares (with a net
asset value of $44,477,811) of International Shares were transferred to
Institutional Shares.
The Small Cap Fund, International Fund International Shares, International
Fund Institutional Shares, Mid Cap Fund and Small Cap Value Fund each have
5,000,000,000 shares authorized with a $0.01 par value.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds.
(a) Security valuation - Each security is valued at the last sales price
reported by the principal securities exchange on which the issue is traded, or
if no sale is reported on the principal exchange, the last sale on a secondary
exchange. The last bid price reported is utilized if no sales have taken place.
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 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
<PAGE>
ARTISAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
amortized cost which approximates market. The Small Cap Fund, Mid Cap
Fund and Small Cap Value Fund each own certain securities which are valued at
their fair value as determined using procedures established by the Funds' Board
of Directors. Each Fund held fair valued securities in the amount of $5,929,172,
$189,000 and $939,938, respectively, representing 3.4%, 0.4% and 1.2%,
respectively, of the net assets of each of the Funds.
(b) Income taxes - No provision has been made for federal income taxes
since each 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 on trade date. Net realized gains and losses on securities are computed
on specific security lot identification.
(d) Foreign currency translation - Values of investments denominated in
foreign currencies are converted into U.S. dollars using the spot market rate of
exchange at the time of valuation. Purchases and sales of investments and
dividend and interest income are translated to U.S. dollars using the spot
market rate of exchange prevailing on the respective dates of such transactions.
The portion of security gains or losses resulting from changes in foreign
exchange rates is included with net realized and unrealized gain or loss from
investments, as appropriate, for both financial reporting and tax purposes.
The International Fund enters into forward currency contracts to hedge
the foreign currency exposure on open payables and receivables. The 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 International Fund
could be exposed to loss if the counterparties fail to perform under these
contracts.
(e) Futures Contracts - Each Fund is authorized to enter into futures
contracts. A purchase or sale of a futures contract may result in losses in
excess of the amount invested and there can be no guarantee that there will be a
correlation between price movements in the futures contract and in the portfolio
exposure sought. In addition, there can be no assurance that a liquid market
will exist at a time when the Fund seeks to close out a futures position and
there is a risk that the counterparty to the futures contract will not be able
to meet the terms of the contract. Futures contracts are valued based upon their
quoted daily settlement prices. Fluctuations in the value of these contracts are
recorded as unrealized appreciation (depreciation) until terminated, at which
time realized gains and losses are recognized.
<PAGE>
ARTISAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
(f) Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts and disclosures
in the financial statements. Actual results could differ from those estimates.
(g) Other - Dividend income is recorded on the ex-dividend date, except
that certain dividends from private placements and foreign securities are
recorded as soon as the information becomes available to the Funds. Interest
income is reported on the accrual basis. Distributions to shareholders are
recorded on the ex-dividend date. Generally accepted accounting principles
require that permanent financial reporting and tax differences be reclassified
in the capital accounts.
(3) TRANSACTIONS WITH AFFILIATES:
Artisan Partners Limited Partnership (the -Adviser-), with which certain
officers and directors of the Funds are affiliated, provides investment advisory
and administrative services to the Funds. In exchange for these services, each
Fund pays a monthly management fee to the Adviser as follows:
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%
Each 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 Small Cap Fund, Mid Cap Fund and Small
Cap Value Fund for any ordinary operating expenses in excess of 2.00% of average
net assets annually, and the International Fund for ordinary operating expenses
in excess of 2.50% of average net assets annually.
Each director who is not an interested person of Artisan Funds, Inc. or
Artisan Partners Limited Partnership receives an annual retainer fee of $5,000
per Fund, plus reimbursement of expenses related to their duties as a director
of Artisan Funds, Inc.
(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. Prepaid registration expenses are amortized over twelve months.
<PAGE>
ARTISAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
(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 each Fund may borrow up to the lesser
of 10% of its net assets or $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 based on relative net assets. Interest is charged on any borrowings
at the current Federal funds rate plus 0.50%. The use of the line of credit is
generally restricted to temporary borrowing for extraordinary or emergency
purposes. Maximum borrowings under the line of credit for the fiscal year ended
June 30, 1999 were as follows:
Fund Maximum Borrowings
---- ------------------
Small Cap Fund $-
International Fund 7,673,495
Mid Cap Fund -
Small Cap Value Fund 48,321
(6)INVESTMENT TRANSACTIONS:
The cost of securities purchased and the proceeds from the sale of
securities (excluding short-term securities) for the year ended June 30, 1999
were as follows:
Fund Security Purchases Security Sales
---- ------------------ --------------
Small Cap $298,849,368 $367,241,377
International 1,024,509,575 533,739,883
Mid Cap 65,195,028 44,131,332
Small Cap Value 54,667,037 24,285,740
<PAGE>
ARTISAN FUNDS, INC.
Notes to Financial Statements - Continued
(7) FUND SHARE ACTIVITIES:
Capital share transactions for the Funds were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL FUND
==================================
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1999 SMALL CAP FUND SHARES SHARES
================================================= ============== ============= ======
<S> <C> <C> <C>
Proceeds from shares issued $41,079,632 $808,115,881 $108,430,376
Net asset value of shares issued in
reinvestment of distributions 17,337,992 7,211,053 1,448,132
Cost of shares redeemed (113,872,710) (376,463,582) (34,961,422)
-------------- ------------- -------------
NET INCREASE (DECREASE) FROM FUND SHARE ACTIVITIES $(55,455,086) $438,863,352 $74,917,086
============== ============= =============
SMALL CAP
FISCAL YEAR ENDED JUNE 30, 1999 MID CAP FUND VALUE FUND
================================================= ============ ==========
Proceeds from shares issued $31,529,435 $57,373,478
Net asset value of shares issued in
reinvestment of distributions 1,156,779 2,161,775
Cost of shares redeemed (9,884,154) (28,525,978)
------------ ------------
Net increase from fund share activities $22,802,060 $31,009,275
============ ============
INTERNATIONAL FUND
===================================
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1999 SMALL CAP FUND SHARES SHARES
================================================== ============== ============= ======
Shares sold 3,778,821 47,804,591 6,392,854
Shares issued from reinvestment of distributions 1,753,078 558,569 112,258
Shares redeemed (10,534,310) (23,304,036) (1,985,942)
------------- ------------ -----------
Net increase (decrease) in capital shares (5,002,411) 25,059,124 4,519,170
============= ============ ===========
SMALL CAP
FISCAL YEAR ENDED JUNE 30, 1999 MID CAP FUND VALUE FUND
================================================== ============ ==========
Shares sold 2,275,136 6,026,910
Shares issued from reinvestment of distributions 105,353 253,135
Shares redeemed (715,659) (3,088,372)
------------ -----------
Net increase from fund share activities 1,664,830 3,191,673
============ ===========
</TABLE>
<PAGE>
ARTISAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
(7) FUND SHARE ACTIVITIES (continued):
<TABLE>
<CAPTION>
INTERNATIONAL FUND
====================================
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1998 SMALL CAP FUND SHARES SHARES
================================================== ============== ============= ======
<S> <C> <C> <C>
Net asset value of shares transferred $(44,477,811) $44,477,811
Proceeds from shares issued $68,878,543 235,471,219 27,045,257
Net asset value of shares issued in
reinvestment of distributions 44,157,727 25,959,795 4,802,555
Cost of shares redeemed (69,996,348) (287,349,997) (2,751,533)
------------ -------------- -----------
Net increase (decrease) from fund share activities $43,039,922 $(70,396,794) $73,574,090
============ ============= ===========
SMALL CAP
FISCAL YEAR ENDED JUNE 30, 1998 MID CAP FUND VALUE FUND
================================================== ============ ==========
Proceeds from shares issued $10,983,008 $54,638,155
Net asset value of shares issued in
reinvestment of distributions 539,701 -
Cost of shares redeemed (2,585,654) (11,585,825)
------------ ------------
Net increase from fund share activities $8,937,055 $43,052,330
============ ============
INTERNATIONAL FUND
====================================
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1998 SMALL CAP FUND SHARES SHARES
================================================== ============== ============= ======
Shares transferred (3,071,672) 3,071,672
Shares sold 4,616,498 15,876,987 1,835,634
Shares issued from reinvestment of distributions 3,125,105 2,075,110 383,897
Shares redeemed (4,721,885) (20,392,769) (207,599)
------------- ------------ ---------
Net increase (decrease) in capital shares 3,019,718 (5,512,344) 5,083,604
============= ============ =========
SMALL CAP
FISCAL YEAR ENDED JUNE 30, 1998 MID CAP FUND VALUE FUND
================================================= ============ ==========
Shares sold 912,840 5,232,019
Shares issued from reinvestment of distributions 45,932 -
Shares redeemed (206,835) (1,078,653)
---------- -----------
Net increase from fund share activities 751,937 4,153,366
========== ===========
</TABLE>
<PAGE>
ARTISAN FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
(8) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
Aggregate Aggregate
Gross Gross Net
Unrealized Unrealized Unrealized
Cost of Appreciation Depreciation Appreciation
Fund Securities on Investments on Investments on Investments
- ---- ----------- ------------- -------------- --------------
Small Cap $155,941,617 $24,120,672 $(5,526,488) $18,594,184
International 965,796,983 210,387,841 (54,363,238) 156,024,603
Mid Cap 38,069,087 7,952,978 (225,495) 7,727,483
Small Cap Value 76,155,503 7,725,292 (5,461,297) 2,263,995
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 for the International Fund, passive foreign investment
company (PFIC) value adjustments. Losses from foreign currency related
transactions for the International Fund of $487,619 and security transactions
for the Small Cap Fund and Small Cap Value Fund of $9,559,925 and $84,661,
respectively, from November 1, 1998 to June 30, 1999 are not recognized for
federal income tax purposes until fiscal 2000. Certain Funds utilized earnings
and profits distributed to shareholders on redemption of shares as part of the
dividends paid deduction.
The Small Cap Fund generated $29,613,980 in capital loss carryforwards during
the fiscal year ended June 30, 1999. These capital loss carryforwards are
available to offset future realized capital gains through June 30, 2007. Small
Cap Fund will resume capital gains distributions in the future to the extent
gains are realized in excess of the available carryforwards.
(9) OTHER TAX INFORMATION (UNAUDITED):
For the year ended June 30, 1999, ordinary income distributions paid by Small
Cap Fund, Mid Cap Fund and Small Cap Value Fund, of 5%, 2% and 9%, respectively,
are eligible for the dividend received deduction available to corporate
shareholders.
In early 1999, shareholders received information regarding distributions paid to
them during the fiscal year ended June 30, 1999. Each Fund hereby designates the
following amounts as long term capital gain distributions.
Long-Term Capital Gains
------------------------
Small Cap Fund $9,324,956
International Fund 7,920,878
Mid Cap Fund 9,526
Small Cap Value Fund 34,376
- --------------------------------------------------------------------------------
NOTES ON PORTFOLIO STATISTICS
The letters to shareholders included in this annual report include statistical
information about the portfolios of each of the Artisan Funds. That information
is as of June 30, 1999; it varies with changes in a Fund's portfolio
investments.
- --------------------------------------------------------------------------------
<PAGE>
PRICE WATERHOUSE COOPERS (LOGO)
- --------------------------------------------------------------------------------
PRICE WATERHOUSE COOPERS LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee WI 53202
Telephone (414) 212 1600
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Artisan Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Artisan Small Cap Fund, Artisan
International Fund, Artisan Mid Cap Fund and Artisan Small Cap Value Fund
(constituting Artisan Funds, Inc., hereafter referred to as the "Funds") at June
30, 1999, the results of each of their operations, the changes in each of their
net assets and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Funds' management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/Price Waterhouse Coopers
July 26, 1999
<PAGE>
(LOGO)
ARTISAN FUNDS
P.O. BOX 8412
BOSTON, MA 02266-8412
(800) 344-1770
----------------
Bulk Rate
U.S. Postage
PAID
Milwaukee, WI
Permit No. 2855
----------------
A9018
