- -----------------------------------------------------------------------------
ARTISAN SMALL CAP FUND
- -----------------------------------------------------------------------------
QUARTERLY UPDATE OCTOBER 1999
Thank you for investing in Artisan Small Cap Fund. We are pleased to present
this update for the year's third quarter.
Record trade deficits, uncertainty over interest rates and concern about
upcoming earnings reports combined to inject volatility into the market. Not
surprisingly, small-caps took a breather after their spurt during the previous
quarter.
Inside you'll find a discussion of the Fund's performance, profiles of three
holdings, and our near-term outlook for the economy and the market. Also
included in this update is a note on the Fund's annual distributions.
(LOGO)
ARTISAN FUNDS
<PAGE>
THIRD QUARTER OVERVIEW
We made up significant ground in a down period when volatility returned to the
market as September ended, taking down nearly everything except energy and
technology. Even though Artisan Small Cap declined 0.9% for the quarter, we
significantly outperformed our benchmark, the Russell 2000 Index, which dropped
6.3%.
A number of factors, as noted earlier, contributed to the volatility, leading
both large- and small-caps to retreat from their highs. However, our portfolio
held up well versus the indices, aided by excellent performance from some of our
technology holdings, profitable takeovers and our avoidance of Internet stocks.
We continue to be enthusiastic about small-caps and believe that we may be
emerging from a period where our style and discipline have been extremely out
of favor.
---------------------------------
AVERAGE ANNUAL TOTAL RETURNS<F1>
---------------------------------
FOR THE PERIODS ENDED 9/30/99
ARTISAN RUSSELL LIPPER
SMALL CAP FUND 2000 INDEX SMALL CAP INDEX
-------------- ---------- ---------------
ONE-YEAR 11.12% 19.07% 26.79%
SINCE INCEPTION 10.24% 13.20% 12.97%
(3/28/95)
<PAGE>
THIRD QUARTER OVERVIEW (continued)
------------------------------------
In the company profiles that follow, we take a different approach than usual.
Rather than focus on holdings that we added in the quarter just ended, we look
at some that have done well for us and continue to have upside potential.
1
INVESTMENT PROFILE
-------------------
MORRISON MANAGEMENT SPECIALISTS, INC.
MORRISON MANAGEMENT SPECIALISTS, INC., formerly Morrison Health Care, is the
largest independent company focused exclusively on health care foodservice.
Through its two divisions, Morrison Healthcare Food Services and Morrison Senior
Dining, the company specializes in providing food, nutrition and dining services
to the hospital and senior living markets. The Atlanta-based company serves some
of the largest and most prominent integrated health care systems, hospitals and
retirement communities in the United States.
TOP 10 HOLDINGS<F3>
---------------------
- ------------------------------------------------------------------------------
COMPANY %
- ------------------------------------------------------------------------------
HEALTHCARE FINANCIAL PARTNERS REIT, INC...Healthcarerelated real estate
investments (144a) 2.3%
ITI TECHNOLOGIES...Wireless home security systems 1.9%
CEC ENTERTAINMENT...Chuck E. Cheese restaurants 1.9%
SHOPKO STORES...Specialty discount retailer 1.9%
APTARGROUP...Pumps, valves and closures for consumer packaging 1.8%
PLAYTEX PRODUCTS...Personal care products 1.7%
MACDERMID...Specialty chemical manufacturer 1.6%
ALLIANT TECHSYSTEMS...Supplier of aerospace and defense products 1.6%
SYKES ENTERPRISES...Technical product support services 1.6%
BELL & HOWELL COMPANY...imaging and information services and systems 1.6%
- ------------------------------------------------------------------------------
TOTAL 17.9%
==============================================================================
<PAGE>
INVESTMENT PROFILE (CONTINUED)
--------------------------------
MORRISON MANAGEMENT SPECIALISTS, INC.
The company enjoys a high client retention rate of 97% and strong volume of new
business. The management of this highly focused company recently raised both its
sales and earnings objectives for the next three years.<F2>
2
INVESTMENT PROFILE
------------------
ELECTRO SCIENTIFIC INDUSTRIES, INC.
This year has seen a boom in semiconductor demand created by upturns in spending
on personal computers, telecommunications and the Internet. ELECTRO SCIENTIFIC
INDUSTRIES, INC. (ESI) has proven to be an excellent vehicle for us to ride this
boom.
As one of the most diversified suppliers of semi-conductor capital equipment,
the company gives us exposure to virtually the entire semiconductor industry.
And it has leading positions in equipment for memory yield improvement, circuit
fine-tuning and ceramic capacitor production, as well as growing participation
in advanced electronic packaging and machine vision.
Even though about 60% of sales come from exports and sales outside the U.S., ESI
remained profitable through the downturn in Asian markets, and announced
recently that it is continuing to invest in both R&D and distribution
capability. We believe the company is positioned to take advantage of what we
consider are improving conditions in its markets.<F2>
<PAGE>
3
INVESTMENT PROFILE
-------------------
TECHNOLOGY SOLUTIONS COMPANY
TECHNOLOGY SOLUTIONS COMPANY provides information technology (IT) services and
strategic business consulting to clients throughout the world. Back in July, we
purchased this stock after a review of IT services companies in the small-cap
universe. We were looking specifically for companies that seemed poised to
benefit from increased spending on electronic commerce and customer-relationship
software.
We found Technology Solutions especially interesting. We consider eLoyalty, its
wholly owned subsidiary, positioned to benefit from two of the most powerful
trends in the IT market, consulting on both customer relationship management
(CRM) processes and the Internet. Formed in 1994 and formerly known as the
Enterprise Customer Management (ECM) business unit, we view eLoyalty as a leader
in an industry that has a significant barrier to entry.<F2>
DIVERSIFICATION BY SECTOR<F4>
-------------------------------
----------------------------------------------------------
SECTOR % SECTOR %
----------------------------------------------------------
BASIC MATERIALS 7.2 REITS 3.5
CAPITAL GOODS 5.9 SERVICES 29.9
CONGLOMERATES 0.0 BUSINESS SERVICES 11.6
CONSUMER CYCLICAL 0.0 CONSUMER SERVICES 18.3
CONSUMER/NON-CYCLICAL 4.5 TECHNOLOGY 16.6
ENERGY 7.1 TELECOMMUNICATIONS 7.0
FINANCIAL 5.6 TRANSPORTATION 2.4
HEALTHCARE 8.9 UTILITIES 1.4
----------------------------------------------------------
TOTAL 100.0%
----------------------------------------------------------
ARTISAN SMALL CAP FUND
<PAGE>
OUR VIEW ON SMALL-CAPS
-----------------------
LOOKING FORWARD
The issues that increased volatility in the third quarter are cause for concern.
However, the companies in the portfolio are relatively insulated from currency
fluctuations, and if the Fed decides to raise rates again, we believe that rates
will remain low enough to encourage continued spending by businesses and
consumers. In particular, we expect our retail holdings to enjoy a strong
Christmas season.
We see our recent focus continuing. In technology, we'll look for companies that
are poised to serve the exploding demand for Internet access and communications.
In healthcare, we'll pursue our change in emphasis from service providers to
product manufacturers. And we're likely to remain underweighted in financials,
until the market is less concerned about an increase in rates.
We reiterate our belief, stated in last quarter's report, that small-caps are
still quite undervalued relative to large-caps, and that investors who share
this view may see a wonderful buying opportunity.
As noted earlier, we are pleased by the relative performance of small-caps.
We'll proceed as before, looking for above-average growth potential at a
reasonable price, with a focus on companies whose growth rates seem predictable
and sustainable.
<PAGE>
SPECIAL NOTE
-----------
1999 DISTRIBUTIONS. Your Artisan Fund, like other mutual funds, passes to you in
the form of distributions any dividends and interest earned by securities in the
portfolio or capital gains from sales of its portfolio securities, less fund
expenses. These taxable distributions are reported as either ordinary dividends
or capital gains.
We are in the process of calculating the ordinary income and capital gain
distributions for all Artisan Funds for 1999. We anticipate paying distributions
in early November. Estimated payment ranges will be available in early October.
Please call toll-free 800.344.1770 for more information. We do not expect the
Artisan Small Cap Fund to pay a distribution this year.
If you have questions regarding the reporting of distributions, you should
consult your tax advisor or legal counsel for advice and information concerning
your particular situation. Neither Artisan Funds nor any of its representatives
may give tax or legal advice.
FUND STATISTICS<F5>
-------------------
NUMBER OF HOLDINGS 81
MEDIAN MARKET CAP $647 million
MEDIAN GROWTH RATE 2000E 24%
MEDIAN P/E 2000E 15.5X
MEDIAN PRICE/INTRINSIC VALUE 2000E 64%
EQUITY DIVIDEND YIELD 0.2%
<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 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 managers, as of 10/1/99. That information and those views may
change and the Fund disclaims any obligation to advise shareholders of
any such changes. On 9/30/99, Morrison Management Specialists, Electro
Scientific Industries and Technology Solutions represented 1.4%, 1.4%
and 1.3% of the Fund's total net assets, respectively.
<F3> As a percentage of total net assets as of 9/30/99.
<F4> As a percentage of total portfolio equities as of 9/30/99.
<F5> Fund statistics are as of 9/30/99.
Artisan Funds offered through Artisan Distributors LLC, 1000 North
Water Street, Milwaukee, WI 53202, member NASD.
Date of first use: October 11, 1999.
---------------
1.800.344.1770
---------------
www.artisanfunds.com
A9037-1
<PAGE>
xxxxxx
- -----------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND
- -----------------------------------------------------------------------------
QUARTERLY UPDATE OCTOBER 1999
We are delighted to announce that for the period since inception (12/28/95)
through 9/30/99, Artisan International Fund ranked #2 for total return among
the 306 international funds tracked by Lipper Inc.<F1>
And, for the one-year period ending 9/30/99, the Fund outperformed 96% of
international funds by ranking #23 for total return among the 578 international
funds tracked by Lipper Inc.<F1>
Inside you'll find a brief review of the quarter's activity, profiles of three
holdings, our current thinking on Japan along with other positive developments
we see overseas plus a note on upcoming Fund distributions.
As always, thank you for the continued confidence you show in our investment
team.
(logo)
ARTISAN FUNDS
<PAGE>
THIRD QUARTER OVERVIEW
-----------------------
Most international markets moved sideways during the quarter, with the exception
of Japan, where a stronger economy and signs of corporate restructuring helped
to strengthen stock prices. For the quarter, the Fund gained 5.0%, while its
benchmark, the EAFE index, rose 4.4%.<F1>
The big news for us during the quarter was Japan, where our quarter-end Japanese
weighting surpassed 18% - our largest commitment there ever. In general, we
haven't been this positive toward Japan in the last 10 years. We continue to be
encouraged by the positive news we hear concerning increased shareholder
friendliness, innovation and restructuring efforts that many Japanese companies
have been adopting. We are particularly excited about opportunities in telecom
and consumer finance as well as a few large restructuring candidates. As
examples, two of this quarter's investment profiles will feature Japanese
holdings.
-----------------------------------
AVERAGE ANNUAL TOTAL RETURNS<F1>
-----------------------------------
FOR THE PERIODS ENDED 9/30/99
INTERNATIONAL EAFE LIPPER INT'L
FUND INDEX FUND INDEX
-------------- ---------- ---------------
ONE-YEAR 51.82% 30.95% 27.64%
SINCE INCEPTION 23.83% 9.47% 12.00%
(12/28/95)
<PAGE>
1
INVESTMENT PROFILE
-----------------------
DEUTSCHE BANK (GERMANY)
Within the highly attractive sector of European banking, DEUTSCHE BANK is one of
our favorites. Already Germany's dominant banking institution, it has embarked
on a strategy to stimulate growth and enhance profitability.
Management has begun an aggressive cost-cutting program. It is also working to
refocus the company and re-deploy assets by shedding several large holdings
unrelated to the core business.
The bank also appears to see the wisdom of local alliances. We believe it may be
considering an unprecedented joint venture in consumer banking with its long-
time rival, Dresdner Bank. And we believe the bank's recent purchase of Bankers
Trust strengthens its position in private banking and extends its capabilities
as a global investment bank.<F2>
TOP 10 HOLDINGS<F3>
--------------------
- -----------------------------------------------------------------------
COMPANY %
- -----------------------------------------------------------------------
AT&T CANADA...Canadian telecommunications service provider 4.0%
NTT MOBILE COMMUNICATIONS NETWORK CORP...Japanese cellular
telecommunications provider 3.1%
COLT TELECOM GROUP PLC...U.K. telephone service provider
for European corporations 2.5%
BCE INC...Canadian full-service telecommunications provider 2.5%
PROMISE COMPANY LTD...Japanese consumer finance company 2.2%
RACAL ELECTRONICS PLC...U.K. telecommunications service provider 2.2%
NORTEL NETWORKS CORP...Canada-based provider of global
telecommunications systems 2.2%
TAKEFUJI CORPORATION...Japanese consumer finance company 2.1%
TELEWEST COMMUNICATIONS PLC...Cable television provider in U.K. 2.0%
SECURICOR PLC...U.K. provider of security and
recruitment services 1.9%
- -----------------------------------------------------------------------
TOTAL 24.7%
=======================================================================
<PAGE>
2
INVESTMENT PROFILE
---------------------
TRANS COSMOS (JAPAN)
One of Japan's largest providers of outsourcing services, Trans Cosmos offers
data processing, call center management and other information and technology
services (IT). Structural changes taking place in Japan appear to point to
significant growth in both outsourcing and IT services.
We're very intrigued by the potential synergy between the company's outsourcing
business and its newer, Internet-related operations. To provide a range of
support services to companies engaged in e-commerce, Trans Cosmos has joined
with some larger companies to offer an Internet news service, Internet
broadcasting and targeted advertising on the Internet.
Trans Cosmos is also part of a venture capital group with stakes in about 20
Internet-related U.S. holdings. The company's objective is to translate these
investments into joint ventures in Japan, where it already is engaged in efforts
with such notable U.S. companies as DoubleClick, RealNetworks and Wit
Capital.<F2>
3
INVESTMENT PROFILE
-------------------
NIPPON TELEGRAPH AND TELEPHONE CORP. (NTT)
(JAPAN)
NTT is one of the world's largest telephone operators. It offers all types of
domestic telecommunications services, including local calls, domestic long-
distance calls, ISDN lines, and leased circuits.
<PAGE>
INVESTMENT PROFILE (continued)
-------------------------------
NIPPON TELEGRAPH AND TELEPHONE CORP. (NTT)
(JAPAN)
We believe that NTT will be a major beneficiary of the fast-growing Internet and
data demand in Japan. The company has a fully digitized nationwide network, and
its optical fiber coverage is among the world's highest. In addition, we see a
multiple re-rating in the valuation of its cellular business.
NTT shares are trading largely in line with their global peers from an earnings
multiple standpoint. However, given its growth and restructuring opportunities,
and the difficult economic environment in which it has operated, we believe its
shares are being discounted by the market.<F2>
REGION/COUNTRY ALLOCATION<F3>
-----------------------------
---------------------------------------------------
EUROPE 55.5% ASIA/PACIFIC 23.8%
---------------------------------------------------
UNITED KINGDOM 19.3 JAPAN 18.4
ITALY 6.6 AUSTRALIA 2.6
FRANCE 6.3 SINGAPORE 2.4
GERMANY 6.0 NEW ZEALAND 0.4
SWITZERLAND 5.6 -------------------
NETHERLANDS 4.6 LATIN AMERICA 4.7%
FINLAND 2.0 -------------------
SPAIN 1.9 BRAZIL 3.0
SWEDEN 1.8 MEXICO 1.7
AUSTRIA 0.7 -------------------
NORWAY 0.4 NORTH AMERICA 15.4%
IRELAND 0.2 -------------------
DENMARK 0.1 CANADA 14.0
BERMUDA 1.4
-------------------
CASH 0.6%
-------------------
ARTISAN INTERNATIONAL FUND
<PAGE>
OUR VIEW OF THE MARKET
----------------------
LOOKING FORWARD
In Europe, and more recently in Japan, we continue to witness the beginnings of
a shift in how companies are being managed - with an increased focus on
profitability. As a result, we're more optimistic than ever about opportunities
abroad. While these changes are occurring in many different markets, they are
most evident in Europe, where a substantial portion of our assets are currently
invested.
On several fronts, we see much greater emphasis on profits. The growing use of
stock options as a management incentive, margin improvement through cost cutting
and better and more uniform financial disclosure are being emphasized. Another
factor is increased economic rationalization, such as recent ground-breaking -
mergers...in Japan, among three of the country's more prominent banks, and in
France, between rival megastores Carrefours and Promodes.
We also see the emergence of an equity culture - from the privatization of
pensions and the adoption of 401(k)-type plans to the proposed establishment
of a Nasdaq-type market - that we expect to greatly increase the current low
level of equity ownership. Based on these changes - and others we've
previously discussed - we anticipate strong profit growth and rising equity
values. As always, it will be our objective to find the most promising
opportunities.
<PAGE>
SPECIAL NOTE
------------
1999 DISTRIBUTIONS. Your Artisan Fund, like other mutual funds, passes to you in
the form of distributions any dividends and interest earned by securities in the
portfolio or capital gains from sales of its portfolio securities, less fund
expenses. These taxable distributions are reported as either ordinary dividends
or capital gains.
We are in the process of calculating the ordinary income and capital gain
distributions for all Artisan Funds for 1999. We anticipate paying distributions
in early November. Estimated payment ranges will be available in early October.
Please call toll-free 800.344.1770 for more information.
If you have questions regarding the reporting of distributions, you should
consult your tax advisor or legal counsel for advice and information concerning
your particular situation. Neither Artisan Funds nor any of its representatives
may give tax or legal advice.
WALL STREET WEEK WITH LOUIS RUKEYSER APPEARANCE. Mark Yockey is scheduled to
appear on Wall Street Week on Friday, October 22, 1999. Please check your local
PBS listings for time and channel.
FUND STATISTICS<F4>
-------------------
NUMBER OF HOLDINGS 106
WEIGHTED AVERAGE MARKET CAP $24.3 billion
WEIGHTED AVERAGE
GROWTH RATE 2000E 13.4%
WEIGHTED AVERAGE P/E 2000E 18.8X
<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 Capital
International EAFE Index (EAFE) 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 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 10/1/99. That information and those views may
change and the Fund disclaims any obligation to advise shareholders of
any such changes. As of 9/30/99, Deutsche Bank, Trans Cosmos and NTT
represented 1.9%, 1.5% and 1.4% of the Fund's total net assets,
respectively.
<F3> As a percentage of total net assets as of 9/30/99.
<F4> Fund statistics are as of 9/30/99.
Artisan Funds offered through Artisan Distributors LLC, 1000 North
Water Street, Milwaukee, WI 53202, member NASD.
Date of first use: October 11, 1999.
-----------------
1.800.344.1770
-----------------
www.artisanfunds.com
A9037-3
<PAGE>
xxxxx
- -----------------------------------------------------------------------------
ARTISAN MID CAP FUND
- -----------------------------------------------------------------------------
QUARTERLY UPDATE OCTOBER 1999
Thank you for investing in Artisan Mid Cap Fund. We are pleased to provide
you with this update for the third quarter of 1999.
The market's volatility as the quarter closed resulted in disappointing
absolute performance for the period even as the Fund outperformed its
benchmark index. Artisan Mid Cap Fund declined 1.2% for the quarter, while
its benchmark index, the S&P 400, fell 8.4%.<F1>
Inside you'll find a review of the quarter's events, profiles of some recent
investments, and our investment outlook for the quarter ahead. Also included in
this update is a note on the Fund's annual distributions.
(logo)
ARTISAN FUNDS
<PAGE>
THIRD QUARTER OVERVIEW
----------------------
The market became volatile and narrowed in September, reacting to an interest
rate increase from the Federal Reserve and concerns that an another increase was
on the horizon. Pressure on the dollar and earnings disappointments also
fostered volatility. As we noted earlier, Artisan Mid Cap Fund outperformed when
compared to its index, as the Fund generally held up while the market focused
its attention on a narrow group of technology issues at the end of the quarter.
To put the Fund's performance in context, it's informative to review some other
results for the quarter. According to preliminary data supplied by Lipper Inc.,
the average diversified stock fund fell 5.38%. A quick survey of widely
followed indexes shows similar performance. The S&P 500 slipped each month of
the quarter, ending down 6.25% for the period and the Russell 2000 was off
6.3%. The Nasdaq Composite was up 2.24% for the period; however, year-to-date,
if technology stocks are removed from the Nasdaq, it too would be down.<F2>
----------------------------------
AVERAGE ANNUAL TOTAL RETURNS<F1>
----------------------------------
FOR THE PERIODS ENDED 9/30/99
S&P 400 LIPPER
MID CAP FUND MIDCAP INDEX MIDCAP FUND INDEX
-------------- ---------- -----------------
ONE-YEAR 50.00% 25.50% 33.44%
SINCE INCEPTION 34.64% 14.58% 13.83%
(6/27/97)
<PAGE>
1
INVESTMENT PROFILE
--------------------
NATIONAL SEMICONDUCTOR
NATIONAL SEMICONDUCTOR makes analog, digital, and mixed-signal (combining analog
and digital functions) integrated circuits used in communications devices,
networking equipment, and automobiles. The company's customers include Compaq,
Delphi Automotive, Lucent, Samsung, and Siemens. Nearly 60% of its sales are in
Asia and Europe.
For much of the '90s, the company's growth was compromised because of poor
acquisitions and over-building of facilities early in the decade. In 1998, the
Board of Directors took steps to reinvigorate the company. It sold 75 of the
company's 80 facilities and re-focused on the core business, deciding to stop
competing with Intel in the PC chip business.<F3>
TOP 10 HOLDINGS<F4>
--------------------
- ----------------------------------------------------------------------
COMPANY %
- ----------------------------------------------------------------------
METTLER-TOLEDO...Leader in precision weighing instruments 4.0%
ZEBRA TECHNOLOGIES CORP...Thermal bar code printer manufacturer 4.0%
LIBERTY MEDIA...Cable television programming 3.3%
NATIONAL SEMICONDUCTOR CORP...Manufacturer of
semiconductor products 3.2%
SYMANTEC CORPORATION...Designs, delivers and supports
utility software products 3.2%
SYMBOL TECHNOLOGIES INC...Develops, manufactures and sells
portable barcode scanning equipment 3.0%
AMERICAN POWER CONVERSION...Uninterruptible power supplies 2.8%
SYBRON INTERNATIONAL CORP...Consolidator in the dental supply
and dental lab industry 2.5%
MILLIPORE CORPORATION...Manufactures products for analysis
and purification of fluids 2.5%
DEVON ENERGY CORPORATION...Natural gas and exploration company 2.4%
- -----------------------------------------------------------------------
TOTAL 30.9%
=======================================================================
<PAGE>
INVESTMENT PROFILE (CONTINUED)
----------------------------------
NATIONAL SEMICONDUCTOR
And product development is evident. The company is developing the next
generation of microchip, called a system-on-a-chip, which combines a
microprocessor and logic and memory components in a single unit.
As these changes took place, the company enjoyed a recovery in demand for
semiconductors, driven by a new product cycle for consumer electronics. We
believe this combination of factors - renewed focus and continuing cyclical
upturn - could result in substantial margin improvement in the near future.<F3>
2
INVESTMENT PROFILE
-------------------
DYNEGY INC.
DYNEGY INC. is a power dynamo and one of the largest natural gas marketers in
the U.S. Formerly NGC, Dynegy engages in natural gas processing, transportation,
and fractionation. It also is developing electric power plants, reinforcing its
move into the electricity market in response to deregulation. The company, which
operates in Canada, the UK, and the U.S., also markets coal, crude oil,
electricity, and natural gas.
To us, the major players of the future will be those who sell, generate, and
deliver power nationally. We believe Dynegy is there already. It has emerged
as a strong second to industry leader Enron as wholesale gas and power
markets are deregulated. We believe Dynegy has a strong asset base and the
expertise to prosper in the new energy environment.
<PAGE>
INVESTMENT PROFILE (CONTINUED)
--------------------------------
DYNEGY INC.
In June, Dynegy and Illinova Corporation, an energy services holding company,
announced an agreement to merge. We feel the resulting company could be well-
positioned to capitalize on opportunities created by energy convergence and
deregulation.<F3>
DIVERSIFICATION BY SECTOR<F5>
-----------------------------
------------------------------------------------------------
SECTOR % SECTOR %
------------------------------------------------------------
BASIC MATERIALS 3.4 HEALTHCARE 3.8
CAPITAL GOODS 14.1 REITS/PROPERTY 2.0
CONGLOMERATES 0.0 SERVICES 19.2
CONSUMER CYCLICAL 2.7 TECHNOLOGY 26.3
CONSUMER/NON-CYCLICAL 3.1 TELECOMMUNICATIONS 9.6
ENERGY 6.9 TRANSPORTATION 1.4
FINANCIAL 4.5 UTILITIES 3.0
-------------------------------------------------------------
TOTAL 100.0%
=============================================================
MARKET CAP DISTRIBUTION<F5>
----------------------------
-------------------------------------------------------------
MARKET CAP MID CAP FUND S&P 400
(IN $ BILLIONS) (%) (%)
-------------------------------------------------------------
$0.0 to 0.5 0.3 1.2
0.5 to 1.0 10.7 8.1
1.0 to 2.0 26.3 24.2
2.0 to 3.0 24.6 24.0
3.0 to 4.0 16.2 13.6
4.0 to 5.0 8.4 9.0
5.0 to 6.0 4.8 5.2
6.0 to 7.0 2.0 4.5
7.0 to 8.0 1.1 0.9
8.0+ 5.6 9.3
-------------------------------------------------------------
TOTAL 100.0% 100.0%
=============================================================
ARTISAN MID CAP FUND
<PAGE>
OUR VIEW OF THE MARKET
------------------------
LOOKING FORWARD
The market reversed itself in the third quarter, moving from blessing a broad
range of securities to once again anointing a select few.
Rising interest rates and the threat of additional Fed action, Y2K fears, a
declining dollar, and disappointing earnings all combined to shift the focus of
the market. We don't envision any of these issues disappearing soon. Also,
consumer confidence could weigh in and bring additional concerns. We believe
that a consensus on market direction hasn't yet formed and, in the meantime, we
can expect continued volatility.
What is clear to us is the emergence of significant trends in areas such as
data processing, storage and transmission, telecommunications and energy that
are creating entirely new business models and major lifestyle changes.
We're also looking for more opportunities to take advantage of Asia's reviving
economies. We're interested in finding U.S. companies that are able to meet
accelerating demand in critical areas, companies that meet our investment
criteria: a franchise company...experiencing a positive growth trend...selling
at attractive valuations.
<PAGE>
SPECIAL NOTE
-------------
1999 DISTRIBUTIONS. Your Artisan Fund, like other mutual funds, passes to you in
the form of distributions any dividends and interest earned by securities in the
portfolio or capital gains from sales of its portfolio securities, less fund
expenses. These taxable distributions are reported as either ordinary dividends
or capital gains.
We are in the process of calculating the ordinary income and capital gain
distributions for all Artisan Funds for 1999. We anticipate paying distributions
in early November. Estimated payment ranges will be available in early October.
Please call toll-free 800.344.1770 for more information.
If you have questions regarding the reporting of distributions, you should
consult your tax advisor or legal counsel for advice and information concerning
your particular situation. Neither Artisan Funds nor any of its representatives
may give tax or legal advice.
FUND STATISTICS<F6>
--------------------
NUMBER OF HOLDINGS 60
MEDIAN MARKET CAP $2.5 billion
WEIGHTED AVG. GROWTH RATE 2000E 18%
WEIGHTED AVERAGE P/E 2000E 16.3X
MEDIAN PRICE/INTRINSIC VALUE 2000E 67%
<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. From its inception through 6/30/99, 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 indices do not include the payment of sales
commissions or other expenses incurred in the purchase of the
securities included in the index.
<F2> Barron's, October 4, 1999, page F3. The S&P 500 is a market-weighted
average of 500 large companies, with dividends reinvested. The Russell
2000 Index is an unmanaged, market-weighted index, with dividends
reinvested, of 2000 small companies. The Nasdaq Composite is a market
value-weighted index of over 5,000 over-the-counter securities.
<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 10/1/99. That information and those views may
change and the Fund disclaims any obligation to advise shareholders of
any such changes. As of 9/30/99, Dynegy Inc., Illinova Corporation and
Enron represented 2.3%, 0.0% and 0.0% of the Fund's total net assets,
respectively.
<F4> As a percentage of total net assets as of 9/30/99.
<F5> As a percentage of total portfolio equities as of 9/30/99.
<F6> Fund statistics are as of 9/30/99.
Artisan Funds offered through Artisan Distributors LLC, 1000 North
Water Street, Milwaukee, WI 53202, member NASD.
Date of first use: October 11, 1999.
----------------
1.800.344.1770
----------------
www.artisanfunds.com
A9037-2
<PAGE>
xxxxx
- -----------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
- -----------------------------------------------------------------------------
QUARTERLY UPDATE OCTOBER 1999
Thank you for investing in Artisan Small Cap Value Fund. We are pleased to
present this update for the third quarter of 1999.
The broadening of the market that began in April, resulting in revived interest
in small-caps, slowed in the third quarter. Although the Artisan Small Cap Value
Fund declined 4.2% for the period, it outperformed its benchmark, the Russell
2000 Value Index, which fell 7.8% during the quarter.<F1>
Inside, we discuss the Fund's quarterly performance, three holdings, and our
outlook for investing in the upcoming quarter. Also included in this update is a
note on the Fund's annual distributions.
(logo)
ARTISAN FUNDS
<PAGE>
THIRD QUARTER OVERVIEW
------------------------
After posting robust gains in the second quarter, small-caps retreated in the
recent period. Rising interest rates, inflation fears and weak earnings arrested
a broad-based rally. The market reverted to a familiar theme to focus on a
narrow selection of securities with technology and energy emerging as the
biggest gainers.
We took advantage of the strength in energy to sell some positions and move
assets into sectors where we see opportunity, such as information technology and
manufactured housing. And, we benefited from a buyout - Host Marriott Services -
which agreed to a price representing a nice premium to its trading level.<F2>
The Fund (which lost 4.2% in the quarter), and small-caps in general, held up to
the market's retreat at the end of the period when compared to the 5.38% drop
in the average diversified U.S. stock fund as reported by Lipper Inc., and the
6.25% drop in the S&P 500.<F3>
----------------------------------
AVERAGE ANNUAL TOTAL RETURNS<F1>
----------------------------------
FOR THE PERIODS ENDED 9/30/99
RUSSELL LIPPER
SMALL CAP VALUE FUND 2000 VALUE INDEX SMALL CAP FUND INDEX
--------------------- ----------------- ---------------------
ONE-YEAR 18.85% 5.83% 26.79%
SINCE INCEPTION 3.87% -3.68% 0.18%
(3/28/95)
<PAGE>
1
INVESTMENT PROFILE
---------------------
GRIEF BROTHERS
GRIEF BROTHERS principally manufactures industrial shipping containers and
containerboard and related products that it sells directly to customers
primarily in the U.S. and Canada. The company is a major player in the shipping
container market.
However, it's the company's timber story we find compelling. It owns about
320,000 acres, mostly in the Southeast and some in Canada. Management now
considers timber to be a core business and is committed to managing it more
aggressively. Grief Brothers has retained a consultant on land management and
hired a team to manage its forests as a profit center. So, we believe this
business segment may generate higher and more consistent earnings than in the
past.<F2>
TOP 10 HOLDINGS<F4>
-----------------------
- ----------------------------------------------------------------------------
COMPANY %
- ----------------------------------------------------------------------------
LONE STAR INDUSTRIES...Cement and ready mix concrete 2.9%
GLEASON CORPORATION...Gear manufacturing equipment producer 2.7%
MUELLER INDUSTRIES...Manufacturer/distributor of plumbing supplies 2.6%
HILB, ROGAL & HAMILTON...Insurance broker 2.6%
ANNUITY LIFE AND RE (HOLDINGS) LTD...Life and annuity reinsurance 2.4%
ADVO INCORPORATED...Direct mail marketing services 2.1%
GREY ADVERTISING...Advertising agency 2.0%
GENLYTE GROUP INCORPORATED...Commercial, industrial and
residential lighting 2.0%
WHITE MOUNTAINS INSURANCE GROUP...Property and
casualty insurance 1.9%
CLEVELAND CLIFFS INCORPORATED...Iron ore supplier 1.9%
- ---------------------------------------------------------------------------
TOTAL 23.1%
===========================================================================
<PAGE>
2
INVESTMENT PROFILE
------------------
BARNETT INC.
BARNETT INC. has a business model we consider outstanding. It distributes
plumbing, electrical and hardware products directly to small contractors, small
independent hardware stores and industrial maintenance departments through six
distinct comprehensive catalogs supported by a nationwide network of
distribution centers and a sophisticated telesales operation.
Barnett serves more than 65,000 active customers with a broad product line of
nearly 12,000 items, about 30% of which are higher margin private label
offerings. We view Barnett as earning a high return on its invested capital,
yet, based on our cost and earnings projections, we consider the stock's
valuation to be low.
There's an additional attraction, too. About 44% of Barnett's stock is owned by
Waxman Industries, Inc., a distributor of similar products, but to large
retailers such as Kmart, Sears and Target. Barnett has announced it is
considering the repurchase of its shares owned by Waxman and preliminary
discussions have occurred.<F2>
3
INVESTMENT PROFILE
-------------------------
REGAL BELOIT CORPORATION
REGAL BELOIT CORPORATION operates in two related businesses. The mechanical
group manufactures mechanical power transmission products for an array of uses,
including conveyor systems, automobiles and flow control. The electrical group
makes electric motors, a business that has grown much more prominent recently.
<PAGE>
INVESTMENT PROFILE (continued)
----------------------------------
REGAL BELOIT CORPORATION
Central to the company's success is its knack of acquiring related product lines
or companies, folding those operations into the existing corporate structure,
and realizing continued growth and income without significant periods of
transition.
Historically, the company has earned a high return on capital and generated
significant free cash flow to pay for acquisitions. While recent purchases have
entailed the assumption of some debt, we believe the unrealized profit in these
acquisitions will help pay down debt and sustain earnings growth. And, although
the mechanical group continues to see softness in its end markets, free cash
flow remains strong. We believe the stock already may have been discounted for
this near-term weakness.<F2>
DIVERSIFICATION BY SECTOR<F5>
-----------------------------
-----------------------------------------------------------
SECTOR % SECTOR %
-----------------------------------------------------------
BASIC MATERIALS 17.2 HEALTHCARE 1.5
CAPITAL GOODS 18.4 REITS 1.9
CONGLOMERATES 0.0 SERVICES 11.0
CONSUMER CYCLICAL 11.6 TECHNOLOGY 9.1
CONSUMER/NON-CYCLICAL 2.0 TRANSPORTATION 1.5
ENERGY 2.8 UTILITIES 1.6
FINANCIAL 21.4
-----------------------------------------------------------
TOTAL 100.0%
===========================================================
ARTISAN SMALL CAP VALUE FUND
<PAGE>
OUR VIEW OF THE MARKET
---------------------
LOOKING FORWARD
We've reached that time of year when bargains can appear. As the year ends, a
number of factors may individually or in combination provide atypical influence
on share prices. It's a time when companies that aren't doing well take write-
offs or reserves, when earnings disappointments can take an especially heavy
toll, when investors indulge in tax-loss selling and when asset managers do some
window dressing. These short-term dislocations may provide attractive long-term
opportunities. Given the market's recent weakness, we believe this scenario may
likely emerge.
We'll continue our efforts to enhance the portfolio with what we consider high
quality companies. We're looking at companies residing in the larger
capitalization end of the small-cap spectrum, often market leaders, that have
histories of high returns, generous levels of free cash, and strong prospects
for longer-term growth. We've been buying such companies recently, and as long
as the market continues presenting such companies at moderate prices, we'll
gladly make the most of the opportunity.
We believe the market may stay rocky for a while. We see issues such as a
weakening dollar, record trade deficits, Y2K preparedness, questionable
earnings and interest rate concerns creating an investment environment that's
less than benign.
SPECIAL NOTE
---------------
1999 DISTRIBUTIONS. Your Artisan Fund, like other mutual funds, passes to you in
the form of distributions any dividends and interest earned by securities in
the portfolio or capital gains from sales of its portfolio securities, less fund
expenses. These taxable distributions are reported as either ordinary dividends
or capital gains.
We are in the process of calculating the ordinary income and capital gain
distributions for all Artisan Funds for 1999. We anticipate paying distributions
in early November. Estimated payment ranges will be available in early October.
Please call toll-free 800.344.1770 for more information.
If you have questions regarding the reporting of distributions, you should
consult your tax advisor or legal counsel for advice and information concerning
your particular situation. Neither Artisan Funds nor any of its representatives
may give tax or legal advice.
FUND STATISTICS<F6>
--------------------
NUMBER OF HOLDINGS 92
MEDIAN MARKET CAP $291 million
WEIGHTED AVG. MARKET CAP $420 million
MEDIAN PRICE/BOOK VALUE 1.2X
MEDIAN P/E 1999E 11.2X
EQUITY DIVIDEND YIELD 1.3%
<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 VALUE STOCKS AND 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 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 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 10/1/99. That information and those views may
change and the Fund disclaims any obligation to advise shareholders of
any such changes. As of 9/30/99, Host Marriott Services, Grief
Brothers, Barnett Inc. and Regal Beloit represented 0.0%, 1.7%, 1.1%
and 1.9% of the Fund's total net assets, respectively.
<F3> Barron's, October 4, 1999, page F3. The S&P 500 is a market-weighted
average of 500 large companies, with dividends reinvested.
<F4> As a percentage of total net assets as of 9/30/99.
<F5> As a percentage of total portfolio equities as of 9/30/99.
<F6> Fund statistics are as of 9/30/99.
Artisan Funds offered through Artisan Distributors LLC, 1000 North
Water Street, Milwaukee, WI 53202, member NASD.
Date of first use: October 11, 1999.
---------------
1.800.344.1770
----------------
www.artisanfunds.com
A9037-4
