- -------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND
- -------------------------------------------------------------------------------
QUARTERLY UPDATE APRIL 1999
Thank you for investing in Artisan Small Cap Fund. We are pleased to present
this update for the year's first quarter.
Inside we discuss the Fund's performance, its new co-manager and our decision to
reopen to new investors.
With deep regret, and our very best wishes, we bid good-bye to Millie Hurwitz,
the Fund co-manager. Millie has decided to retire and focus her energies on her
young family. We can't say enough about Millie's contributions to the Fund and
the firm. Both professionally and personally, she truly will be missed.
(Logo)
ARTISAN FUNDS
<PAGE>
FIRST QUARTER OVERVIEW
-----------------------
Artisan Small Cap Fund declined 11.9% for the quarter, while our benchmark
index, the Russell 2000, lost 5.4%.<F1>
In the first quarter the market continued to favor large-caps over small-caps.
And although we're disappointed with the performance, we still believe that
small-cap investing makes sense for long-term investors.
Many of our stocks, even those with excellent earnings, were discounted by the
market. Others, that barely missed their earnings, were discounted even more.
Some of our companies declined in value simply because they were small. Hence,
the market is saying it prefers size and liquidity. We've responded with an
appropriate bias when evaluating our holdings that lifted the Fund's median
market cap to $576 million at quarter-end.
------------------------------------------------
AVERAGE ANNUAL RETURNS<F1>
------------------------------------------------
FOR THE PERIODS ENDED 3/31/99
SINCE INCEPTION
ONE YEAR (3/28/95)
---------- ---------------
SMALL CAP -29.00% 8.53%
RUSSELL 2000 INDEX -16.26% 12.71%
LIPPER SMALL CAP FUND INDEX -14.68% 11.43%
<PAGE>
FIRST QUARTER OVERVIEW (continued)
----------------------------------
The roster of favored large-caps continues to narrow. We believe the large-cap
dominance will end and that the stage is being set for small-cap performance
resurgence.
At quarter-end, about 40% of the Fund's assets were invested in "services." We
live in a service economy, and, broadly defined, anything that's not
manufactured is a service.
We invest in both consumer and business services. For us, consumer services
range from broadcasting, movie theaters, restaurants and retailers to companies
in personal care and education. Business services include security, waste
management, temporary staffing and outsourced technology support. The following
investment profiles are representative of the service providers we own.
TOP 10 HOLDINGS<F2>
---------------------------------
- -----------------------------------------------------------------------
COMPANY %
- -----------------------------------------------------------------------
HEALTHCARE FINANCIAL PARTNERS...Specialty finance
for healthcare providers 2.6%
WILD OATS MARKETS...Natural food supermarkets 2.5%
HEALTHCARE FINANCIAL PARTNERS REIT...Healthcare related
real estate investments (144A) 2.5%
APTARGROUP...Pumps, valves and closures for consumer packaging 2.4%
TECHNE CORP...Specialty manufacturer of biological products 2.3%
CEC ENTERTAINMENT...Chuck E. Cheese restaurants 2.2%
RES-CARE...Provider of residential and support services to people
with disabilities and troubled youths 2.1%
TETRA TECH...Environmental consultant/engineer in water quality 2.1%
REGIS...National operator/franchiser of hair salons 2.1%
TRACTOR SUPPLY COMPANY...Farm supplies retailer 2.0%
- -----------------------------------------------------------------------
TOTAL 22.8%
=======================================================================
<PAGE>
1
INVESTMENT PROFILE
------------------------------------
PROFIT RECOVERY GROUP
Profit Recovery Group is a specialist in accounts payable audit recovery
services. It uses sophisticated, proprietary computer systems to analyze
invoices and purchase orders for overpayments to vendors. Using its advanced
technology, Profit Recovery Group is exploiting an opportunity and taking market
share in the retail and grocery industries.
At the same time, the company is determined to enter new markets through
investment and acquisition. While accelerating growth, this diversification is
reducing industry-specific risk. We think the company has the potential for
several years of earnings gains.<F3>
2
INVESTMENT PROFILE
------------------------------
TETRA TECH
Tetra Tech is an environmental consulting/engineering firm specializing in water
quality.
The company's focus is on marine, surface and groundwater problems related to
nuclear site cleanup, military base compliance, hazardous waste remediation and
water resource management. Tetra Tech's business is about equally divided
between government entities and corporate clients.
A recent venture, and one that appears to offer great potential, is providing
site development services for the wireless communications and cable TV
industries. Year after year this company has grown 20-25% - a record of
consistency that we find very attractive.<F3>
<PAGE>
!
FUND ANNOUNCEMENT
----------------------------------
SMALL CAP FUND REOPENED
- --------------------------------------------------------------------------------
THE ARTISAN SMALL CAP FUND REOPENED TO NEW INVESTORS AS OF APRIL 1, 1999.
The Fund managers consider the current disparity in the valuations of small-
caps versus large-caps an opportunity. They conclude that additional funds
will allow them to purchase what they consider quality small-caps at
attractive prices. Should small-caps experience a resurgence, they believe
these currently out-of-favor small-caps could provide substantial growth.
As before, we intend to close the Fund when it again reaches about $300
million in total net assets.
- --------------------------------------------------------------------------------
DIVERSIFICATION BY SECTOR<F4>
- ----------------------------------
- -----------------------------------
SECTOR %
- -----------------------------------
BASIC MATERIALS 6.9
CAPITAL GOODS 2.1
CONGLOMERATES 0.0
CONSUMER CYCLICAL 0.6
CONSUMER/NON-CYCLICAL 2.0
ENERGY 5.8
FINANCIAL 6.0
HEALTHCARE 10.1
REITS 3.6
SERVICES 39.6
BUSINESS SERVICES 13.1
CONSUMER SERVICES 26.5
TECHNOLOGY 17.4
TRANSPORTATION 4.2
UTILITIES 1.7
- ------------------------------------
TOTAL 100.0%
- ------------------------------------
ARTISAN SMALL CAP FUND
<PAGE>
OUR VIEW ON SMALL-CAPS
-------------------------------------
LOOKING FORWARD
We believe that the markets continue to overlook a critical factor, relative
valuation, which may drive the future performance of small-caps. Consider the
following:
- - The Leuthold Group reports that in late 1990, preceding the most recent major
small-cap rally, small-caps sold at P/E discounts relative to large-caps of
25% to 30%. As of February 1999 this small-cap P/E discount ratio had widened
to 45%.<F5>
- - Salomon Smith Barney concluded recently that emerging growth stocks are on one
of the longest losing streaks on record, with relative valuations sinking to
40-year lows, creating an opportunity to buy high-quality small growth stocks
at fire-sale prices.<F6>
- - Over the long-term, corporate earnings drive stock prices. And small
companies, by virtue of their size, can grow their earnings much faster on a
percentage basis than large companies.
- - Don't discount the cycle. We believe the historical cycle of small-caps
outperforming large-caps is still with us, even though large-caps are winning
today.
We believe that today's global economy offers fertile ground for small, nimble
companies with strategic focus to flourish and grow. We're dedicated to finding
those companies that have the potential for superior long-term growth.
<PAGE>
SPECIAL ANNOUNCEMENT
---------------------------------------
NEW PORTFOLIO CO-MANAGER
(Photo)
Carlene Ziegler, CFA Marina Carlson, CFA
Please join us in welcoming Marina Carlson as portfolio co-manager of Artisan
Small Cap Fund. We've long been aware of Marina's considerable skills. Most
recently at Strong Funds, and previously at Stein Roe & Farnham, she worked on
Carlene Ziegler's management team.
Marina comes to Artisan Partners from Strong Capital Management, where she had
co-managed Strong Common Stock Fund and Strong Opportunity Fund, and most
recently managed the Strong Mid Cap Disciplined Fund. Marina holds a BBA from
Drake University and an MBA from DePaul University.
FUND STATISTICS<F7>
---------------------
NUMBER OF HOLDINGS 79
MEDIAN MARKET CAP $576 million
MEDIAN GROWTH RATE 1999E 25%
MEDIAN P/E 1999E 17.8X
MEDIAN PRICE/INTRINSIC VALUE 1999E 72%
EQUITY DIVIDEND YIELD 0.4%
<PAGE>
NOTES
---------
<F1> PERFORMANCE DATA IS HISTORICAL AND DOES 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 Russell 2000 Index is an unmanaged, market-weighted index,
with dividends reinvested, of 2000 small companies. The Lipper Small
Cap Fund Index reflects the net asset weighted return of the 30
largest small-cap funds, with dividends reinvested. The returns of the
Russell 2000 do not include the payment of sales commissions or other
expenses incurred in the purchase of the securities included in the
index.
<F2> As a percentage of total net assets as of March 31, 1999.
<F3> Portfolio profiles are for illustration only and are not intended as
recommendations of individual stocks. The profiles present information
about the companies believed to be accurate, and the views of the
portfolio managers, as of April 1, 1999. That information and those
views may change and the Fund disclaims any obligation to advise
shareholders of any such changes. As of March 31, 1999, Profit
Recovery Group represented 1.7% of the Fund's total net assets.
<F4> As a percentage of portfolio equities as of March 31, 1999.
<F5> Perception For The Professional, The Leuthold Group, March 1999.
<F6> Emerging Growth Stocks, Salomon Smith Barney, March 19, 1999.
<F7> Fund statistics are as of March 31, 1999.
Artisan Funds offered through Artisan Distributors LLC, 1000 North Water
Street, Milwaukee, WI 53202, member NASD.
--------------
1-800-344-1770
--------------
<PAGE>
- -------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
- -------------------------------------------------------------------------------
QUARTERLY UPDATE APRIL 1999
Thank you for investing in Artisan Small Cap Value Fund. We are pleased to
present this update for the first quarter of 1999.
During the quarter, Artisan Small Cap Value Fund declined 4.6%. Its benchmark
index, the Russell 2000 Value, lost 9.7%. By contrast, the Russell 2000 Growth
Index fell by 1.7% and the S&P 500 Index, which tracks 500 large-cap companies,
gained 4.9%. Once again, the markets strongly favored large-caps over small-caps
and growth stocks over value. In this context, we're pleased with the Fund's
performance.<F1>
Thank you for your confidence.
<LOGO>
ARTISAN FUNDS
<PAGE>
FIRST QUARTER OVERVIEW
-----------------------
It was a volatile quarter. Technical factors ruled the markets as investors
continued their clear preference for large, liquid companies, preferably in
technology or communications, and ideally with earnings momentum, a positive
earnings surprise and strong sponsorship.
Investors' apparent disdain for fundamentals caused small-caps to fare poorly
and small-cap value stocks to fare worse. Small-caps with disappointing earnings
were hammered; those with good earnings were, at best, ignored.
The good news: relative to large-caps, small-caps are currently selling at
unusually attractive valuations. Given that large-caps and small-caps have
tended to outperform in cycles, we believe that small-caps' potential return has
become especially compelling.
AVERAGE ANNUAL RETURNS<F1>
----------------------------
FOR THE PERIODS ENDED 3/31/99
SINCE INCEPTION
ONE YEAR (9/29/97)
------------- ---------------
SMALL CAP VALUE FUND -17.38% -4.91%
RUSSELL 2000 VALUE INDEX -22.03% -9.31%
LIPPER SMALL CAP FUND INDEX -14.68% -7.20%
<PAGE>
1
INVESTMENT PROFILE
--------------------------
ACCEPTANCE INSURANCE COMPANIES
ACCEPTANCE INSURANCE COMPANIES is a major player in writing crop insurance.
Recently, President Clinton submitted a bill to Congress that would essentially
subsidize crop insurance premiums. The intent is to wean the farmer from
traditional subsidizations. If Congress approves this plan - and we believe it
will - Acceptance Insurance could benefit enormously. It could expand its
traditional business and write larger, longer-term policies, as well as policies
covering different kinds of crops.
We regard management as very capable. It generates a high return on equity, and
recently restructured the company's property & casualty business. Last fall,
when the insurance sector sold off, we were able to start purchasing this stock
at just 8X our '99 estimated earnings and a slight premium to book value. We
have since added to
TOP 10 HOLDINGS<F3>
-------------------
- -----------------------------------------------------------------------------
COMPANY %
- -----------------------------------------------------------------------------
SUPERIOR NATIONAL INSURANCE GROUP...worker's compensation
insurance in arizona and california 3.6%
AVIALL INC...aviation parts and supplies distributor 3.1%
EMCOR GROUP...mechanical and electrical contractor 3.1%
HILB, ROGAL & HAMILTON...insurance broker 3.1%
GLEASON CORPORATION...gear manufacturing equipment producer 2.6%
MUELLER INDUSTRIES...manufacturer/distributor of plumbing supplies 2.6%
ANNUITY AND LIFE RE (HOLDINGS)...life and annuity reinsurance 2.4%
R.G. BARRY...manufacturer of specialized comfort footwear 2.4%
ACCEPTANCE INSURANCE COMPANIES...crop insurance 2.1%
SNYDER OIL...texas-based producer of oil and gas 2.1%
- -----------------------------------------------------------------------------
TOTAL 27.1%
=============================================================================
<PAGE>
INVESTMENT PROFILE(continued)
------------------------------
ACCEPTANCE INSURANCE COMPANIES
our position as the stock has continued dropping with its industry - and with
small-caps in general.<F2>
2
INVESTMENT PROFILE
-----------------------
STEWART INFORMATION SERVICES
STEWART INFORMATION SERVICES is a title insurance company - one of the nation's
largest. We owned this stock before, during its industry's boom period. But
rising rates early this year caused title insurers to plummet.
For that reason alone, we think we got a bargain. But we also started buying
this stock for roughly the company's stated book value, while our research
indicated that the true value was considerably higher. As we crunched the
numbers, it seemed to us that Stewart - in an ultra-conservative fashion - had
substantially overstated its loss reserves.
In addition, the company is very liquid, with a solid balance sheet. We see it
as capable of growing its asset base at 10-12% over time.<F2>
3
INVESTMENT PROFILE
--------------------
ROANOKE ELECTRIC STEEL
ROANOKE ELECTRIC STEEL is a mini-mill producer of steel products. Historically,
it fabricated items such as joists and reinforcing bars, chiefly for the
construction industry. In December 1998, however, the acquisition
<PAGE>
INVESTMENT PROFILE (CONTINUED)
------------------------------
ROANOKE ELECTRIC STEEL
of Steel of West Virginia added the capacity to fabricate beams for the trailer
market and other shippers.
Import competition has depressed prices of domestic steel and, logically, steel
stocks. However, because Roanoke Electric Steel captures added value from
selling finished products, it has fared better than raw steel producers or
integrated manufacturers.
Nonetheless, we believe we got a top-notch operation at a knock-down price. The
company has a long record of profitability. And we believe that efficiencies
offered by the merger - from buying scrap to cutting overhead - may
significantly enhance profitability. We started buying this stock at a slight
premium to book value and only 7X our projected '99 earnings.<F2>
DIVERSIFICATION BY SECTOR <F4>
------------------------------
- --------------------------------------
SECTOR %
- --------------------------------------
BASIC MATERIALS 12.9
CAPITAL GOODS 14.2
CONGLOMERATES 0.0
CONSUMER CYCLICAL 5.8
CONSUMER/NON-CYCLICAL 1.9
ENERGY 8.9
FINANCIAL 25.6
HEALTHCARE 1.3
REITS 3.1
SERVICES 15.0
TECHNOLOGY 8.1
TRANSPORTATION 3.2
UTILITIES 0.0
- --------------------------------------
TOTAL 100.0%
======================================
ARTISAN SMALL CAP VALUE FUND
<PAGE>
OUR VIEW OF THE MARKET
----------------------
LOOKING FORWARD
The economy remains strong, with inflation a non-event and interest rates still
low. Though quarterly earnings came in better overall than expected, we remain
vigilant about earnings.
Specifically, we hope that small-cap stocks with good earnings will get rewarded
by the market with higher valuations. Last quarter, after many of our holdings
came through with solid earnings, they not only didn't go up, they went down.
Among these were: Lone Star Industries, Varlen Corporation and Hilb, Rogal &
Hamilton. They fell victim to the market's liquidity concerns, as investors
bailed out of small-caps and small-cap value in particular.<F5>
We're also hoping for more corporate actions, like last quarter's buyout of
Pinkerton's. As of March 31, four of our companies had hired investment bankers
to look into strategic alternatives. They are: EMCOR Group, American Pacific,
Harding Lawson and Aviall. At the current low valuation levels, similar activity
- - both strategic and financial - wouldn't surprise us.<F5>
And we'd like to see the recent vigor in energy stocks continue. We believe that
natural gas will be in short supply by summer or fall. And we hope the increase
in oil prices will hold. While its effect on inflation would probably be
minimal, it would likely benefit the modest energy portfolio we've built up.
Snyder Oil, Cabot Oil & Gas,
continued on following panel
<PAGE>
OUR VIEW OF THE MARKET (CONTINUED)
----------------------------------
LOOKING FORWARD
Forest Oil and Patina Oil and Gas are part of our 8.9% position in this sector.
They all jumped nicely in response to production cuts by OPEC.<F5>
Along with energy, we'll be looking closely at any sector - from cement to
semiconductors - that's leveraged to the overall economy. We'll also search for
more opportunities in the ravaged insurance industry. And we'll hunt for
bargains at the smaller end of the small-cap market, regardless of industry or
sector.
FUND STATISTICS<F6>
-------------------
NUMBER OF HOLDINGS 65
MEDIAN MARKET CAP $181 million
WEIGHTED AVG. MARKET CAP $225 million
MEDIAN PRICE/BOOK VALUE 1.0X
MEDIAN P/E 1999E 7.6X
EQUITY DIVIDEND YIELD 1.1%
- ------------------------------------------------------------------------------
NEWS ABOUT ARTISAN SMALL CAP FUND<F1>
-------------------------------------
As of April 1, 1999, we are pleased to let you know that Artisan Small Cap
Fund has reopened to new investors, and that Marina Carlson has joined
Carlene Ziegler as co-manager.
If you would like an application or more information, please call 1-800-344-
1770. An Artisan Funds representative will be happy to help you.
- ------------------------------------------------------------------------------
<PAGE>
NOTES
------
<F1> PERFORMANCE DATA CONTAINED HEREIN 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 Russell 2000 Index is an unmanaged,
market-weighted index, with dividends reinvested, 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 Russell 2000 Growth Index measures the
performance of those Russell 2000 companies with higher price-to-book
ratios and higher forecasted growth values. The S&P 500 is a market-
weighted, unmanaged index of 500 large companies, with dividends
reinvested. The Lipper Small Cap Fund Index reflects the net asset
weighted return of the 30 largest small-cap funds, with dividends
reinvested. The returns of the Russell indices do not include the
payment of sales commissions or other expenses incurred in the purchase
of the securities included in the index.
<F2> Portfolio profiles are for illustration only and are not intended as
recommendations of individual stocks. The profiles present information
about the companies believed to be accurate, and the views of the
portfolio manager, as of April 1, 1999. That information and those
views may change and the Fund disclaims any obligation to advise
shareholders of any such changes. As of March 31, 1999, Stewart
Information Services and Roanoke Electric Steel represented 1.4% and
1.1% of the Fund's total net assets, respectively.
<F3> As a percentage of total net assets as of March 31, 1999.
<F4> As a percentage of portfolio equities as of March 31, 1999.
<F5> As of March 31, 1999, Lone Star Industries, Varlen Corporation,
Pinkerton's, American Pacific, Harding Lawson, Cabot Oil & Gas, Forest
Oil and Patina Oil and Gas represented 2.1%, 1.8%, 0.0%,1.5%, 1.5%,
1.5%, 1.2% and 1.4% of the Fund's total net assets, respectively.
<F6> Fund statistics are as of March 31, 1999.
Artisan Funds offered through Artisan Distributors LLC, 1000 North
Water Street, Milwaukee, WI 53202, member NASD.
--------------
1-800-344-1770
--------------
<PAGE>
- -------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND
- -------------------------------------------------------------------------------
QUARTERLY UPDATE APRIL 1999
#1 INTERNATIONAL FUND SINCE INCEPTION
We are delighted to announce that for the period since inception (12/28/95)
through 3/31/99, Artisan International Fund ranked #1 for total return among the
308 international funds tracked by Lipper, Inc.
As the quarter opened, Mark Yockey, the Fund's portfolio manager, was named
Morningstar International Fund Manager of the Year for 1998.
According to Morningstar, this award "recognizes portfolio managers who
demonstrate excellent investment skill, the courage to differ from consensus and
the commitment to shareholders necessary to deliver outstanding long-term
performance."
Thank you for investing in Artisan International Fund. We are pleased to provide
this update for the first quarter of 1999.
<LOGO>
ARTISAN FUNDS
<PAGE>
FIRST QUARTER OVERVIEW
-----------------------
For the quarter, Artisan International Fund gained 11.2%, while its benchmark,
the EAFE index, rose 1.4%. In the thirteen quarters since inception, the Fund
has returned over 104%, versus EAFE's return of 31.3%.<F1>
At quarter-end, roughly 75% of assets were in European stocks. European markets
were relatively flat and there was late quarter strength in some Asian markets,
where the Fund has invested only a small percentage of its assets. So, we
attribute our outperformance to good stock-picking. Two particular sectors of
emphasis, telecommunications and financial services, continued to serve us well.
And despite newspaper headlines bemoaning slower European GNP growth rates and
high unemployment levels, we continue to uncover solid earnings growth potential
in European companies.
---------------------------------
AVERAGE ANNUAL RETURNS<F1>
---------------------------------
FOR THE PERIODS ENDED 3/31/99
SINCE INCEPTION
ONE YEAR (12/28/95)
---------- ---------------
INTERNATIONAL FUND 22.29% 24.52%
EAFE INDEX 6.06% 8.74%
LIPPER INT'L FUND INDEX -0.64% 10.97%
<PAGE>
1
INVESTMENT PROFILE
---------------------
AUTOGRILL SPA (ITALY)
Italy's AUTOGRILL SPA - with over 600 outlets - has rapidly grown into one of
Europe's leading restaurant chains. The company's core business - a network of
roadside restaurant and snack bar concessions - is expanding successfully into
railway stations, airports and trade fairs.
With its Spizzico (pizza by the slice) outlets, Autogrill is also a growing
presence in Italian fast-food. Spizzico kiosk concepts in urban areas and
shopping malls have been test marketed with great success. Autogrill has started
to take this concept into France and hopes to soon expand it throughout Europe.
We believe this company has huge potential for expansion. Relative to Italy's
food-service industry, Italian restaurant chains have a market share that is
well below the European average. And, compared to U.S. restaurant chains, those
in Europe have only about half the market penetration.<F2>
TOP 10 HOLDINGS<F3>
-------------------
- ----------------------------------------------------------------------------
COMPANY %
- ----------------------------------------------------------------------------
METRONET...Canadian telecommunications service provider 6.2%
COLT TELECOM GROUP PLC...U.K. telephone service provider
for European corporations 3.3%
UBS AG...Swiss-based global bank 2.9%
TELEWEST COMMUNICATIONS PLC...Cable television provider in U.K. 2.8%
RACAL ELECTRONICS PLC...U.K. telecommunications service provider 2.5%
ROCHE HOLDING AG...Swiss developer and manufacturer of
pharmaceutical and chemical products 2.2%
GLOBAL TELESYSTEMS GROUP...Telephone and integrated
services firm in Bermuda 2.1%
SECURICOR PLC...U.K. provider of security and recruitment services 2.0%
BANCA COMMERCIALE ITALIANA...Commercial bank in Italy 1.9%
TELECOM ITALIA SPA...Telephone and integrated services in Italy 1.9%
- ---------------------------------------------------------------------------
TOTAL 27.8%
===========================================================================
<PAGE>
2
INVESTMENT PROFILE
------------------------
JULIUS BAER HOLDING AG (SWITZERLAND)
Among European banks, Switzerland's JULIUS BAER HOLDING AG occupies a
distinctive niche. Largely family-owned and operated, it is also conservative,
relatively small and highly focused. Its primary activities are private banking,
asset management, trading and custody services. The largest business segment is
asset management, where assets have quadrupled in the past ten years, providing
a growing stream of fee income. Management intends to seek additional growth
through off-shore banking.
With its strong management, high-quality balance sheet (virtually no exposure to
hedge funds or emerging markets), and above-average return on equity, we regard
Julius Baer as an excellent long-term investment. These same qualities may also
make it attractive as a takeover candidate in Europe's rapidly consolidating
banking industry.<F2>
3
A SPECIAL NOTE
------------------------------
METRONET COMMUNICATIONS CORPORATION (CANADA)
METRONET COMMUNICATIONS CORPORATION, a Canadian telecom company, is currently
the Fund's largest holding. In early March, MetroNet stock rose strongly, in
part reflecting AT&T's decision to purchase a 30% stake (currently Canada's
limit on foreign ownership) in this competitive local exchange company. If this
limit is liberalized, as Canada's authorities are considering, AT&T has stated
their intention to purchase more of the company.
<PAGE>
A SPECIAL NOTE (continued )
----------------------------
METRONET COMMUNICATIONS CORPORATION (CANADA)
As you can see in the "Top Ten Holdings" list, MetroNet represented over 6% of
assets at quarter-end. That's quite high for us. We try to limit each holding to
less than 5% of assets - to help control risk and enhance diversification. Our
largest positions are typically in the 3% to 4% range.
However, our research, including conversations with MetroNet management, leads
us to believe this stock still offers significant growth potential. As a result,
we plan to maintain this higher than normal position.<F2>
REGION/COUNTRY ALLOCATION<F4>
-----------------------------
- ----------------------------------------------------------------------
EUROPE 75.7% ASIA/PACIFIC 5.3%
- ----------------------------------------------------------------------
UNITED KINGDOM 21.2 AUSTRALIA 3.1
ITALY 14.2 JAPAN 2.1
FRANCE 12.9 SINGAPORE 0.1
SWITZERLAND 8.8 --------------------------------
NETHERLANDS 5.3 LATIN AMERICA 4.3%
GERMANY 4.4 --------------------------------
SWEDEN 2.8 BRAZIL 3.0
FINLAND 2.1 MEXICO 1.3
SPAIN 1.9 --------------------------------
AUSTRIA 0.7 NORTH AMERICA 14.2%
POLAND 0.6 --------------------------------
NORWAY 0.4 CANADA 12.1
CZECH REPUBLIC 0.2 BERMUDA 2.1
DENMARK 0.1 --------------------------------
IRELAND 0.1 CASH 0.5%
--------------------------------
<PAGE>
OUR VIEW OF THE MARKET
----------------------
LOOKING AT EUROPE
A word about our approach. As we've noted before, our focus is on stocks, not on
country allocation. We look for high-quality growth companies that appear well
positioned to make the most of positive trends in strong, stable economies. And
we try to invest in these companies at what we consider to be attractive values.
Thus, country weighting is a residual of company selection; we do not allocate
assets by country or region.
Today, the vast majority of the companies we favor happen to be in Europe. As
we've highlighted in this space over the past few quarters, we believe economic
and social trends are creating extraordinary investment opportunity in this
region. We continue to see a greater emphasis on shareholder value, increased
focus on core businesses, and new direct incentives for managements that make
companies more efficient. With the launch of the "Euro", Europe's new common
currency, Europe is now developing into one large marketplace where "geographic
barriers" may become a thing of the past.
Following the introduction of the Euro, we traveled to Europe to take a first-
hand look at companies our research had uncovered. Our trip not only revealed a
number of additional opportunities, it also reaffirmed our faith in Europe's
investment potential.
continued on following panel
<PAGE>
OUR VIEW OF THE MARKET (continued)
----------------------------------
LOOKING AT EUROPE
Is this optimism inconsistent with the recent weakness in Europe's equity
markets? We don't think so. The weakness reflects what we believe will prove
to be transient factors: weakness in the newly introduced Euro; a general
slowdown in economic growth; and the resignation of European Commission
leadership. We make it our business to look beyond the headlines in order
to focus on promising concepts and trends that point to sustainable
long-term growth potential.
FUND STATISTICS<F5>
-------------------
NUMBER OF HOLDINGS 108
WEIGHTED AVERAGE MARKET CAP $16.8 BILLION
WEIGHTED AVERAGE
GROWTH RATE 1999E 16.5%
WEIGHTED AVERAGE P/E 1999E 19.5x
- -------------------------------------------------------------------------------
NEWS ABOUT ARTISAN SMALL CAP FUND<F6>
-------------------------------------
As of April 1, 1999, we are pleased to let you know that Artisan Small Cap
Fund has re-opened to new investors, and that Marina Carlson has joined
Carlene Ziegler as co-manager.
If you would like an application or more information, please call 1-800-344-
1770. An Artisan Funds representative will be happy to help you.
------------------------------------------------------------------------------
<PAGE>
NOTES
-----
<F1> PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS.
INTERNATIONAL INVESTMENTS INVOLVE SPECIAL RISKS, INCLUDING CURRENCY
FLUCTUATION, SOMETIMES LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS,
DIFFERENT ACCOUNTING METHODS AND HIGHER TRANSACTION COSTS, 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 Morgan Stanley EAFE Index is
unmanaged and includes net reinvested dividends for companies
throughout the world, excluding the U.S. and Canada, in proportion to
world stock market capitalization. EAFE's average annual return since
inception of the Fund is based upon a starting date of December 31,
1995. The Lipper International Fund Index reflects the net asset
weighted return of the 30 largest international funds. The returns of
the EAFE index do not include the payment of sales commissions or other
expenses incurred in the purchase of the securities included in the
index.
<F2> Portfolio profiles are for illustration only and are not intended as
recommendations of individual stocks. The profiles present information
about the companies believed to be accurate, and the views of the
portfolio manager, as of April 1, 1999. That information and those
views may change and the Fund disclaims any obligation to advise
shareholders of any such changes. As of March 31, 1999, Autogrill SPA
and Julius Baer Holding AG (Class B)represented 1.6% and 1.4% of the
Fund's total net assets, respectively.
<F3> As a percentage of total net assets as of March 31, 1999.
<F4> As a percentage of portfolio equities as of March 31, 1999.
<F5> Fund statistics are as of March 31, 1999.
<F6> 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.
Artisan Funds offered through Artisan Distributors LLC, 1000 North Water
Street, Milwaukee, WI 53202, member NASD.
--------------
1-800-344-1770
--------------
<PAGE>
- -------------------------------------------------------------------------------
ARTISAN MID CAP FUND
- -------------------------------------------------------------------------------
QUARTERLY UPDATE APRIL 1999
Thank you for investing in Artisan Mid Cap Fund. We are pleased to provide you
with this update for the first quarter of 1999.
Artisan Mid Cap Fund increased 0.4% for the quarter, while its benchmark index,
the S&P 400 MidCap Index, lost 6.4%. Since its inception, the Fund has returned
71.6% versus its index's gain of 30.1%.<F1>
Inside you'll find a review of the quarter's events, a look at some recent
investments, and our outlook for the economy and equity markets.
Thank you for your confidence.
(LOGO)
ARTISANFUNDS
<PAGE>
FIRST QUARTER OVERVIEW
-----------------------
While the quarter saw some normal turbulence related to economic data, a
dramatic narrowing of market leadership was much more significant.
Investors intensified their focus on well-known, liquid, large-caps and Internet
providers. While we continue to study Internet stocks and look for
opportunities, this arena doesn't mesh with our process at the moment.
Despite our patience and long-term focus, it was still tough to watch as Sybron,
American Power Conversion and Cadence Design all declined for what we considered
short-sighted misperception - especially after each met its earnings
expectations. We still regard these holdings as outstanding long-term
franchises. So we added to each position at lower prices.
The quarter brought some good news, too. Century Communication, Media One and
American Bankers Insurance announced they were being acquired at
--------------------------------
AVERAGE ANNUAL RETURNS<F1>
--------------------------------
FOR THE PERIODS ENDED 3/31/99
SINCE INCEPTION
ONE YEAR (6/27/97)
---------- ---------
MID CAP FUND 16.64% 35.88%
S&P 400 MIDCAP INDEX 0.45% 16.12%
LIPPER MID CAP FUND
INDEX 1.91% 13.65%
<PAGE>
FIRST QUARTER OVERVIEW (CONTINUED)
-----------------------------------
prices close to our estimates of their private market value, as strategic buyers
recognized the quality of these franchise companies.<F2>
1
INVESTMENT PROFILE
------------------
NCR
Guided by a visionary, cost-conscious CEO, NCR is two years into a complete
restructuring. No longer a hardware manufacturer, the company is leveraging its
historic franchise in ATM machines, migrating its customer base into higher-
margin products, chiefly software and business services.
TOP 10 HOLDINGS<F4>
-------------------
- --------------------------------------------------------------------------------
COMPANY %
- --------------------------------------------------------------------------------
CENTURY COMMUNICATION CORP...Southern California cable operator 3.9%
AMERICAN POWER CONVERSION...Uninterruptible power supplies 3.8%
METTLER-TOLEDO...Leader in precision weighing instruments 3.0%
SYBRON INTERNATIONAL...Consolidator in the dental supply
and dental lab industry 3.0%
APARTMENT INVESTMENT & MANAGEMENT...Apartment complex
management 2.9%
UNIVERSAL FOODS CORP...Provider of flavor and coloring
products for food processing market 2.8%
WESTERN WIRELESS...Rural cellular telephone and PCS provider 2.8%
CLEARNET COMMUNICATIONS...Canadian PCS provider 2.6%
CADENCE DESIGN SYSTEMS...Electronic design automation
for integrated circuits 2.3%
AUTODESK...Computer Aided Design (CAD) software provider 2.2%
- --------------------------------------------------------------------------------
TOTAL 29.3%
================================================================================
<PAGE>
INVESTMENT PROFILE (CONTINUED)
------------------------------
NCR
Its strongest growth element is scalable data warehouses, emerging as a powerful
marketing tool for retailers. Using data collected at point-of-sale, these
warehouses enable retailers to analyze buying patterns in order to enhance sales
to existing customers.
From 2% in '98, NCR's operating margins doubled in '99, and are projected to
reach 6% in 2000. But its peer group's margins are 10%, so we believe there's
ample opportunity for further margin expansion. In this regard, a new CFO is
taking additional steps - among them, selling unproductive assets and redefining
the equity structure. Further enhancing its appeal for us, NCR has minimal debt
and significant cash reserves.<F3>
2
INVESTMENT PROFILE
----------------
SIGMA ALDRICH
Though not well-known, SIGMA ALDRICH has a wonderful franchise: It's a leading
producer of chemicals for pharmaceutical research, diagnosis of disease and
specialized manufacturing processes.
This high-quality company has recently seen its growth languish as it integrated
some European acquisitions and brought its systems up-to-date - particularly
through installation of an enterprise resource planning software system for
customer service.
It now appears that operations are approaching normal levels. Significantly, the
company is making further acquisitions in the fastest-growing segments of life
<PAGE>
INVESTMENT PROFILE (CONTINUED)
-------------------------------
SIGMA ALDRICH
sciences, including gene mapping and biotechnology. Its global expansion is
forging ahead. And management is improving distribution: it has become more
aggressive about new-product sales; and in five years it wants the lion's share
of sales to be through the Internet, thus enhancing efficiency and lowering the
cost of sales while broadening reach.<F3>
DIVERSIFICATION BY SECTOR<F5>
------------------------------
- -----------------------------------------
SECTOR %
- -----------------------------------------
BASIC MATERIALS 5.5
CAPITAL GOODS 6.6
CONGLOMERATES 0.0
CONSUMER CYCLICAL 2.5
CONSUMER/NON-CYCLICAL 8.0
ENERGY 2.9
FINANCIAL 9.9
HEALTHCARE 10.5
REITS/PROPERTY 3.7
SERVICES 15.9
TECHNOLOGY 26.9
TELECOMMUNICATIONS 5.6
TRANSPORTATION 2.0
UTILITIES 0.0
- -----------------------------------------
TOTAL 100.0%
=========================================
MARKET CAP DISTRIBUTION<F5>
- ------------------------------------------------------------------------
MARKET CAP MID CAP FUND S&P 400
(IN $ BILLIONS) (%) (%)
- ------------------------------------------------------------------------
$0.0 to 0.5 0.7 1.6
0.5 to 1.0 16.3 7.1
1.0 to 2.0 25.7 24.0
2.0 to 3.0 19.0 20.6
3.0 to 4.0 10.4 14.2
4.0 to 5.0 13.7 9.7
5.0 to 6.0 3.8 6.6
6.0 to 7.0 1.7 4.1
7.0 to 8.0 2.0 2.7
8.0+ 6.7 9.4
- ------------------------------------------------------------------------
TOTAL 100.0% 100.0%
========================================================================
<PAGE>
OUR VIEW OF THE MARKET
--------------------
LOOKING FORWARD
We don't know what would change the current market environment. Large-cap
dominance may well continue for a while. So may the popular argument that "it's
different this time."
For our part, we'll be patient and stick to our process, while we monitor and
assess the changing information that moves the markets. We'll be
cautious, too. In adding new holdings, we'll focus, as always, on growing,
quality companies with accelerating trends and attractive valuations.
Within that context, we expect to explore a couple of intriguing themes:
emerging media and the trend to outsourcing.
- - Who will be the winners and losers as voice, data and video converge, and the
various media reinvent themselves to compete as carriers? We'll be watching
closely, hoping to enhance our holdings in this dynamic area of the economy.
Top Ten Holdings included: Century Communications, Clearnet Communications
and Western Wireless.
- - As corporations focus increasingly on their core competencies, the trend to
outsourcing other services will continue to strengthen. Some of our largest
holdings in this area are: C.H. Robinson, Cadence Design and
continued on following panel
<PAGE>
OUR VIEW OF THE MARKET (CONTINUED)
----------------------------------
LOOKING FORWARD
Sunguard Data Systems. While these current holdings are chiefly in technology,
potentially attractive outsourcing investments exist throughout the economy.<F6>
FUND STATISTICS<F7>
-------------------
NUMBER OF HOLDINGS 55
MEDIAN MARKET CAP $2.5 billion
WEIGHTED AVG. GROWTH RATE 1999E 17.0%
WEIGHTED AVERAGE P/E 1999E 15.7X
MEDIAN PRICE/INTRINSIC VALUE 1999E 75%
- -------------------------------------------------------------------------------
NEWS ABOUT ARTISAN SMALL CAP FUND<F8>
-------------------------------------
As of April 1, 1999, we are pleased to let you know that Artisan Small Cap
Fund has reopened to new investors, and that Marina Carlson has joined
Carlene Ziegler as co-manager.
If you would like an application or more information, please call 1-800-344-
1770. An Artisan Funds representative will be happy to help you.
- -------------------------------------------------------------------------------
<PAGE>
NOTES
-----
<F1> PERFORMANCE DATA IS HISTORICAL AND DOES 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 S&P 400 MidCap Index is an
unmanaged, market-weighted index, with dividends reinvested, of 400
mid-cap companies. The Lipper Mid Cap Fund Index reflects the net
asset weighted return of the 30 largest mid-cap funds, with dividends
reinvested. The Artisan Mid Cap Fund was reimbursed for expenses in
excess of 2.00% of its average net assets, which may have had a
material effect on the Fund's total return. The returns of the S&P 400
MidCap Index do not include the payment of sales commissions or other
expenses incurred in the purchase of the securities included in the
index.
<F2> As of March 31, 1999, Media One and American Bankers Insurance
represented 1.5% and 1.1% of the Fund's total net assets,
respectively.
<F3> Portfolio profiles are for illustration only and are not intended as
recommendations of individual stocks. The profiles present information
about the companies believed to be accurate, and the views of the
portfolio manager, as of April 1, 1999. That information and those
views may change and the Fund disclaims any obligation to advise
shareholders of any such changes. As of March 31, 1999, NCR and Sigma
Aldrich represented 2.0% and 1.9% of the Fund's total net assets,
respectively.
<F4> As a percentage of total net assets as of March 31, 1999.
<F5> As a percentage of portfolio equities as of March 31, 1999.
<F6> As of March 31, 1999, C.H. Robinson and Sungard Data Systems
represented 1.9% and 2.1% of the Fund's total net assets,
respectively.
<F7> Fund statistics are as of March 31, 1999.
<F8> 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.
Artisan Funds offered through Artisan Distributors LLC, 1000 North Water
Street, Milwaukee, WI 53202, member NASD.
--------------
1-800-344-1770
--------------
