ANNUAL
REPORT
INTERNATIONAL FUND INSTITUTIONAL SHARES
(LOGO)
ARTISAN FUNDS
JUNE 30, 1999
<PAGE>
ARTISAN
INTERNATIONAL FUND INSTITUTIONAL SHARES
(A Series of Artisan Funds, Inc.)
Table of Contents
- -------------------------------------------------------------
LETTER TO SHAREHOLDERS 3
SCHEDULE OF INVESTMENTS 9
STATEMENT OF ASSETS & LIABILITIES 14
STATEMENT OF OPERATIONS 15
STATEMENTS OF CHANGES IN NET ASSETS 16
FINANCIAL HIGHLIGHTS 17
NOTES TO FINANCIAL STATEMENTS 18
INDEPENDENT ACCOUNTANT'S REPORT 23
- -------------------------------------------------------------
ARTISAN FUNDS, Inc.
SUITE 1770
1000 NORTH WATER STREET
MILWAUKEE, WI 53202-3197
(800) 399-1770
This report and the financial statements contained herein are provided for the
general information of the shareholders of the Artisan International Fund
Institutional Shares. 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)
399-1770 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
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Letter to Shareholders - August 27, 1999
Effective July 1, 1997, the Artisan International Fund began offering two
classes of capital shares: International Shares and Institutional Shares.
Additional information regarding each class of shares is available in the Fund's
prospectus. Performance data herein relates to the International Shares prior to
July 1, 1997, and to the Institutional Shares subsequent to July 1, 1997.
THE FUND'S PERFORMANCE
The Fund rose 17.62% 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 24.16%
compared to 8.87% and 11.86% for EAFE and Lipper, respectively, through June 30,
1999.
COMPARATIVE QUARTERLY PERFORMANCE
Artisan Lipper EAFE
International Fund International Fund Index Index
------------------ ------------------------ -----
12/31/95 10,000.00 10,000.00 10,000.00
3/31/96 10,910.00 10,467.28 10,288.95
6/30/96 12,080.00 10,894.57 10,451.74
9/30/96 12,220.00 10,902.89 10,438.63
12/31/96 13,437.23 11,471.87 10,604.70
3/31/97 14,153.48 11,756.05 10,438.60
6/30/97 14,607.44 13,071.82 11,793.25
9/30/97 14,849.55 13,322.30 11,710.22
12/31/97 13,913.31 12,303.30 10,793.24
3/31/98 16,729.50 14,128.57 12,380.92
6/30/98 18,171.12 14,248.54 12,512.37
9/30/98 14,744.43 12,000.45 10,733.87
12/31/98 18,436.25 13,861.03 12,951.55
3/31/99 20,516.47 14,038.65 13,131.73
6/30/99 21,373.70 14,817.92 13,465.42
- ------------------------------
Artisan International Fund
Average Annual Total Returns:
One Year: 17.62%
Since Inception: 24.16%
- ------------------------------
<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% 1.7% -6.3% 20.2% 8.6% -18.9% 25.0% 11.3% 4.2%
- ---------------------------------------------------------------------------------------------------------------------------------
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 International
Shares on December 28, 1995 (the date the Fund began operations) to June 30,
1997, and in the Institutional Shares from July 1, 1997 to June 30, 1999, with
the Morgan Stanley Capital International Europe, Australasia and Far East (EAFE)
Index and the Lipper International Fund Index. The EAFE Index's 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.
<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 ASIA/PACIFIC TOTAL 8.4%
Germany 5.5
Sweden 3.6 Brazil 3.5
Spain 2.7 Mexico 2.3
----
Finland 2.2 LATIN AMERICA TOTAL 5.8%
Austria 0.7
Norway 0.4 Canada 13.1
Ireland 0.3 Bermuda 2.6
----
Portugal 0.3 NORTH AMERICA TOTAL 15.7%
Luxembourg 0.2
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.
- -----------------------------------------------------------------------
TOP 5 GAINERS<F3> TOP 5 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 International class is available under separate cover.
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
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<F3> - 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%<F1><F1> $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
(A Series of Artisan Funds, Inc.)
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%
============== ======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
<PAGE>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
ASSETS:
Investments in securities, at value
(cost $960,678,938) $1,121,821,586
Cash 613,654
Receivable from investments sold 32,824,911
Receivable from forward currency contracts 25,384,553
Receivable from fund shares sold 8,268,389
Interest receivable 3,727
Dividends receivable 2,121,737
Organizational costs 10,980
Other assets 2,005
-------------
Total assets 1,191,051,542
LIABILITIES:
Payable for investments purchased 40,996,522
Payable for forward currency contracts 25,333,558
Payable for fund shares redeemed 283,328
Payable for organizational costs 10,980
Payable for operating expenses 805,929
Other liabilities 116,626
-------------
Total liabilities 67,546,943
-------------
Total net assets $1,123,504,599
==============
NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding 927,059,446
Net unrealized appreciation on investments and
foreign currency transactions 161,028,212
Accumulated undistributed net investment income 1,876,177
Accumulated undistributed net realized gains on
investments and foreign
currency related transactions 33,540,764
-------------
$1,123,504,599
=============
INTERNATIONAL SHARES:
Net assets $943,941,134
Shares authorized ($0.01 par value) 5,000,000,000
Shares issued and outstanding 50,561,875
Net asset value, offering and redemption price
per share $18.67
======
INSTITUTIONAL SHARES:
Net assets $179,563,465
Shares authorized ($0.01 par value) 5,000,000,000
Shares issued and outstanding 9,602,774
Net asset value, offering and redemption price
per share $18.70
======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1999
INVESTMENT INCOME:
Interest $885,548
Dividends (net of foreign taxes withheld of $1,526,314) 12,395,675
------------
Total investment income 13,281,223
EXPENSES:
Advisory fees 6,718,770
Transfer agent fees:
International Shares 1,208,884
Institutional Shares 21,460
Shareholder communications:
International Shares 171,859
Institutional Shares 8,351
Custodian fees 577,023
Accounting fees 79,271
Professional fees 91,085
Registration fees 216,993
Director's fees 15,000
Organizational costs 7,320
Other operating expenses 55,424
------------
Total operating expenses 9,171,440
------------
Net investment income 4,109,783
REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS - NET:
Net realized gain (loss) on:
Investments 38,449,100
Foreign currency related transactions (677,233)
------------
37,771,867
Net increase in unrealized appreciation on:
Investments 79,783,283
Foreign currency related transactions (137,818)
------------
79,645,465
------------
Net gain on investments 117,417,332
------------
Net increase in net assets resulting from operations $121,527,115
============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
STATEMENTS OF CHANGES IN NET ASSETS
Year Ended Year Ended
June 30, June 30,
1999 1998
---------- ---------
OPERATIONS:
Net investment income $4,109,783 $1,635,707
Net realized gain (loss) on:
Investments 38,449,100 28,895,798
Foreign currency related transactions (677,233) (991,131)
Net increase in unrealized appreciation
(depreciation) on:
Investments 79,783,283 47,423,084
Foreign currency related transactions (137,818) 22,144
----------- ----------
Net increase in net assets resulting
from operations 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:
International Shares (6,509,837) (23,067,732)
Institutional Shares (1,271,446) (4,236,936)
----------- ----------
Total distributions paid to shareholders (8,982,569) (32,163,353)
FUND SHARE ACTIVITIES:
Net increase in net assets resulting from fund
share activities 513,780,438 3,177,296
----------- ----------
Total increase in net assets 626,324,984 47,999,545
Net assets, beginning of period 497,179,615 449,180,070
----------- ----------
Net assets, end of period $1,123,504,599 $497,179,615
============== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Period Ended
June 30, 1999 June 30, 1998 June 30, 1997 June 30, 1996
Institutional Institutional International International
For a share outstanding throughout each period Shares Shares Shares Shares<F1>
- ---------------------------------------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $16.26 $14.48 $12.08 $10.00
Income from investment operations:
Net investment income 0.11<F2> 0.09<F2> 0.07 0.04
Net realized and unrealized gains on
on securities and foreign
currency transactions 2.62 3.04 2.44 2.04
------- -------- ------- -------
Total from investment operations 2.73 3.13 2.51 2.08
------- -------- ------- -------
Distributions paid to shareholders:
Net investment income (0.05) (0.22) (0.02) -
Net realized gains on investment
transactions (0.24) (1.13) (0.09) -
------- -------- ------- -------
Total distributions paid to shareholders (0.29) (1.35) (0.11) -
------- -------- ------- -------
Net asset value, end of period $18.70 $16.26 $14.48 $12.08
======= ======= ======= =======
Total return 17.6% 24.4% 20.9% 20.8%<F3>
Ratios/supplemental data:
Net assets, end of period (millions) $179.6 $82.6 $449.2 $71.5
Ratio of expenses to average net assets 1.17% 1.25% 1.61% 2.50%<F4>
Ratio of net investment income to
average net assets 0.68% 0.68% 1.07% 1.60%<F4>
Portfolio turnover rate 79.41% 109.42% 103.66% 57.00%<F3>
</TABLE>
<F1> For the period from commencement of operations (December 28, 1995)
through June 30, 1996.
<F2> Computed based on average shares outstanding.
<F3> Not annualized.
<F4> Annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - June 30, 1999
(1) ORGANIZATION:
The Artisan International Fund (the "Fund") is a series of Artisan Funds,
Inc. ("Artisan Funds" ) which 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. The International Fund commenced operations on
December 28, 1995.
Effective July 1, 1997, the 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.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Fund.
(a) Security valuation - Each security is valued at the 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 amortized cost which approximates market.
(b) Income taxes - No provision has been made for federal income taxes since
the Fund intends to 1) distribute to its shareholders substantially all
of its taxable income as well as realized gains from the sale of
investment securities and 2) comply with all provisions of the Internal
Revenue Code applicable to regulated investment companies.
(c) Portfolio transactions - Security and shareholder transactions are
recorded on trade date. Net realized gains and losses on securities are
computed on specific security lot identification.
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - Continued
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
(d) Foreign currency translation - Values of investments denominated in
foreign currencies are converted into U.S. dollars using the spot market
rate of exchange at the time of valuation. Purchases and sales of
investments and dividend and interest income are translated to U.S.
dollars using the spot market rate of exchange prevailing on the
respective dates of such transactions. The portion of security gains or
losses resulting from changes in foreign exchange rates is included with
net realized and unrealized gain or loss from investments, as
appropriate, for both financial reporting and tax purposes.
The Fund enters into forward currency contracts 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
Fund could be exposed to loss if the counterparties fail to perform under
these contracts.
(e) Use of estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and
disclosures in the financial statements. Actual results could differ from
those estimates.
(f) Other - Dividend income is recorded on the ex-dividend date, except that
certain dividends from private placements and foreign securities are
recorded as soon as the information becomes available to the Fund.
Interest income is reported on the accrual basis. Distributions to
shareholders are recorded on the ex-dividend date. Generally accepted
accounting principles require that 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 Fund are affiliated, provides investment
advisory and administrative services to the Fund. In exchange for these
services, the Fund pays a monthly management fee to the Adviser as follows:
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%
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - Continued
(3) TRANSACTIONS WITH AFFILIATES (continued):
The Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports.
Each director who is not an interested person of Artisan Funds, Inc. or
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.
(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.
During the year ended June 30, 1999, maximum borrowings under the line of
credit were $7,673,495.
(6) INVESTMENT TRANSACTIONS:
For the year ended June 30, 1999, the cost of securities purchased and the
proceeds from the sale of securities (excluding short-term securities) were
$1,024,509,575 and $533,739,883, respectively.
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - Continued
(7) FUND SHARE ACTIVITIES:
Capital share transactions for the Fund were as follows:
INTERNATIONAL FUND
===============================
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1999 SHARES SHARES
================================ ============= ==============
Proceeds from shares issued $808,115,881 $108,430,376
Net asset value of shares issued in
reinvestment of distributions 7,211,053 1,448,132
Cost of shares redeemed (376,463,582) (34,961,422)
------------- -----------
NET INCREASE (DECREASE) FROM FUND
SHARE ACTIVITIES $438,863,352 $74,917,086
============= ===========
INTERNATIONAL FUND
=============================
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1999 SHARES SHARES
=============================== ============= =============
Shares sold 47,804,591 6,392,854
Shares issued from reinvestment of
distributions 558,569 112,258
Shares redeemed (23,304,036) (1,985,942)
----------- ----------
Net increase (decrease) in capital shares 25,059,124 4,519,170
=========== ==========
INTERNATIONAL FUND
==============================
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1998 SHARES SHARES
=============================== ============= =============
Net asset value of shares transferred $(44,477,811) $44,477,811
Proceeds from shares issued 235,471,219 27,045,257
Net asset value of shares issued in
reinvestment of distributions 25,959,795 4,802,555
Cost of shares redeemed (287,349,997) (2,751,533)
------------ -----------
Net increase (decrease) from fund share
activities $(70,396,794) $73,574,090
============ ===========
INTERNATIONAL FUND
==============================
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1998 SHARES SHARES
================================ ============= =============
Shares transferred (3,071,672) 3,071,672
Shares sold 15,876,987 1,835,634
Shares issued from reinvestment of
distributions 2,075,110 383,897
Shares redeemed (20,392,769) (207,599)
----------- ----------
Net increase (decrease) in capital shares (5,512,344) 5,083,604
=========== ==========
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - Continued
(8) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
Aggregate gross unrealized appreciation (depreciation) on investments as of
June 30, 1999, based on investment cost of $965,796,983 for federal tax
purposes, is as follows:
Aggregate gross unrealized appreciation on investments $210,387,841
Aggregate gross unrealized depreciation on investments (54,363,238)
------------
Net unrealized appreciation $156,024,603
============
The difference between cost amounts for financial reporting and tax purposes
is due primarily to timing differences in recognizing certain gains and
losses on security transactions and passive foreign investment company
(PFIC) value adjustments. Losses from foreign currency related transactions
of $487,619 from November 1, 1998, to June 30, 1999, are not recognized for
federal income tax purposes until fiscal 2000. The Fund utilized earnings
and profits distributed to shareholders on redemption of shares as part of
the dividends paid deduction.
(9) OTHER TAX INFORMATION (UNAUDITED):
In early 1999, shareholders received information regarding distributions
paid to them during the fiscal year ended June 30, 1999. The Fund hereby
designates $7,920,878 as long term capital gain distributions.
- ----------------------------------------------------------------------------
NOTES ON PORTFOLIO STATISTICS
The letter to shareholders included in this annual report include statistical
information about the Fund. That information is as of June 30, 1999; it varies
with changes in the Fund's portfolio investments.
- ----------------------------------------------------------------------------
<PAGE>
PRICEWATERHOUSE COOPERS
(LOGO)
- -----------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS 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 statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Artisan International Fund (one of
the portfolios comprising Artisan Funds, Inc., hereafter referred to as the
"Fund") at June 30, 1999, the results of its operations, the changes in its net
assets and the financial highlights for each of the periods indicated, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1999 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse Coopers LLP
July 26, 1999
