As filed with the Securities and Exchange Commission on October 31, 2000
1933 Act Reg. No. 33-88316
1940 Act File No. 811-8932
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 13 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 15 [X]
Artisan Funds, Inc.
(Registrant)
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
Telephone Number: (414) 390-6100
Andrew A. Ziegler Cameron S. Avery
Artisan Funds, Inc. Bell, Boyd & Lloyd LLC
1000 North Water Street, #1770 Three First National Plaza, #3300
Milwaukee, Wisconsin 53202 Chicago, Illinois 60602
(Agents for Service)
--------------------------------------------------------------------------------
Amending Parts A, B, and C and filing Exhibits.
It is proposed that this filing will become effective:
[X] immediately upon filing pursuant to rule 485(b)
-----
on _________________ pursuant to rule 485(b)
-----
60 days after filing pursuant to rule 485(a)(1)
-----
on _________________ pursuant to rule 485(a)(1)
-----
75 days after filing pursuant to rule 485(a)(2)
-----
on _________________ pursuant to rule 485(a)(2)
-----
--------------------------------------------------------------------------------
<PAGE>
--------------------------
(LOGO)
ARTISAN
--------------------------
PROSPECTUS
OCTOBER 31, 2000
--------------------------
INTERNATIONAL FUND
MID CAP FUND
SMALL CAP FUND
SMALL CAP VALUE FUND
--------------------------
<PAGE>
INVESTMENT MANAGEMENT
PRACTICED WITH INTELLIGENCE
AND DISCIPLINE IS AN ART/R
--------------------------------------------------------------------------------
Each Artisan Fund is 100% no-load, which means you pay no sales charges. You
also pay no 12b-1 fees. However, you bear your share of annual fund operating
expenses (including the investment management fee) which are deducted from Fund
assets.
ARTISAN FUNDS, INC. - P.O. Box 8412 - Boston, MA 02266-8412
Be sure to read this prospectus before you invest and please keep it on file for
future reference. This prospectus presents essential facts about the Artisan
Funds, including investment strategies, management fees and services available
to you as an investor.
If you have a question about any part of the prospectus, please call
800.344.1770. An Artisan Funds representative will be happy to help you. You may
also obtain more information about Artisan Funds on our website at
WWW.ARTISANFUNDS.COM.
The SECURITIES AND EXCHANGE COMMISSION has not approved or disapproved any of
the Fund's shares or determined whether this prospectus is truthful or complete.
Anyone who tells you otherwise is committing a crime.
<PAGE>
----------------------------------------------TABLE OF CONTENTS---------------
GOAL, STRATEGY & PHILOSOPHY................................................ 2
Artisan International Fund........................................... 2
Artisan Mid Cap Fund................................................. 4
Artisan Small Cap Fund............................................... 6
Artisan Small Cap Value Fund......................................... 8
PRINCIPAL RISKS YOU SHOULD CONSIDER....................................... 10
TOTAL RETURN FOR EACH CALENDAR YEAR....................................... 13
AVERAGE ANNUAL TOTAL RETURNS.............................................. 14
ARTISAN FUNDS FEES & EXPENSES............................................. 15
HOW DO I KNOW IF AN ARTISAN FUND IS RIGHT FOR ME?......................... 16
ARTISAN FUNDS FINANCIAL HIGHLIGHTS........................................ 17
ORGANIZATION, MANAGEMENT & MANAGEMENT FEES................................ 21
INVESTING WITH ARTISAN FUNDS.............................................. 23
HOW TO BUY SHARES......................................................... 24
Who is Eligible to Invest in a Closed Artisan Fund?................. 25
Automatic Investment Plan (7)....................................... 27
HOW TO SELL SHARES........................................................ 28
Systematic Withdrawals.............................................. 29
WHAT TYPE OF ACCOUNT WOULD YOU LIKE?...................................... 30
SHAREHOLDER & ACCOUNT PROCEDURES.......................................... 32
Statements and Reports.............................................. 32
Website (www.artisanfunds.com)...................................... 32
Share Price......................................................... 32
Purchases........................................................... 33
Minimum Balances.................................................... 34
Authorized Agents................................................... 34
Redemptions......................................................... 35
Signature Guarantees................................................ 36
Account Registration................................................ 37
Telephone Transactions.............................................. 37
Telephone Exchange Plan............................................. 38
DIVIDENDS, CAPITAL GAINS & TAXES.......................................... 39
Distribution Options................................................ 39
Taxes............................................................... 39
800.344.WWW.ARTISANFUNDS.COM
<PAGE>
ARTISAN INTERNATIONAL FUND
GOAL, STRATEGY & PHILOSOPHY
--------GOAL--------------------------------------------------------------------
Artisan International Fund seeks maximum long-term capital growth. The Fund may
change this goal without the approval of shareholders.
--------STRATEGY & PHILOSOPHY---------------------------------------------------
Under normal circumstances, the Fund invests at least 65% of its total assets in
stocks of foreign companies.
Through its own research process, the Fund invests in a broadly diversified
portfolio of international growth stocks, concentrating on industries or
investment themes that present accelerating growth prospects and companies that
capitalize on that growth. The Fund's investment strategy focuses on stock
selection.
The research method used by Artisan Partners, the adviser to the Fund, also
looks at industry selection, theme selection and country selection. It favors
countries and regions with improving or rapidly expanding economies. To
determine economic growth, it assesses factors such as gross domestic product
growth, corporate profitability, current account and currency issues, interest
rates, economic climate and social change. Having identified favorable areas, it
eliminates those whose stock markets appear to be overvalued.
In countries where the economic and market conditions provide attractive
valuations, Artisan Partners seeks companies that seem well-positioned for
strong, sustainable growth. As the first step to stock selection, Artisan
Partners narrows its focus to industries or themes likely to experience
meaningful growth. It focuses on well-managed companies with above-average
financial characteristics, increasing earnings per share and dominant or
increasing market share in strong industries. Having isolated promising
companies, Artisan Partners then purchases those whose stocks are attractively
valued.
02
-------
TWO
- Under ordinary circumstances, the Fund is fully invested in common stocks. At
times, however, Artisan Partners may determine that market or economic
conditions warrant a temporary defensive position. During those periods, the
Fund's assets may not be invested in accordance with its strategy and the
Fund may not achieve its investment objective. In this case, the Fund may
hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.
- Changes in security prices, currency exchange rates and other factors can
affect the portfolio's value.
The Fund tries to lower the risks inherent in foreign investing through a highly
selective investment strategy and broad diversification by country, industry and
company.
Artisan Partners may decide to sell a stock when a company's valuation
approaches its growth rate, changing circumstances affect the original reasons
for a company's purchase, a company exhibits deteriorating fundamentals or more
attractive alternatives exist.
800.344.1770 - WWW.ARTISANFUNDS.COM
03
------
THREE
ARTISAN MID CAP FUND
GOAL, STRATEGY & PHILOSOPHY
-------GOAL---------------------------------------------------------------------
Artisan Mid Cap Fund seeks maximum long-term capital growth. The Fund may change
this goal without the approval of shareholders.
-------STRATEGY & PHILOSOPHY----------------------------------------------------
Under normal circumstances, the Fund invests at least 65% of its total assets in
the common stocks of medium-sized U.S. companies.
A medium-sized company is one whose total stock market value falls within the
range of companies in the S&P 400 MidCap Index. As of September 29, 2000, this
index included companies with capitalizations between approximately $120 million
and $17.7 billion. Over time, the capitalization range of the companies in the
Index will change. As it does, the size of the companies in which the Fund
invests may change.
- The Fund prefers to invest in companies with "franchise" characteristics.
These could be a proprietary technology, dominant market share or some other
form of sustainable competitive advantage.
- The Fund also favors companies with predictable streams of cash flow through
real growth in demand for their products or services. Such companies are
well-positioned to take advantage of opportunities in their markets.
- If Artisan Partners, the adviser to the Fund, is impressed with a company's
competitive position and prospects for growth, it then defines and researches
key investment issues. It also estimates the company's intrinsic value, and
will generally buy the stock only if it sells below that estimate.
04
------
FOUR
- Under ordinary circumstances, the Fund is fully invested in common stocks. At
times, however, Artisan Partners may determine that market or economic
conditions warrant a temporary defensive position. During those periods, the
Fund's assets may not be invested in accordance with its strategy and the
Fund may not achieve its investment objective. In this case, the Fund may
hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.
- The Fund tries to lower the risks of investing in medium-sized companies
through broad diversification by industry and company, as well as continuous
monitoring of each holding.
- The Fund may engage in active and frequent trading to achieve its principal
investment strategies. A higher rate of portfolio turnover results in
increased transaction expenses, the realization of capital gains or losses
and may reduce performance.
- Artisan Partners may decide to sell a stock when a company's valuation
approaches its growth rate, changing circumstances affect the original
reasons for a company's purchase, a company exhibits deteriorating
fundamentals or more attractive alternatives exist.
800.344.1770 - WWW.ARTISANFUNDS.COM
05
------
FIVE
ARTISAN SMALL CAP FUND<F1>
GOAL, STRATEGY & PHILOSOPHY
-------GOAL---------------------------------------------------------------------
Artisan Small Cap Fund invests for maximum long-term capital growth. The Fund
may change this goal without the approval of shareholders.
-------STRATEGY & PHILOSOPHY----------------------------------------------------
Under normal circumstances, the Fund invests at least 65% of its assets in the
common stocks of small companies. The Fund considers a "small" company one whose
total stock market value is less than $1.5 billion.
The Fund's focus is on well-managed companies with sustainable growth prospects
whose stocks appear undervalued, either because they lack investor recognition
or are temporarily out of favor.
The Fund's investment approach rests on a few basic beliefs.
- Stocks that are underfollowed or under-researched by Wall Street tend to be
less efficiently priced because of lack of attention by investors. Investors
demand a premium for the risk of incomplete information. By doing its own
research, Artisan Partners, the adviser to the Fund, attempts to reduce this
risk and realize the premium returns.
- Through its research, Artisan Partners analyzes a company's operating
history, financial health, competitive position and prospects for growth. And
through face-to-face meetings it assesses the quality of management - a
critical factor in small company success.
- Artisan Partners also estimates a company's intrinsic value. It does so to
determine if a prospective investment is undervalued, and if so, to what
degree. This emphasis on stock valuation relative to growth prospects sets
the Fund apart from pure "growth" or "value" funds. Thus, the Fund's style
can be characterized as "growth at a reasonable price" or "growth/value
blend."
06
------
SIX
Under ordinary circumstances, the Fund is substantially fully invested in common
stocks. At times, however, Artisan Partners may determine that market or
economic conditions warrant a temporary defensive position. During those
periods, the Fund's assets may not be invested in accordance with its strategy
and the Fund may not achieve its investment objective. In this case, the Fund
may hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.
In choosing to take a temporary defensive position, the Fund would be trying to
avoid losses. If, however, the choice proved to be wrong, the Fund would have a
harder time achieving its goal of long-term capital growth.
The Fund seeks to limit risk by choosing companies with positive cash flows and
sustainable growth prospects, and by diversifying its holdings. The Fund
monitors each holding closely, evaluating new information relative to the
original reasons for investing.
The Fund may engage in active and frequent trading to achieve its principal
investment strategies. A higher rate of portfolio turnover results in increased
transaction expenses, the realization of capital gains or losses and may reduce
performance.
Artisan Partners may decide to sell a stock when a company's valuation
approaches its growth rate, changing circumstances affect the original reasons
for a company's purchase, more attractive alternatives exist or
a company's market cap exceeds $1.5 billion.
<F1> PLEASE NOTE: Artisan Small Cap Fund reopened to purchases by new investors
effective April 1, 1999. The Fund intends to close again to most new
investors when it reaches about $300 million in total assets. See "Who is
Eligible to Invest in a Closed Artisan Fund?" on page 25 for new account
eligibility criteria.
800.344.1770 - WWW.ARTISANFUNDS.COM
07
------
SEVEN
ARTISAN SMALL CAP VALUE FUND<F1>
GOAL, STRATEGY & PHILOSOPHY
-------GOAL---------------------------------------------------------------------
Artisan Small Cap Value Fund seeks long-term capital growth. This goal may be
changed without the approval of shareholders.
--------STRATEGY & PHILOSOPHY---------------------------------------------------
Under normal circumstances, the Fund invests at least 65% of its assets in small
companies with a total stock market value of less than $1.5 billion.
- The Fund purchases a stock only at what Artisan Partners, the adviser to the
Fund, considers a bargain price...a price that _ because of market forces _
is greatly below the value of the business as determined by Artisan Partners.
- In looking for bargains, Artisan Partners uses its own research process. The
focus is on individual companies, rather than on trends in the economy or
securities markets.
- Artisan Partners' research may uncover companies that have one or more of the
following characteristics:
TURNAROUNDS. At times, the Fund invests in companies that have had poor results,
but that Artisan Partners believes will be able to substantially improve.
UNDISCOVERED OR UNSPONSORED STOCKS. There need not be something wrong with a
company to qualify it as a bargain. Sometimes a company may simply be little
known to the investing public. Small companies typically have little or no
coverage by Wall Street analysts, so they often lack a following among investors
and become undervalued.
COMPANIES WITH HIDDEN ASSETS. Undervalued real estate, unrecognized business
lines and other "hidden" assets may not be given enough credit by investors,
thus providing investment opportunities for the Fund.
08
------
EIGHT
COMPANIES IN THE PROCESS OF MAJOR CHANGE. A company's stock may not reflect
positive change in the business until it shows up in financial results. The Fund
tries to invest ahead of this broad recognition, which, logically, can cause the
stock's price to rise.
- For the Fund to purchase a stock, a bargain price alone is not enough. To
provide an additional margin of safety, Artisan Partners looks for two other
attributes:
FINANCIAL STRENGTH. Artisan Partners favors companies with little debt and
positive cash flow.
FAVORABLE ECONOMICS. A company with acceptable returns on capital and free cash
over its business cycle is less likely to experience eroding values over the
long term.
Under ordinary circumstances, the Fund remains fully invested in equity
securities. At times, however, Artisan Partners may determine that market or
economic conditions warrant a temporary defensive position. During those
periods, the Fund's assets may not be invested in accordance with its strategy
and the Fund may not achieve its investment objective. In this case, the Fund
may hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.
Artisan Partners may decide to sell a stock when its target value is realized,
companies exhibit deteriorating margins of safety or more attractive
alternatives exist.
<F1> PLEASE NOTE: Artisan Small Cap Value Fund closed to most new investors on
June 30, 2000. Please refer to the "Who is Eligible to Invest in a Closed
Artisan Fund" on page 25 for new account eligibility criteria.
800.344.1770 - WWW.ARTISANFUNDS.COM
09
------
NINE
PRINCIPAL RISKS YOU SHOULD CONSIDER
-------RISKS APPLICABLE TO ALL FUNDS-------------------------------------------
All of the Artisan Funds invest primarily in common stocks. Over time, stocks
have shown greater growth than other types of securities. In the short-term,
however, stock prices may fluctuate widely in response to company, market or
economic news. When you sell your shares, they may be worth more or less than
you paid for them. You can lose money by investing in a Fund.
The percentage of each Fund's assets invested in various industries and sectors
will vary from time to time depending on the portfolio management team's
perception of investment opportunities. Investments in particular industries or
sectors may be more volatile than the overall stock market. For example,
technology, science and communications are rapidly changing fields, and stocks
of these companies may be subject to more abrupt or erratic market movements
than the stock market in general. Consequently, a higher percentage of holdings
in a particular industry or sector may have the potential for a greater impact
on the Fund.
The Funds do not pursue income, and are not, alone or together, a balanced
investment plan. In addition, there can be no assurance that they will achieve
their investment goals. Each investment manager's ability to choose suitable
investments for each Fund has a significant impact on each Fund's ability to
achieve its investment objective.
The principal investment risks of each Fund follow.
10
------
TEN
-----------------------------------------------ARTISAN INTERNATIONAL FUND---
- Foreign stocks as an asset class may underperform U.S. stocks.
- Foreign stocks tend to be more volatile than U.S. stocks.
- Investments in foreign securities (including American Depository Receipts, or
"ADRs") are subject to risks. These risks include currency exchange rate
fluctuation; less available public information about the issuers of
securities; less stringent regulatory standards; lack of uniform accounting,
auditing and financial reporting standards; and country risks including less
liquidity, high inflation rates, unfavorable economic practices, and
political instability.
- Artisan International Fund invests in securities denominated in the Euro and
the exchange rate between the Euro and the U.S. dollar will have a
significant impact on the value of the Fund's investments. With the advent of
the Euro, the participating countries in the European Monetary Union can no
longer follow independent monetary policies. This may limit a country's
ability to respond to economic downturns or political upheavals, and
consequently reduce the value of an investment in foreign securities. The
decision of certain countries not to participate may also create uncertainty
in the European markets and thereby increase volatility of the various
currencies and securities. The European securities markets also may become
less liquid.
------------------------------------------------------ARTISAN MID CAP FUND---
- Stocks of medium-sized companies tend to be more volatile than those of large
companies.
- Compared to large companies, medium-sized companies typically have analyst
coverage by fewer Wall Street firms. For this reason, they are more likely to
be trading at prices that reflect incomplete or inaccurate information.
- During some periods, stocks of mid-sized companies, as an asset class, have
underperformed the stocks of small and large companies.
800.344.1770 - WWW.ARTISANFUNDS.COM
11
------
ELEVEN
PRINCIPAL RISKS YOU SHOULD CONSIDER
(CONTINUED)
------ARTISAN SMALL CAP FUND----------------------------------------------------
- Historically, small company stocks have tended to outperform those of large
companies over the long-term. However, during some periods, stocks of small
companies as an asset class have under-performed the stocks of large
companies.
- Stocks of small companies tend to be more volatile and less liquid than
stocks of large companies. Small companies may have a shorter history of
operations, less access to additional financing, and a less diversified
product line - making them more susceptible to market pressures.
------ARTISAN SMALL CAP VALUE FUND----------------------------------------------
- Historically, small company stocks have tended to outperform those of large
companies over the long-term. However, during some periods, stocks of small
companies as an asset class have under-performed the stocks of large
companies.
- Stocks of small companies tend to be more volatile and less liquid than
stocks of large companies. Small companies may have a shorter history of
operations, less access to additional financing, and a less diversified
product line - making them more susceptible to market pressures.
- Value stocks may fall out of favor with investors and may under-
perform other asset types during given periods.
12
------
TWELVE
TOTAL RETURN FOR EACH CALENDAR YEAR
The risks of investing in the Funds are illustrated in the following bar charts
that show returns achieved year-to-year. Tables on the following page compare
each Fund's average annual total returns for the periods listed to a market
index. How the Funds have performed in the past does not necessarily indicate
how they will perform in the future.
ARTISAN INTERNATIONAL FUND
[BAR CHART APPEARS HERE:
1996 1997 1998 1999
---- ---- ---- ----
34.37% 3.46% 32.18% 81.29% ]
Since inception (12/28/95), the Fund's highest and lowest quarterly returns were
49.10% and (18.83)%, respectively, for the quarters ended December 31, 1999, and
September 30, 1998. The year-to-date return as of September 30, 2000, was -
5.93%.
ARTISAN MID CAP FUND
[BAR CHART APPEARS HERE:
1998 1999
---- ----
33.37% 57.89% ]
Since inception (6/27/97), the Fund's highest and lowest quarterly returns were
37.66% and (10.54)%, respectively, for the quarters ended December 31, 1999, and
September 30, 1998. The year-to-date return as of September 30, 2000, was
41.22%.
ARTISAN SMALL CAP FUND
[BAR CHART APPEARS HERE:
1996 1997 1998 1999
---- ---- ---- ----
11.86% 22.67% -13.47% 19.18% ]
Since inception (3/28/95), the Fund's highest and lowest quarterly returns were
21.02% and (25.99)%, respectively, for the quarters ended December 31, 1999, and
September 30, 1998. The year-to-date return as of September 30, 2000, was 4.74%.
ARTISAN SMALL CAP VALUE FUND
[BAR CHART APPEARS HERE:
1998 1999
---- ----
-5.76% 15.42% ]
Since inception (9/29/97), the Fund's highest and lowest quarterly returns were
21.44% and (20.15)%, respectively, for the quarters ended June 30, 1999, and
September 30, 1998. The year-to-date return as of September 30, 2000, was
11.61%.
800.344.1770 - WWW.ARTISANFUNDS.COM
13
----------
THIRTEEN
AVERAGE ANNUAL TOTAL RETURNS
--------------------------------------------------------------------------------
FOR THE YEAR FROM INCEPTION
FUND ENDED 12/31/99 THROUGH 12/31/99
--------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND<F1> 81.29% 34.96%
--------------------------------------------------------------------------------
Morgan Stanley Capital
International, Inc. (MSCI)
EAFE Index<F2> 26.96% 13.19%<F3>
--------------------------------------------------------------------------------
Fund inception date: 12/28/95. All returns reflect reinvested dividends.
--------------------------------------------------------------------------------
FOR THE YEAR FROM INCEPTION
FUND ENDED 12/31/99 THROUGH 12/31/99
--------------------------------------------------------------------------------
ARTISAN MID CAP FUND<F1> 57.89% 48.39%
--------------------------------------------------------------------------------
S&P 400 MidCap Index<F4> 14.72% 20.38%
--------------------------------------------------------------------------------
Fund inception date: 6/27/97. All returns reflect reinvested dividends.
--------------------------------------------------------------------------------
FOR THE YEAR FROM INCEPTION
FUND ENDED 12/31/99 THROUGH 12/31/99
--------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND 19.18% 14.15%
--------------------------------------------------------------------------------
Russell 2000 Index<F5> 21.26% 16.52%
--------------------------------------------------------------------------------
Fund inception date: 3/28/95. All returns reflect reinvested dividends.
--------------------------------------------------------------------------------
FOR THE YEAR FROM INCEPTION
FUND ENDED 12/31/99 THROUGH 12/31/99
--------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND 15.42% 5.21%
--------------------------------------------------------------------------------
Russell 2000 Value Index<F6> -1.49% -2.62%
--------------------------------------------------------------------------------
Fund inception date: 9/29/97. All returns reflect reinvested dividends.
<F1> In times of market volatility, the Fund's return may vary greatly over
short periods of time. In 1999, the Fund's performance was achieved during
a period of unusually favorable market conditions. Investors should
maintain realistic expectations for future performance. Such performance
may not be sustainable.
<F2> Morgan Stanley Capital International, Inc. (MSCI) EAFE Index is unmanaged
and includes companies throughout the world, excluding the U.S. and Canada,
in proportion to world stock market capitalization.
<F3> The average annual total return for the EAFE Index, when used in comparison
to the Fund's inception date, is calculated started 12/31/95.
<F4> The S&P 400 MidCap Index is an unmanaged, market-weighted index of 400 mid-
cap companies.
<F5> Russell 2000 Index is an unmanaged, market-weighted index of small
companies, formed by taking the largest 3,000 companies and eliminating the
largest 1,000 companies.
<F6> The Russell 2000 Value Index measures the performance of those companies in
the Russell 2000 Index with lower price-to-book ratios and lower forecasted
growth values.
14
----------
FOURTEEN
ARTISAN FUNDS FEES & EXPENSES
Below are the fees and expenses that you may pay if you buy and hold shares in
an Artisan Fund.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
SHAREHOLDER FEES (fees paid directly from your investment):
Maximum sales charge (load) imposed on purchases........................................................... None
Exchange fee............................................................................................... None
Redemption fee............................................................................................. None
----------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets):
----------------------------------------------------------------------------------------------------------------
SMALL CAP
EXPENSE INTERNATIONAL MID CAP SMALL CAP VALUE
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Management fees 0.95% 1.00% 1.00% 1.00%
---------------------------------------------------------------------------------------------------------------
Distribution (12b-1) Fees None None None None
---------------------------------------------------------------------------------------------------------------
Other Expenses 0.32% 0.40% 0.35% 0.35%
---------------------------------------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.27% 1.40% 1.35% 1.35%
---------------------------------------------------------------------------------------------------------------
</TABLE>
EXAMPLE. This example is intended to help you compare the cost of investing in
an Artisan Fund with that of investing in other mutual funds. The example
assumes you invest $10,000 for the time periods indicated and then redeem all of
your shares at the end of those periods. This example also assumes that you earn
a 5% return each year, and that operating expenses remain constant.
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
SMALL CAP
TIME PERIOD INTERNATIONAL MID CAP SMALL CAP VALUE
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 year $ 129 $ 143 $ 137 $ 137
-----------------------------------------------------------------------------------------------
3 years $ 403 $ 443 $ 428 $ 428
-----------------------------------------------------------------------------------------------
5 years $ 697 $ 766 $ 739 $ 739
-----------------------------------------------------------------------------------------------
10 years $1,534 $1,680 $1,624 $ 1,624
-----------------------------------------------------------------------------------------------
</TABLE>
This example is for illustration only. It is not meant to suggest actual or
expected costs or returns, which may be more or less than the amounts shown.
800.344.1770 - WWW.ARTISANFUNDS.COM
15
----------
FIFTEEN
HOW DO I KNOW IF AN ARTISAN FUND IS RIGHT FOR ME?
These are some of the potential rewards of investing in a Fund:
ARTISAN INTERNATIONAL FUND------------------------------------------------------
- From time to time, many foreign economies have grown faster than our own
(though some have not), and the returns on investments in these countries
have exceeded those of similar U.S. investments.
- Foreign markets can offer opportunities that are unavailable domestically.
Thus, international investing brings you greater diversification and enables
you to take advantage of changes in foreign economies and equity markets.
----ARTISAN MID CAP FUND--------------------------------------------------------
- Medium-sized companies can offer attractive investment characteristics. They
are typically small enough to have higher growth potential than the general
U.S. economy, mature enough to have seasoned management and established,
multiple product lines, and large enough to have liquid trading markets.
----ARTISAN SMALL CAP FUND AND ARTISAN SMALL CAP VALUE FUND---------------------
- Small companies tend to have better growth potential than large companies,
and are less likely to be broadly recognized.
- Historically, small-cap stocks have outperformed large-cap stocks over the
long-term.
----INVESTING WITH ARTISAN MAY BE SUITABLE FOR YOU IF:--------------------------
- You want to invest for maximum long-term growth, rather than income.
- You are a patient investor, and able to maintain your investment over a
relatively long period of time.
- You understand the specific risks of investing in a particular market segment
- small-caps, mid-caps, value-based stocks or foreign stocks.
16
----------
SIXTEEN
ARTISAN FUNDS FINANCIAL HIGHLIGHTS
The following tables are intended to help you understand each Fund's financial
performance since it began operations. Certain information reflects financial
results for a single Fund share. Total returns represent the rate you would have
earned (or lost) on an investment, assuming reinvestment of all dividends and
distributions. This information has been audited by PricewaterhouseCoopers LLP,
independent accountants, whose report, along with each Fund's financial
statements, is included in the annual report and the Statement of Additional
Information, which are available on request. For each year shown, all
information is for the fiscal year ended June 30.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL FUND - INVESTOR SHARES
Year Ended Year Ended Year Ended Year Ended Period Ended
For a share outstanding throughout each period 6/30/00 6/30/99 6/30/98 6/30/97 6/30/96<F1>
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $18.67 $16.25 $14.48 $12.08 $10.00
Income from investment operations:
Net investment income (loss)............ (0.03)<F2> 0.08<F2> 0.06<F2> 0.07 0.04
Net realized and unrealized gain (loss)
on investments.......................... 12.08 2.62 3.04 2.44 2.04
----------- ----------- ----------- ----------- -----------
Total income (loss) from investment operations 12.05 2.70 3.10(2) 2.51 2.08<F3>
----------- ----------- ----------- ----------- -----------
Distributions paid to shareholders:
Net investment income................... (0.02) (0.04) (0.20) (0.02) _
Net realized gains...................... (0.54) (0.24)( (1.13) (0.09) _
----------- ----------- ----------- ----------- -----------
Total distributions.......................... (0.56) (0.28) (1.33) (0.11) _
----------- ----------- ----------- ----------- -----------
Net asset value, end of period............... $30.16 $18.67 $16.25 $14.48 $12.08<F3>
=========== =========== =========== =========== ===========
Total return................................. 65.6% 17.4% 24.1% 20.9% 20.8%<F3>
Ratios/supplemental data:
Net assets, end of
period (millions)....................... $3,734.8<F5> $943.9<F5> $414.5<F5> $449.2 $71.5
Ratio of expenses to average net assets...... 1.27% 1.38% 1.45% 1.61% 2.50%<F4>
Ratio of net investment
income (loss) to average net assets..... (0.10)% 0.59% 0.37% 1.07% 1.60%<F4>
Portfolio turnover rate...................... 99.02% 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.
<F5> Does not include amounts represented by Institutional Shares, which were
first offered for sale on July 1, 1997.
800.344.1770 - WWW.ARTISANFUNDS.COM
17
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SEVENTEEN
ARTISAN FUNDS FINANCIAL HIGHLIGHTS (CONT.)
------------------------------------------------------------------------------
MID CAP FUND - INVESTOR SHARES
------------------------------------------------------------------------------
Year Year Year Period
Ended Ended Ended Ended
For a share outstanding throughout 6/30/00 6/30/99 6/30/98 6/30/97<F1>
each period -------- -------- -------- ---------
NET ASSET VALUE, BEGINNING
OF PERIOD..........................$16.67 $13.69 $10.00 $10.00
Income from investment operations:
Net investment income (loss).......(0.18)<F5> (0.16)<F5> (0.08) -
Net realized and unrealized gain
(loss) on investments..............11.91 4.41 4.56 -
----- ----- ----- -----
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS..............11.73 4.25 4.48 -
----- ----- ----- -----
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net realized gains..................(0.83) (1.27) (0.79) _
NET ASSET VALUE, END OF PERIOD......$27.57 $16.67 $13.69 $10.00
===== ===== ===== =====
Total return.........................72.9% 35.8% 46.1% 0.0%<F2>
Ratios/supplemental data:
Net assets, end of period
(millions)........................$225.0 $43.3 $12.8 $1.8
Ratio of expenses to average
net assets .......................1.40% 2.00%<F4> 2.00%<F4> 0.00%<F3>
Ratio of net investment income
(loss) to average
net assets ......................(0.79)% (1.13)%<F4> (0.77)%<F4> 0.00%<F3>
Portfolio turnover rate........245.69%<F2> 02.84% 235.65 0.00%<F2>
<F1> For the period from commencement of operations (June 27, 1997) through
June 30, 1997.
<F2> Not annualized.
<F3> Annualized.
<F4> The ratios of expenses to average net assets and net investment loss to
average net assets exclude fees paid by the Adviser. Absent fees paid by
the Adviser, the ratios of expenses to average net assets and net
investment loss to average net assets would have been 2.12% and (1.25)%
for the year ended June 30, 1999 and 3.64% and (2.41)% for the year ended
June 30, 1998, respectively.
<F5> Computed based on average shares outstanding.
18
--------
EIGHTEEN
ARTISAN FUNDS FINANCIAL HIGHLIGHTS (CONT.)
------------------------------------------------------------------------------
SMALL CAP FUND
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Year Year Year Year Year Period
Ended Ended Ended Ended Ended Ended
For a share outstanding throughout each period 6/30/00 6/30/99 6/30/98 6/30/97 6/30/96 6/30/95<F1>
------- ------- ------- ------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.09 $14.66 $15.11 $14.67 $11.52 $10.00
Income from investment operations:
Net investment income (loss) (0.10)<F4> (0.08) (0.10) (0.04) (0.07) (0.01)
Net realized and unrealized gain (loss) on
investments............... 3.70 (2.53) 2.23 1.55 3.32 1.53
Total income (loss) from investment operations 3.60 (2.61) 2.13 1.51 3.25 1.52
Distributions paid to shareholders:
Net realized gains........ - (0.96) (2.58) (1.07) (0.10) _
NET ASSET VALUE, END OF PERIOD $14.69 $11.09 $14.66 $15.11 $14.67 $11.52
Total return.............. 32.5% (17.0)% 14.7% 11.3% 28.3% 15.2%<F2>
Ratios/supplemental data:
Net assets, end of period (millions) $185.4 $174.6 $304.1 $267.8 $400.0 $99.3
Ratio of expenses to average net assets 1.35% 1.37% 1.33% 1.41% 1.52% 2.00%<F3>
Ratio of net investment income (loss) to average
net assets ........... (0.79)% (0.67)% (0.74)% (0.73)% (0.75)% (0.59)%<F3>
Portfolio turnover rate 193.76% 155.38% 134.67% 87.18% 105.19% 9.28%<F2>
</TABLE>
<F1> For the period from commencement of operations (March 28, 1995)
through June 30, 1995.
<F2> Not annualized.
<F3> Annualized.
<F4> Computed based on average shares outstanding.
800.344.1770 - WWW.ARTISANFUNDS.COM
19
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NINETEEN
ARTISAN FUNDS FINANCIAL HIGHLIGHTS (CONT.)
--------------------------------------------------------------------------------
SMALL CAP VALUE FUND
--------------------------------------------------------------------------------
Year Year Year
Ended Ended Ended
6/30/00 6/30/99 6/30/98<F1>
For a share outstanding throughout -------- -------- -----------
each period
NET ASSET VALUE, BEGINNING OF PERIOD $10.59 $11.37 $10.00
Income from investment operations:
Net investment income (loss) 0.065 (0.03) (0.03)
Net realized and unrealized gain (loss)
on investments 0.36 (0.21)<F4> 1.40
-------- --------- -------
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS 0.42 (0.24) 1.37
-------- --------- -------
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income (0.03) - -
Net realized gains (0.35) (0.54) -
Total distributions (0.38) (0.54) -
NET ASSET VALUE, END OF PERIOD $10.63 $10.59 $11.37
======== ======== =======
Total return 4.2% (1.0)% 13.7%<F2>
Ratios/supplemental data:
Net assets, end of period (millions) $261.7 $77.8 $47.23
Ratio of expenses to average net assets 1.35% 1.93%3 1.66%
Ratio of net investment income (loss)
to average net assets 0.60% (0.45)% (0.50)%<F3>
Portfolio turnover rate 8.19% 49.29% 52.58%
<F1> For the period from commencement of operations (September 29, 1997) through
June 30, 1998.
<F2> Not annualized.
<F3> Annualized.
<F4> The amount shown may not correlate with the aggregate gains and losses of
portfolio securities due to the timing of subscriptions and redemptions
of fund shares.
<F5> Computed based on average shares outstanding.
20
------
TWENTY
ORGANIZATION, MANAGEMENT &
MANAGEMENT FEES
ORGANIZATION. Each Artisan Fund is a series of Artisan Funds, Inc. Artisan
International Fund and Artisan Mid Cap Fund offer two classes of shares -
Investor Shares and Institutional Shares. This prospectus describes Investor
Shares. Institutional Shares are offered through separate prospectuses.
MANAGEMENT. Each Artisan Fund is managed by Artisan Partners Limited Partnership
(Artisan Partners), which selects the Fund's investments and handles its
business affairs under the direction of the board of directors. Artisan Partners
was organized in 1994 and, as of September 30, 2000, managed approximately $10.6
billion for Artisan Funds and institutional clients. Artisan Partners is a
limited partnership managed by its general partner, Artisan Investment
Corporation. Its address is: Artisan Partners, 1000 North Water Street, Suite
1770, Milwaukee, Wisconsin 53202-3197.
ARTISAN INTERNATIONAL FUND
MARK L. YOCKEY, Portfolio Manager, is a Managing Director of Artisan Partners
and a Vice President of Artisan Funds. He joined Artisan Partners in 1995. From
1990 to 1995, Mr. Yockey was Portfolio Manager of United International Growth
Fund and a Vice President of Waddell & Reed, Inc. Prior to assuming fund
management responsibilities, he served as an Equity Analyst with Waddell & Reed.
Mr. Yockey holds BA and MBA degrees from Michigan State University and is a
Chartered Financial Analyst.
ARTISAN MID CAP FUND
ANDREW C. STEPHENS, Portfolio Manager, is a Managing Director of Artisan
Partners and a Vice President of Artisan Funds. He joined Artisan Partners in
1997. From 1993 to 1997, Mr. Stephens was Portfolio Co-Manager of the Strong
Asset Allocation Fund. From 1994 to 1996, he served as senior Research Analyst
for the Strong Common Stock Fund and Strong Opportunity Fund.
Mr. Stephens holds a BS degree in Economics from the University of Wisconsin -
Madison.
800.344.1770 - WWW.ARTISANFUNDS.COM
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TWENTY-ONE
ORGANIZATION, MANAGEMENT &
MANAGEMENT FEES (CONTINUED)
ARTISAN SMALL CAP FUND
CARLENE MURPHY ZIEGLER, Portfolio Co-Manager, is a Managing Director of Artisan
Partners and a Director of Artisan Funds. Prior to founding Artisan Partners in
1994, she was Portfolio Co-Manager of Strong Common Stock Fund and Strong
Opportunity Fund.
Ms. Ziegler holds BA and MA degrees from the University of Illinois and an MBA
from the University of Chicago Graduate School of Business. She is a Chartered
Financial Analyst and has been a frequent member of the Barron's Roundtable.
MARINA T. CARLSON, Portfolio Co-Manager, is a Managing Director of Artisan
Partners and a Vice President of Artisan Funds. Prior to joining Artisan
Partners in 1999, she was employed by Strong Capital Management, Inc., where she
served as Portfolio Manager of Strong Mid Cap Disciplined Fund (from its
inception in December 1998 through March 1999) and Portfolio Co-Manager of
Strong Opportunity Fund and Strong Common Stock Fund (from 1993 through December
30, 1998).
Ms. Carlson holds a BBA in Finance from Drake University and an MBA in Finance
from DePaul University. She is a Chartered Financial Analyst.
ARTISAN SMALL CAP VALUE FUND
SCOTT C. SATTERWHITE, Portfolio Co-Manager, is a Managing Director of Artisan
Partners and a Vice President of Artisan Funds. Prior to joining Artisan
Partners in 1997, Mr. Satterwhite was Senior Vice President and Portfolio
Manager at Wachovia Corporation. From 1993 to 1997, Mr. Satterwhite was
Portfolio Manager of the Biltmore Special Values Fund, in addition to being a
Personal Trust Portfolio Manager and Manager of the Georgia Personal Trust
Portfolio Group.
Mr. Satterwhite earned his BA degree from the University of the South and MBA
from Tulane University. He is a Chartered Financial Analyst.
JAMES C. KIEFFER, Portfolio Manager, is a Managing Director of Artisan Partners
and a Vice President of Artisan Funds. From 1997 to 2000,
22
----------
TWENTY-TWO
Mr.Kieffer was a Research Analyst for Artisan Partners. Prior to joining Artisan
Partners, Mr. Kieffer was a Research Analyst from 1996 to 1997 at the investment
firm McColl Partners. Mr. Kieffer began his investment career at Wachovia
Corporation, working with Scott Satterwhite from 1989 to 1996, initially as a
Personal Trust Portfolio Manager and later as a General Equities and Small-Cap
Value Research Analyst in the institutional portfolio group. Mr. Kieffer holds a
BA degree in Economics from Emory University and is a Chartered Financial
Analyst.
MANAGEMENT FEES
Each Fund pays a management fee to Artisan Partners for serving as its
investment adviser and providing administrative services. The fee is determined
as a percentage of average daily net assets. Each Fund also pays expenses
related to its daily operations. Expenses paid out of a Fund's assets are
reflected in the share price or dividends. For the fiscal year ended June 30,
2000, the management fees paid by the Funds were:
Artisan International Fund.............0.95%
Artisan Mid Cap Fund...................1.00%
Artisan Small Cap Fund.................1.00%
Artisan Small Cap Value Fund ..........1.00%
INVESTING WITH ARTISAN FUNDS
Each Artisan Fund is 100% no-load, which means you pay no sales charges. You
also pay no 12b-1 fees. However, you bear your share of annual fund operating
expenses (including the investment management fee) which are deducted from Fund
assets.
MINIMUM INVESTMENTS
To open an account...................$1,000*
To add to an account....................$50*
Minimum balance required...............$500*
<F1>THE FUND WILL WAIVE THE INITIAL MINIMUM OF $1,000 IF YOU INVEST THROUGH THE
AUTOMATIC INVESTMENT PLAN, EXPLAINED LATER ON PAGE 27.
800.344.1770 - WWW.ARTISANFUNDS.COM
23
------------
TWENTY-THREE
HOW TO BUY SHARES
-------MAIL-------------------------------------------------------------------
TO OPEN AN ACCOUNT:
Complete and sign the new account application. Mail it to the address
on the application, along with your check or money order for $1,000 or
more. Make your check or money order payable to "Artisan Funds" or to
the name of the fund in which you are investing. Third-party and
starter checks will not be accepted.
TO ADD TO AN ACCOUNT:
Put your account number on a check or money order for $50 or more.
Make your check or money order payable to "Artisan Funds" or to the
name of the fund in which you are investing. Mail it, along with the
form at the bottom of your account statement, to the address on your
account statement. Third-party and starter checks will not be
accepted.
DELIVERY:
FOR REGULAR MAIL DELIVERY: FOR OVERNIGHT DELIVERY:
Artisan Funds Artisan Funds
c/o Boston Financial Data Services c/o Boston Financial
P.O. Box 8412 Data Services
Boston, MA 02266-8412 66 Brooks Drive
Braintree, MA 02184
800.344.1770
All investment checks must be delivered to one of the above addresses.
Neither Artisan Funds nor Artisan Distributors LLC is authorized to
accept shareholder investment checks at their corporate offices
------TELEPHONE 800.344.1770----------------------------------------------------
TO OPEN AN ACCOUNT:
You may open a new account by telephone only by exchange of $1,000 or
more from your identically registered account in another of the
Artisan Funds.
You may establish the telephone transaction option by electing it on
your new account application. If you did not do so, please request and
complete the shareholder options form available at
www.artisanfunds.com or by calling 800.344.1770.
24
-----------
TWENTY-FOUR
TO ADD TO AN ACCOUNT:
The telephone transaction option enables you to add from $50 to $25,000 to your
account by telephone. It also lets you exchange among Artisan Funds by
telephone.
You may elect the telephone transaction option on your application or - at a
later date - by completing the shareholder options form.
---------------------------------------------------------------------WIRE------
TO OPEN AN ACCOUNT:
Please call 800.344.1770 for instructions on opening an account by wire.
TO ADD TO AN ACCOUNT:
Please call 800.344.1770 for instructions on adding to an account by wire.
WHO IS ELIGIBLE TO INVEST IN A CLOSED ARTISAN FUND?
Artisan Small Cap Value Fund is closed to most new investors and Artisan Small
Cap Fund has announced that it intends to close to most new investors when it
reaches approximately $300 million in total assets. The following eligibility
criteria apply to a Fund when it is closed.
If you are a shareholder in a Fund when it closes, you may make additional
investments in that Fund and reinvest your dividends and capital gain
distributions, even though the Fund has closed.
You may open a new account in a closed Fund only if:
_ you are already a shareholder (in your own name or as beneficial owner of
shares held in someone else's name) of that Fund;
_ you are a shareholder with combined balances of $100,000 in any of the
Artisan Funds (in your own name or as beneficial owner of shares held in
someone else's name);
_ your business or other organization is already a shareholder of the Fund and
you are opening an account for an employee benefit plan sponsored by that
organization or an affiliated organization;
800.344.1770 - WWW.ARTISANFUNDS.COM
25
-----------
TWENTY-FIVE
HOW TO BUY SHARES (CONTINUED)
- you are transferring or doing a "rollover" into a Fund IRA from an employee
benefit plan through which you held shares of the Fund (if your plan doesn't
qualify for rollovers you may still open a new account with all or part of
the proceeds of a distribution from the plan);
- you are an employee benefit plan sponsored by an institution that also
sponsors (or is an affiliate of an institution that sponsors) another
employee benefit plan account that is a shareholder of the Fund as of the
date the Fund closed;
- you are a director or officer of Artisan Funds, or a partner or employee of
Artisan Partners, or a member of the immediate family of any of those
people;
- you are a client of Artisan Partners or you have an existing business
relationship with Artisan Partners and, in the judgment of Artisan Partners,
your investment in the Fund would not adversely affect Artisan Partners'
ability to manage the Fund effectively; or
- you are a client of a financial advisor or planner who had at least $500,000
of client assets invested with the Fund or at least $1,000,000 of client
assets invested with Artisan Funds as of the date on which the Fund closed,
or at the time of your application.
You may continue to add to your existing Fund account(s) through the
reinvestment of dividends and distributions from the Fund, and through the
purchase of additional Fund shares, even after the Fund closes. An employee
benefit plan which is a Fund shareholder may continue to buy shares in the
ordinary course of the plan's operations, even for new plan participants. An
eligible financial advisor or planner may continue to buy shares for existing
and new clients.
Call us at 800.344.1770 if you have questions about your ability to invest in a
closed Fund.
26
----------
TWENTY-SIX
AUTOMATIC INVESTMENT PLAN<F7>
This service is a convenient way to make regular, systematic investments into
your Artisan Fund. Once a month, you purchase shares by transferring money from
your designated checking or savings account directly into your Artisan Fund.
Simply decide how much you want to invest (the monthly minimum is $50) and the
day (between the 3rd and the 28th) that you want the transfer to take place.
The rest is automatic. There are no telephone calls to make, no monthly forms to
complete, no trips to the post office. And you're not locked in. If you wish to
discontinue the 7, just notify us in writing.
TO OPEN AN ACCOUNT:
Complete and sign the account application including the Automatic Investment
Plan section of your account application.
If you choose the Automatic Investment Plan when you open your account, the
minimum initial investment will be waived.
TO ADD TO AN ACCOUNT:
To add this convenient feature to your Artisan Fund account, please call
800.344.1770 or visit our website at www.artisanfunds.com for a shareholder
options form.
800.344.1770 - WWW.ARTISANFUNDS.COM
27
------------
TWENTY-SEVEN
HOW TO SELL SHARES
You may request to take money out of your account at any time by
selling some or all of your shares. You will receive the share price
calculated after your order is received by the Fund or its authorized
agent.
Some redemptions require SIGNATURE GUARANTEES. Please see page 36.
The following procedures apply ONLY TO NON-IRA ACCOUNTS. To sell
shares in an IRA, you must send us both a letter of instruction as
described below and an IRA distribution form. You may request the form
by calling 800.344.1770 or by visiting our website at
www.artisanfunds.com.
------MAIL---------------------------------------------------------------------
INDIVIDUAL, JOINT OWNERS, SOLE PROPRIETORSHIPS, UGMA AND UTMA
Mail a letter of instruction including: the Fund's name; your account
number; each owner's name and address; the dollar amount or number of
shares to be sold; and the signature of each owner as it appears on
the account.
TRUST
All Trustees must sign the letter of instruction.
FOR REGULAR MAIL DELIVERY: FOR OVERNIGHT DELIVERY:
Artisan Funds Artisan Funds
c/o Boston Financial Data c/o Boston Financial Data
Services Services
P.O. Box 8412 66 Brooks Drive
Boston, MA 02266-8412 Braintree, MA 02184
800.344.1770
ALL OTHERS
Call 800.344.1770 for instructions.
--------TELEPHONE 800.344.1770-------------------------------------------------
Available to all account types except IRAs
With the telephone redemption option, you can sell from $500 to $25,000 worth of
shares per day by telephone. You automatically have this option unless you
declined it on your account application. If you did decline and would like to
add it, call 800.344.1770 or visit our website at www.artisanfunds.com for a
shareholder options form.
28
------------
TWENTY-EIGHT
-----------------------------------------------------------------WIRE----------
Available to all account types except IRAs
We will transmit payment by wire to a pre-authorized bank account. Usually, the
funds will arrive at your bank the next business day after Artisan Funds
receives your redemption request. This option is available to you if you
enclosed a voided check with your account application or have subsequently
completed a shareholder options form to have this featured added to your Artisan
Funds account. The fee for this service is currently $5.00 per wire transaction.
SYSTEMATIC WITHDRAWALS
Available to all account types except IRAs
This service lets you withdraw a set amount from your account at regular
intervals. To be eligible for systematic withdrawal, you must have at least
$5,000 in your Artisan Fund Account. You must withdraw at least $50 per
transaction. If you'd like to add this option, please call us at 800.344.1770 or
visit our website at www.artisanfunds.com for a shareholder options form.
800.344.1770 - WWW.ARTISANFUNDS.COM
29
-----------
TWENTY-NINE
WHAT TYPE OF ACCOUNT WOULD
YOU LIKE?
--------RETIREMENT ACCOUNTS REQUIRE A SPECIAL APPLICATION-----------------------
Please call us at 800.344.1770 or visit www.artisanfunds.com to request one.
--------INDIVIDUAL OR JOINT OWNERSHIP
These are intended for your general investment needs. Individual accounts are
owned by one person. Joint accounts can have two or more owners.
--------GIFT OR TRANSFER TO A MINOR (UGMA, UTMA)
These custodial accounts let you give money to a minor for any purpose. This
gift is irrevocable, and the minor gains control of the account once he/she
reaches the age of majority. Your application should include the minor's social
security number.
--------TRUST FOR ESTABLISHED EMPLOYEE BENEFIT OR PROFIT-SHARING PLAN
The trust or plan must be established before you can open an account. Please
include the date of the trust or plan on the application.
--------BUSINESS OR ORGANIZATION----------------------------------------------
This account is for a corporation, association, partnership or similar
institution. Along with your application, please enclose a certified corporate
resolution that indicates which officers are authorized to act on behalf of the
entity.
--------RETIREMENT------------------------------------------------------------
A retirement account enables you to defer taxes on investment income and capital
gains. Your contributions may be tax-deductible.
- INDIVIDUAL RETIREMENT ACCOUNT (IRA). You may invest up to $2,000 per tax
year in an IRA if you are of legal age, under 70 1/2 and have "earned"
(non-investment) income. If your spouse has less than $2,000 in earned
income, he or she may still contribute up to $2,000 in an IRA, so long as
your combined earned income is at least $4,000 and you file a joint return.
30
-----
THIRTY
- ROTH IRA. Compared to the traditional IRA, the Roth IRA has different
eligibility requirements and tax treatment. If you're a single taxpayer
with adjusted gross income up to $95,000, you may contribute up to $2,000
per year - or up to $4,000 per year if you're married with adjusted gross
income up to $150,000 per year and you file a joint return. You also must
have earned income equal to your contributions, as with a traditional IRA,
but you can contribute to a Roth IRA even if you are over 70 1/2. Your
contributions to a Roth IRA are not tax-deductible. But your withdrawals
are not taxable if you've held your IRA for at least five years and are at
least 59 1/2, disabled, or use the proceeds (up to $10,000) to purchase a
first home. The amount you can contribute to a Roth IRA in any year is
reduced by the amount you contribute to a traditional IRA, and vice-versa.
- ROLLOVER IRA. This plan offers you special tax advantages for certain
distributions from employer-sponsored retirement plans.
- SIMPLIFIED EMPLOYEE PENSION PLAN (SEP-IRA). If you have a small business or
self-employment income, this plan lets you make annual tax-deductible
contributions of up to 15% of the first $160,000 of compensation for you
and any eligible employees.
- OTHER RETIREMENT PLANS. You may also use an Artisan Fund for Keogh,
profit sharing and money purchase plans, 403(b) plans and 401(k) plans. The
plan trustee must establish the appropriate account; Artisan Funds does not
offer prototype plans.
The above is just a summary of the types of retirement accounts available. When
we send your retirement-account application, we will include an IRA Disclosure
Statement. It contains more detailed information about the requirements for
specific retirement accounts, including a summary of the custodian fees which
you may incur for account set-up and maintenance.
FOR MORE INFORMATION ABOUT THE TAX ADVANTAGES AND CONSEQUENCES OF THESE VARIOUS
IRAS AND RETIREMENT PLAN ACCOUNTS, PLEASE CONSULT YOUR TAX ADVISOR.
800.344.1770 - WWW.ARTISANFUNDS.COM
31
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THIRTY-ONE
SHAREHOLDER & ACCOUNT PROCEDURES
STATEMENTS AND REPORTS
As an Artisan Fund investor, you will receive:
- Confirmation statements - after every transaction in your account or change in
your account registration.
- Quarterly account statements.
- Annual and semi-annual reports with financial statements.
- Year-end tax statements.
We suggest you keep each quarterly and year-end account statement with your
other important financial papers. You may need them for tax purposes.
If you need copies of statements, call 800.344.1770 or visit our website at
www.artisanfunds.com. Copies of this year's or last year's statements are free
of charge; for earlier years, there is a $10 processing fee.
We reduce the number of duplicate prospectuses, annual and semi-annual reports
you receive by sending only one copy of each to those addresses shared by two or
more accounts. Call us at 800.344.1770 to request individual copies of these
documents. We will begin sending individual copies thirty days after receiving
your request.
WEBSITE (WWW.ARTISANFUNDS.COM)
Our website at www.artisanfunds.com is a good source of information on the
Artisan Funds. You can obtain a prospectus, an application or other important
forms, as well as periodic reports and updates on the Funds.
SHARE PRICE
Each Artisan Fund is open for business every day the New York Stock Exchange
("NYSE") is open. Shares will not be priced on days when the NYSE is closed.
Each Artisan Fund buys and sells its shares each day, at the net asset value per
share.
A Fund's NET ASSET VALUE PER SHARE is the value of a single share. It is
computed by totaling the Fund's investments, cash, and other assets,
32
----------
THIRTY-TWO
subtracting its liabilities, then dividing the result by the number of shares
outstanding. The net asset value is computed daily at the NYSE closing time -
usually 3:00 p.m. Central Time, but sometimes earlier.
Fund securities and assets are valued chiefly by quotations from the primary
market in which they are traded. If quotations are not readily available, they
are valued by a method that the board of directors believes reflects a fair
value.
Values of foreign securities are translated from local currencies into U.S.
dollars using current exchange rates. With respect to foreign securities traded
primarily on foreign exchanges, a Fund's share price may change on days when the
Fund is not open for purchase or sale.
PURCHASES
- Your purchases must be in U.S. dollars, and your checks must be drawn on U.S.
banks.
- The Funds do not accept cash, credit cards, third-party or starter checks.
- If your check or telephone purchase order does not clear, your purchase will
be cancelled. You also will be liable for any resulting losses or fees a Fund
or its transfer agent incurs.
- The price you pay for shares is the net asset value per share next calculated
after your investment is received. An order is considered received when the
Fund or its authorized agent receives and accepts an application or
appropriate instruction along with the intended investment if applicable.
- A Fund may reject any purchase order it deems inappropriate - for example, one
that appears so large that it would disrupt management of the Fund, or an
order from someone ineligible to invest.
- A holiday, weekend or other interruption can affect the normal processing of
an investment. Thus, in the Automatic Investment Plan (7), your monthly
investment may be transferred from your bank to your Fund account either
earlier or later than the date you selected. Artisan Funds will not be
responsible for non-sufficient funds fees. If your 7 does not clear, your
purchase will be cancelled. You will also be liable for any resulting losses
or fees a Fund or its transfer agent incurs.
- A Fund may immediately terminate your ability to make automatic investments
and telephone purchases if an item is not paid by your financial institution.
800.344.1770 - WWW.ARTISANFUNDS.COM
33
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THIRTY-THREE
SHAREHOLDER & ACCOUNT PROCEDURES (CONTINUED)
MINIMUM BALANCES
It is very expensive for a Fund to maintain small accounts, and that cost is
borne by all the Fund's investors. For this reason, each Fund reserves the right
to close your account if its value falls below $500. However, before closing a
small account, the Fund would notify you and give you at least 30 days to bring
your account's value up to the minimum.
If you discontinue an Automatic Investment Plan before your account reaches
$1,000, that account may also be closed.
If you participate in systematic withdrawal and your account has insufficient
funds to meet a withdrawal, the amount remaining will be completely redeemed.
AUTHORIZED AGENTS
The Fund may authorize certain financial services companies, broker-dealers or
other authorized agents to accept share purchase and redemption orders on the
Fund's behalf. If you buy shares through an authorized agent, you will pay the
Fund's net asset value per share plus any transaction charge imposed by the
agent.
It is possible that an authorized agent may not charge you a direct transaction
fee. It may, however, charge a fee for accounting and shareholder services that
it provides to the Fund on your behalf. This fee may be a percentage - currently
up to 0.35% - of the annual average value of accounts for which the authorized
agent provides services. The Fund's portion of this fee does not exceed what it
would normally pay if your shares were registered directly with its own transfer
agent. Artisan Partners pays the balance of the fee.
34
-----------
THIRTY-FOUR
REDEMPTIONS
- Normally, redemption proceeds will be mailed to you within seven days after
receipt and acceptance of your redemption request.
- If you have recently made a purchase, the Fund may withhold redemption
proceeds until it is reasonably satisfied that it has received payment. This
confirmation process can take up to fifteen days.
- If you make a telephone redemption, the Fund will send payment in one of three
ways: (i) by mail; (ii) by Electronic Funds Transfer (EFT) to a pre-
authorized bank account; or (iii) to your bank account by wire transfer, the
cost of which (currently $5.00) will be deducted from the payment. Your bank
also may impose a fee for the incoming wire or incoming EFT. Payment by EFT
will usually arrive at your bank two banking days after your call. Payment by
wire is usually credited to your bank account on the next business day after
your call.
- Redemptions may be suspended or payment dates postponed on days when, other
than weekends or holidays, the NYSE is closed, its trading is restricted or
as permitted by the Securities and Exchange Commission (SEC).
- If you place a redemption order through an authorized agent, your redemption
proceeds will reflect the net asset value per share next computed after the
agent's receipt of your order, less any redemption fees imposed by the agent.
If a Fund sends you a check - for a redemption, systematic withdrawal payment or
cash distribution - that is returned "undeliverable" or remains uncashed for six
months, the Fund will cancel the check and reinvest the proceeds in your Fund at
the net asset value per share on the date of cancellation. And, if applicable,
the Fund will (a) cancel your systematic withdrawal payments, honoring
withdrawals only by request and (b) automatically reinvest your future dividends
and capital gains, even if you had elected cash payment.
Each Fund intends to pay all redemptions in cash. During any 90-day period for
any one shareholder, a Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the Fund's net assets. Redemptions in excess of
these limits may be paid wholly or partly by an in-kind distribution of
securities.
800.344.1770 - WWW.ARTISANFUNDS.COM
35
-----------
THIRTY-FIVE
SHAREHOLDER & ACCOUNT PROCEDURES (CONTINUED)
SIGNATURE GUARANTEES
To protect you and your Fund from fraud, the following redemption requests and
account changes must be submitted in writing and include a signature guarantee:
- If you wish to redeem more than $25,000 worth of shares.
- If you add/change your name or add/remove an owner on your account.
- If you add/change the beneficiary on your account.
- If you ask that a check be mailed to an address other than the one on your
account.
- If you ask that a check be made payable to someone other than the account
owner.
- If you wish to add the telephone redemption option to your existing account.
- If you wish to transfer the ownership of your account.
- If you have changed the address on your account by phone within the last 60
days.
You should be able to obtain a signature guarantee from a bank, broker-dealer,
securities exchange or association, clearing agency, savings association or
credit union if authorized under state law. A NOTARY PUBLIC CANNOT PROVIDE A
SIGNATURE GUARANTEE.
EACH OWNER'S SIGNATURE MUST BE GUARANTEED SEPARATELY. FOR EXAMPLE, A JOINT
ACCOUNT WITH TWO OWNERS WOULD REQUIRE TWO SIGNATURE GUARANTEES.
36
----------
THIRTY-SIX
ACCOUNT REGISTRATION
If you wish to change the address on your account, call us at 800.344.1770. Your
Fund will send a written confirmation of the change to both your old and new
addresses.
We prefer that a change of address request be submitted in writing with a
signature guarantee. If you make your request by phone, we will not honor a
telephone redemption for the following 60 days. During that period, we will
require written redemption requests with signature guarantees.
TELEPHONE TRANSACTIONS
You may perform many transactions - including exchanges, purchases and
redemptions - by telephone.
You may place telephone trades only during the hours that the NYSE is open for
business (generally weekdays between 7:00 a.m. and 3:00 p.m. Central Time).
To prevent unauthorized transactions in your account, your Fund will take
precautions designed to verify the identity of every caller. It may record a
call, request more information and send written confirmation of telephone
transactions. The Fund will not be responsible for any loss resulting from an
unauthorized transaction initiated by telephone if it or its transfer agent
follows reasonable procedures designed to verify the identity of the caller.
You should verify the accuracy of each telephone transaction as soon as you
receive your confirmation statement.
800.344.1770 - WWW.ARTISANFUNDS.COM
37
------------
THIRTY-SEVEN
SHAREHOLDER & ACCOUNT PROCEDURES (CONTINUED)
TELEPHONE EXCHANGE PLAN
This plan permits you to transfer investments among the Artisan Funds. Each
exchange between accounts must be at least $1,000. The price of shares exchanged
is determined at the end of that day's trading session.
Please note: An exchange is a sale and may have tax consequences for you.
TELEPHONE EXCHANGE PLAN RESTRICTIONS:
- If you wish to exchange between Funds, be sure both accounts are registered
in the same name, with the same address and taxpayer identification number.
- You may open a Fund account by telephone exchange from another Artisan Fund
account only if you previously chose the telephone transaction option for the
Fund from which you want to make the exchange.
- If your account is subject to backup withholding, you may not use the
telephone exchange plan.
- Excessive trading can hurt both performance and shareholders. Thus, if you
make excessive use of the telephone exchange plan, Artisan Funds may terminate
your access to the plan or limit the number of transfers you can make in a
calendar year.
- Artisan Funds reserves the right to terminate or modify the telephone exchange
plan at any time. If Artisan Funds finds it necessary to do either, it will
try to notify you in advance.
38
------------
THIRTY-EIGHT
DIVIDENDS, CAPITAL GAINS & TAXES
As a shareholder in an Artisan Fund, you are entitled to your share of its net
income and any gains realized on its investments. Each Fund intends to
distribute substantially all of its net income and net realized capital gains to
investors at least annually.
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to receive
your distributions. If you later want to change, you may either submit a written
request or call us at 800.344.1770.
Each Fund offers three options:
REINVESTMENT OPTION. Your dividends and capital gain distributions will be
reinvested in additional shares of the Fund. If you do not indicate a choice on
your application, we will automatically reinvest your distributions.
INCOME-ONLY OPTION. We will automatically reinvest your capital gain
distributions, but send you a check for dividends.
CASH OPTION. We will send you a check for all distributions.
In IRA accounts, all distributions are automatically reinvested. Otherwise, they
could be subject to income tax and penalties. After you are 59 1/2, you may
request payment of distributions in cash, although these too might be subject to
income tax.
When you reinvest, the reinvestment price is the Fund's net asset value per
share at the close of business on the reinvestment date. The mailing of
distribution checks will usually begin on the payment date.
TAXES
As you should with any investment, consider how the return on your investment in
a Fund will be taxed. If your investment is a tax-deferred account - an IRA, for
example - the following tax discussion does not apply.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and may
be subject to state or local taxes. If you are a U.S. citizen residing outside
the United States, your distributions also may be taxed by the country in which
you reside.
800.344.1770 - WWW.ARTISANFUNDS.COM
39
-----------
THIRTY-NINE
DIVIDENDS, CAPITAL GAINS & TAXES
(CONTINUED)
Your distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares. However, distributions declared in
October, November or December and paid in January are taxable as if you received
them on December 31.
For federal tax purposes, the Fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions are
taxed as long-term capital gains. The character of a capital gain depends on the
length of time that the Fund held the asset it sold.
Given their objectives and strategies, each of the Artisan Funds will chiefly
produce capital gains distributions, as opposed to current income. Every
January, each of your Funds will send you and the IRS a statement - called Form
1099 - showing the amount of every taxable distribution you received in the
previous calendar year.
TAXES ON TRANSACTIONS. When you redeem shares, you will experience a capital
gain or loss if there is a difference between the cost of your shares and the
price you receive when you sell them. You may be subject to tax.
Whenever you sell shares of a Fund, you will receive a confirmation statement
showing how many shares you sold and at what price. You also will receive a
year-end statement every January that reports, among other things, your average
cost basis of the shares you sold. This will allow you or your tax preparer to
determine the tax consequences of each redemption. However, be sure to keep your
regular account statements; their information will be essential in verifying the
amount of your capital gains or losses.
To invest, you must be a U.S. resident with a Social Security or taxpayer
identification number. When you sign your account application, you must certify
that your Social Security or taxpayer identification number is correct and that
you are not subject to backup withholding for failing to report income to the
IRS. If you fail to comply with this procedure, the IRS can require the Fund to
withhold 31% of your taxable distributions and redemptions.
40
-----
FORTY
For more detail on the Artisan Funds, you may request the Statement of
Additional Information, which is incorporated herein by reference.
You can find more information about a Fund's investments in its annual and semi-
annual reports to shareholders. Those documents discuss the market conditions
and investment strategies that significantly affected the Fund's performance
during its most recent fiscal period.
For a free copy of any of these documents, call 800.344.1770. Also call this
number if you have a question or would like to receive other information about
an Artisan Fund. You may also obtain copies of the reports to shareholders and
other information about the Artisan Funds on Artisan Funds' website at
www.artisanfunds.com.
Information about the Funds, including the Statement of Additional Information,
is also available to you through the Securities and Exchange Commission. You can
review and copy Fund documents at the Commission's Public Reference Room, 450
5th St., N.W., Washington, D.C. 20549-0102. The telephone number there is
202.942.8090.
You may also request Fund documents by accessing the Commission's website at:
http://www.sec.gov.
And you may obtain copies for a fee by writing to: Securities and Exchange
Commission, Public Reference Section, 450 5th St., N.W., Washington, D.C. 20549-
0102, or by email request at [email protected].
811-8932
(LOGO) ARTISAN FUNDS
INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART(R)
800.344.1770 - WWW.ARTISANFUNDS.COM
----------------
PRSRT STD
U.S. POSTAGE
PAID
Milwaukee, WI
PERMIT NO. 2855
----------------
(LOGO)
-------------------------
ARTISAN FUNDS
P.O. BOX 8412
BOSTON, MA 02266-8412
800.344.1770
WWW.ARTISANFUNDS.COM
-------------------------
10/31/00 - A0189
<PAGE>
(ARTISAN LOGO)
PROSPECTUS
ARTISAN MID CAP FUND
(Institutional Shares)
October 31, 2000
This prospectus offers Artisan Mid Cap Fund Institutional Shares to
institutional investors including, but not limited to, employee benefit plans,
endowments, foundations, trusts and corporations able to meet the Fund's minimum
investment requirement of $5 million.
An investment in the Fund is 100% no-load, which means you pay no sales charges.
You also pay no 12b-1 fees. However, you bear your share of annual fund
operating expenses (including the investment management fee) which are deducted
from Fund assets.
ARTISAN FUNDS, INC.
Suite 1770
1000 North Water Street
Milwaukee, WI 53202-3197
Be sure to read this prospectus before you invest and please keep it on file for
future reference. This prospectus presents essential facts about the Fund,
including investment strategies, management fees and services available to you
as an investor.
If you have a question about any part of this prospectus, please call the number
below. An Artisan Funds representative will be happy to help you.
---------------
1-800-399-1770
---------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUND'S SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
<PAGE>
TABLE OF CONTENTS
Important Legal Information.......................Cover
Goal, Strategy & Philosophy...........................2
Principal Risks You Should Consider...................3
Total Return - Calendar Year..........................4
Average Annual Total Returns..........................5
Fees & Expenses of the Fund...........................5
Who is Eligible to Invest?............................6
The Fund's Financial Highlights.......................7
Organization, Management & Management Fee.............8
Investing with the Fund...............................8
Minimum Investments..............................8
How to Buy Shares.....................................9
How to Sell Shares...................................10
Shareholder & Account Policies.......................12
Statements & Reports............................12
Share Price.....................................12
Dividends, Capital Gains & Taxes.....................13
Distribution Options............................13
Taxes...........................................13
1
GOAL, STRATEGY & PHILOSOPHY
-------------------------------------------------------------------------------
GOAL
Artisan Mid Cap Fund seeks maximum long-term capital growth. The Fund may change
this goal without the approval of shareholders.
-------------------------------------------------------------------------------
STRATEGY & PHILOSOPHY
The Fund invests at least 65% of its total assets in the common stocks of
medium-sized U.S. companies.
A medium-sized company is one whose total stock market value falls within the
range of companies in the S&P 400 MidCap Index. As of September 29, 2000, this
Index included companies with capitalizations between approximately $120 million
and $ 17.7 billion. Over time, the capitalization range of companies in the
Index will change. As it does, the size of the companies in which the Fund
invests may change.
- The Fund prefers to invest in companies with "franchise" characteristics.
These could be a proprietary technology, dominant market share or some other
form of sustainable competitive advantage.
- The Fund also favors companies with predictable streams of cash flow through
real growth in demand for their products or services. Such companies are
well-positioned to take advantage of opportunities in their markets.
- If Artisan Partners, the adviser to the Fund, is impressed with a company's
competitive position and prospects for growth, it then defines and
researches key investment issues. It also estimates the company's intrinsic
value, and generally will buy the stock only if it sells below that
estimate.
- Under ordinary circumstances, the Fund is fully invested in common stocks. At
times, however, Artisan Partners may determine that market or economic
conditions warrant a temporary defensive position. During those periods, the
Fund's assets may not be invested in accordance with its strategy and the
Fund may not achieve its investment objective. In this case, the Fund may
hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.
- The Fund tries to lower the risks of investing in medium-sized companies
through broad diversification by industry and company, as well as
continuous monitoring of each holding.
- The Fund may engage in active and frequent trading to achieve its principal
investment strategies. A higher rate of portfolio turnover results in
increased transaction expenses, the realization of capital gains or losses
and may reduce performance.
2
- Artisan Partners may decide to sell a stock when a company's valuation
approaches its growth rate, changing circumstances affect the original
reasons for a company's purchase, a company exhibits deteriorating
fundamentals or more attractive alternatives exist.
PRINCIPAL RISKS YOU SHOULD CONSIDER
The Fund invests primarily in common stocks. In the short-term, stock prices may
fluctuate widely in response to company, market or economic news. When you sell
your shares, they may be worth more or less than you paid for them. You can lose
money by investing in the Fund.
The Fund does not pursue income and is not a balanced investment plan. In
addition, there can be no assurance that it will achieve its investment goal.
The investment manager's ability to choose suitable investments for the Fund has
a significant impact on the Fund's ability to achieve its investment objective.
The percentage of the Fund's assets invested in various industries and sectors
will vary from time to time depending on the portfolio management team's
perception of investment opportunities. Investments in particular industries or
sectors may be more volatile than the overall stock market. For example,
technology, science and communications are rapidly changing fields, and stocks
of these companies may be subject to more abrupt or erratic market movements
than the stock market in general. Consequently, a higher percentage of holdings
in a particular industry or sector may have the potential for a greater impact
on the Fund.
Below are the principal investment risks of the Fund.
- Stocks of medium-sized companies tend to be more volatile than those of
large companies.
- Compared to large companies, medium-sized companies typically have analyst
coverage by fewer Wall Street firms. For this reason, they are more likely
to be trading at prices that reflect incomplete or inaccurate information.
- During some periods, stocks of mid-sized companies, as a class, have
underperformed the stocks of small and large companies.
3
INVESTMENT RETURNS
The risks of investing in the Fund are illustrated in the following bar chart
that shows the returns achieved year by year and the table that compares the
Fund's average annual total returns for various periods, compared to a market
index. How the Fund has performed in the past does not necessarily indicate how
it will perform in the future.
TOTAL RETURN - CALENDAR YEAR<F1>
ARTISAN MID CAP FUND - INVESTOR SHARES
[BAR CHART APPEARS HERE:
1998 33.37%
1999 57.89% ]
<F1> Because Institutional Shares have not been offered for a full calendar
year, the information provided in the bar chart and table represents
the performance of Investor Shares, the Fund's other class of shares,
which are offered to individual investors by a separate prospectus.
Institutional Shares and Investor Shares would have substantially
similar annual returns because the shares are invested in the same
portfolio of securities. However, because the classes do not have the
same expenses, the expense ratio and the Total Return and Average Annual
Total Return of Institutional Shares will differ from the Investor Shares.
The Fund's total return for the period January 1, 2000 through September
30, 2000 was 41.26%, consisting of the total return on its Investor Shares from
January 1, 2000 through June 30, 2000 and on its Institutional Shares from
July 1, 2000 (the Institutional Shares' Inception) through September 30, 2000.
The Fund's return on its Investor Shares from January 1, 2000 through September
30, 2000 was 41.22%
For the periods shown in the bar chart, the highest and lowest quarterly returns
for the Investor Shares were 37.66% and (10.54)% for the quarters ended December
31, 1999 and September 30, 1998, respectively.
4
AVERAGE ANNUAL TOTAL RETURNS
------------------------------------------------------------------------------
FOR THE YEAR ENDED FROM INCEPTION
12/31/99 THROUGH 12/31/99
------------------------------------------------------------------------------
ARTISAN MID CAP FUND 57.89% 48.39%
(INVESTOR SHARES)
------------------------------------------------------------------------------
S&P 400 MidCap Index<F1> 14.72% 20.38%
------------------------------------------------------------------------------
Investor Shares inception date is 6/27/97. All returns reflect reinvested
dividends.
<F1> The S&P 400 MidCap Index is an unmanaged, market-weighted index of 400 mid-
cap companies.
In times of market volatility, the Fund's return may vary greatly over short
periods of time. In 1999, the Fund's performance was achieved during a period
of unusually favorable market conditions. Investors should maintain realistic
expectations for future performance. Such performance may not be sustainable.
FEES & EXPENSES OF THE FUND
Below are the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.
-------------------------------------------------------------------------------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum sales charge (load) imposed on purchases None
Exchange fee................................... None
Redemption fee................................. None
5
-------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
-----------------------------------------------------
EXPENSE MID CAP FUND
(INSTITUTIONAL
SHARES)
-----------------------------------------------------
MANAGEMENT FEES 1.00%
-----------------------------------------------------
DISTRIBUTION (12B-1) FEES None
-----------------------------------------------------
OTHER EXPENSES 0.20<F1>
-----------------------------------------------------
TOTAL ANNUAL FUND OPERATING
EXPENSES 1.20<F1>
-----------------------------------------------------
<F1> In the absence of an operating history, the amount shown for "other
expenses" is the estimated amount that the Fund will incur.
EXAMPLE. This example is intended to help you compare the cost of investing in
Institutional Shares of the Fund with that of investing in other mutual funds.
The example assumes you invest $10,000 for the time periods indicated and then
redeem all of your shares at the end of those periods. The example also assumes
that you earn a 5% return each year, and that operating expenses remain
constant.
-----------------------------------------------------
TIME PERIOD MID CAP FUND
(INSTITUTIONAL
SHARES)
-----------------------------------------------------
1 YEAR $122
-----------------------------------------------------
3 YEARS $381
-----------------------------------------------------
5 YEARS $660
-----------------------------------------------------
10 YEARS $1,455
-----------------------------------------------------
This example is for illustration only. It is not meant to suggest actual or
expected costs or returns, which may be more or less than the amounts shown.
WHO IS ELIGIBLE TO INVEST?
Institutional Shares are designed for institutional investors who are able to
meet the high minimum investment requirements, who want maximum long-term
capital growth rather than income, and who have the long-term investment outlook
needed for investing in the stocks of mid cap companies.
6
TO REDUCE COSTS, INSTITUTIONAL SHARES ARE NOT AVAILABLE FOR SALE IN ALL STATES.
TO FIND OUT IF INSTITUTIONAL SHARES ARE AVAILABLE OR CAN BE MADE AVAILABLE IN
YOUR STATE, OR TO OBTAIN AN APPLICATION, CALL 1-800-399-1770. SEE "HOW TO BUY
SHARES."
THE FUND'S FINANCIAL HIGHLIGHTS
The following table is intended to help you understand the financial performance
of the Fund since it began operations as it relates to Investor Shares (not
Institutional Shares). Certain information reflects financial results for a
single Investor Share. Because Institutional Shares have not previously been
issued, similar information does not exist for them. Total return represents
the rate you would have earned (or lost) on an investment, assuming reinvestment
of all dividends and distributions. This information has been audited by
PricewaterhouseCoopers LLP, independent accountants, whose report, along with
the Fund's financial statements, is included in the annual report and the
Statement of Additional Information, which are available on request.
For a share outstanding throughout Year Year Year Period
the period Ended Ended Ended Ended
6/30/00 6/30/99 6/30/98 6/30/97<F1>
--------- ------- ------- ---------
Net asset value, beginning of
period........................... $16.67 $13.69 $10.00 $10.00
Income from investment operations:
Net investment loss............(0.18)<F5> (0.16)<F5> (0.08) --
Net realized and unrealized
gain on investments......... 11.91 4.41 4.56 --
------ ------ ------ -----
TOTAL INCOME FROM INVESTMENT
OPERATIONS.................. 11.73 4.25 4.48 --
------ ------ ------ -----
Distributions paid to shareholders:
Net realized gains............. (0.83) (1.27) (0.79) --
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD...... $27.57 $16.67 $13.69 $10.00
====== ====== ====== ======
Total return........................ 72.9% 35.8% 46.1% 0.0%<F2>
Ratios/supplemental data:
Net assets, end of period
(millions).................. $225.0 $43.3 $12.8 $1.8
Ratio of expenses to average net
assets...................... 1.40% 2.00%<F4> 2.00%<F4> 0.00%<F3>
Ratio of net investment income
to average net assets....... (0.79)% (1.13)%<F4> (0.77)%<F4> 0.00%<F3>
Portfolio turnover rate 245.69% 202.84% 235.65% 0.00%<F2>
---------------
<F1> For the period from commencement of operations (June 27, 1997) through June
30, 1997.
<F2> Not annualized.
<F3> Annualized.
<F4> The ratios of expenses to average net assets and net investment loss to
average net assets exclude fees paid by Artisan Partners. Absent
fees paid by Artisan Partners, the ratios of expenses to average net assets
and net investment loss to average net assets would have been 2.12% and
(1.25)% for the year ended June 30, 1999 and 3.64% and (2.41)% for the year
ended June 30, 1998, respectively.
<F5> Computed based on average shares outstanding.
7
ORGANIZATION, MANAGEMENT & MANAGEMENT FEE
ORGANIZATION. The Fund is a series of Artisan Funds, Inc. The Fund offers two
classes of shares - Investor Shares and Institutional Shares. This prospectus
describes Institutional Shares. Investor Shares are offered to individual
investors through a separate prospectus.
MANAGEMENT. The Fund is managed by Artisan Partners Limited Partnership (Artisan
Partners), which selects the Fund's investments and handles its business affairs
under the direction of the board of directors. Artisan Partners was organized in
1994 and, as of September 30, 2000, managed approximately $10.6 billion for
Artisan Funds and institutional clients. Artisan Partners is a limited
partnership managed by its general partner, Artisan Investment Corporation. The
address is: Artisan Partners, 1000 North Water Street, Suite 1770, Milwaukee,
Wisconsin 53202-3197.
ANDREW C. STEPHENS, Portfolio Manager, has been a Managing Director of Artisan
Partners and a Vice President of Artisan Funds since he joined Artisan Partners
in 1997. From 1993 to 1997, Mr. Stephens was Portfolio Co-Manager of the Strong
Asset Allocation Fund. From 1994 to 1996, he served as a Senior Research
Analyst for the Strong Common Stock Fund and Strong Opportunity Fund.
Mr. Stephens holds a BS degree in Economics from the University of Wisconsin -
Madison.
MANAGEMENT FEE. The Fund pays a management fee to Artisan Partners for serving
as its investment adviser and providing administrative services. The fee is
determined as a percentage of average daily net assets. The Fund also pays
expenses related to its daily operations. Expenses paid out of the Fund's
assets are reflected in its share price or dividends. For services furnished
by Artisan Partners, the Fund has agreed to pay an annual fee of 1.00% of the
Fund's average daily net assets.
INVESTING WITH THE FUND
THE FUND IS 100% NO-LOAD, which means you pay no sales charges. You also pay no
12b-1 fees. However, you bear your share of annual fund operating expenses
(including the investment management fee) which are deducted from Fund assets.
-------------------------------------------------------------------------------
MINIMUM INVESTMENTS
To open an account........$5,000,000
To add to an account........$100,000
Minimum balance required..$5,000,000
8
Each account must separately meet the minimum investment requirements
applicable to Institutional Shares. The Fund reserves the right to close your
account if the value is less than $5 million, unless the reduction in value is
due solely to market depreciation. Before closing an account below this level,
the Fund will notify you and allow you at least 30 days to bring the value of
the account up to the minimum.
HOW TO BUY SHARES
APPLICATIONS FOR INSTITUTIONAL SHARES ARE ONLY MADE AVAILABLE THROUGH ARTISAN
DISTRIBUTORS LLC BY CALLING 1-800-399-1770. Institutional Shares may be
purchased by check or wire. There are no sales commissions or underwriting
discounts.
-------------------------------------------------------------------------------
BY WIRE
You may purchase shares by instructing your bank to wire money to Artisan Funds'
custodian bank. Your bank may charge you a fee for sending the wire. IF YOU ARE
OPENING A NEW ACCOUNT BY WIRE TRANSFER, YOU MUST FIRST TELEPHONE ARTISAN
DISTRIBUTORS LLC AT 1-800-399-1770 TO REQUEST AN ACCOUNT NUMBER AND FURNISH YOUR
TAX IDENTIFICATION NUMBER. Artisan Funds will not be responsible for the
consequences of delays, including delays in the banking or Federal Reserve wire
systems.
Wire transfer instructions are:
State Street Bank and Trust Company
Attn: Mutual Funds
Boston, MA 02110
Routing #011000028
Credit to Artisan Mid Cap Institutional Shares 1333
Deposit DDA 99050882
-------------------------------------------------------------------------------
BY CHECK
To make an initial purchase of shares by check, complete and sign the "Account
Application" and send it to the Fund's transfer agent at one of the following
addresses with a check for the total purchase amount payable to "Artisan Funds":
REGULAR MAIL OVERNIGHT DELIVERY
------------ ------------------
Artisan Funds Artisan Funds
c/o Boston Financial Data c/o Boston Financial Data Services
Services 66 Brooks Drive
P.O. Box 8412 Braintree, MA 02184
Boston, MA 02266-8412
All investment checks must be delivered to one of the above addresses. Neither
Artisan Funds nor Artisan Distributors LLC is authorized to accept shareholder
investment checks at their corporate offices.
9
-------------------------------------------------------------------------------
PURCHASES IN KIND
You may, subject to the approval of Artisan Funds, purchase shares of the Fund
with securities that are eligible for purchase by the Fund (consistent with the
Fund's investment strategy, goal and philosophy) that have value that is readily
ascertainable in accordance with the Fund's valuation policies. Call Artisan
Funds at 1-800-399-1770 if you would like to purchase Fund shares with other
securities.
-------------------------------------------------------------------------------
SUBSEQUENT INVESTMENTS
You may make subsequent investments by wire transfer using the instructions
given above, or by submitting a check, along with either the stub from your Fund
account confirmation statement or a note indicating the amount of the purchase,
your account number, and the name in which your account is registered. ARTISAN
FUNDS WILL NOT ACCEPT CASH, DRAFTS, THIRD PARTY CHECKS, OR CHECKS DRAWN ON BANKS
OUTSIDE OF THE UNITED STATES. If your order to purchase Institutional Shares is
canceled because your check does not clear, you will be responsible for any
resulting loss incurred by the Fund.
-------------------------------------------------------------------------------
PURCHASE PRICE & EFFECTIVE DATE
Each purchase of Institutional Shares is made at the net asset value applicable
to Institutional Shares (see "Share Price") next determined after receipt by the
Fund's transfer agent of the check or wire transfer of funds in payment of the
purchase.
-------------------------------------------------------------------------------
GENERAL
Artisan Funds cannot accept a purchase order specifying a particular purchase
date or price per share. Each purchase order must be accepted by an authorized
officer of Artisan Funds or its transfer agent and is not binding until accepted
and entered on the books of the Fund. Once your purchase order has been
accepted, you may not cancel or revoke it; however, you may redeem the shares.
Artisan Funds reserves the right not to accept any purchase order that it
determines not to be in the best interest of the Fund or the Fund's
shareholders.
HOW TO SELL SHARES
You may redeem all or any part of your Institutional Shares upon your written
request delivered to Artisan Funds' transfer agent at one of the following
addresses:
REGULAR MAIL OVERNIGHT DELIVERY
------------ ------------------
Artisan Funds Artisan Funds
c/o Boston Financial Data c/o Boston Financial Data Services
Services 66 Brooks Drive
P.O. Box 8412 Braintree, MA 02184
Boston, MA 02266-8412
10
Your redemption request must:
- identify the Fund and give your account number;
- specify the number of shares or dollar amount to be redeemed;
- be accompanied by a corporate resolution or other authorization in the case
of a redemption by a corporation, trust, partnership or other entity, as
described below; and
- be signed by the shareholder in ink or by a duly authorized agent of the
shareholder.
-------------------------------------------------------------------------------
EVIDENCE OF AUTHORITY
Redemption requests by a corporation, trust, partnership or other entity must be
accompanied by evidence of authority of the person or persons signing the
redemption request to so act.
In the case of a corporation, the request must be signed in the name of the
corporation by an officer whose title must be stated, and must be accompanied by
a by-law provision or resolution of the board of directors, certified within 60
days, authorizing the officer to so act. A redemption request from a
partnership or a trust must be signed in the name of the partnership or trust by
a general partner or a trustee and include a signature guarantee. If the trustee
is not named in the account registration, a redemption request by a trust must
also include evidence of the trustee's appointment, such as a certified copy of
the relevant portions of the trust instrument. Under certain circumstances,
before the shares can be redeemed, additional documents may be required in order
to verify the authority of the person seeking to redeem.
-------------------------------------------------------------------------------
GENERAL REDEMPTION POLICIES
You may not cancel or revoke your redemption order once your instructions have
been received and accepted. Artisan Funds cannot accept a redemption request
that specifies a particular date or price for redemption or any special
conditions. PLEASE CALL 1-800-399-1770 IF YOU HAVE ANY QUESTIONS ABOUT
REQUIREMENTS FOR A REDEMPTION BEFORE SUBMITTING YOUR REQUEST. Artisan Funds
reserves the right to require a properly completed application before making
payment for shares redeemed.
The Fund intends to pay all redemptions in cash. During any 90-day period for
any one shareholder, a Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the Fund's net assets. Redemptions in excess of
these limits may be paid wholly or partly by an in-kind distribution of
securities.
The price at which your redemption order will be executed is the net asset value
next determined after proper redemption instructions are received by the Fund's
transfer agent. See "Share Price." Because the redemption price you receive
depends upon the net asset value per share of Institutional Shares at the time
of redemption, it may be more or less than the price you originally paid for the
shares and may result in a realized capital gain or loss.
11
Artisan Funds will generally wire transfer the proceeds of your redemption to
the bank account designated in your purchase application. If you attempt to
redeem shares within 15 days after they have been purchased by check, Artisan
Funds may delay payment of the redemption proceeds to you until it can verify
that payment for the purchase of those shares has been (or will be) collected.
To reduce such delays, Artisan Funds recommends that your purchase be made by
federal funds wire through your bank.
Shares in any account you maintain with Artisan Funds may be redeemed to the
extent necessary to reimburse Artisan Funds for any loss it sustains that is
caused by you (such as losses from uncollected checks or any Fund liability
under the Internal Revenue Code provisions on backup withholding relating to
your account).
SHAREHOLDER & ACCOUNT POLICIES
-------------------------------------------------------------------------------
STATEMENTS & REPORTS
As a Fund investor, you will receive:
- confirmation statements - after every transaction in your account or change
in your account registration;
- quarterly account statements;
- annual and semi-annual reports with financial statements;
- year-end tax statements.
We suggest you keep each quarterly and year-end account statement with your
other important financial papers. You may need them for tax purposes.
If you need copies of statements, call 1-800-399-1770. Copies of this year's
or last year's statements are free of charge; for earlier years, there is a $10
processing fee.
------------------------------------------------------------------------------
SHARE PRICE
The Fund is open for business every day the New York Stock Exchange ("NYSE") is
open. Institutional Shares will not be priced on days when the NYSE is closed.
The Fund buys and sells Institutional Shares each day at the net asset value per
Institutional Share.
The NET ASSET VALUE PER INSTITUTIONAL SHARE is the value of a single
Institutional Share. It is computed by totaling the Institutional Shares' pro
rata share of the value of the Fund's investments, cash and other assets,
subtracting the Institutional Shares' pro rata share of the value of the Fund's
liabilities and the liabilities specifically allocated to Institutional Shares,
then dividing the result by the number of Institutional Shares outstanding. The
net asset value is computed daily at the NYSE closing time - usually 3:00 p.m.
central time, but sometimes earlier.
12
Fund securities and assets are valued chiefly by quotations from the primary
market in which they are traded. If quotations are not readily available, they
are valued by a method that the board of directors believes reflects a fair
value.
The Fund may hold foreign securities to a limited extent. Values of foreign
securities are translated from local currencies into U.S. dollars using current
exchange rates. To the extent the Fund holds foreign securities traded primarily
on foreign exchanges, the price of Institutional Shares may change on days when
the Fund is not open for purchase or sale.
------------------------------------------------------------------------------
DIVIDENDS, CAPITAL GAINS & TAXES
AS A SHAREHOLDER IN THE FUND, YOU ARE ENTITLED TO YOUR SHARE OF ITS NET INCOME
AND ANY GAINS REALIZED ON ITS INVESTMENTS. The Fund intends to distribute
substantially all of its net income and net realized capital gains to investors
at least annually.
------------------------------------------------------------------------------
DISTRIBUTION OPTIONS
When you open an account, specify on your Application how you want to receive
your distributions. If you want to change your distribution option at a later
date, you may either submit a written request or call us at 1-800-399-1770.
The Fund offers three options:
- REINVESTMENT OPTION. Your dividends and capital gain distributions will be
reinvested in additional shares of the Fund. If you do not indicate a
choice on your application, we will automatically reinvest your
distributions.
- INCOME-ONLY OPTION. We will automatically reinvest your capital gain
distributions but send you a check for dividends.
- CASH OPTION. We will send you a check for all distributions.
When you reinvest, the reinvestment price is the net asset value per
Institutional Share at the close of business on the reinvestment date. The
mailing of distribution checks will usually begin on the payment date.
------------------------------------------------------------------------------
TAXES
As you should with any investment, consider how the return on your investment in
the Fund will be taxed. If your investment is in a tax-deferred account - an
employee benefit plan account, for example - the following tax discussion does
not apply.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and may
be subject to state or local taxes. If you are a U.S. citizen residing outside
the United States, your distributions may also be taxed by the country in which
you reside.
Your distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares. However, distributions declared in
October, November or December and paid in January are taxable as if you received
them on December 31.
13
For federal tax purposes, the Fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions are
taxed as long-term capital gains. The character of a capital gain depends on the
length of time that the Fund held the asset it sold.
Given its objective and strategy, the Fund will chiefly produce capital gains
distributions, as opposed to current income. Every January, the Fund will send
you and the IRS a statement - called Form 1099 - showing the total amount of
taxable distributions you received in the previous calendar year.
TAXES ON TRANSACTIONS. When you redeem shares, you will experience a capital
gain or loss if there is a difference between the cost of your shares and the
price you receive when you sell them. You may be subject to tax.
Whenever you sell shares of the Fund, you will receive a confirmation statement
showing how many shares you sold and at what price. You also will receive a
year-end statement every January that reports, among other things, your
average cost basis of the shares you sold. This will allow you or your tax
preparer to determine the tax consequences of each redemption. However, be sure
to keep your regular account statements; their information will be essential in
verifying the amount of your capital gains or losses.
To invest, you must be a U.S. resident with a Social Security or taxpayer
identification number. When you sign your account application, you must certify
that your Social Security or taxpayer identification number is correct and that
you are not subject to backup withholding for failing to report income to the
IRS. If you fail to comply with this procedure, the IRS can require the Fund to
withhold 31% of your taxable distributions and redemptions.
14
For more detail on the Fund, you may request the Statement of Additional
Information, which is incorporated herein by reference.
You can find more information about the Fund's investments in its annual and
semi-annual reports to shareholders. Those documents discuss the market
conditions and investment strategies that significantly affected the Fund's
performance in its most recent fiscal period.
For a free copy of any of these documents, call 1-800-399-1770. Also call this
number if you have a question or would like to receive other information about
the Fund.
Text-only versions of the Fund's documents can be viewed online or downloaded
from the EDGAR Database on the SEC's Internet web site at www.sec.gov. You may
also review and copy those documents by visiting the SEC's Public Reference Room
in Washington, D.C. Information on the operation of the Public Reference Room
may be obtained by calling the SEC at 202-942-8090. In addition, copies may be
obtained, after mailing the appropriate duplicating fee, by writing to the SEC's
Public Reference Section, 450 5th Street, N.W., Washington, D.C. 20549-0102 or
by e-mail request at [email protected].
15
811-8932
(ARTISAN LOGO) ARTISAN FUNDS
INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.
<PAGE>
(ARTISAN LOGO)
PROSPECTUS
ARTISAN INTERNATIONAL FUND
(Institutional Shares)
October 31, 2000
This prospectus offers Artisan International Fund Institutional Shares to
institutional investors including, but not limited to, employee benefit plans,
endowments, foundations, trusts and corporations able to meet the Fund's minimum
investment requirement of $5 million.
An investment in the Fund is 100% no-load, which means you pay no sales charges.
You also pay no 12b-1 fees. However, you bear your share of annual fund
operating expenses (including the investment management fee) which are deducted
from Fund assets.
ARTISAN FUNDS, INC.
Suite 1770
1000 North Water Street
Milwaukee, WI 53202-3197
Be sure to read this prospectus before you invest and please keep it on file for
future reference. This prospectus presents essential facts about the Fund,
including investment strategies, management fees and services available to you
as an investor.
If you have a question about any part of this prospectus, please call the number
below. An Artisan Funds representative will be happy to help you.
--------------
1-800-399-1770
---------------
---------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUND'S SHARES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
<PAGE>
TABLE OF CONTENTS
Important Legal Information.......................Cover
Goal, Strategy & Philosophy...........................2
Principal Risks You Should Consider...................3
Total Return for Calendar Year........................4
Average Annual Total Returns..........................5
Fees & Expenses of the Fund...........................5
Who is Eligible to Invest?............................6
The Fund's Financial Highlights.......................7
Organization, Management & Management Fee.............8
Investing with the Fund...............................9
Minimum Investments..............................9
How to Buy Shares.....................................9
How to Sell Shares...................................11
Shareholder & Account Policies.......................13
Statements & Reports............................13
Share Price.....................................13
Dividends, Capital Gains & Taxes.....................14
Distribution Options............................14
Taxes...........................................14
1
GOAL, STRATEGY & PHILOSOPHY
--------------------------------------------------------------------------------
GOAL
Artisan International Fund seeks maximum long-term capital growth. The Fund may
change this goal without the approval of shareholders.
--------------------------------------------------------------------------------
STRATEGY & PHILOSOPHY
Under normal circumstances, the Fund invests at least 65% of its total assets in
stocks of foreign companies.
Through its own research process, the Fund invests in a broadly diversified
portfolio of international growth stocks, concentrating on industries or
investment themes that present accelerating growth prospects and companies that
capitalize on that growth. The Fund's investment strategy focuses on stock
selection.
The research method used by Artisan Partners, the adviser to the Fund, also
looks at industry selection, theme selection and country selection. It favors
countries and regions with improving or rapidly expanding economies. To
determine economic growth, it assesses factors such as gross domestic product
growth, corporate profitability, current account and currency issues,
interest rates, economic climate and social change. Having identified
favorable areas, it eliminates those whose stock markets appear to be
overvalued.
In countries where the economic and market conditions provide attractive
valuations, Artisan Partners seeks companies that seem well-positioned for
strong, sustainable growth. As the first step to stock selection, Artisan
Partners narrows its focus to industries or themes likely to experience
meaningful growth. It focuses on well-managed companies with above-average
financial characteristics, increasing earnings per share and dominant or
increasing market share in strong industries. Having isolated promising
companies, Artisan Partners then purchases those whose stocks are
attractively valued.
- Under ordinary circumstances, the Fund is fully invested in common stocks. At
times, however, Artisan Partners may determine that market or economic
conditions warrant a temporary defensive position. During those periods, the
Fund's assets may not be invested in accordance with its strategy and the
Fund may not achieve its investment objective. In this case, the Fund may
hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.
- Changes in security prices, currency exchange rates and other factors can
affect the portfolio's value.
The Fund tries to lower the risks inherent in foreign investing through a
highly selective investment strategy and broad diversification by country,
industry and company.
Artisan Partners may decide to sell a stock when a company's valuation
approaches its growth rate, changing circumstances affect the original reasons
for a company's purchase, a company exhibits deteriorating fundamentals or more
attractive alternatives exist.
2
PRINCIPAL RISKS YOU SHOULD CONSIDER
The Fund invests primarily in common stocks. Over time, stocks have shown
greater growth than other types of securities. In the short-term, however, stock
prices may fluctuate widely in response to company, market or economic news.
When you sell your shares, they may be worth more or less than you paid for
them. You can lose money by investing in the Fund.
The Fund does not pursue income and is not a balanced investment plan. In
addition, there can be no assurance that it will achieve its investment goal.
The investment manager's ability to choose suitable investments for the Fund has
a significant impact on the Fund's ability to achieve its investment objective.
The percentage of the Fund's assets invested in various industries and sectors
will vary from time to time depending on the portfolio management team's
perception of investment opportunities. Investments in particular industries or
sectors may be more volatile than the overall stock market. For example,
technology, science and communications are rapidly changing fields, and stocks
of these companies may be subject to more abrupt or erratic market movements
than the stock market in general. Consequently, a higher percentage of holdings
in a particular industry or sector may have the potential for a greater impact
on the Fund.
Below are the principal investment risks of the Fund.
- Foreign stocks as an asset class may underperform U.S. stocks.
- Foreign stocks tend to be more volatile than U.S. stocks.
- Investments in foreign securities (including American Depository Receipts,
or "ADRs") are subject to risks. These risks include: currency exchange rate
fluctuation; less available public information about the issuers of
securities; less stringent regulatory standards; lack of uniform accounting,
auditing and financial reporting standards; and country risks including less
liquidity, high inflation rates, unfavorable economic practices and
political instability.
- The Fund invests in securities denominated in the euro and the exchange rate
between the euro and the U.S. dollar will have a significant impact on the
value of the Fund's investments. With the advent of the euro, the
participating countries in the European Monetary Union can no longer follow
independent monetary policies. This may limit a country's ability to respond
to economic downturns or political upheavals, and consequently reduce the
value of an investment in foreign securities. The decision of certain
countries not to participate may also create uncertainty in the European
markets and thereby increase volatility of the various currencies and
securities. The European securities markets also may become less liquid.
3
INVESTMENT RETURNS
The risks of investing in Institutional Shares of the Fund are illustrated in
the following bar chart that shows the returns achieved year by year and the
table that compares the Fund's average annual total return of the Fund's
Institutional Shares for various periods, compared to a market index. How the
Fund has performed in the past does not necessarily indicate how it will perform
in the future.
TOTAL RETURN - CALENDAR YEAR
ARTISAN INTERNATIONAL FUND - INSTITUTIONAL SHARES
[BAR CHART APPEARS HERE:
1998 32.51%
1999 81.65% ]
Since inception on July 1, 1997, the highest and lowest quarterly returns for
the Institutional Shares were 49.11% and (18.86)% for the quarters ended
December 31, 1999 and September 30, 1998, respectively. The year-to-date return
as of September 30, 2000 was (5.78)%.
4
AVERAGE ANNUAL TOTAL RETURNS
-----------------------------------------------------------------------------
FROM INCEPTION
FOR THE YEAR THROUGH
ENDED 12/31/99 12/31/99
-----------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND
(INSTITUTIONAL SHARES) 81.65%<F1> 39.23%
-----------------------------------------------------------------------------
Morgan Stanley Capital
International Europe,
Australasia and Far East 26.96% 14.18%
Index (EAFE)<F2>
-----------------------------------------------------------------------------
Institutional Share class inception date: 7/1/97. All returns reflect
reinvested dividends.
<F1> In times of market volatility, the Fund's return may vary greatly over
short periods of time. In 1999, the Fund's performance was achieved
during a period of unusually favorable market conditions. Investors
should maintain realistic expectations for future performance. Such
performance may not be sustainable.
<F2> Morgan Stanley Capital International (MSCI) EAFE Index is unmanaged and
includes companies throughout the world, excluding the U.S. and Canada, in
proportion to world stock market capitalization.
FEES & EXPENSES OF THE FUND
Below are the fees and expenses that you may pay if you buy and hold
Institutional Shares of the Fund.
-------------------------------------------------------------------------------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Maximum sales charge (load)
imposed on purchases..................None
Exchange fee..........................None
Redemption fee........................None
5
-------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
-----------------------------------------------------
EXPENSE INTERNATIONAL FUND
(INSTITUTIONAL
SHARES)
-----------------------------------------------------
MANAGEMENT FEES 0.95%
-----------------------------------------------------
DISTRIBUTION (12B-1) FEES None
-----------------------------------------------------
OTHER EXPENSES 0.13%
-----------------------------------------------------
TOTAL ANNUAL FUND OPERATING 1.08%
EXPENSES
-----------------------------------------------------
EXAMPLE. This example is intended to help you compare the cost of investing in
Institutional Shares of the Fund with that of investing in other mutual funds.
The example assumes you invest $10,000 for the time periods indicated and then
redeem all of your shares at the end of those periods. This example also
assumes that you earn a 5% return each year, and that operating expenses remain
constant.
-----------------------------------------------------
TIME PERIOD INTERNATIONAL FUND
(INSTITUTIONAL
SHARES)
-----------------------------------------------------
1 YEAR $ 110
-----------------------------------------------------
3 YEARS $ 343
-----------------------------------------------------
5 YEARS $ 595
-----------------------------------------------------
10 YEARS $1,317
-----------------------------------------------------
This example is for illustration only. It is not meant to suggest actual or
expected costs or returns, which may be more or less than the amounts shown.
WHO IS ELIGIBLE TO INVEST?
Institutional Shares are designed for institutional investors who are able to
meet the high minimum investment requirements, who want maximum long-term
capital growth rather than income, and who have the long-term investment outlook
needed for investing in the stocks of foreign companies.
TO REDUCE COSTS, INSTITUTIONAL SHARES ARE NOT AVAILABLE FOR SALE IN ALL STATES.
TO FIND OUT IF INSTITUTIONAL SHARES ARE AVAILABLE OR CAN BE MADE AVAILABLE IN
YOUR STATE, OR TO OBTAIN AN APPLICATION, CALL 1-800-399-1770. SEE "HOW TO BUY
SHARES."
6
THE FUND'S FINANCIAL HIGHLIGHTS
The following table is intended to help you understand the Fund's financial
performance since it began operations as it relates to Institutional Shares.
Certain information reflects financial results for a single Institutional Share.
Total return represents the rate you would have earned (or lost) on an
investment, assuming reinvestment of all dividends and distributions. This
information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the Fund's financial statements, is
included in the annual report and the Statement of Additional Information, which
are available on request.
For a share outstanding throughout the YEAR
period ENDED YEAR ENDED YEAR ENDED
6/30/00 6/30/99 6/30/98
-------- ---------- ----------
Net asset value, beginning of period.... $18.70 $16.26 $14.48
Income from investment operations:
Net investment income................. 0.03<F1> 0.11<F1> 0.09<F1>
Net realized and unrealized gain on
investments......................... 12.09 2.62 3.04
------ ------- -------
TOTAL FROM INVESTMENT OPERATIONS...... 12.12 2.73 3.13
====== ======= =======
Distributions paid to shareholders:
Net investment income................. (0.06) (0.05) (0.22)
Net realized gains.................... (0.54) (0.24) (1.13)
------ ------- -------
Total distributions..................... (0.60) (0.29) (1.35)
------ ------- -------
NET ASSET VALUE, END OF PERIOD.......... $30.22 $18.70 $16.26
====== ======= =======
Total return............................ 66.0% 17.6% 24.4%
Ratios/supplemental data:
Net assets, end of period (millions)..$1,136.2<F2> $179.6<F2> $82.6<F2>
Ratio of expenses to average net
assets............................. 1.08% 1.17% 1.25%
Ratio of net investment income to
average net assets................. 0.09% 0.68% 0.68%
Portfolio turnover rate............... 99.02% 79.41% 109.42%
<F1> Computed based on average shares outstanding.
<F2> Does not include assets represented by Investor Shares, which are offered
to retail investors by a separate prospectus.
7
ORGANIZATION, MANAGEMENT & MANAGEMENT FEE
ORGANIZATION. The Fund is a series of Artisan Funds, Inc. The Fund offers two
classes of shares - Investor Shares and Institutional Shares. This prospectus
describes Institutional Shares. Investor Shares are offered to retail investors
through a separate prospectus.
MANAGEMENT. The Fund is managed by Artisan Partners Limited Partnership (Artisan
Partners), which selects the Fund's investments and handles its business affairs
under the direction of the board of directors. Artisan Partners was organized in
1994 and, as of September 30, 2000, managed approximately $10.6 billion for
Artisan Funds and institutional clients. Artisan Partners is a limited
partnership managed by its general partner, Artisan Investment Corporation. The
address is: Artisan Partners, 1000 North Water Street, Suite 1770, Milwaukee,
Wisconsin 53202-3197.
MARK L. YOCKEY, CFA, Portfolio Manager, is a Managing Director of Artisan
Partners and a Vice President of Artisan Funds. He joined Artisan Partners in
1995. From 1990 to 1995, Mr. Yockey was Portfolio Manager of United
International Growth Fund and a Vice President of Waddell & Reed, Inc.
Mr. Yockey holds BA and MBA degrees from Michigan State University and holds the
Chartered Financial Analyst designation.
MANAGEMENT FEE. The Fund pays a management fee to Artisan Partners for serving
as its investment adviser and providing administrative services. The fee is
determined as a percentage of average daily net assets. The Fund also pays
expenses related to its daily operations. Expenses paid out of the Fund's
assets are reflected in its share price or dividends. For the fiscal year ended
June 30, 2000, the management fee paid by the Fund was at the annual rate of
0.95%.
8
INVESTING WITH THE FUND
THE FUND IS 100% NO-LOAD, which means you pay no sales charges. You also pay no
12b-1 fees. However, you bear your share of annual fund operating expenses
(including the investment management fee) which are deducted from Fund assets.
-------------------------------------------------------------------------------
MINIMUM INVESTMENTS
To open an account........$5,000,000
To add to an account........$100,000
Minimum balance required..$5,000,000
Each account must separately meet the minimum investment requirements applicable
to Institutional Shares. The Fund reserves the right to close your account if
the value is less than $5 million, unless the reduction in value is due solely
to market depreciation. Before closing an account below this level, the Fund
will notify you and allow you at least 30 days to bring the value of the account
up to the minimum.
HOW TO BUY SHARES
APPLICATIONS FOR INSTITUTIONAL SHARES ARE ONLY MADE AVAILABLE THROUGH ARTISAN
DISTRIBUTORS LLC BY CALLING 1-800-399-1770. Institutional Shares may be
purchased by check or wire. There are no sales commissions or underwriting
discounts.
-------------------------------------------------------------------------------
BY WIRE
You may purchase shares by instructing your bank to wire money to Artisan Funds'
custodian bank. Your bank may charge you a fee for sending the wire. IF YOU ARE
OPENING A NEW ACCOUNT BY WIRE TRANSFER, YOU MUST FIRST TELEPHONE ARTISAN
DISTRIBUTORS LLC AT 1-800-399-1770 TO REQUEST AN ACCOUNT NUMBER AND FURNISH YOUR
TAX IDENTIFICATION NUMBER. Artisan Funds will not be responsible for the
consequences of delays, including delays in the banking or Federal Reserve wire
systems.
Wire transfer instructions are:
State Street Bank and Trust Company
Attn: Mutual Funds
Boston, MA 02110
Routing #011000028
Credit to Artisan International Institutional Fund 662
Deposit DDA 99050882
9
--------------------------------------------------------------------------------
BY CHECK
To make an initial purchase of shares by check, complete and sign the Share
Purchase Application and send it to one of the following addresses with a check
for the total purchase amount payable to "Artisan Funds":
REGULAR MAIL OVERNIGHT DELIVERY
------------ ------------------
Artisan Funds Artisan Funds
c/o Boston Financial Data c/o Boston Financial Data Services
Services 66 Brooks Drive
P.O. Box 8412 Braintree, MA 02184
Boston, MA 02266-8412
All investment checks must be delivered to one of the above addresses. Neither
Artisan Funds nor Artisan Distributors LLC accepts shareholder investment checks
at their corporate offices.
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SUBSEQUENT INVESTMENTS
You may make subsequent investments by wire transfer using the instructions
given above, or by submitting a check, along with either the stub from your Fund
account confirmation statement or a note indicating the amount of the purchase,
your account number, and the name in which your account is registered. ARTISAN
FUNDS WILL NOT ACCEPT CASH, DRAFTS, THIRD PARTY CHECKS, STARTER CHECKS OR CHECKS
DRAWN ON BANKS OUTSIDE OF THE UNITED STATES. If your order to purchase
Institutional Shares is canceled because your check does not clear, you will be
responsible for any resulting loss incurred by the Fund.
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PURCHASE PRICE & EFFECTIVE DATE
Each purchase of Institutional Shares is made at the net asset value applicable
to Institutional Shares (see "Share Price") next determined after receipt by the
Fund of the check or wire transfer of funds in payment of the purchase.
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GENERAL
Artisan Funds cannot accept a purchase order specifying a particular purchase
date or price per share. Each purchase order must be accepted by an authorized
officer of Artisan Funds or its transfer agent and is not binding until accepted
and entered on the books of the Fund. Once your purchase order has been
accepted, you may not cancel or revoke it; however, you may redeem the shares.
Artisan Funds reserves the right not to accept any purchase order that it
determines not to be in the best interest of the Fund or the Fund's
shareholders.
10
HOW TO SELL SHARES
You may redeem all or any part of your Institutional Shares upon your written
request delivered to Artisan Funds' transfer agent at one of the following
addresses:
REGULAR MAIL OVERNIGHT DELIVERY
------------ -------------------
Artisan Funds Artisan Funds
c/o Boston Financial Data c/o Boston Financial Data Services
Services 66 Brooks Drive
P.O. Box 8412 Braintree, MA 02184
Boston, MA 02266-8412
Your redemption request must:
- identify the Fund and give your account number;
- specify the number of shares or dollar amount to be redeemed;
- be accompanied by a corporate resolution or other authorization in the case
of a redemption by a corporation, trust, partnership or other entity, as
described below; and
- be signed by the shareholder in ink or by a duly authorized agent of the
shareholder.
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EVIDENCE OF AUTHORITY
Redemption requests by a corporation, trust, partnership or other entity must be
accompanied by evidence of authority of the person or persons signing the
redemption request to so act.
In the case of a corporation, the request must be signed in the name of the
corporation by an officer whose title must be stated, and must be accompanied by
a by-law provision or resolution of the board of directors, certified within 60
days, authorizing the officer to so act. A redemption request from a partnership
or a trust must be signed in the name of the partnership or trust by a general
partner or a trustee and include a signature guarantee. If the trustee is not
named in the account registration, a redemption request by a trust must also
include evidence of the trustee's appointment, such as a certified copy of the
relevant portions of the trust instrument. Under certain circumstances, before
the shares can be redeemed, additional documents may be required in order to
verify the authority of the person seeking to redeem.
11
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GENERAL REDEMPTION POLICIES
You may not cancel or revoke your redemption order once your instructions have
been received and accepted. Artisan Funds cannot accept a redemption request
that specifies a particular date or price for redemption or any special
conditions. PLEASE CALL 1-800-399-1770 IF YOU HAVE ANY QUESTIONS ABOUT
REQUIREMENTS FOR A REDEMPTION BEFORE SUBMITTING YOUR REQUEST. Artisan Funds
reserves the right to require a properly completed Application before making
payment for shares redeemed.
The Fund intends to pay all redemptions in cash. During any 90-day period for
any one shareholder, a Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the Fund's net assets. The Fund has the ability
to pay redemptions in excess of these limits wholly or partly by an in-kind
distribution of securities, although the Fund does not currently expect to do
so.
The price at which your redemption order will be executed is the net asset value
next determined after proper redemption instructions are received. See "Share
Price." Because the redemption price you receive depends upon the net asset
value per share of Institutional Shares at the time of redemption, it may be
more or less than the price you originally paid for the shares and may result in
a realized capital gain or loss.
Artisan Funds will generally wire transfer the proceeds of your redemption to
the bank account designated in your purchase application. If you attempt to
redeem shares within 15 days after they have been purchased by check, Artisan
Funds may delay payment of the redemption proceeds to you until it can verify
that payment for the purchase of those shares has been (or will be) collected.
To reduce such delays, Artisan Funds recommends that your purchase be made by
Federal funds wire through your bank.
Shares in any account you maintain with Artisan Funds may be redeemed to the
extent necessary to reimburse Artisan Funds for any loss it sustains that is
caused by you (such as losses from uncollected checks or any Fund liability
under the Internal Revenue Code provisions on backup withholding relating to
your account).
12
SHAREHOLDER & ACCOUNT POLICIES
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STATEMENTS & REPORTS
As a Fund investor, you will receive:
- confirmation statements - after every transaction in your account or change
in your account registration;
- quarterly account statements;
- annual and semi-annual reports with financial statements;
- year-end tax statements.
We suggest you keep each quarterly and year-end account statement with your
other important financial papers. You may need them for tax purposes.
If you need copies of statements, call 1-800-399-1770. Copies of this year's or
last year's statements are free of charge; for earlier years, there is a $10
processing fee.
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SHARE PRICE
The Fund is open for business every day the New York Stock Exchange ("NYSE") is
open. Institutional Shares will not be priced on days when the NYSE is closed.
The Fund buys and sells Institutional Shares each day at the net asset value per
Institutional Share.
The NET ASSET VALUE PER INSTITUTIONAL SHARE is the value of a single
Institutional Share. It is computed by totaling the Institutional Shares' pro
rata share of the value of the Fund's investments, cash and other assets,
subtracting the Institutional Shares' pro rata share of the value of the Fund's
liabilities and the liabilities specifically allocated to Institutional Shares,
then dividing the result by the number of Institutional Shares outstanding. The
net asset value is computed daily at the NYSE closing time _ usually 3:00 p.m.
central time, but sometimes earlier.
Fund securities and assets are valued chiefly by quotations from the primary
market in which they are traded. If quotations are not readily available, they
are valued by a method that the board of directors believes reflects a fair
value.
Values of foreign securities are translated from local currencies into U.S.
dollars using current exchange rates. With respect to foreign securities traded
primarily on foreign exchanges, the price of Institutional Shares may change on
days when the Fund is not open for purchase or sale.
13
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DIVIDENDS, CAPITAL GAINS & TAXES
AS A SHAREHOLDER IN THE FUND, YOU ARE ENTITLED TO YOUR SHARE OF ITS NET INCOME
AND ANY GAINS REALIZED ON ITS INVESTMENTS. The Fund intends to distribute
substantially all of its net income and net realized capital gains to investors
at least annually.
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DISTRIBUTION OPTIONS
When you open an account, specify on your Application how you want to receive
your distributions. If you want to change your distribution option at a later
date, you may either submit a written request or call us at 1-800-399-1770.
The Fund offers three options:
- REINVESTMENT OPTION. Your dividends and capital gain distributions will
be reinvested in additional shares of the Fund. If you do not indicate a
choice on your Application, we will automatically reinvest your
distributions.
- INCOME-ONLY OPTION. We will automatically reinvest your capital gain
distributions but send you a check for dividends.
- CASH OPTION. We will send you a check for all distributions.
When you reinvest, the reinvestment price is the net asset value per
Institutional Share at the close of business on the reinvestment date. The
mailing of distribution checks will usually begin on the payment date.
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TAXES
As you should with any investment, consider how the return on your investment in
the Fund will be taxed. If your investment is in a tax-deferred account - an
employee benefit plan account, for example - the following tax discussion does
not apply.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and may
be subject to state or local taxes. If you are a U.S. citizen residing outside
the United States, your distributions may also be taxed by the country in which
you reside.
Your distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares. However, distributions declared in
October, November or December and paid in January are taxable as if you received
them on December 31.
For federal tax purposes, the Fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions are
taxed as long-term capital gains. The character of a capital gain depends on the
length of time that the Fund held the asset it sold.
14
Given its objective and strategy, the Fund will chiefly produce capital gains
distributions, as opposed to current income. Every January, the Fund will send
you and the IRS a statement - called Form 1099 - showing the total amount of
taxable distributions you received in the previous calendar year.
TAXES ON TRANSACTIONS. When you redeem shares, you will experience a capital
gain or loss if there is a difference between the cost of your shares and the
price you receive when you sell them. You may be subject to tax.
Whenever you sell shares of the Fund, you will receive a confirmation statement
showing how many shares you sold and at what price. You also will receive a
year-end statement every January that reports, among other things, your average
cost basis of the shares you sold. This will allow you or your tax preparer to
determine the tax consequences of each redemption. However, be sure to keep your
regular account statements; their information will be essential in verifying the
amount of your capital gains or losses.
To invest, you must be a U.S. resident with a Social Security or taxpayer
identification number. When you sign your account Application, you must certify
that your Social Security or taxpayer identification number is correct and that
you are not subject to backup withholding for failing to report income to the
IRS. If you fail to comply with this procedure, the IRS can require the Fund to
withhold 31% of your taxable distributions and redemptions.
15
For more detail on the Fund, you may request the Statement of Additional
Information, which is incorporated herein by reference.
You can find more information about the Fund's investments in its annual and
semi-annual reports to shareholders. Those documents discuss the market
conditions and investment strategies that significantly affected the Fund's
performance in its most recent fiscal period.
For a free copy of any of these documents, call 1-800-399-1770. Also call this
number if you have a question or would like to receive other information about
the Fund.
Text-only versions of the Fund's documents can be viewed online or downloaded
from the EDGAR Database on the SEC's Internet web site at www.sec.gov. You may
also review and copy those documents by visiting the SEC's Public Reference Room
in Washington, D.C. Information on the operation of the Public Reference Room
may be obtained by calling the SEC at 202-942-8090. In addition, copies may be
obtained, after mailing the appropriate duplicating fee, by writing to the SEC's
Public Reference Section, 450 5th Street, N.W., Washington, D.C. 20549-0102 or
by e-mail request at [email protected].
811-8932
(ARTISAN LOGO) ARTISAN FUNDS
INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.
<PAGE>
ARTISAN FUNDS, INC.
ARTISAN SMALL CAP FUND
ARTISAN INTERNATIONAL FUND
ARTISAN MID CAP FUND
ARTISAN SMALL CAP VALUE FUND
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
(414) 390-6100 (800) 344-1770
STATEMENT OF ADDITIONAL INFORMATION
October 31, 2000
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Artisan Small Cap Fund, Artisan International Fund, Artisan Mid Cap Fund
and Artisan Small Cap Value Fund (each, a "Fund," together, the "Funds") are
series of Artisan Funds, Inc. ("Artisan Funds"). This Statement of Additional
Information is not a prospectus. It should be read in conjunction with the
prospectus of the Funds dated October 31, 2000 and any supplement to the
prospectus. A copy of the prospectus can be obtained without charge by calling
(800) 344-1770, by writing to Artisan Funds, or by accessing the Artisan Funds
website at www.artisanfunds.com.
---------------------
TABLE OF CONTENTS
Page
----
Information about the Funds and Artisan Partners..............B-2
Investment Objective and Policies.............................B-2
Investment Techniques and Risks...............................B-3
Investment Restrictions......................................B-17
Performance Information......................................B-19
Organization.................................................B-24
Directors and Officers.......................................B-25
Principal Shareholders.......................................B-28
Investment Advisory Services.................................B-30
Code of Ethics...............................................B-31
Distributor..................................................B-31
Portfolio Transactions.......................................B-32
Purchasing and Redeeming Shares..............................B-33
Additional Tax Information...................................B-34
Custodian and Transfer Agent.................................B-36
Independent Accountants......................................B-36
Financial Statements.........................................B-36
Appendix - Description of Bond Ratings...................Appendix
<PAGE>
INFORMATION ABOUT THE FUNDS AND ARTISAN PARTNERS
Each Fund is a series of Artisan Funds, Inc. ("Artisan Funds"). Artisan
Partners Limited Partnership ("Artisan Partners") provides investment advisory
services to the Funds.
Artisan Funds strives to offer distinctive, high-value-added investment
opportunities. Artisan Funds is not a "family" of indistinguishable products
devised by marketers in a financial services conglomerate. Rather, Artisan
Partners is a small partnership of investment professionals, focused on a
limited number of distinct investment strategies, each of which is offered as a
series of Artisan Funds. The portfolio manager of each Fund is a specialist in
his or her market, with an investment process created and refined through years
of experience - an artisan. At Artisan Funds, we believe that experienced,
active managers investing in inefficient markets can produce superior returns
over time. The Artisan Funds are intended for long-term investors who share
that belief.
The discussion below supplements the description in the prospectus of each
Fund's investment objectives, policies and restrictions.
INVESTMENT OBJECTIVE AND POLICIES
Artisan Small Cap Fund invests for maximum long-term capital growth
primarily in the common stocks of small companies whose outstanding shares have
an aggregate market value of less than $1.5 billion.
Artisan International Fund seeks to achieve its objective of long-term
capital growth by investing primarily in the stocks of foreign companies.
Artisan Mid Cap Fund seeks long-term capital growth by investing at least
65% of its total assets in the common stocks of medium-sized U.S. companies.
Medium-sized companies are those whose market capitalizations fall within the
range of companies in the S&P MidCap 400 Index (the "MidCap Index").
Artisan International Fund and Artisan Mid Cap Fund offer two classes of
shares: Investor Shares and Institutional Shares. As described more fully in
each Institutional Shares prospectus, Institutional Shares are offered to
certain institutional investors with a minimum initial investment of $5 million.
Artisan Small Cap Value Fund seeks long-term capital growth by investing
primarily in common stocks that appear undervalued relative to earnings, book
value, cash flows or potential earnings growth, and that are issued by small
companies whose outstanding shares have an aggregate market value of less than
$1.5 billion.
The Funds invest primarily in equity securities, including common and
preferred stocks, warrants or other similar rights, and convertible securities.
While Artisan International Fund invests mostly in the securities of foreign
issuers, each other Artisan Fund may from time to time have significant portions
of its portfolio invested in foreign securities. The Funds also may invest in
any other type of security, including debt securities.
B-2
The investment objective of each Fund may be changed by the board of
directors without the approval of a "majority of the outstanding voting
securities" (as defined in the Investment Company Act of 1940) of the Fund.
However, investors in a Fund will receive at least 30 days' prior written notice
of any change in a Fund's investment objective.
INVESTMENT TECHNIQUES AND RISKS
Foreign Securities
Each Fund, other than Artisan International Fund, may invest up to 25% of
its total assets in foreign securities (including American Depository Receipts
("ADRs") European Depositary Receipts ("EDRs"), Global Depositary Receipts
("GDRs"), or other securities representing underlying shares of foreign
issuers), which may entail a greater degree of risk (including risks relating to
exchange rate fluctuations, tax provisions, or expropriation of assets) than
does investment in securities of domestic issuers. Under normal market
conditions, Artisan International Fund invests at least 65% of its total assets
in foreign securities. ADRs are receipts typically issued by an American bank
or trust company evidencing ownership of the underlying securities. EDRs are
European receipts evidencing a similar arrangement. GDRs are receipts that may
trade in U.S. or non-U.S. markets. The Funds may invest in sponsored or
unsponsored ADRs, EDRs or GDRs. In the case of an unsponsored depositary
receipt, a Fund is likely to bear its proportionate share of the expenses of the
depository and it may have greater difficulty in receiving shareholder
communications than it would have with a sponsored depositary receipt. No Fund
intends to invest more than 5% of its net assets in unsponsored depositary
receipts.
With respect to portfolio securities that are issued by foreign issuers or
denominated in foreign currencies, a Fund's investment performance is affected
by the strength or weakness of the U.S. dollar against these currencies. For
example, if the dollar falls in value relative to the Japanese yen, the dollar
value of a yen-denominated stock held in the portfolio will rise even though the
price of the stock remains unchanged. Conversely, if the dollar rises in value
relative to the yen, the dollar value of the yen-denominated stock will fall.
(See discussion of transaction hedging and portfolio hedging under "Managing
Investment Exposure.")
Investors should understand and consider carefully the risks involved in
foreign investing. Investing in foreign securities, positions in which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts involve certain considerations comprising both risks
and opportunities not typically associated with investing in U.S. securities.
These considerations include: fluctuations in exchange rates of foreign
currencies; possible imposition of exchange control regulation or currency
restrictions that would prevent cash from being brought back to the United
States; less public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers, and issuers of
securities; lack of uniform accounting, auditing, and financial reporting
standards; lack of uniform settlement periods and trading practices; less
liquidity and frequently greater price volatility in foreign markets than in the
United States; possible imposition of foreign taxes; possible investment in
securities of companies in developing as well as developed countries; and
sometimes less advantageous legal, operational, and financial protections
applicable to foreign sub-custodial arrangements.
B-3
Although the Funds will try to invest in companies and governments of
countries having stable political environments, there is the possibility of
expropriation or confiscatory taxation, seizure or nationalization of foreign
bank deposits or other assets, establishment of exchange controls, the adoption
of foreign government restrictions, or other adverse political, social or
diplomatic developments that could affect investment in these nations.
European Currency Unification
Eleven of the fifteen member countries of the European Union adopted a
single European currency, the Euro, effective January 1, 1999. The countries
participating in the Economic and Monetary Union (EMU) are Austria, Belgium,
Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal
and Spain. The notable countries missing from the new unified currency are
Great Britain, Denmark, Sweden and Greece. A new European Central Bank (ECB)
was created to manage the monetary policy of the new unified region. On the
same day, the exchange rates were irrevocably fixed between the EMU member
countries. National currencies will continue to circulate until they are
replaced by Euro coins and bank notes by the middle of 2002. This change is
likely to significantly impact the European capital markets in which the Artisan
International Fund invests a portion of its assets. As the ECB and European
market participants search for a common understanding of policy targets and
instruments, interest rates and exchange rates could become more volatile and
may increase the Fund's share price volatility.
Debt Securities
In pursuing its investment objective, a Fund may invest in debt securities
of corporate and governmental issuers. The risks inherent in debt securities
depend primarily on the term and quality of the obligations in the Fund's
portfolio as well as on market conditions. A decline in the prevailing levels
of interest rates generally increases the value of debt securities, while an
increase in rates usually reduces the value of those securities.
Investments in debt securities by the Funds may be in those that are within
the four highest ratings categories of Standard & Poor's Corporation ("S&P") or
Moody's Investors Services, Inc. ("Moody's") (generally referred to as
"investment grade") or, if unrated, deemed to be of comparable quality by
Artisan Partners. Each Fund may invest up to 35% of its net assets in debt
securities that are rated below investment grade (i.e. securities rated BBB or
lower by S&P or Ba or lower by Moody's, commonly called "junk bonds"). However,
no Fund currently intends to invest more than 5% of its net assets in debt
securities rated below investment grade.
Debt securities in the fourth highest grade may possess speculative
characteristics, and changes in economic conditions are more likely to affect
the issuer's capacity to pay interest and repay principal. If the rating of a
security held by a Fund is lost or reduced below investment grade, the Fund is
not required to dispose of the security, but Artisan Partners will consider that
fact in determining whether the Fund should continue to hold the security.
Securities that are rated below investment grade are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to
B-4
the terms of the obligation and therefore carry greater investment risk,
including the possibility of issuer default and bankruptcy.
Defensive Investments
Each Fund intends to be substantially fully invested in equity securities
in ordinary circumstances, although a Fund may invest without limit in corporate
or government obligations (U.S. or non-U.S., in the case of Artisan
International Fund) or hold cash or cash equivalents if Artisan Partners
determines that a temporary defensive position is advisable. During those
periods, a Fund's assets may not be invested in accordance with its strategy and
the Fund may not achieve its investment objective.
Convertible Securities
Convertible securities include any corporate debt security or preferred
stock that may be converted into underlying shares of common stock. The common
stock underlying convertible securities may be issued by a different entity than
the issuer of the convertible securities. Convertible securities entitle the
holder to receive interest payments paid on corporate debt securities or the
dividend preference on a preferred stock until such time as the convertible
security matures or is redeemed or until the holder elects to exercise the
conversion privilege.
The value of convertible securities is influenced by both the yield of non-
convertible securities of comparable issuers and by the value of a convertible
security viewed without regard to its conversion feature (i.e., strictly on the
basis of its yield). The estimated price at which a convertible security would
be valued by the marketplace if it had no conversion feature is sometimes
referred to as its "investment value." The investment value of the convertible
security will typically fluctuate inversely with changes in prevailing interest
rates. However, at the same time, the convertible security will be influenced
by its "conversion value," which is the market value of the underlying common
stock that would be obtained if the convertible security were converted.
Conversion value fluctuates directly with the price of the underlying common
stock.
By investing in convertible securities, a Fund obtains the right to benefit
from the capital appreciation potential in the underlying stock upon exercise of
the conversion right, while earning higher current income than would be
available if the stock were purchased directly. In determining whether to
purchase a convertible security, Artisan Partners will consider the same
criteria that would be considered in purchasing the underlying stock. Although
convertible securities purchased by a Fund are frequently rated investment
grade, the Fund also may purchase unrated securities or securities rated below
investment grade if the securities meet Artisan Partners' other investment
criteria. Convertible securities rated below investment grade (a) tend to be
more sensitive to interest rate and economic changes, (b) may be obligations of
issuers which are less creditworthy than issuers of higher quality convertible
securities, and (c) may be more thinly traded due to such securities being less
well known to investors than either common stock or conventional debt
securities. As a result, Artisan Partners' own investment research and analysis
tends to be more important in the purchase of such securities than other
factors.
B-5
Managing Investment Exposure
The Funds may use various techniques to increase or decrease their exposure
to the effects of possible changes in security prices, currency exchange rates
or other factors that affect the value of their portfolios. These techniques
include buying and selling options, futures contracts, or options on futures
contracts, or entering into currency exchange contracts.
These techniques are used by Artisan Partners to adjust the risk and return
characteristics of a Fund's portfolio. If Artisan Partners judges market
conditions incorrectly or employs a strategy that does not correlate well with a
particular Fund's investments, or if the counterparty to the transaction does
not perform as promised, the transaction could result in a loss. Use of these
techniques may increase the volatility of that Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. These
techniques are used by the Funds for hedging, risk management or portfolio
management purposes and not for speculation.
Currency Exchange Transactions. Currency exchange transactions may be
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through forward
currency exchange contracts ("forward contracts"). Forward contracts are
contractual agreements to purchase or sell a specified currency at a specified
future date (or within a specified time period) and at a price set at the time
of the contract. Forward contracts are usually entered into with banks and
broker-dealers, are not exchange traded, and are usually for less than one year,
but may be renewed.
Forward currency transactions may involve currencies of the different
countries in which a Fund may invest, and serve as hedges against possible
variations in the exchange rate between these currencies. Currency transactions
are limited to transaction hedging and portfolio hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of forward contracts with respect to specific receivables or
payables of a Fund accruing in connection with the purchase and sale of its
portfolio securities or income receivables. Portfolio hedging is the use of
forward contracts with respect to portfolio security positions denominated or
quoted in a particular currency. Portfolio hedging allows a Fund to limit or
reduce exposure in a foreign currency by entering into a forward contract to
sell or buy such foreign currency (or another foreign currency that acts as a
proxy for that currency) so that the U.S. dollar value of certain underlying
foreign portfolio securities can be approximately matched by an equivalent U.S.
dollar liability. A Fund may not engage in portfolio hedging with respect to
the currency of a particular country to an extent greater than the aggregate
market value (at the time of making such sale) of the securities held in its
portfolio denominated or quoted in that particular currency, except that the
Fund may hedge all or part of its foreign currency exposure through the use of a
basket of currencies or a proxy currency where such currencies or currency act
as an effective proxy for other currencies. In such a case, the Fund may enter
into a forward contract where the amount of the foreign currency to be sold
exceeds the value of the securities denominated in such currency. The use of
this basket hedging technique may be more efficient and economical than entering
into separate forward contracts for each currency held in the portfolio of a
particular Fund. The Funds may not engage in "speculative" currency exchange
transactions.
B-6
At the maturity of a forward contract to deliver a particular currency, a
Fund may either sell the portfolio security related to such contract and make
delivery of the currency, or it may retain the security and either acquire the
currency on the spot market or terminate its contractual obligation to deliver
the currency by purchasing an offsetting contract with the same currency trader
obligating it to purchase on the same maturity date the same amount of the
currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of a forward contract. Accordingly, it
may be necessary for a Fund to purchase additional currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of currency the Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the currency.
Conversely, it may be necessary to sell on the spot market some of the currency
received upon the sale of the portfolio security if its market value exceeds the
amount of currency the Fund is obligated to deliver.
If a Fund retains the portfolio security and engages in an offsetting
transaction, the Fund will incur a gain or a loss to the extent that there has
been movement in forward contract prices. If the Fund engages in an offsetting
transaction, it may subsequently enter into a new forward contract to sell the
currency. Should forward prices decline during the period between the Fund's
entering into a forward contract for the sale of a currency and the date it
enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for a Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to the Fund of
engaging in currency exchange transactions varies with such factors as the
currency involved, the length of the contract period, and prevailing market
conditions. Because currency exchange transactions are usually conducted on a
principal basis, no fees or commissions are involved.
Options on Securities and Indexes. The Funds may purchase and write (sell)
put options and call options on securities, indexes or foreign currencies in
standardized contracts traded on recognized securities exchanges, boards of
trade, or similar entities, or quoted on the Nasdaq stock market. The Funds may
purchase agreements, sometimes called cash puts, that may accompany the purchase
of a new issue of bonds from a dealer.
An option on a security (or index) is a contract that gives the purchaser
(holder) of the option, in return for a premium, the right to buy from (call) or
sell to (put) the seller (writer) of the option the security underlying the
option (or the cash value of the index) at a specified exercise price at any
time during the term of the option (normally not exceeding nine months). The
writer of an option on an individual security or on a foreign currency has the
obligation upon
B-7
exercise of the option to deliver the underlying security or foreign
currency upon payment of the exercise price or to pay the exercise price upon
delivery of the underlying security or foreign currency. Upon exercise, the
writer of an option on an index is obligated to pay the difference between the
cash value of the index and the exercise price multiplied by the specified
multiplier for the index option. (An index is designed to reflect specified
facets of a particular financial or securities market, a specific group of
financial instruments or securities, or certain economic indicators.)
The Fund will write call options and put options only if they are
"covered." For example, in the case of a call option on a security, the option
is "covered" if a Fund owns the security underlying the call or has an absolute
and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, cash or cash
equivalents in such amount are held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio.
If an option written by a Fund expires, the Fund realizes a capital gain
equal to the premium received at the time the option was written. If an option
purchased by a Fund expires, the Fund realizes a capital loss equal to the
premium paid.
Prior to the earlier of exercise or expiration, an option may be closed out
by an offsetting purchase or sale of an option of the same series (type,
exchange, underlying security or index, exercise price, and expiration). There
can be no assurance, however, that a closing purchase or sale transaction can be
effected when a Fund desires.
A Fund will realize a capital gain from a closing purchase transaction if
the cost of the closing option is less than the premium received from writing
the option, or, if it is more, the Fund will realize a capital loss. If the
premium received from a closing sale transaction is more than the premium paid
to purchase the option, the Fund will realize a capital gain or, if it is less,
the Fund will realize a capital loss. The principal factors affecting the
market value of a put or a call option include supply and demand, interest
rates, the current market price of the underlying security or index in relation
to the exercise price of the option, the volatility of the underlying security
or index, and the time remaining until the expiration date.
A put or call option purchased by a Fund is an asset of the Fund, valued
initially at the premium paid for the option. The premium received for an
option written by the Fund is recorded as a deferred credit. The value of an
option purchased or written is marked-to-market daily and is valued at the
closing price on the exchange on which it is traded or, if not traded on an
exchange or no closing price is available, at the mean between the last bid and
asked prices.
Risks Associated with Options on Securities and Indexes. There are several
risks associated with transactions in options. For example, there are
significant differences between the securities markets, the currency markets,
and the options markets that could result in an imperfect correlation between
these markets, causing a given transaction not to achieve its objectives. A
decision as to whether, when and how to use options involves the exercise of
skill and judgment, and even a well-conceived transaction may be unsuccessful to
some degree because of market behavior or unexpected events.
B-8
There can be no assurance that a liquid market will exist when a Fund seeks
to close out an option position. If a Fund were unable to close out an option
that it had purchased on a security, it would have to exercise the option in
order to realize any profit or the option would expire and become worthless. If
a Fund were unable to close out a covered call option that it had written on a
security, it would not be able to sell the underlying security until the option
expired. As the writer of a covered call option on a security, a Fund foregoes,
during the option's life, the opportunity to profit from increases in the market
value of the security covering the call option above the sum of the premium and
the exercise price of the call.
If trading were suspended in an option purchased or written by a Fund, the
Fund would not be able to close out the option. If restrictions on exercise
were imposed, the Fund might be unable to exercise an option it has purchased.
Futures Contracts and Options on Futures Contracts. The Funds may use
interest rate futures contracts, index futures contracts, and foreign currency
futures contracts. An interest rate, index or foreign currency futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a financial instrument or the cash value of an index<F1>
at a specified price and time. A public market exists in futures contracts
covering a number of indexes (including, but not limited to: the Standard &
Poor's 500 Index, the Value Line Composite Index, the Russell 2000 Index and the
New York Stock Exchange Composite Index) as well as financial instruments
(including, but not limited to: U.S. Treasury bonds, U.S. Treasury notes,
Eurodollar certificates of deposit, and foreign currencies). Other index and
financial instrument futures contracts are available and it is expected that
additional futures contracts will be developed and traded.
The Funds may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities,
indexes and foreign currencies (discussed above). A futures option gives the
holder the right, in return for the premium paid, to assume a long position
(call) or short position (put) in a futures contract at a specified exercise
price at any time during the period of the option. Upon exercise of a call
option, the holder acquires a long position in the futures contract and the
writer is assigned the opposite short position. In the case of a put option,
the opposite is true. A Fund might, for example, use futures contracts to hedge
against or gain exposure to fluctuations in the general level of stock prices,
anticipated changes in interest rates or currency fluctuations that might
adversely affect either the value of the Fund's securities or the price of the
securities that the Fund intends to purchase. Although other techniques could
be used to reduce or increase the Fund's exposure to stock price, interest rate
and currency fluctuations, the Fund may be able to achieve its exposure more
effectively and perhaps at a lower cost by using futures contracts and futures
options.
The Funds will only enter into futures contracts and futures options that
are standardized and traded on an exchange, board of trade, or similar entity,
or quoted on an automated quotation system.
----------------------------
<F1> A futures contract on an index is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading
day of the contract and the price at which the index contract was
originally written. Although the value of a securities index is a function
of the value of certain specified securities, no physical delivery of those
securities is made.
B-9
The success of any futures transaction depends on Artisan Partners
correctly predicting changes in the level and direction of stock prices,
interest rates, currency exchange rates and other factors. Should those
predictions be incorrect, a Fund's return might have been better had the
transaction not been attempted; however, in the absence of the ability to use
futures contracts, Artisan Partners might have taken portfolio actions in
anticipation of the same market movements with similar investment results but,
presumably, at greater transaction costs.
When a purchase or sale of a futures contract is made by a Fund, the Fund
is required to deposit with its custodian or broker a specified amount of cash
or U.S. Government securities or other securities acceptable to the broker
("initial margin"). The margin required for a futures contract is generally set
by the exchange on which the contract is traded, although the margin requirement
may be modified during the term of the contract and the Fund's broker may
require margin deposits in excess of the minimum required by the exchange. The
initial margin is in the nature of a performance bond or good faith deposit on
the futures contract, which is returned to the Fund upon termination of the
contract, assuming all contractual obligations have been satisfied. Each Fund
expects to earn interest income on its initial margin deposits. A futures
contract held by a Fund is valued daily at the official settlement price of the
exchange on which it is traded. Each day the Fund pays or receives cash, called
"variation margin," equal to the daily change in value of the futures contract.
This process is known as "marking-to-market." Variation margin paid or received
by a Fund does not represent a borrowing or loan by the Fund but is instead
settlement between the Fund and the broker of the amount one would owe the other
if the futures contract had expired at the close of the previous day. In
computing daily net asset value, each Fund will mark-to-market its open futures
positions.
Each Fund is also required to deposit and maintain margin with respect to
put and call options on futures contracts written by it. Such margin deposits
will vary depending on the nature of the underlying futures contract (and the
related initial margin requirements), the current market value of the option,
and other futures positions held by that Fund.
Although some futures contracts call for making or taking delivery of the
underlying securities, usually these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund engaging in the
transaction realizes a capital gain, or if it is more, the Fund realizes a
capital loss. Conversely, if an offsetting sale price is more than the original
purchase price, the Fund engaging in the transaction realizes a capital gain, or
if it is less, the Fund realizes a capital loss. The transaction costs must
also be included in these calculations.
Risks Associated with Futures. There are several risks associated with the
use of futures contracts and futures options. A purchase or sale of a futures
contract may result in losses in excess of the amount invested in the futures
contract. In trying to increase or reduce market exposure, there can be no
guarantee that there will be a correlation between price movements in the
futures contract and in the portfolio exposure sought. In addition, there are
significant differences between the securities and futures markets that could
result in an imperfect correlation between the markets, causing a given
transaction not to achieve its objectives. The degree of imperfection of
correlation depends on circumstances such as: variations in speculative market
demand for futures, futures options and the related securities, including
B-10
technical influences in futures and futures options trading and differences
between the securities market and the securities underlying the standard
contracts available for trading. For example, in the case of index futures
contracts, the composition of the index, including the issuers and the weighting
of each issue, may differ from the composition of a Fund's portfolio, and, in
the case of interest rate futures contracts, the interest rate levels,
maturities, and creditworthiness of the issues underlying the futures contract
may differ from the financial instruments held in a Fund's portfolio. A
decision as to whether, when and how to use futures contracts involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected stock price
or interest rate trends.
Futures exchanges may limit the amount of fluctuation permitted in certain
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses. Stock index futures contracts are not normally subject to
such daily price change limitations.
There can be no assurance that a liquid market will exist at a time when a
Fund seeks to close out a futures or futures option position. The Fund would be
exposed to possible loss on the position during the interval of inability to
close, and would continue to be required to meet margin requirements until the
position is closed. In addition, many of the contracts discussed above are
relatively new instruments without a significant trading history. As a result,
there can be no assurance that an active secondary market will develop or
continue to exist.
Limitations on Options and Futures. If other options, futures contracts,
or futures options of types other than those described herein are traded in the
future, a Fund also may use those investment vehicles, provided the board of
directors determines that their use is consistent with that Fund's investment
objective.
A Fund will not enter into a futures contract or purchase an option thereon
if, immediately thereafter, the initial margin deposits for futures contracts
held by the Fund plus premiums paid by it for open futures option positions,
less the amount by which any such positions are "in-the-money,"<F2> would
exceed 5% of the Fund's total assets.
When purchasing a futures contract or writing a put option on a futures
contract, a Fund must maintain with its custodian (or broker, if legally
permitted) assets (including any margin) equal to the market value of such
contract. When writing a call option on a futures contract, a
---------------------------
<F2> A call option is "in-the-money" if the value of the futures contract that
is the subject of the option exceeds the exercise price. A put option is
"in-the-money" if the exercise price exceeds the value of the futures
contract that is the subject of the option.
B-11
Fund similarly will maintain with its custodian assets (including any
margin) equal to the amount by which such option is in-the-money until the
option expires or is closed out by the Fund.
The Fund may not maintain open short positions in futures contracts, call
options written on futures contracts or call options written on indexes if, in
the aggregate, the market value of all such open positions exceeds the current
value of the securities in its portfolio, plus or minus unrealized gains and
losses on the open positions, adjusted for the historical relative volatility of
the relationship between the portfolio and the positions. For this purpose, to
the extent a Fund has written call options on specific securities in its
portfolio, the value of those securities will be deducted from the current
market value of the securities portfolio.
In order to comply with Commodity Futures Trading Commission Regulation 4.5
and thereby avoid being deemed a "commodity pool operator," each Fund will use
commodity futures or commodity options contracts solely for bona fide hedging
purposes within the meaning and intent of Regulation 1.3(z), or, with respect to
positions in commodity futures and commodity options contracts that do not come
within the meaning and intent of Regulation 1.3(z), the aggregate initial margin
and premiums required to establish such positions will not exceed 5% of the fair
market value of the assets of each Fund, after taking into account unrealized
profits and unrealized losses on any such contracts it has entered into (in the
case of an option that is in-the-money at the time of purchase, the in-the-money
amount (as defined in Section 190.01(x) of the Commission Regulations) may be
excluded in computing such 5%).
Taxation of Options and Futures. If a Fund exercises a call or put option
that it holds, the premium paid for the option is added to the cost basis of the
security purchased (call) or deducted from the proceeds of the security sold
(put). For cash settlement options and futures options exercised by a Fund, the
difference between the cash received at exercise and the premium paid is a
capital gain or loss.
If a call or put option written by a Fund is exercised, the premium is
included in the proceeds of the sale of the underlying security (call) or
reduces the cost basis of the security purchased (put). For cash settlement
options and futures options written by a Fund, the difference between the cash
paid at exercise and the premium received is a capital gain or loss.
Entry into a closing purchase transaction will result in capital gain or
loss. If an option written by a Fund is in-the-money at the time it was written
and the security covering the option was held for more than the long-term
holding period prior to the writing of the option, any loss realized as a result
of a closing purchase transaction will be long-term. The holding period of the
securities covering an in-the-money option will not include the period of time
the option is outstanding.
If a Fund writes an equity call option<F3> other than a "qualified covered
call option," as defined in the Internal Revenue Code, any loss on such option
transaction, to the extent it does
----------------------------------
<F3> An equity option is defined to mean any option to buy or sell stock, and
any other option the value of which is determined by reference to an index
of stocks of the type that is ineligible to be traded on a commodity
futures exchange (e.g., an option contract on a sub-index based on the
price of nine hotel-casino stocks). The definition of equity option
excludes options on broad-based stock indexes (such as the Standard &
Poor's 500 index).
B-12
not exceed the unrealized gains on the securities covering the option, may
be subject to deferral until the securities covering the option have been sold.
A futures contract held until delivery results in capital gain or loss
equal to the difference between the price at which the futures contract was
entered into and the settlement price on the earlier of delivery notice date or
expiration date. If a Fund delivers securities under a futures contract, the
Fund also realizes a capital gain or loss on those securities.
For federal income tax purposes, a Fund generally is required to recognize
for each taxable year its net unrealized gains and losses as of the end of the
year on futures, futures options and non-equity options positions ("year-end
mark-to-market"). Generally, any gain or loss recognized with respect to such
positions (either by year-end mark-to-market or by actual closing of the
positions) is considered to be 60% long-term and 40% short-term, without regard
to the holding periods of the contracts. However, in the case of positions
classified as part of a "mixed straddle," the recognition of losses on certain
positions (including options, futures and futures options positions, the related
securities and certain successor positions thereto) may be deferred to a later
taxable year. Sale of futures contracts or writing of call options (or futures
call options) or buying put options (or futures put options) that are intended
to hedge against a change in the value of securities held by a Fund may affect
the holding period of the hedged securities.
If a Fund were to enter into a short index future, short index futures
option or short index option position and the Fund's portfolio were deemed to
"mimic" the performance of the index underlying such contract, the option or
futures contract position and the Fund's stock positions may be deemed to be
positions in a mixed straddle, subject to the above-mentioned loss deferral
rules.
The Taxpayer Relief Act of 1997 (the "Act") imposed constructive sale
treatment for federal income tax purposes on certain hedging strategies with
respect to appreciated securities. Under these rules taxpayers will recognize
gain, but not loss, with respect to securities if they enter into short sales or
"offsetting notional principal contracts" (as defined by the Act) with respect
to, or futures or "forward contracts" (as defined by the Act) to deliver, the
same or substantially identical property, or if they enter into such
transactions and then acquire the same or substantially identical property.
Furthermore, the Secretary of the Treasury is authorized to promulgate
regulations that will treat as constructive sales certain transactions that have
substantially the same effect as short sales, offsetting notional principal
contracts, and futures or forward contracts to deliver the same or substantially
similar property.
B-13
In order for each Fund to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities or foreign currencies, or other income (including but not limited to
gains from options, futures, or forward contracts). Any net gain realized from
futures (or futures options) contracts will be considered gain from the sale of
securities and therefore will be qualifying income for purposes of the 90%
requirement.
Each Fund intends to distribute to shareholders at least annually any
capital gains that have been recognized for federal income tax purposes
(including year-end mark-to-market gains) on options and futures transactions,
together with gains on other Fund investments, to the extent such gains exceed
recognized capital losses and any net capital loss carryovers of a Fund.
Shareholders will be advised of the nature of such capital gain distributions.
Rule 144A Securities
The Funds may purchase securities that have been privately placed but that
are eligible for purchase and sale under Rule 144A under the 1933 Act ("Rule
144A securities"). That Rule permits certain qualified institutional buyers,
including investment companies that own and invest at least $100 million in
securities, to trade in privately placed securities that have not been
registered for sale under the 1933 Act. Artisan Partners, under the supervision
of the board of directors, will consider whether Rule 144A securities are
illiquid and thus subject to each Fund's restriction on investing no more than
10% of its net assets in illiquid securities. In making a determination of
whether a Rule 144A security is liquid or not, Artisan Partners will consider
the trading markets for the specific security, taking into account the
unregistered nature of a Rule 144A security. In addition, Artisan Partners
could consider the (1) frequency of trades and quotes, (2) number of dealers and
potential purchasers, (3) dealer undertakings to make a market, and (4) nature
of the security and of marketplace trades (e.g., the time needed to dispose of
the security, the method of soliciting offers, and the mechanics of transfer).
The liquidity of Rule 144A securities would be monitored and, if as a result of
changed conditions, Artisan Partners determined that a Rule 144A security is no
longer liquid, a Fund's holdings of illiquid securities would be reviewed to
determine what, if any, steps are required to assure that the Fund does not
invest more than 10% of its assets in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of a Fund's
assets invested in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.
Lending of Portfolio Securities
Subject to restriction (3) under "Investment Restrictions" in this
Statement of Additional Information, each Fund may lend its portfolio securities
to broker-dealers and banks. Any such loan must be continuously secured by
collateral in cash or cash equivalents maintained on a current basis in an
amount at least equal to the market value of the securities loaned by the Fund.
The Fund would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned, and also would receive an
additional return that may be in the form of a fixed fee or a percentage of the
collateral. The Fund would have the right to call the loan and obtain the
securities loaned at any time on notice of not more than five business days.
The Fund would not have the right to vote the securities during the existence of
the loan but would call the
B-14
loan to permit voting of the securities if, in Artisan Partners' judgment,
a material event requiring a shareholder vote would otherwise occur before the
loan was repaid. In the event of bankruptcy or other default of the borrower,
the Fund could experience both delays in liquidating the loan collateral or
recovering the loaned securities and losses, including (a) possible decline in
the value of the collateral or in the value of the securities loaned during the
period while the Fund seeks to enforce its rights thereto, (b) possible
subnormal levels of income and lack of access to income during this period, and
(c) expenses of enforcing its rights. No Fund currently intends to loan more
than 5% of its net assets.
Repurchase Agreements
Repurchase agreements are transactions in which a Fund purchases a security
from a bank or recognized securities dealer and simultaneously commits to resell
that security to the bank or dealer at an agreed-upon price, date, and market
rate of interest unrelated to the coupon rate or maturity of the purchased
security. Although repurchase agreements carry certain risks not associated
with direct investments in securities, a Fund will enter into repurchase
agreements only with banks and dealers believed by Artisan Partners to present
minimal credit risks. Artisan Partners will review and monitor the
creditworthiness of such institutions, and will consider the capitalization of
the institution, Artisan Partners' prior dealings with the institution, any
rating of the institution's senior long-term debt by independent rating
agencies, and other relevant factors.
A Fund will invest only in repurchase agreements collateralized at all
times in an amount at least equal to the repurchase price plus accrued interest.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase were less than the repurchase price, the Fund
would suffer a loss. If the financial institution which is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings there may be restrictions on the
Fund's ability to sell the collateral and the Fund could suffer a loss.
However, with respect to financial institutions whose bankruptcy or liquidation
proceedings are subject to the U.S. Bankruptcy Code, each Fund intends to comply
with provisions under such Code that would allow it immediately to resell such
collateral.
When-Issued and Delayed-Delivery Securities; Reverse Repurchase Agreements
Each Fund may purchase securities on a when-issued or delayed-delivery
basis. Although the payment and interest terms of these securities are
established at a time the Fund enters into the commitment, the securities may be
delivered and paid for a month or more after the date of purchase, when their
value may have changed. A Fund makes such commitments only with the intention
of actually acquiring the securities, but may sell the securities before
settlement date if Artisan Partners deems it advisable for investment reasons.
No Fund currently intends to have commitments to purchase when-issued securities
in excess of 5% of its net assets.
A Fund may enter into reverse repurchase agreements with banks and
securities dealers. A reverse repurchase agreement is a repurchase agreement in
which a Fund is the seller of, rather than the investor in, securities and
agrees to repurchase them at an agreed-upon time and price. Use of a reverse
repurchase agreement may be preferable to a regular sale and later repurchase of
securities because it avoids certain market risks and transaction costs.
However, reverse
B-15
repurchase agreements will be treated as borrowing and subject to each
Fund's fundamental limitation on borrowing.
At the time a Fund enters into a binding obligation to purchase securities
on a when-issued or delayed-delivery basis or enters into a reverse repurchase
agreement, assets of the Fund having a value at least as great as the purchase
price of the securities to be purchased will be segregated on the books of the
Fund and held by the custodian throughout the period of the obligation. The use
of these investment strategies, as well as borrowing under a line of credit as
described below, may increase net asset value fluctuation.
Short Sales
Each Fund may make short sales "against the box." In a short sale, a Fund
sells a borrowed security and is required to return the identical security to
the lender. A short sale "against the box" involves the sale of a security with
respect to which the Fund already owns an equivalent security in kind and
amount. A short sale "against the box" enables a Fund to obtain the current
market price of a security which it desires to sell but is unavailable for
settlement. No Fund currently intends to have commitments to make short sales
"against the box" in excess of 5% of its net assets.
Line of Credit
Artisan Funds maintains a line of credit with a bank in order to permit
borrowing on a temporary basis to meet share redemption requests in
circumstances in which temporary borrowing may be preferable to liquidation of
portfolio securities. Any borrowings under that line of credit by a Fund would
be subject to restriction (4) under "Investment Restrictions" in this Statement
of Additional Information.
Portfolio Turnover
Although the Funds do not purchase securities with a view to rapid
turnover, there are no limitations on the length of time that portfolio
securities must be held. At times, the Funds may invest for short-term capital
appreciation. Portfolio turnover can occur for a number of reasons such as
general conditions in the securities markets, more favorable investment
opportunities in other securities, or other factors relating to the desirability
of holding or changing a portfolio investment. Because of each Fund's
flexibility of investment and emphasis on growth of capital, it may have greater
portfolio turnover than that of mutual funds that have primary objectives of
income or maintenance of a balanced investment position. For the years ended
June 30, 2000 and 1999, respectively, each Fund's portfolio turnover rates were
as follows: Artisan Small Cap Fund, and 193.76% and 155.38%; Artisan
International Fund, 99.02% and 79.41%; Artisan Mid Cap Fund, 245.69% and
202.84%; and Artisan Small Cap Value Fund, 38.19% and 49.29%. The future
turnover rate may vary greatly from year to year. A high rate of portfolio
turnover results in increased transaction costs, which must be borne by that
Fund. High portfolio turnover also may result in the realization of capital
gains or losses and, to the extent net short-term capital gains are realized,
any distributions resulting from such gains will be considered ordinary income
for federal income tax purposes. (See "Dividends, Capital Gains, and Taxes" in
the prospectus, and "Additional Tax Information" in this Statement of Additional
Information.)
B-16
INVESTMENT RESTRICTIONS
Fundamental Restrictions
Artisan Funds has adopted the following investment restrictions which may
not be changed without the approval of the lesser of (i) 67% of each Fund's
shares present at a meeting if more than 50% of the shares outstanding are
present or (ii) more than 50% of each Fund's outstanding shares, under which a
Fund may not:
(1) act as an underwriter of securities, except insofar as it may be
deemed an underwriter for purposes of the Securities Act of 1933 on disposition
of securities acquired subject to legal or contractual restrictions on resale;
(2) purchase or sell real estate (although it may purchase securities
secured by real estate or interests therein, or securities issued by companies
which invest in real estate or interests therein), commodities, or commodity
contracts, except that it may enter into (a) futures and options on futures and
(b) forward contracts;
(3) make loans, but this restriction shall not prevent a Fund from (a)
buying a part of an issue of bonds, debentures, or other obligations which are
publicly distributed, or from investing up to an aggregate of 15% of its total
assets (taken at market value at the time of each purchase) in parts of issues
of bonds, debentures or other obligations of a type privately placed with
financial institutions, (b) investing in repurchase agreements, or (c) lending
portfolio securities, provided that it may not lend securities if, as a result,
the aggregate value of all securities loaned would exceed 33% of its total
assets (taken at market value at the time of such loan);
(4) borrow (including entering into reverse repurchase agreements), except
that it may (a) borrow up to 33 1/3% of its total assets, taken at market value
at the time of such borrowing, as a temporary measure for extraordinary or
emergency purposes, but not to increase portfolio income and (b) enter into
transactions in options, futures, and options on futures;<F4>
(5) invest in a security if more than 25% of its total assets (taken at
market value at the time of a particular purchase) would be invested in the
securities of issuers in any particular industry, except that this restriction
does not apply to securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities;
(6) issue any senior security except to the extent permitted under the
Investment Company Act of 1940;
(7) with respect to 75% of its total assets, invest more than 5% of its
total assets, taken at market value at the time of a particular purchase, in the
securities of a single issuer, except for securities issued or guaranteed by the
U.S. Government or any of its agencies or instrumentalities or repurchase
agreements for such securities;
-------------------------
<F4> A Fund will not purchase securities when total borrowings by the Fund are
greater than 5% of its net asset value.
B-17
(8) acquire more than 10%, taken at the time of a particular purchase, of
the outstanding voting securities of any one issuer.
A Fund's investment objective is not a fundamental restriction and,
therefore, a change in the objective is not subject to shareholder approval.
However, investors in a Fund will receive written notification at least 30 days
prior to any change in that Fund's investment objective.
Non-Fundamental Restrictions
The Funds also are subject to the following non-fundamental restrictions
and policies, which may be changed by the board of directors.
A Fund may not:
(a) invest in companies for the purpose of exercising control or
management;
(b) purchase more than 3% of the stock of another investment company or
purchase stock of other investment companies equal to more than 5% of the Fund's
total assets (valued at time of purchase) in the case of any one other
investment company and 10% of such assets (valued at time of purchase) in the
case of all other investment companies in the aggregate; any such purchases are
to be made in the open market where no profit to a sponsor or dealer results
from the purchase, other than the customary broker's commission, except for
securities acquired as part of a merger, consolidation, acquisition or
reorganization;
(c) invest more than 25% of its total assets (valued at time of purchase)
in securities of foreign issuers [Artisan Small Cap Fund, Artisan Mid Cap Fund
and Artisan Small Cap Value Fund only];
(d) purchase securities on margin (except for use of short-term credits as
are necessary for the clearance of transactions), or sell securities short
unless (i) the Fund owns or has the right to obtain securities equivalent in
kind and amount to those sold short at no added cost or (ii) the securities sold
are "when issued" or "when distributed" securities which the Fund expects to
receive in recapitalization, reorganization, or other exchange for securities
the Fund contemporaneously owns or has the right to obtain and provided that
transactions in options, futures, and options on futures are not treated as
short sales; or
(e) invest more than 10% of its net assets (taken at market value at the
time of each purchase) in illiquid securities, including repurchase agreements
maturing in more than seven days; or
(f) under normal market conditions, invest less than 65% of its total
assets in securities of issuers having aggregate common stock market
capitalizations within the range of the aggregate common stock market
capitalizations of issuers included in the S&P MidCap 400 Index, in each case
at the time of investment [Artisan Mid Cap Fund only]; or
(g) under normal market conditions, invest less than 65% of its total
assets in securities of issuers having aggregate common stock market
capitalizations of less than $1.5 billion, in each case taken at the time of
investment [Artisan Small Cap Value Fund only].
B-18
PERFORMANCE INFORMATION
From time to time the Funds may quote total return figures. "Total Return"
for a period is the percentage change in value during the period of an
investment in shares of a fund, including the value of shares acquired through
reinvestment of all dividends and capital gains distributions. "Average Annual
Total Return" is the average annual compounded rate of change in value
represented by the Total Return for the period.
Average Annual Total Return is computed as follows:
ERV = P(l+T)/n/
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
investment made at the beginning of the period, at the
end of the period (or fractional portion thereof)
Each Fund's Total Return and Average Annual Total Return for various periods
ended June 30, 2000 is shown below:
Artisan Small Cap Fund
----------------------
Average Annual
Total Return Total Return
------------ --------------
1 year 32.46% 32.46%
5 year 80.20% 12.48%
Life of Fund* 107.59% 14.88%
--------------------
* from March 28, 1995 (commencement of operations)
Artisan International Fund
--------------------------
Investor Shares
----------------
Average Annual
Total Return Total Return
------------ -------------
1 year 65.65% 65.65%
Life of Fund* 252.54% 32.21%
------------------
* from December 28, 1995 (commencement of operations)
Institutional Shares
--------------------
Average Annual
Total Return Total Return
------------ --------------
1 year 65.97% 65.97%
Life of Class* 142.85% 34.34%
------------------
* from the date the class was first offered for sale (July 1, 1997)
B-19
In times of market volatility, the Fund's return may vary greatly over
short periods of time. In 1999, the Fund's performance was achieved during a
period of unusually favorable market conditions. Investors should maintain
realistic expectations for future performance. Such performance may not be
sustainable.
Total Return and Average Annual Total Return of Institutional Shares are
calculated in the same way as for Investor Shares. The performance of
Institutional Shares is different from the performance of Investor Shares
because the expenses allocated to the classes are different. Because the
expense ratio for Institutional Shares is expected to be lower, the Total Return
and Average Annual Total Return of Institutional Shares are expected to be
greater than for Investor Shares. If you were a shareholder of Investor Shares
prior to July 1, 1997, and your shares were transferred to Institutional Shares
on that date, the total return and average annual total return on your
investment for 1 year through June 30, 2000 would have been 65.97%, and the
total return and average annual total return for the life of the Fund (Investor
Shares from inception on December 28, 1995 through June 30, 1997 and
Institutional Shares from July 1, 1997 through June 30, 2000) would have been
254.74% and 32.39%, respectively.
Artisan Mid Cap Fund
--------------------
Investor Shares
---------------
Average Annual
Total Return Total Return
------------ ---------------
1 year 72.88% 72.88%
Life of Fund* 242.99% 50.53%
----------------------
* from June 27, 1997 (commencement of operations)
In times of market volatility, the Fund's return may vary greatly over
short periods of time. In 1999, the Fund's performance was achieved during a
period of unusually favorable market conditions. Investors should maintain
realistic expectations for future performance. Such performance may not be
sustainable.
Total Return and Average Annual Total Return of Mid Cap Investor Shares are
calculated in the same way as for Mid Cap Institutional Shares. The performance
of Mid Cap Institutional Shares is expected to be different from the performance
of Mid Cap Investor Shares because the expenses allocated to the classes are
different. Because the expense ratio for Mid Cap Institutional Shares is
expected to be lower, the Total Return and Average Annual Total Return of Mid
Cap Institutional Shares are expected to be greater than for Mid Cap Investor
Shares.
Artisan Small Cap Value Fund
----------------------------
Average Annual
Total Return Total Return
------------ --------------
One Year 4.22% 4.22%
Life of Fund* 17.33% 5.97%
---------------------
* from September 29, 1997 (commencement of operations)
The Funds impose no sales charges and pay no distribution expenses. Income
taxes are not taken into consideration. Performance figures quoted by the Funds
are not necessarily indicative of future results. Each Fund's performance is a
function of conditions in the securities markets, portfolio management, and
operating expenses. Although information about past
B-20
performance is useful in reviewing a Fund's performance and in providing some
basis for comparison with other investment alternatives, it should not be used
for comparison with other investments using different reinvestment assumptions
or time periods. The Funds may invest in initial public offerings (IPOs). IPOs
and other investment techniques may have a magnified performance impact on a
Fund with a small asset base and similar performance may not continue as assets
grow.
In advertising and sales literature, the performance of a Fund may be
compared with that of other mutual funds, indexes or averages of other mutual
funds, indexes of related financial assets or data, other accounts or
partnerships managed by Artisan Partners, and other competing investment and
deposit products available from or through other financial institutions. The
composition of these indexes, averages or accounts differs from those of the
Funds. Comparison of a Fund to an alternative investment should consider
differences in features and expected performance.
All of the indexes and averages noted below will be obtained from the
indicated sources or reporting services, which Artisan Funds generally believe
to be accurate. The Funds also may note their mention (including performance or
other comparative rankings) in newspapers, magazines, or other media from time
to time. However, Artisan Funds assumes no responsibility for the accuracy of
such data. Newspapers and magazines and other media which might mention the
Funds include, but are not limited to, the following:
Atlanta Constitution Mutual Fund Letter
Barron's Mutual Fund News Service
Boston Herald Mutual Fund Values
Business Week Morningstar Publications
Chicago Tribune Newsweek
Chicago Sun-Times The New York Times
Cleveland Plain Dealer No-Load Fund Investor
CNBC Outstanding Investor Digest
CNN Pension World
Crain's Chicago Pensions and Investments
Business Personal Investor
Consumer Reports Jane Bryant Quinn
Consumer Digest (syndicated column)
Financial World Louis Rukeyser's Mutual Fund
Forbes The San Francisco Chronicle
Fortune Smart Money
Fund Action Stranger's Investment Adviser
Investor's Business Daily 13D Opportunities Report
Kiplinger's Personal Time
Finance Magazine United Mutual Fund Selector
Knight-Ridder USA Today
Los Angeles Times U.S. News and World Report
Milwaukee Business Journal The Wall Street Journal
Milwaukee Journal Sentinel Working Woman
Money Worth
Your Money
B-21
When a newspaper, magazine or other publication mentions a Fund, such
mention may include: (i) listings of some or all of the Fund's holdings, (ii)
descriptions of characteristics of some or all of the securities held by the
Fund, including price-earnings ratios, earnings, growth rates and other
statistical information, and comparisons of that information to similar
statistics for the securities comprising any of the indexes or averages listed
above; and (iii) descriptions of the Fund's or a portfolio manager's economic
and market outlook, generally and for the Fund.
Various newspapers and publications including those listed above may also
make mention of a Fund's portfolio manager. Portfolio managers and other
members of the Adviser's staff may make presentations at conferences or trade
shows, appear on television or radio programs, or conduct or participate in
telephone conference calls, and the Funds may announce those presentations,
appearances or calls to some or all shareholders, or to potential investors in
the Funds. Biographical and other information about a Fund's portfolio manager,
including information about awards received by that portfolio manager or
mentions of the manager in the media, may also be described or quoted in Fund
advertisements or sales literature. Mark L. Yockey, portfolio manager of
Artisan International Fund, was named "Morningstar International Fund Manager of
the Year for 1998" by Morningstar, Inc. ("Morningstar"). Morningstar presents
the award to a portfolio manager based on, according to Morningstar, "excellent
investment skill, the courage to differ from consensus and the commitment to
shareholders deemed necessary to deliver outstanding long-term performance."
A Fund may compare its performance to the Consumer Price Index (All Urban),
a widely recognized measure of inflation.
The performance of a Fund may be compared to the following indexes or
averages:
B-22
Dow-Jones Industrial Average New York Stock Exchange Composite
Russell 2000 Index Index
Russell 2000 Growth Index American Stock Exchange Composite
Russell 2000 Value Index Index
Russell Mid-Cap Stock Index NASDAQ Composite
Russell Mid-Cap Value Index NASDAQ Industrials
Standard & Poor's 500 Stock Index (These indexes generally reflect the
Standard & Poor's 400 Industrials performance of stocks traded in the
Standard & Poor's 400 Index indicated markets.)
Wilshire 5000
Wilshire 4500 Lipper International Fund Index
Wilshire 4000 Lipper International & Global Funds
Wilshire Small-Cap Index Average
Wilshire Small-Cap Value Index Morgan Stanley Capital International
(These indexes are widely recognized Europe, Australasia and Far East
indicators of general U.S. stock market (EAFE) Index
results.) Morningstar International Stock
Average
Financial Times-Actuaries World Index
(Ex-U.S.)
Morgan Stanley Capital International
World Index
(These indexes are widely recognized
indicators of the international
markets)
The performance of a Fund also may be compared to the following mutual fund
industry indexes or averages: Value Line Index; Lipper Capital Appreciation
Fund Average; Lipper Growth Funds Average; Lipper Small Cap Fund Index; Lipper
Small-Cap Core Fund Index, Lipper Small-Cap Value Fund Index, Lipper
International Fund Index; Lipper Mid Cap Fund Index; Lipper Mid-Cap Core Fund
Index, Lipper General Equity Funds Average; Lipper Equity Funds Average; Lipper
Small Company Growth Fund Index; Morningstar Growth Average; Morningstar Small-
Cap Funds Average; Morningstar Aggressive Growth Average; Morningstar U.S.
Diversified Average; Morningstar Equity Fund Average; Morningstar Hybrid Fund
Average; Morningstar All Equity Funds Average; and Morningstar General Equity
Average.
The Lipper Small Cap Fund Index reflects the net asset value weighted total
return of the thirty largest small cap funds as calculated and published by
Lipper Analytical Services, Inc. ("Lipper"), an independent service that
monitors the performance of more than 1,000 funds. The Lipper Mid Cap Fund
Index reflects the net asset value weighted total return of the thirty largest
mid cap funds, and the Lipper International Fund Index reflects the net asset
value weighted total return of the thirty largest international equity funds.
The Lipper and Morningstar averages are unweighted averages of total return
performance of mutual funds as classified, calculated and published by these
independent services that monitor the performance of mutual funds. The Funds
also may use comparative performance as computed in a ranking by Lipper or
category averages and rankings provided by another independent service. Should
Lipper or another service reclassify a Fund to a different
B-23
category or develop (and place that Fund into) a new category, the Fund may
compare its performance or ranking against other funds in the newly assigned
category, as published by the service. A Fund may also compare its performance
or ranking against all funds tracked by Lipper or another independent service.
A Fund may cite its rating, recognition or other mention by Morningstar or
any other entity. Morningstar's rating system is based on risk-adjusted total
return performance and is expressed in a star-rating format. The risk-adjusted
number is computed by subtracting a Fund's risk score (which is a function of
the Fund's monthly returns less the 3-month Treasury bill return) from the
Fund's load-adjusted total return score. This numerical score is then
translated into rating categories, with the top 10% labeled five star, the next
22.5% labeled four star, the next 35% labeled three star, the next 22.5% labeled
two star and the bottom 10% one star. A high rating reflects either above-
average returns or below-average risk, or both.
To illustrate the historical returns on various types of financial assets,
Artisan Funds may use historical data provided by Ibbotson Associates, Inc.
("Ibbotson"), a Chicago-based investment firm. Ibbotson constructs (or obtains)
very long-term (since 1926) total return data (including, for example, total
return indexes, total return percentages, average annual total returns and
standard deviations of such returns) for the following asset types: common
stocks, small company stocks, long-term corporate bonds, long-term government
bonds, intermediate-term government bonds, U.S. Treasury bills and Consumer
Price Index. The Funds also may use historical data compiled by Prudential
Securities, Inc., or by other similar sources believed by Artisan Funds to be
accurate, illustrating the past performance of small-capitalization stocks,
large-capitalization stocks, common stocks, equity securities, growth stocks
(small-capitalization, large-capitalization, or both) and value stocks (small-
capitalization, large-capitalization, or both).
ORGANIZATION
The Funds are series of Artisan Funds, Inc. ("Artisan Funds"), an open-end,
diversified management investment company which was incorporated under Wisconsin
law on January 5, 1995.
Each share of a Fund has one vote. All shares participate equally in
dividends and other distributions declared by the board of directors, and all
shares of a Fund have equal rights in the event of liquidation of that Fund.
Shares of the Funds have no preemptive, conversion or subscription rights.
Artisan Funds is governed by a board of directors which is responsible for
protecting the interests of the shareholders of the Funds. The directors are
experienced executives and professionals who meet at regular intervals to
oversee the activities of the Funds, review contractual arrangements with
companies that provide services to the Funds and review performance. A majority
of directors are not otherwise affiliated with Artisan Funds or Artisan
Partners.
B-24
The Wisconsin Business Corporation Law permits registered investment
companies to operate without an annual meeting of shareholders under specified
circumstances, such as if an annual meeting is not required by the Investment
Company Act of 1940 (the federal securities law that governs the regulation of
investment companies). Artisan Funds has adopted the appropriate provisions in
its bylaws and does not expect to hold an annual meeting in any year in which
the election of directors is not required to be acted on by shareholders.
Artisan Funds believes that not holding shareholder meetings except as otherwise
required reduces each Fund's expenses and enhances shareholder return.
The Funds may hold special meetings of shareholders to elect or remove
directors, change fundamental policies, approve a management contract, or for
other purposes. The Funds will mail proxy materials in advance, including a
voting card and information about the proposals to be voted on. You are
entitled to one vote for each share of any Fund that you own. Shareholders not
attending these meetings are encouraged to vote by proxy.
DIRECTORS AND OFFICERS
Directors and officers of Artisan Funds, and their principal business
occupations during at least the last five (5) years, are shown below. Directors
deemed to be "interested persons" of Artisan Funds for purposes of the 1940 Act
are indicated with an asterisk.
NAME AND DATE OF POSITIONS HELD PRINCIPAL OCCUPATIONS DURING
BIRTH WITH REGISTRANT PAST 5 YEARS
------------------- ---------------- ------------
Andrew A. Ziegler* Director, Chairman Managing Director of Artisan
10/7/57 of the Board and Partners; Chairman of Artisan
Chief Executive Distributors; prior to founding
Officer Partners in 1994, President and
Artisan Chief Operating Officer
of Strong/Corneliuson Capital
Management ("Strong") and
President of the Strong Funds
from 1990 to 1994.
Carlene Murphy Director Managing Director of Artisan
Ziegler* Partners; Portfolio Co-Manager of
6/20/56 Artisan Small Cap Fund; President
of Artisan Funds (1995-1999);
prior to founding Artisan
Partners in 1994, a Portfolio Co-
Manager of the Strong Common
Stock Fund, Strong Opportunity
Fund and numerous institutional
small-capitalization equity
portfolios at Strong since March
1991.
David A. Erne Director Partner of the law firm Reinhart,
5/6/43 Boerner, Van Deuren, Norris &
Rieselbach, S.C., Milwaukee, WI,
and Director of Capital Commerce
Banccorporation - Milwaukee
Western Bank since 1994.
B-25
Thomas R. Hefty Director President of United Wisconsin
6/9/47 Services, Inc. (a provider of
managed care and specialty
business services) since 1986 and
Chairman of the Board and Chief
Executive Officer since 1991; and
Chairman of the Board of Blue
Cross & Blue Shield United of
Wisconsin (parent company of
United Wisconsin Services, Inc.)
since 1988 and President since
1982.
Howard B. Witt Director President and Chief Executive
5/17/40 Officer of Littelfuse, Inc. (a
manufacturer of advanced circuit
protection devices) since 1990
and Chairman of the Board of
Littelfuse since 1993; prior
thereto Executive Vice President
of Littelfuse; and Director of
Material Sciences Corporation,
(a technology based manufacturer
of continuously processed coated
and specialty engineered
materials and services) since
1997; and Director of Franklin
Electric Co., Inc. (a
manufacturer of electronic
motors) since 1994.
Michael C. Roos President Managing Director of Artisan
4/18/58 Partners; President of Artisan
Distributors; prior to joining
Artisan Partners in 1995, Vice
President, Fidelity Investments
(since 1994).
Lawrence A. Totsky Chief Financial Managing Director and Chief
5/6/59 Officer, Treasurer Financial Officer of Artisan
and Secretary Partners; Secretary, Chief
Financial Officer and Treasurer,
Artisan Distributors; prior to
joining Artisan Partners in 1998,
Senior Vice President (since 1994)
and Director of Mutual Fund
Administration, Strong Capital
Management, Inc., prior thereto.
Mark L. Yockey Vice President Managing Director of Artisan
6/5/56 Partners; Portfolio Manager of
Artisan International Fund;
prior to joining Artisan
Partners in 1995, Portfolio
Manager of the United
International Growth Fund and
Vice President of Waddell & Reed
(investment management firm)
since January 1990.
B-26
Sandra Jean Voss- Vice President Senior Equity Trader for Artisan
Reinhardt Partners; prior to joining
3/6/64 Artisan Partners in 1995, Equity
Trader with Northwestern Mutual
Life Insurance Company since
January 1989.
Scott C. Satterwhite Vice President Managing Director of Artisan
7/15/57 Partners and Portfolio Co-Manager,
Artisan Small Cap Value Fund;
prior to joining Artisan Partners
in June 1997, Senior Vice
President and Portfolio Manager at
Wachovia Corporation. From 1993
to 1997, Portfolio Manager of
Biltmore Special Values Fund in
addition to being a Personal Trust
Portfolio Manager and Manager of
the Georgia Personal Trust
Portfolio Group.
Andrew C. Stephens Vice President Managing Director of Artisan
10/31/63 Partners, and Portfolio Manager,
Artisan Mid Cap Fund; prior to
joining Artisan Partners in 1997,
Portfolio Co-Manager of Strong
Asset Allocation Fund at Strong,
February 1993 through March 1997,
and Senior Research Analyst for
Strong Common Stock Fund and
Strong Opportunity Fund, September
1994 through March 1996.
Marina T. Carlson Vice President Managing Director of Artisan
5/9/64 Partners, and Portfolio Co-
Manager, Artisan Small Cap Fund;
prior to joining Artisan Partners
in 1999, Manager of Strong Mid Cap
Disciplined Fund from its
inception in December 1998 through
March 1999 and Portfolio Co-
Manager of Strong Opportunity Fund
and Strong Common Stock Fund from
1993 through December 1998.
James C. Kieffer Vice President Managing Director of Artisan
12/2/64 Partners and Portfolio Co-Manager,
Artisan Small Cap Value Fund, and
Vice President of Artisan Funds.
From 1997 to 2000, Research
Analyst for Artisan Partners;
from 1996 to 1997 Research Analyst
for McColl Partners; prior to
McColl Partners, Research Analyst
for Wachovia Investment Management
since 1989.
Gregory K. Ramirez Assistant Secretary Controller of Artisan Partners;
7/14/70 and Assistant Assistant Treasurer and Assistant
Treasurer Secretary of Artisan Funds; prior
to joining Artisan Partners in
1997, Audit Manager of Price
Waterhouse LLP.
B-27
The business address of the officers and directors affiliated with Artisan
Partners is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202.
The addresses of the other directors are: Mr. Erne - 1000 N. Water Street,
Milwaukee, Wisconsin 53202; Mr. Hefty - 401 W. Michigan Street, Milwaukee,
Wisconsin 53203; and Mr. Witt - 800 E. Northwest Highway, Des Plaines, Illinois
60016.
Mr. Ziegler and Ms. Ziegler are married to each other.
Mr. Ziegler and Ms. Ziegler serve as members of the Executive Committee of
the Board of Directors. The Executive Committee, which meets between regular
meetings of the Board, is authorized to exercise many of the powers of the Board
of Directors.
The compensation paid to directors and officers of Artisan Funds for their
services as such consists of an annual retainer fee in the amount of $27,000.
In addition, directors receive $1,000 for any meeting held in person and $500
for any meeting held by telephone. Compensation is paid only to directors who
are not interested persons of Artisan Funds or Artisan Partners and is allocated
among the series of the Artisan Funds. Artisan Funds has no retirement or
pension plans.
The following table sets forth compensation paid by Artisan Funds, Inc.
during the fiscal year ended June 30, 2000 to each of the directors of the Fund.
PENSION OR TOTAL
AGGREGATE RETIREMENT COMPENSATION
COMPENSATION BENEFITS ACCRUED FROM ARTISAN FUND AND
FROM ARTISAN AS PART OF FUND FUND COMPLEX(4)
NAME OF DIRECTOR FUNDS EXPENSES PAID TO DIRECTORS
---------------- ----------- ---------------- -----------------
Andrew A. Ziegler $ 0 $ 0 $ 0
Carlene Murphy
Ziegler 0 0 0
David A. Erne 20,000 0 20,000
Thomas R. Hefty 20,000 0 20,000
Howard B. Witt 20,000 0 20,000
At October 2, 2000, the officers and directors of Artisan Funds as a group
owned less than 1% of the outstanding shares of each Fund.
PRINCIPAL SHAREHOLDERS
The only persons known by Artisan Funds to own of record or beneficially 5%
or more of the outstanding shares of any Fund (or class in the case of
International Fund) as of September 30, 2000 were:
PERCENTAGE OF
OUTSTANDING
NAME AND ADDRESS FUND SHARES HELD
---------------- ---- -----------
Charles Schwab & Co. Inc. <F1> Small Cap Fund 11%
B-28
101 Montgomery Street Mid Cap Fund - Investor Shares 49%
San Francisco, CA 94104-4122 International Fund - 54%
Investor Shares
Small Cap Value Fund 18%
University of Iowa Foundation Small Cap Fund 12%
One West Park Road
PO Box 4550
Iowa City, IA 52244-4550
The Queens Health System Small Cap Fund 6%
1099 Alakea Street, Suite 1100
Honolulu, HI 96812-4512
The Childrens Museum of Small Cap Fund 9%
Indianapolis
PO Box 3000
Indianapolis, IN 46206-3000
National Financial International Fund - 17%
Services Corp. <F1> Investor Shares
One World Financial Center Mid Cap Fund 23%
200 Liberty Street Investor Shares
New York, NY 10281-1003 Small Cap Value Fund 9%
The Professional Golfers Small Cap Fund 5%
Association of America
PO Box 109601
Palm Beach Gardens, FL 33410-9601
The Harold and Arlene Schnitzer Mid-Cap Fund - 6%
Care Foundation Institutional Shares
4080 Southwest Macadan
Portland, OR 97201-6407
Northern Trust Company Small Cap Value Fund 5%
FBO Marshfield Clinic ERP
PO Box 92956
Chicago, IL 60675-2955
National Investor Services Corp.(1) Mid Cap Fund - 6%
55 Water Street, 32nd Floor Investor Shares
New York, NY 10041-3299
University of Georgia Foundation Small Cap Value Fund 5%
824 South Milledge Avenue
Athens, GA 30602-1538
Maryland National Capital Park Small Cap Value Fund 7%
and Planning Commission
6611 Kenilworth Avenue, Suite 100
Riverdale, MD 20737-1332
Union Bank of California Small Cap Value Fund 6%
FBO AGC-IUOE Local 701
PO Box 85484
San Diego, CA 92186-5484
Arnot Ogden Medical Center Mid Cap Fund - 5%
Pension Institutional Shares
PO Box 1522
Elmira, NY 14902-1522
B-29
FABCO Mid Cap Fund - 6%
FBO Rollins, Inc. Master Trust Institutional Shares
PO Box 105870 CTR 3144
Atlanta, GA 30348-5870
U.S. Bank NA, Custodian Mid Cap Fund - 5%
Sierra Health Foundation Institutional Shares
PO Box 64010
Saint Paul, MN 55164-0010
Vermont American Corp. Mid Cap Fund - 5%
Retirement Plan Institutional Shares
Cleveland, OH 44101-4984
Norwest Bank, MN N.A. Mid Cap Fund - 10%
FBO Stoel Rives LLP Institutional Shares
PO Box 1535
Minneapolis, MN 55480-1535
The Charlotte W. Newcombe Mid Cap Fund - 5%
Foundation Institutional Shares
35 Park Place
Princeton, NJ 08542-6918
Georgia Tech Foundation, Inc. Mid Cap Fund - 7%
177 North Avenue Institutional Shares
Atlanta, GA 30332-0001
<F1> Shares are held of record on behalf of customers, and not beneficially.
INVESTMENT ADVISORY SERVICES
Artisan Partners Limited Partnership ("Artisan Partners") provides
investment advisory services to each Fund pursuant to Investment Advisory
Agreements dated March 27, 1995, (Small Cap Fund); December 27, 1995
(International Fund); April 10, 1997 (Mid Cap Fund); July 31, 1997 (Small Cap
Value Fund) (the "Advisory Agreements"). Artisan Partners is a Delaware limited
partnership. Artisan Investment Corporation was incorporated on December 7,
1994 for the sole purpose of acting as general partner of Artisan Partners. Mr.
Ziegler and Ms. Ziegler, as officers of Artisan Investment Corporation, manage
Artisan Partners. The principal address of Artisan Partners is 1000 North Water
Street, Suite 1770, Milwaukee, Wisconsin 53202. Artisan Partners also has
offices at 100 Pine Street, Suite 2950, San Francisco, California, and Five
Concourse Parkway NE, Suite 2120, Atlanta, Georgia 30328.
In return for its services, each Fund pays Artisan Partners a monthly fee
at the annual rate of 1% of the Fund's average daily net assets up to $500
million; .975 of 1% of average daily net assets from $500 million up to $750
million; .950 of 1% of average daily net assets from $750 million to $1 billion;
and .925 of 1% of average daily net assets over $1 billion. In addition Artisan
Partners has undertaken to reimburse Artisan International Fund for any ordinary
operating expenses in excess of 2.50% of average net assets annually, and has
undertaken to reimburse each of Artisan Small Cap Fund, Artisan Mid Cap Fund and
Artisan Small Cap Value Fund for any ordinary operating expenses in excess of
2.00% of average net assets over each fiscal year.
B-30
The advisory fees paid by Artisan Small Cap Fund for the fiscal years ended
June 30, 2000, 1999 and 1998, were $1,763,380, $1,980,620 and $2,900,335,
respectively. The investment advisory fees paid by Artisan International Fund
for the fiscal years ended June 30, 2000, 1999 and 1998, were $27,952,915,
$6,718,770 and $3,923,189, respectively. For the fiscal years ended June 30,
2000, 1999 and 1998, Artisan Mid Cap Fund paid investment advisory fees of
$1,063,517, $229,384 and $93,853, respectively, of which $29,152 and $93,853 was
waived or reimbursed by Artisan Partners in 1999 and 1998, respectively. The
investment advisory fees paid by Artisan Small Cap Value Fund for the fiscal
years ended June 30, 2000, 1999 and from its inception on September 29, 1997
through June 30, 1998, were $1,532,665, $511,680 and $252,397, respectively.
Each Advisory Agreement provides that Artisan Partners shall not be liable for
any loss suffered by a Fund or its shareholders as a consequence of any act of
omission in connection with investment advisory or portfolio services under the
agreement, except by reason of willful misfeasance, bad faith or gross
negligence on the part of Artisan Partners in the performance of its duties or
from reckless disregard by Artisan Partners of its obligations and duties under
the Advisory Agreement.
Each Advisory Agreement may be continued from year to year only so long as
the continuance is approved annually (a) by the vote of a majority of the
directors of each Fund who are not "interested persons" of the Fund or Artisan
Partners cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the board of directors or by the vote of a majority (as
defined in the 1940 Act) of the outstanding shares of the portfolio. Each
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
CODE OF ETHICS
The 1940 Act and rules thereunder require that Artisan Funds, Artisan
Partners and Artisan Distributors LLC ("Distributors") establish standards and
procedures for the detection and prevention of certain conflicts of interest,
including activities by which persons having knowledge of the investments and
investment intentions of Artisan Funds might take advantage of that knowledge
for their own benefit. Artisan Funds, Artisan Partners and Distributors have
adopted a Code of Ethics to meet those concerns and legal requirements.
Although the Code does not prohibit employees who have knowledge of the
investments and investment intentions of Artisan Funds from engaging in personal
securities investing, it does regulate such personal securities investing by
these employees as a part of the effort by Artisan Funds, Artisan Partners and
Distributors to detect and prevent conflicts of interest.
DISTRIBUTOR
Shares of the Funds are offered for sale by Distributors without any sales
commissions, 12b-1 fees, or other charges to the Funds or their shareholders.
Distributors is wholly-owned by Artisan Partners. All distribution expenses
relating to the Funds are paid by Artisan Partners, including the payment or
reimbursement of any expenses incurred by Distributors. The Distribution
Agreement will continue in effect from year to year provided such continuance is
approved annually (i) by a majority of the directors or by a majority of the
outstanding voting securities of the Funds and (ii) by a majority of the
directors who are not parties to the Agreement or interested persons of any such
party.
B-31
Artisan Funds has agreed to pay all expenses in connection with
registration of its shares with the Securities and Exchange Commission and any
auditing and filing fees required in compliance with various state securities
laws. Artisan Partners bears all sales and promotional expenses, including the
cost of prospectuses and other materials used for sales and promotional purposes
by Distributors. Distributors offers the Funds' shares only on a best efforts
basis. Distributors is located at 1000 North Water Street, Suite 1770,
Milwaukee, Wisconsin 53202.
PORTFOLIO TRANSACTIONS
Artisan Partners places the orders for the purchase and sale of each Fund's
portfolio securities and options and futures contracts. Artisan Partners'
overriding objective in effecting portfolio transactions is to seek to obtain
the best combination of price and execution. The best net price, giving effect
to brokerage commissions, if any, and other transaction costs, normally is an
important factor in this decision, but a number of other judgmental factors also
may enter into the decision. These include: Artisan Partners' knowledge of
negotiated commission rates currently available and other current transaction
costs; the nature of the security being traded; the size of the transaction; the
desired timing of the trade; the activity existing and expected in the market
for the particular security; confidentiality; the execution, clearance and
settlement capabilities of the broker or dealer selected and others which are
considered; Artisan Partners' knowledge of the financial stability of the broker
or dealer selected and such other problems of any broker or dealer. Recognizing
the value of these factors, a Fund may pay a brokerage commission in excess of
that which another broker or dealer may have charged for effecting the same
transaction. Evaluations of the reasonableness of brokerage commissions, based
on the foregoing factors, are made on an ongoing basis by Artisan Partners'
staff while effecting portfolio transactions. The general level of brokerage
commissions paid is reviewed by Artisan Partners, and reports are made annually
to the board of directors.
With respect to issues of securities involving brokerage commissions, when
more than one broker or dealer is believed to be capable of providing the best
combination of price and execution with respect to a particular portfolio
transaction for a Fund, Artisan Partners often selects a broker or dealer that
has furnished it with research products or services such as research reports,
subscriptions to financial publications and research compilations, compilations
of securities prices, earnings, dividends, and similar data, and computer data
bases, quotation equipment and services, research-oriented computer software and
services, and services of economic and other consultants. Selection of brokers
or dealers is not made pursuant to an agreement or understanding with any of the
brokers or dealers; however, Artisan Partners uses internal allocation
procedures to identify those brokers or dealers who provide it with research
products or services and the amount of research products or services they
provide, and endeavors to direct sufficient commissions generated by its
clients' accounts in the aggregate, including Artisan Funds, to such brokers or
dealers to ensure the continued receipt of research products or services Artisan
Partners feels are useful. In certain instances, Artisan Partners receives from
brokers and dealers products or services that are used both as investment
research and for administrative, marketing, or other non-research purposes. In
such instances, Artisan Partners makes a good faith effort to determine the
relative proportions of such products or services which may be considered as
investment research. The portion of the costs of such products or services
attributable to research usage may be defrayed by Artisan Partners (without
prior
B-32
agreement or understanding, as noted above) through brokerage commissions
generated by transactions by clients (including Artisan Funds), while the
portions of the costs attributable to non-research usage of such products or
services is paid by Artisan Partners in cash. No person acting on behalf of
Artisan Funds is authorized, in recognition of the value of research products or
services, to pay a commission in excess of that which another broker or dealer
might have charged for effecting the same transaction. Research products or
services furnished by brokers and dealers may be used in servicing any or all of
the clients of Artisan Partners and not all such research products or services
are used in connection with the management of Artisan Funds.
With respect to each Fund's purchases and sales of portfolio securities
transacted with a broker or dealer on a net basis, Artisan Partners also may
consider the part, if any, played by the broker or dealer in bringing the
security involved to Artisan Partners' attention, including investment research
related to the security and provided to the Artisan Funds. During fiscal years
2000, 1999 and 1998, Artisan Small Cap Fund paid brokerage commissions of
$1,733,133, $1,811,405 and $1,866,349, respectively, to brokers who furnished
research services to the Fund or Artisan Partners on purchases and sales
aggregating $701,949,105, $666,090,745, and $762,845,329, respectively. During
fiscal years 2000, 1999, and 1998, Artisan International Fund paid brokerage
commissions of $18,858,117, $4,343,103 and $2,893,523, respectively, to brokers
who furnished research services to the Fund or Artisan Partners on purchases and
sales aggregating $8,086,392,185, $1,558,249,458 and $885,882,850, respectively.
During fiscal years ended June 30, 2000, 1999, and 1998, Artisan Mid Cap Fund
paid brokerage commissions of $851,657, $175,709 and $72,800, respectively, to
brokers who furnished research services to the Fund or Artisan Partners on
purchases and sales aggregating $628,119,525, $109,326,360 and $50,307,734,
respectively. For the fiscal years ended June 30, 2000, 1999 and from its
inception on September 29, 1997 through June 30, 1998, Artisan Small Cap Value
Fund paid brokerage commissions of $580,258, $183,523 and $184,278,
respectively, to brokers who furnished research services to the Fund or Artisan
Partners on purchases and sales aggregating $268,124,319, $78,952,777 and
$70,354,053, respectively.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the prospectus under the
headings "How to Buy Shares," and "How to Sell Shares." All of that information
is incorporated herein by reference.
Shares of each Fund may be purchased or redeemed through certain financial
services companies, some of which may charge a transaction fee. Each Fund may
authorize from time to time certain financial services companies, broker-dealers
or their designees ("authorized agents") to accept share purchase and redemption
orders on its behalf. For purchase orders placed through an authorized agent, a
shareholder will pay a Fund's NAV per share (see "Net Asset Value," below) next
computed after the receipt by the authorized agent of such purchase order, plus
any applicable transaction charge imposed by the agent. For redemption orders
placed through an authorized agent, a shareholder will receive redemption
proceeds which reflect the NAV per share next computed after the receipt by the
authorized agent of the redemption order, less any redemption fees imposed by
the agent.
B-33
In some instances, an authorized agent or other financial services company
may not charge any transaction fees directly to investors in a Fund. However,
accounting and shareholder servicing services provided by such a company with
respect to Fund shares held by that company for its customers, the company may
charge a fee based on a percentage of the annual average value of those
accounts. A Fund pays a portion of those fees not to exceed the estimated fees
and expenses that the Fund would pay to its own transfer agent if the shares of
the Fund held by such customers of the company were registered directly in their
names on the books of the Fund's transfer agent. The balance of those fees is
paid by Artisan Partners.
Net Asset Value. Share purchase and redemption orders will be priced at a
Fund's net asset value next computed after such orders are received and accepted
by: (i) the Fund; (ii) a broker-dealer or other financial services company
authorized by the Fund to accept purchase and redemption orders on the Fund's
behalf; or (iii) such authorized broker-dealer's designee. The net asset value
of the shares of the Fund is determined as of the close of regular session
trading on the New York Stock Exchange ("NYSE") (currently 3:00 p.m., Central
time) each day the NYSE is open for trading. The NYSE is regularly closed on
Saturdays and Sundays and on New Year's Day, the third Monday in January, the
third Monday in February, Good Friday, the last Monday in May, Independence Day,
Labor Day, Thanksgiving, and Christmas. If one of these holidays falls on a
Saturday or Sunday, the NYSE will be closed on the preceding Friday or the
following Monday, respectively. Net asset value will not be determined on days
when the NYSE is closed unless, in the judgment of the board of directors, net
asset value of the Fund should be determined on any such day, in which case the
determination will be made at 3:00 p.m., Central time. The net asset value per
share of the Fund is determined by dividing the value of all its securities and
other assets, less its liabilities, by the number of shares of the Fund
outstanding.
Because each Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940, the Funds are obligated to pay share redemptions
to any one shareholder in cash only up to the lesser of $250,000 or one percent
of a Fund's net assets represented by such share class during any 90-day period.
Redemptions in excess of such limit may be paid wholly or partly by a
distribution in kind of readily marketable securities. If redemptions are made
in kind, the redeeming shareholders might incur transaction costs in selling the
securities received in the redemptions.
Each Fund reserves the right to suspend or postpone redemptions of its
shares during any period when: (a) trading on the NYSE is restricted, as
determined by the Commission, if the NYSE is closed for other than customary
weekend and holiday closings; (b) the Commission has by order permitted such
suspension; or (c) an emergency, as determined by the Commission, exists, making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable.
ADDITIONAL TAX INFORMATION
Artisan Funds intends for each Fund to continue to qualify as a "regulated
investment company" under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code") and thus not be subject to federal income taxes on amounts
which it distributes to shareholders. If Artisan Funds should fail to qualify
for pass-through tax treatment under Subchapter M, then it
B-34
would be required to pay taxes on any income and realized capital gains,
reducing the amount of income and realized capital gains that would otherwise be
available for distribution to the Funds' shareholders.
Your distributions will be taxable to you, under income tax law, whether
received in cash or reinvested in additional shares. For federal income tax
purposes, any distribution that is paid in January but was declared in October,
November or December of the prior calendar year is deemed paid in the prior
calendar year.
You will be subject to income tax at ordinary rates on income dividends and
distributions of net short-term capital gain. Distributions of net long-term
capital gains are taxable to you as long-term capital gains (currently taxed at
a maximum rate of 20% for individual taxpayers) regardless of the length of time
you have held your shares. Long-term gains are those derived from securities
held by a Fund for more than one year.
You will be advised annually as to the source of distributions for tax
purposes. If you are not subject to tax on your income, you will not be
required to pay tax on these amounts.
If you realize a loss on the sale of Fund shares held for six months or
less, your short-term loss is recharacterized as long-term to the extent of any
long-term capital gain distributions you have received with respect to those
shares.
A Fund may be required to withhold federal income tax ("backup
withholding") from certain payments to you, generally redemption proceeds.
Backup withholding may be required if:
- You fail to furnish your properly certified social security or other
tax identification number;
- You fail to certify that your tax identification number is correct or
that you are not subject to backup withholding due to the
underreporting of certain income;
- The IRS informs the Fund that your tax identification number is
incorrect.
These certifications are contained in the application that you complete
when you open your Fund account. Artisan Funds must promptly pay the IRS all
amounts withheld. Therefore, it usually is not possible for Artisan Funds to
reimburse you for amounts withheld. You may, however, claim the amount withheld
as a credit on your federal income tax return.
The Funds may purchase the securities of certain foreign investment funds
or trusts called passive foreign investment companies ("PFICs"). In addition to
bearing their proportionate share of a Fund's expenses (management fees and
operating expenses), shareholders will also indirectly bear similar expenses of
PFICs. Capital gains on the sale of PFIC holdings will be deemed to be ordinary
income regardless of how long the Fund holds its investment. In addition, a
Fund may be subject to corporate income tax and an interest charge on certain
dividends and capital gains earned from PFICs, regardless of whether such income
and gains are distributed to shareholders.
B-35
In accordance with tax laws, each Fund intends to treat securities in PFICs
as sold on the last day of the Fund's fiscal year and recognize any gains for
tax purposes at that time; losses may be recognized to the extent of any gains
recognized. Such gains will be considered ordinary income which the Fund will
be required to distribute even though it has not sold the security and received
cash to pay such distributions.
The discussion of taxation above is not intended to be a full discussion of
income tax laws and their effect on shareholders. You are encouraged to consult
your own tax advisor. The foregoing information applies to U.S. shareholders.
U.S. citizens residing in a foreign country should consult their tax advisors as
to the tax consequences of ownership of Fund shares.
CUSTODIAN AND TRANSFER AGENT
State Street Bank & Trust Company ("State Street"), 66 Brooks Drive,
Braintree, MA 02184, acts as custodian of the securities and other assets of the
Fund. State Street is responsible for, among other things, safeguarding and
controlling the Fund's cash and securities, handling the receipt and delivery of
securities, and collecting interest and dividends on the Fund's investments.
State Street also performs transfer agency, dividend paying agency and portfolio
accounting services for the Fund. State Street is not an affiliate of Artisan
Partners or its affiliates. State Street is authorized to deposit securities in
securities depositories for the use of services of sub-custodians.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202 serves as the Funds' independent accountants, providing services including
(i) an audit of the annual financial statements; (ii) assistance and
consultation in connection with Securities and Exchange Commission filings; and
(iii) review of the annual income tax returns filed on behalf of the Funds.
FINANCIAL STATEMENTS
The financial statements and financial highlights of Artisan Funds
appearing in the prospectus and this Statement of Additional Information have
been audited by PricewaterhouseCoopers LLP, independent accountants, as
indicated in their reports with respect thereto, and are included in reliance
upon such reports given upon the authority of such firm as experts in
accounting and auditing.
B-36
ARTISAN
INTERNATIONAL FUND
(ARTIX)
Schedule of Investments - June 30, 2000
SHARES MARKET
HELD VALUE
-------- --------
COMMON AND PREFERRED STOCKS - 95.4%
AUSTRALIA - 1.8%
<F1> Cable & Wireless Optus Limited -
telecommunication services 16,150,200 $ 47,810,204
Commonwealth Bank of Australia -
diversified financial services 2,601,334 41,226,782
-------------
89,036,986
BRAZIL - 2.7%
<F1> Celular CRT Participacoes S.A. -
telecommunication services 130,728,900 57,264,115
Cia Riograndense Telecomunicacoes -
Preferred - telecommunication services 93,584,900 31,653,335
Tele Norte Leste Participacoes S.A.
(ADR) - telecommunication services 36,240 856,177
Tele Sudeste Celular Participacoes S.A.
(ADR) - cellular telecommunication
services 61,900 1,887,950
Telecomunicacoes Brasileiras S.A. (ADR) -
telecommunication services 358,500 34,819,312
Telecomunicacoes de Sao Paulo S.A. (ADR) -
telecommunication services 309,500 5,725,750
-------------
132,206,639
CANADA - 7.9%
<F1> AT&T Canada, Inc.<F2> -
telecommunication services 3,924,400 130,241,025
Clearnet Communications, Inc.<F2> -
Class A - telecommunication services 1,961,500 54,462,274
<F1> Cognos, Inc.<F2> - computer software 1,147,400 47,473,675
Corus Entertainment, Inc. -
Class B - multimedia 1,394,250 37,211,402
Nortel Networks Corporation (ADR)<F2> -
telecommunication equipment 1,188,300 81,101,475
Open Text Corporation (ADR) -
network software 370,400 7,963,600
Rogers Communications, Inc. -
cable television 985,300 27,927,929
-------------
386,381,380
FINLAND - 1.9%
Helsingin Puhelin Oyj -
telecommunication services 273,200 26,760,558
Nokia Corporation (ADR) -
telecommunication equipment 891,200 44,504,300
Sonera Corporation Oyj -
telecommunication services 502,500 22,907,440
-------------
94,172,298
FRANCE - 7.0%
Bouygues S.A. - building and construction 35,733 23,880,017
Club Mediterranee S.A. - recreational centers 572,207 77,518,021
Equant N.V. - telecommunication services 673,200 27,353,496
18
------------
EIGHTEEN
---------------------------------------------------------SCHEDULE OF INVESTMENTS
SHARES MARKET
HELD VALUE
-------- --------
FRANCE (CONTINUED)
Lagardere SCA - diversified operations 642,851 $ 49,098,409
Schneider Electric S.A. -
electrical machinery 788,389 54,945,298
SPIR Communication (ADR) - publishing 92,325 6,928,018
Suez-Lyonnaise des Eaux S.A. -
building and construction 422,450 74,007,971
Unilog S.A. - information technology services 267,559 26,029,202
-------------
339,760,432
GERMANY - 4.1%
Dresdner Bank AG - money center banks 1,211,050 49,831,786
Endemann!! Internet AG - internet content 107,070 5,059,879
KDG Investors L.P.<F3> - cable television 4,000,000 4,000,000
ProSieben Media AG - television broadcaster 685,395 85,228,683
Software AG - computer software & services 509,532 47,185,690
United Internet AG -internet content 56,080 6,879,839
-------------
198,185,877
HONG KONG - 2.8%
China Mobile (Hong Kong) Limited -
cellular telecommunication services 15,647,000 137,993,875
INDIA - 0.0%<F4>
Videsh Sanchar Nigam Ltd. (GDR) -
telecommunication services 35,000 533,750
IRELAND - 0.8%
Bank of Ireland - commercial bank 6,305,200 39,458,328
ITALY - 5.5%
Autogrill SPA - restaurants 3,134,050 33,421,521
Autostrade Concessioni e Construzioni
Autostrade SPA - transportation services 2,403,700 17,991,337
Class Editori SPA - publishing 1,140,800 16,707,135
Gucci Group NV<F2> - apparel manufacturer 564,600 53,495,850
Ifil (Finanziaria di Partecipazioni) SPA -
diversified operations 3,452,850 28,679,005
Olivetti SPA - telecommunication services 17,195,700 62,547,787
Unicredito Italiano SPA - commercial bank 11,498,300 54,996,933
-------------
267,839,568
JAPAN - 16.6%
Asatsu-DK Inc. - advertising agencies 684,700 28,070,733
Banyu Pharmaceutical Co., Ltd. -
pharmaceuticals 1,965,600 48,072,496
Canon, Inc. - office automation equipment
& computer hardware 622,000 30,951,983
Daiwa Securities Group, Inc. -
brokerage/investment banking 1,843,800 24,327,978
Focus Systems Corporation - network software 417,300 16,832,798
Fujitsu Limited - computer manufacturer/
information technology services 2,473,800 85,564,736
Future Systems Consulting Corporation -
consulting services 120 2,567,268
NEC Corporation - electronic manufacturer/
information technology services 2,310,300 72,506,473
Nihon Unisys, Ltd. - computer integrated
services/information technology services 978,700 19,785,228
19
------------
NINETEEN
SCHEDULE OF INVESTMENTS---------------------------------------------------------
SHARES MARKET
HELD VALUE
-------- --------
JAPAN (CONTINUED)
Nippon Telegraph & Telephone Corporation -
integrated telephone services 9,211 $122,402,436
Nippon Television Network Corporation
(Bonus Issue) - television broadcasting 15,850 10,337,119
Nippon Television Network Corporation -
television broadcasting 25,970 16,888,272
NTT DoCoMo, Inc. - cellular
telecommunication services 937 25,344,612
Promise Co., Ltd. - consumer finance 1,188,200 93,842,103
Takefuji Corporation - consumer finance 458,300 55,330,316
Toho Co., Ltd. - motion pictures & services 173,400 29,514,199
Tokyo Broadcasting System, Inc. -
television broadcasting 2,075,000 89,566,942
Toyo Information Systems Co., Ltd. -
information technology services 603,000 33,473,165
-------------
805,378,857
KOREA - 5.7%
Cheil Communications, Inc. -
advertising agencies 293,600 38,311,965
Korea Telecom Corporation - telecommunication
services 374,500 32,982,130
Korea Telecom Freetel - cellular
telecommunication services 913,842 60,894,114
Samsung Electronics - semiconductors and
telecommunication equipment 319,700 105,799,688
SK Telecom Co. Ltd. (ADR) - cellular
telecommunication services 1,097,600 39,856,600
-------------
277,844,497
LUXEMBOURG - 0.4%
Audiofina - television 146,623 18,897,440
MEXICO - 0.9%
Grupo Iusacell S.A. de C.V. (ADR) -
cellular telecommunication services 261,000 4,078,125
Seguros Comercial America - Class B -
multi-line insurance 927,500 3,362,965
Wal-Mart De Mexico - department stores 14,555,000 34,147,928
-------------
41,589,018
NETHERLANDS - 4.4%
ASR Verzekeringsgroep N.V. -
multi-line insurance 278,000 14,411,585
KPN N.V. - telecommunication services 546,814 24,457,741
UnitedGlobalCom, Inc.<F2> - cable television 2,234,300 104,453,525
VNU N.V. - publishing 668,850 34,545,629
Wolters Kluwer N.V. - publishing 1,333,600 35,521,959
-------------
213,390,439
NEW ZEALAND - 0.1%
<F1> Contact Energy Limited - electric utility 4,231,500 5,657,239
NORWAY - 0.1%
P4 Radio Hele Norge ASA - radio stations 1,139,600 6,242,200
PORTUGAL - 0.4%
Portugal Telecom S.A. -
telecommunication services 1,483,000 16,650,052
20
------------
TWENTY
---------------------------------------------------------SCHEDULE OF INVESTMENTS
SHARES MARKET
HELD VALUE
-------- --------
SINGAPORE - 1.7%
<F1> DBS Group Holdings Limited - money
center banks 4,388,707 $ 56,415,342
<F1> Overseas Chinese Banking Corporation Ltd. -
money center banks 3,957,750 27,271,120
-------------
83,686,462
SPAIN - 3.3%
Altadis, S.A. - tobacco 3,402,988 52,273,740
Banco Bilbao Vizcaya Argentaris, S.A. -
money center bank 2,766,952 41,341,200
Banco Santander Central Hispano, S.A. -
money center bank 3,212,000 33,884,800
Centros Comerciales Pryca, S.A. -
retail hypermarkets 2,060,740 29,491,166
Promotora de Informaciones S.A.
(Prisa) - multimedia 114,200 2,649,351
-------------
159,640,257
SWEDEN - 1.4%
Pharmacia Corporation<F2> - pharmaceuticals 1,211,870 62,638,531
Utfors AB - telecommunication services 304,100 6,723,299
-------------
69,361,830
SWITZERLAND - 6.5%
<F1> ABB Limited - engineering services 719,454 86,111,318
Charles Voegele Holding AG - retail apparel 313,137 61,617,714
Geberit International AG - building
and construction products 57,359 19,163,033
Julius Baer Holding AG - Class B -
commercial bank 14,464 57,189,236
UBS AG - money center banks 640,450 93,831,637
-------------
317,912,938
UNITED KINGDOM - 19.4%
Abbey National PLC - mortgage banks 7,646,200 91,398,755
Alliance & Leicester PLC - mortgage banks 4,150,802 36,113,318
Cable & Wireless PLC -
telecommunication services 784,700 13,274,342
Carlton Communications PLC - television
broadcaster 4,059,600 52,211,925
Compass Group PLC - food catering 3,268,600 43,052,471
Diageo PLC - food and beverage producer 6,984,700 62,671,485
<F1> Global TeleSystems, Inc.<F2> -
telecommunication services 5,312,360 64,080,343
Granada Group PLC - television broadcaster 10,575,100 105,607,789
Kingfisher PLC - retail department store 6,607,711 60,138,724
Lloyds TSB Group PLC - money center bank 14,299,623 135,013,349
Northern Rock PLC - mortgage bank 4,210,344 21,660,278
NTL Incorporated<F2> - cable television 1,041,400 62,353,825
Reckitt Benckiser PLC - household products 3,062,100 34,286,142
Royal & Sun Alliance Insurance Group PLC -
multi-line insurance 5,840,695 37,515,415
Saatchi & Saatchi PLC - advertising/
media services 10,091,100 64,944,484
Schroders PLC - international merchant
banking group 1,098,000 19,737,235
TI Group PLC - diversified manufacturing
operations 799,340 4,354,132
Vodafone AirTouch PLC - cellular
telecommunication services 9,214,953 37,228,190
-------------
945,642,202
-------------
TOTAL COMMON AND PREFERRED STOCKS (Cost $4,158,898,708) 4,647,462,564
21
------------
TWENTY-ONE
SCHEDULE OF INVESTMENTS---------------------------------------------------------
PAR MARKET
AMOUNT VALUE
-------- --------
SHORT TERM INVESTMENTS - 5.8%
Repurchase agreement with State Street
Bank and Trust Company, 5.25%, dated
6/30/00, due 7/3/00, maturity value
$281,155,952, collateralized by $153,013,106
market value U.S. Treasury Bond,
10.625%, due 8/15/2015 and $133,657,650
market value U.S. Treasury Bond, 8.875%,
due 2/15/2019 (Cost $281,033,000) $281,033,000 $281,033,000
-------------
TOTAL INVESTMENTS - 101.2% (Cost $4,439,931,708) 4,928,495,564
OTHER ASSETS LESS LIABILITIES - (1.2)% (57,519,486)
-------------
TOTAL NET ASSETS - 100.0%<F5> $4,870,976,078
==============
<F1> Non-income producing security.
<F2> Principally traded in the United States.
<F3> Private Investment Partnership which is restricted as to resale. Valued at
cost which approximates market. Acquired March 6, 2000 for $4,000,000. As
of June 30, 2000, the Fund is obligated to meet additional capital
contributions in the amount of $6,000,000.
<F4> Represents less than 0.1% of total net assets.
<F5> Percentages for the various classifications relate to total net assets.
(ADR) American Depository Receipt
(GDR) Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
22
------------
TWENTY-TWO
ARTISAN
INTERNATIONAL FUND
Portfolio Diversification - June 30, 2000
MARKET VALUE PERCENTAGE
------------ ------------
Consumer Cyclical $1,110,982,022 22.8%
Consumer Non-Cyclical 295,982,827 6.1%
Diversified 183,385,204 3.8%
Financial 1,028,160,463 21.1%
Industrial 458,759,266 9.4%
Technology 313,140,409 6.4%
Telecommunications
(Equipment and Services) 802,289,579 16.5%
Utilities 454,762,794 9.3%
--------------- ------------
TOTAL COMMON AND PREFERRED STOCKS 4,647,462,564 95.4%
Total short-term investments 281,033,000 5.8%
--------------- ------------
TOTAL INVESTMENTS 4,928,495,564 101.2%
OTHER ASSETS LESS LIABILITIES (57,519,486) (1.2%)
--------------- ------------
TOTAL NET ASSETS $ 4,870,976,078 100.0%
=============== ============
The accompanying notes are an integral part of the financial statements.
23
------------
TWENTY-THREE
ARTISAN
MID CAP FUND
(ARTMX)
Schedule of Investments - June 30, 2000
SHARES MARKET
HELD VALUE
-------- --------
COMMON STOCKS - 95.1%
BASIC MATERIALS - 3.7%
CHEMICAL MANUFACTURING - 1.2%
Minerals Technologies, Inc. - synthetic
and specialty mineral products 60,700 $ 2,792,200
CONTAINERS & PACKAGING - 2.5%
<F1> Sealed-Air Corporation -
specialty packaging 72,800 3,812,900
<F1> Smurfit Stone Container Corporation -
packaging products 134,200 1,727,825
------------
5,540,725
CAPITAL GOODS - 9.3%
MISCELLANEOUS CAPITAL GOODS - 7.8%
American Power Conversion Corporation -
uninterruptible power supplies 121,300 4,950,556
<F1> Capstone Turbine Corporation - electric
and heat generator manufacturer 9,300 419,081
<F1> Mettler-Toledo International, Inc. -
precision weighing instruments 114,000 4,560,000
<F1> SPX Corporation - diversified industrial
and electrical products and services 36,000 4,353,750
<F1> Zebra Technologies Corporation - thermal
bar code printer manufacturer 73,900 3,274,694
------------
17,558,081
SCIENTIFIC & TECHNICAL INSTRUMENTS - 1.5%
<F1> Varian, Inc. - scientific instruments
and equipment 74,000 3,413,250
CONSUMER CYCLICAL - 3.2%
APPLIANCE & TOOL - 1.1%
Danaher Corporation - industrial tools
and process/environmental controls 46,900 2,318,619
AUDIO & VIDEO EQUIPMENT - 1.1%
Harman International Industries, Inc. -
high fidelity audio product manufacturer 41,600 2,537,600
AUTO & TRUCK PARTS - 1.0%
<F1> Lear Corporation - independent
automotive supplier 114,600 2,292,000
CONSUMER NON-CYCLICAL - 2.4%
OFFICE SUPPLIES - 2.4%
<F1> United Stationers, Inc. - business
products wholesaler 169,500 5,487,563
24
------------
TWENTY-FOUR
---------------------------------------------------------SCHEDULE OF INVESTMENTS
SHARES MARKET
HELD VALUE
-------- --------
ENERGY - 7.2%
OIL & GAS OPERATIONS - 3.4%
Devon Energy Corporation - natural
gas and exploration company 55,800 $ 3,135,262
Dynegy, Inc. - independent power
producer and energy marketer 65,000 4,440,313
------------
7,575,575
OIL WELL SERVICES & EQUIPMENT - 3.8%
<F1> Nabors Industries, Inc. - contract land
drilling services 112,500 4,675,781
Weatherford International, Inc. - diversified
energy services 101,000 4,021,063
------------
8,696,844
FINANCIAL - 8.3%
INSURANCE (ACCIDENT & HEALTH) - 1.8%
<F1> Wellpoint Health Networks, Inc. -
managed healthcare company 56,800 4,114,450
INSURANCE (LIFE) - 2.3%
Lincoln National Corporation - insurance
and investment management 31,200 1,127,100
ReliaStar Financial Corporation - insurance
and annuity provider 79,200 4,153,050
------------
5,280,150
INSURANCE (PROPERTY & CASUALTY) - 1.4%
ACE Limited - insurance and
reinsurance products 110,000 3,080,000
INVESTMENT SERVICES - 1.5%
Neuberger Berman, Inc. -
investment management 73,800 3,431,700
S&LS/SAVINGS BANKS - 1.3%
Charter One Financial, Inc. -
savings and loan 121,445 2,793,235
HEALTHCARE - 6.8%
BIOTECHNOLOGY & DRUGS - 6.8%
<F1> Affymetrix, Inc. - DNA chip technology 16,300 2,691,537
<F1> ALZA Corporation - research based
pharmaceutical company 56,800 3,358,300
Pe Corporation-Celera Genomics Group -
genomic information for biological p
rocesses 19,500 1,823,250
<F1> Pharmacopeia, Inc. - drug discovery and
chemical development products 44,000 2,040,500
<F1> Watson Pharmaceuticals, Inc. -
development of branded and off-patent
pharmaceutical products 99,000 5,321,250
------------
15,234,837
REAL ESTATE INVESTMENT TRUSTS - 0.1%
HealthCare Financial Partners REIT, Inc.,
144A - healthcare-related
real estate investments 9,160 137,400
SERVICES - 5.1%
BROADCASTING & CABLE TV - 2.0%
<F1> Adelphia Communications Corporation -
cable television operator 96,022 4,501,031
BUSINESS SERVICES - 1.8%
Manpower, Inc. - U.S. and European
temporary staffing firm 124,700 3,990,400
RETAIL (TECHNOLOGY) - 1.3%
InterTAN, Inc. - electronics retailer 253,400 2,977,450
25
------------
TWENTY-FIVE
SCHEDULE OF INVESTMENTS---------------------------------------------------------
SHARES MARKET
HELD VALUE
-------- --------
TECHNOLOGY - 30.8%
COMPUTER HARDWARE - 2.5%
<F1> Handspring, Inc. - expandable handheld
computer manufacturer 43,500 $ 1,174,500
<F1> MIPS Technologies, Inc. - Class A -
designer of high-performance processors 30,800 1,309,000
<F1> MIPS Technologies, Inc. - Class B -
designer of high-performance processors 80,200 3,087,700
------------
5,571,200
COMPUTER SERVICES - 7.1%
Exodus Communications, Inc. - web hosting
services 87,200 4,016,650
<F1> Fiserv, Inc. - administrative processing
for financial institutions 86,200 3,728,150
<F1> Freemarkets, Inc. - online marketplace
for industrial parts, commodities
and services 22,800 1,081,575
<F1> SunGard Data Systems, Inc. - recordkeeping
software and systems for investment
management 228,000 7,068,000
------------
15,894,375
ELECTRONIC INSTRUMENTS & CONTROLS - 7.7%
<F1> Advanced Energy Industries, Inc. - developer
of power conversion and control systems 65,000 3,830,937
Sanmina Corporation - integrated electronic
manufacturing services 54,600 4,668,300
Tektronix, Inc. - electronic measurement and
video-conferencing products 60,900 4,506,600
<F1> Viasystems Group, Inc. - electronic
manufacturing services 263,900 4,271,881
------------
17,277,718
SCIENTIFIC & TECHNICAL INSTRUMENTS - 2.4%
<F1> Veeco Instruments, Inc. - metrology
and process equipment manufacturer 74,000 5,420,500
SEMICONDUCTORS - 7.3%
<F1> Integrated Device Technology, Inc. -
semiconductor designer/manufacturer 112,800 6,753,900
<F1> National Semiconductor Corporation -
semiconductor designer/manufacturer 127,600 7,241,300
SDL, Inc. - optical components manufacturer 8,900 2,538,169
------------
16,533,369
SOFTWARE & PROGRAMMING - 3.8%
Allaire Corporation - internet software
tools and applications 78,200 2,873,850
<F1> Cadence Design Systems, Inc. - electronic
design automation provider 119,300 2,430,737
<F1> Retek, Inc. - web-based software for the
retail industry 101,400 3,244,800
------------
8,549,387
TELECOMMUNICATIONS - 10.7%
COMMUNICATIONS EQUIPMENT - 2.9%
<F1> Polycom, Inc. - audio and videoconferencing
equipment 42,800 4,027,213
Powerwave Technologies, Inc. - power
amplifiers for wireless communications 55,900 2,459,600
------------
6,486,813
COMMUNICATION SERVICES - 7.8%
<F1> Citizens Communications Company - rural
telecommunication services 330,900 5,708,025
Nextlink Communications, Inc. -
telecommunication services 43,400 1,646,488
<F1> Voicestream Wireless Corporation -
telecommunication services 54,600 6,349,809
<F1> Western Wireless Corporation -
telecommunication services 69,600 3,793,200
------------
17,497,522
26
------------
TWENTY-SIX
---------------------------------------------------------SCHEDULE OF INVESTMENTS
SHARES MARKET
HELD VALUE
-------- --------
UTILITIES - 7.5%
ELECTRIC UTILITIES - 2.8%
Calpine Corporation - power
generation facilities 42,600 $ 2,800,950
<F1> NRG Energy, Inc. - power generation
facilities 198,300 3,618,975
------------
6,419,925
NATURAL GAS UTILITIES - 4.7%
Keyspan Corporation - energy services 95,000 2,921,250
Kinder Morgan, Inc. - energy services 220,000 7,603,750
------------
10,525,000
------------
TOTAL COMMON STOCKS (Cost $169,901,522) 213,928,919
WARRANTS - 0.0%
HealthCare Financial Partners REIT,
expires 4/28/01 - (Cost $0) 3,664 -
Par
Amount
------------
SHORT TERM INVESTMENTS - 5.3%
Repurchase Agreement with State Street Bank
and Trust Company, 5.25%, dated 6/30/00,
due 7/3/00, maturity value $11,906,207,
collateralized by $12,141,806 market
value U.S. Treasury Bond, 10.625%,
due 8/15/2015, (Cost $11,901,000) $11,901,000 11,901,000
------------
TOTAL INVESTMENTS - 100.4% (Cost $181,802,522) 225,829,919
OTHER ASSETS LESS LIABILITIES - (0.4)% (851,044)
------------
TOTAL NET ASSETS - 100.0%<F2> $224,978,875
============
<F1> Non-income producing securities.
<F2> Percentages for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
27
------------
TWENTY-SEVEN
ARTISAN
SMALL CAP FUND
(ARTSX)
Schedule of Investments - June 30, 2000
SHARES MARKET
HELD VALUE
-------- --------
COMMON STOCKS - 97.5%
BASIC MATERIALS - 1.1%
CONTAINERS & PACKAGING - 1.1%
AptarGroup, Inc. - pumps, valves and
closures for consumer packaging 75,600 $ 2,041,200
CAPITAL GOODS - 1.5%
AEROSPACE & DEFENSE - 1.5%
<F1> Alliant Techsystems, Inc. - defense
electronics systems 42,300 2,852,606
CONSUMER NON-CYCLICAL - 3.6%
CROPS - 1.4%
Delta & Pine Land Company - cotton and
soybean seed producer 103,500 2,593,969
OFFICE SUPPLIES - 0.9%
<F1> Daisytek International Corporation - office
products supply distributor 171,100 1,614,756
PERSONAL & HOUSEHOLD PRODUCTS - 1.3%
<F1> Playtex Products, Inc. - personal
care products 222,500 2,517,031
ENERGY - 6.8%
OIL & GAS OPERATIONS - 3.2%
<F1> Chieftain International, Inc. - oil
and gas exploration and production 117,600 2,241,750
<F1> Newfield Exploration Company - oil and
gas exploration and production 36,300 1,420,237
Pogo Producing Company - oil and gas
exploration and production 103,030 2,279,539
------------
5,941,526
OIL WELL SERVICES & EQUIPMENT - 3.6%
<F1> Newpark Resources, Inc. - oil and gas
environmental management 230,000 2,170,625
and construction services
<F1> Pride International, Inc. - oil and
gas contract drilling services 100,300 2,482,425
<F1> Varco International, Inc. - oil and gas
technical services 89,500 2,080,875
------------
6,733,925
FINANCIAL - 6.3%
INSURANCE (LIFE) - 3.5%
Reinsurance Group of America, Inc. -
life reinsurance writer 87,400 2,632,925
StanCorp Financial Group, Inc. - group
disability and life insurance 117,900 3,787,538
------------
6,420,463
REGIONAL BANKS - 2.8%
Community First Bankshares, Inc. -
North Dakota-based bank holding company 132,600 2,163,037
<F1> Silicon Valley Bancshares - Silicon
Valley-based bank holding company 43,300 1,845,662
Sterling Bancshares, Inc. - Houston-based
bank holding company 108,300 1,170,994
------------
5,179,693
28
------------
TWENTY-EIGHT
SCHEDULE OF INVESTMENTS---------------------------------------------------------
SHARES MARKET
HELD VALUE
-------- --------
HEALTHCARE - 9.4%
BIOTECHNOLOGY & DRUGS - 8.5%
<F1> Barr Laboratories, Inc. - pharmaceutical
developer and manufacturer 92,250 $ 4,133,953
<F1> Caremark Rx, Inc. - pharmacy benefit
services 406,300 2,767,919
Dexter Corporation - specialty chemicals 28,092 1,348,416
<F1> Invitrogen Corporation - research tools
for biotechnology industry 27,200 2,045,525
<F1> Medicis Pharmaceutical Corporation -
specialty pharmaceuticals for
dermatology 55,400 3,157,800
<F1> Pharmaceutical Product Development, Inc. -
product development services for the
pharmaceutical industry 111,300 2,337,300
------------
15,790,913
MEDICAL EQUIPMENT & SUPPLIES - 0.9%
<F1> SonoSite, Inc. - handheld
ultrasonic imaging devices 56,500 1,627,906
REAL ESTATE INVESTMENT TRUSTS - 1.6%
HealthCare Financial Partners REIT, Inc.,
144A - healthcare-related real
estate investments 199,320 2,989,800
SERVICES - 23.4%
BROADCASTING & CABLE TV - 1.5%
<F1> Spanish Broadcasting System, Inc. -
Spanish language radio broadcaster 135,000 2,775,938
BUSINESS SERVICES - 7.7%
<F1> Bell & Howell Company - imaging and
information services and systems 110,900 2,689,325
<F1> ChoicePoint, Inc. - risk management services
to the insurance industry 59,400 2,643,300
<F1> F.Y.I., Inc. - document management services 90,100 3,035,244
<F1> Modis Professional Services, Inc. -
information technology services 323,990 2,875,411
<F1> NCO Group, Inc. - accounts receivable
management 127,600 2,950,750
------------
14,194,030
PRINTING & PUBLISHING - 2.9%
<F1> Martha Stewart Living Omnimedia, Inc. -
lifestyle publisher and merchandiser 140,160 3,083,520
Penton Media, Inc. - trade publications
and trade shows 63,300 2,215,500
------------
5,299,020
RECREATIONAL ACTIVITIES - 1.4%
<F1> Steiner Leisure Limited - spa service provider 115,209 2,606,604
RESTAURANTS - 1.5%
Morrison Management Specialists, Inc. -
food service to healthcare institutions 98,880 2,787,180
RETAIL (APPAREL) - 1.6%
<F1> Men's Wearhouse, Inc. - mens fashion retailer 133,800 2,985,412
RETAIL (DRUGS) - 1.4%
<F1> Duane Reade, Inc. - retail drugstore operator 104,000 2,678,000
RETAIL (SPECIALTY) - 2.6%
Haverty Furniture Companies, Inc. - home
furnishings retailer 205,400 1,745,900
<F1> ShopKo Stores, Inc. - discount
department stores 198,830 3,057,011
------------
4,802,911
29
------------
TWENTY-NINE
SCHEDULE OF INVESTMENTS
SHARES MARKET
HELD VALUE
-------- --------
SERVICES (CONTINUED)
RETAIL (TECHNOLOGY) - 1.7%
<F1> InterTAN, Inc. - consumer electronics
retailer 272,950 $ 3,207,163
SCHOOLS - 0.8%
<F1> Career Education Corporation - for-profit
post-secondary education provider 28,800 1,396,800
SECURITY SYSTEMS & SERVICES - 0.3%
<F1> Interlogix, Inc. - security, fire protection
and access control systems 43,510 598,262
TECHNOLOGY - 27.5%
COMPUTER NETWORKS - 1.4%
<F1> Globix Corporation - high-end
Internet-solutions provider 85,300 2,500,356
COMPUTER PERIPHERALS - 1.9%
<F1> Apex, Inc. - switching systems for
client/server computing 80,800 3,535,000
COMPUTER SERVICES - 3.2%
<F1> iGate Capital Corporation - information
technology services 177,500 2,440,625
<F1> Technology Solutions Company - information
technology services 553,844 3,426,910
------------
5,867,535
ELECTRONIC INSTRUMENTS & CONTROLS - 3.8%
<F1> Littelfuse, Inc. - circuit protection devices 56,100 2,748,900
<F1> Manufacturers Services Limited -
contract manufacturing for the
electronics industry 45,000 925,313
<F1> Rayovac Corporation - battery manufacturer 153,600 3,436,800
------------
7,111,013
SCIENTIFIC & TECHNICAL INSTRUMENTS - 1.8%
<F1> Veeco Instruments, Inc. - metrology and
process equipment manufacturer 45,800 3,354,850
SEMICONDUCTORS - 4.5%
<F1> Actel Corporation - programmable logic
devices for semiconductor manufacturing 60,800 2,774,000
<F1> Galileo Technology Limited - digital
semiconductor devices 139,635 3,002,152
<F1> Photronics, Inc. - semiconductor photomasks 89,700 2,545,237
------------
8,321,389
SOFTWARE & PROGRAMMING - 10.9%
<F1> Aspect Communications Corporation - customer
interaction software 65,500 2,574,969
<F1> AVT Corporation - computer-telephony solutions 186,600 1,376,175
<F1> Clarus Corporation - web-based procurement
software 69,800 2,713,475
<F1> Peregrine Systems, Inc. - organizational
infrastructure software 82,750 2,870,391
<F1> Progress Software Corporation - software
application development tools 184,500 3,309,469
<F1> Structural Dynamics Research Corporation -
design automation software 209,200 3,151,075
<F1> Systems & Computer Technology - information
technology outsourcing 172,820 3,456,400
<F1> Visual Networks, Inc. - network
management solutions 29,400 773,345
------------
20,225,299
30
------
THIRTY
---------------------------------------------------------SCHEDULE OF INVESTMENTS
SHARES MARKET
HELD VALUE
-------- --------
TELECOMMUNICATIONS - 12.6%
COMMUNICATION EQUIPMENT - 7.7%
<F1> Com21, Inc. - cable broadband access products 122,300 $ 3,057,500
<F1> Paradyne Networks, Inc. - network
access products 93,180 3,034,174
<F1> PC-Tel, Inc. - software-based
connectivity solutions 79,800 3,032,400
<F1> Spectrian Corporation - wireless
communications infrastructure equipment 125,000 2,078,125
<F1> Tekelec - data network switching and
diagnostic systems 65,340 3,148,571
------------
14,350,770
COMMUNICATION SERVICES - 4.9%
<F1> Alamosa PCS Holdings, Inc. - Sprint-branded
wireless communications services provider 60,300 1,258,762
<F1> Clearnet Communications, Inc. - wireless
communications services provider 86,250 2,394,785
<F1> Commonwealth Telephone Enterprises, Inc. -
independent local phone company 42,600 2,004,863
<F1> Motient Corporation - wireless communications
services provider 214,100 3,358,694
------------
9,017,104
TRANSPORTATION - 1.9%
AIRLINE - 0.5%
<F1> Atlantic Coast Airlines Holdings, Inc. -
regional airline service 29,300 930,275
TRUCKING - 1.4%
Werner Enterprises, Inc. - nationwide
truckload carrier 220,140 2,545,369
UTILITIES - 1.8%
NATURAL GAS UTILITIES - 1.8%
Energen Corporation - natural gas distributor 156,600 3,415,838
------------
TOTAL COMMON STOCKS (Cost $159,072,469) 180,809,906
WARRANTS - 0.0%
HealthCare Financial Partners REIT,
expires 4/28/01 (Cost $0) 79,728 -
Par
Amount
------------
SHORT TERM INVESTMENTS - 3.3%
Repurchase agreement with State Street Bank
and Trust Company, 5.25%, dated 6/30/00,
due 7/3/00, maturity value $6,147,688,
collateralized by $6,269,331 market
value U.S. Treasury Bond, 8.875%, due
2/15/19 (Cost $6,145,000) $6,145,000 6,145,000
------------
TOTAL INVESTMENTS - 100.8% (Cost $165,217,469) 186,954,906
OTHER ASSETS LESS LIABILITIES - (0.8%) (1,562,164)
------------
TOTAL NET ASSETS - 100.0%<F2> $185,392,742
============
<F1> Non-income producing securities.
<F2> Percentages for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
31
----------
THIRTY-ONE
ARTISAN
SMALL CAP VALUE FUND
(ARTVX)
Schedule of Investments - June 30, 2000
SHARES MARKET
HELD VALUE
-------- --------
COMMON STOCKS - 94.7%
BASIC MATERIALS - 16.8%
CHEMICAL MANUFACTURING - 1.7%
<F1> American Pacific Corporation - specialty
chemicals for aerospace and defense 193,100 $ 1,086,187
<F1> CFC International, Inc. - specialty
chemical coatings 100,100 775,775
Minerals Technologies, Inc. -
synthetic & specialty mineral products 57,100 2,626,600
------------
4,488,562
CONTAINERS & PACKAGING - 1.4%
Greif Brothers Corporation - Class A -
shipping containers and packaging
manufacturer 114,700 3,527,025
FABRICATED PLASTIC & RUBBER - 2.4%
Carlisle Companies, Inc. - diversified
manufacturer of durable products 137,700 6,196,500
IRON & STEEL - 3.4%
AK Steel Holding Corporation - flat
rolled carbon steel manufacturer 325,300 2,602,400
Intermet Corporation - iron and
aluminum castings 302,300 2,078,312
Roanoke Electronic Steel Corporation -
fabricated steel products 149,800 1,872,500
Schnitzer Steel Industries, Inc. - Class A -
steel scrap processor and
minimill operation 153,700 2,439,987
------------
8,993,199
METAL MINING - 2.2%
Cleveland-Cliffs, Inc. - iron ore supplier 222,300 5,738,119
MISCELLANEOUS FABRICATED PRODUCTS - 5.7%
<F1> Barnett, Inc. - distributor of plumbing,
electrical and hardware products 305,500 3,131,375
Kaydon Corporation - custom-engineered
industrial products 213,400 4,481,400
<F1> L.B. Foster Company - Class A - rail and
construction supplies manufacturer 189,700 604,669
<F1> Mueller Industries, Inc. - plumbing
products manufacturer 240,700 6,739,600
------------
14,957,044
CAPITAL GOODS - 15.6%
AEROSPACE & DEFENSE - 1.0%
Primex Technologies, Inc. -
ordnance & aerospace contractor
and manufacturer 122,700 2,699,400
CONSTRUCTION (SUPPLIES & FIXTURES) - 0.4%
Insteel Industries, Inc. - steel wire
products manufacturer 159,800 988,762
32
----------
THIRTY-TWO
---------------------------------------------------------SCHEDULE OF INVESTMENTS
SHARES MARKET
HELD VALUE
-------- --------
CAPITAL GOODS (CONTINUED)
CONSTRUCTION (RAW MATERIALS) - 1.2%
Centex Construction Products, Inc. - cement
and gypsum wallboard manufacturer 139,400 $ 3,162,637
CONSTRUCTION SERVICES - 4.5%
<F1> EMCOR Group, Inc. - mechanical and
electrical contractor 270,500 6,272,219
<F1> Jacobs Engineering Group, Inc. - engineering
and construction 171,900 5,618,981
------------
11,891,200
MISCELLANEOUS CAPITAL GOODS - 7.2%
Briggs & Stratton Corporation - manufacturer
of air-cooled gasoline engines 108,700 3,722,975
Franklin Electric Company - electric
motor manufacturer 21,200 1,436,300
Lincoln Electric Holdings, Inc. -
welding products 268,600 3,827,550
Regal-Beloit Corporation - electrical
equipment manufacturer 302,500 4,858,906
Smith Investment Company - multi-industry
holding company 16,000 720,000
Tecumseh Products Company - pump, compressor
and engine component manufacturer 48,300 1,844,456
Thomas Industries, Inc. - compressor
and vacuum pump manufacturer 109,800 1,942,087
Twin Disc, Inc. - heavy-duty power
transmission equipment manufacturer 25,500 435,094
------------
18,787,368
MOBILE HOMES & RVS - 1.3%
<F1> Champion Enterprises, Inc. - manufactured
housing 226,400 1,103,700
Fleetwood Enterprises, Inc. - manufactured
housing and recreational vehicle
manufacturer 151,500 2,158,875
------------
3,262,575
CONSUMER CYCLICAL - 14.9%
APPAREL/ACCESSORIES - 2.9%
Guilford Mills, Inc. - knit textile
fabrics producer 307,900 1,308,575
Kellwood Company - apparel & soft goods
manufacturer 186,000 3,929,250
Velcro Industries, N.V. - manufacturer of
Velcro brand fasteners 210,000 2,310,000
------------
7,547,825
AUTO & TRUCK PARTS - 7.4%
BorgWarner, Inc. - engineered automotive
systems and components 147,600 5,184,450
CLARCOR, Inc. - filtration products 273,800 5,441,775
Modine Manufacturing Co. - heat exchangers
and systems manufacturer 233,600 6,307,200
Superior Industries International, Inc. -
designer & manufacturer of motor
vehicle parts 94,900 2,443,675
------------
19,377,100
FOOTWEAR - 1.9%
Justin Industries, Inc. - western wear and
building products 196,000 4,287,500
<F1> R.G. Barry Corporation - specialized comfort
footwear manufacturer 198,500 769,187
------------
5,056,687
FURNITURE & FIXTURES - 1.3%
Chromcraft Revington, Inc. - manufacturer
of residential and commercial furniture 39,000 453,375
Kimball International, Inc. - diversified
furniture manufacturer 189,600 2,796,600
------------
3,249,975
RECREATIONAL PRODUCTS - 1.4%
Arctic Cat, Inc. - snowmobile and all-terrain
vehicle manufacturer 308,500 3,663,438
33
------------
THIRTY-THREE
SCHEDULE OF INVESTMENTS---------------------------------------------------------
SHARES MARKET
HELD VALUE
-------- --------
CONSUMER NON-CYCLICAL - 0.8%
FOOD PROCESSING - 0.5%
<F1> Ralcorp Holdings, Inc. - manufacturer
of private label food products 99,300 $ 1,216,425
TOBACCO - 0.3%
<F1> M&F Worldwide Corporation -
flavorings producer 146,700 825,188
ENERGY - 10.4%
OIL & GAS OPERATIONS - 10.4%
<F1> Barrett Resources Corporation -
oil and natural gas exploration/production 110,900 3,375,519
Cabot Oil & Gas Corporation - Class A -
natural gas exploration/production 217,900 4,616,756
<F1> Forest Oil Corporation - oil and natural gas
exploration/production 339,217 5,406,271
<F1> Nuevo Energy Company - oil and natural gas
exploration/production 139,200 2,627,400
<F1> Prima Energy Corporation - oil and natural
gas exploration/production 36,750 1,966,125
<F1> Pure Resources, Inc. - oil and natural gas
exploration/production 75,789 1,354,728
<F1> Santa Fe Snyder - oil and natural gas
exploration/production 317,800 3,614,975
<F1> Tom Brown, Inc. - oil and natural
gas exploration 189,800 4,377,263
------------
27,339,037
FINANCIAL - 19.5%
CONSUMER FINANCIAL SERVICES - 2.5%
White Mountains Insurance Group, Ltd. -
insurance and mortgage banking 41,100 6,576,000
INSURANCE (LIFE) - 2.5%
Annuity and Life RE (Holdings), Ltd. -
life and annuity reinsurance 176,200 4,316,900
Scottish Annuity & Life Holdings, Ltd. -
life and annuity reinsurance 278,300 2,330,763
------------
6,647,663
INSURANCE (MISCELLANEOUS) - 2.3%
Hilb, Rogal & Hamilton Company -
insurance broker 175,800 6,098,063
INSURANCE (PROPERTY & CASUALTY) - 7.1%
<F1> Acceptance Insurance Companies -
crop insurance 124,200 621,000
<F1> Arch Capital Group, Ltd. - reinsurance
products and services 166,100 2,481,119
First American Financial Corporation -
property title insurer 192,100 2,749,431
IPC Holdings, Ltd. - catastrophe reinsurer 188,900 2,644,600
<F1> Markel Corporation - specialty
insurance products and services 19,600 2,775,850
<F1> PICO Holdings, Inc. - property and
casualty insurance 176,400 2,480,625
<F1> Stewart Information Services Corporation -
property title insurer 329,900 4,824,788
------------
18,577,413
INVESTMENT SERVICES - 2.0%
John Nuveen Company - investment
management services 124,900 5,237,994
MISCELLANEOUS FINANCIAL SERVICES - 1.0%
Capital Southwest Corporation -
closed-end venture capital
investment company 40,600 2,476,600
S&LS/SAVINGS BANKS - 2.1%
John Hancock Bank & Thrift Opportunity Fund -
closed-end investment company 741,500 4,958,781
The Somerset Group, Inc. - investment services 18,700 409,063
------------
5,367,844
34
-----------
THIRTY-FOUR
---------------------------------------------------------SCHEDULE OF INVESTMENTS
SHARES MARKET
HELD VALUE
-------- --------
HEALTHCARE - 1.7%
HEALTHCARE FACILITIES - 1.7%
<F1> America Service Group, Inc. - managed
healthcare services 90,100 $ 1,847,050
<F1> Manor Care, Inc. - healthcare service provider 179,000 1,253,000
<F1> National Dentex Corporation - dental
laboratory operator 82,900 1,398,938
------------
4,498,988
REAL ESTATE INVESTMENT TRUSTS - 0.6%
Asset Investors Corporation - manufactured
housing communities 87,500 1,033,594
Healthcare Financial Partners REIT, Inc.,
144A - healthcare-related real estate
investments 31,405 471,075
------------
1,504,669
SERVICES - 8.2%
ADVERTISING - 4.2%
<F1> ADVO, Inc. - direct mail marketing services 165,300 6,942,600
Grey Advertising, Inc. - advertising agency 8,021 4,042,584
------------
10,985,184
BUSINESS SERVICES - 1.3%
<F1> Craig Corporation - Class A Preference -
movie theatres owner/operator 81,200 309,575
Midas, Inc. - automotive repair services 151,900 3,038,000
------------
3,347,575
PRINTING & PUBLISHING - 0.6%
Courier Corporation - book manufacturer 59,200 1,672,400
RETAIL (APPAREL) - 1.9%
<F1> Footstar, Inc. - athletic and casual
footwear retailer 111,700 3,714,025
<F1> Polo Ralph Lauren Corporation - premium
apparel designer/manufacturer 85,500 1,218,375
------------
4,932,400
WASTE MANAGEMENT SERVICES - 0.2%
Sevenson Environmental Services, Inc. -
hazardous waste remediation 37,800 415,800
TECHNOLOGY - 4.1%
COMPUTER PERIPHERALS - 0.2%
Astro-Med, Inc. - medical instrumentation/
specialty printers 96,800 532,400
ELECTRONIC INSTRUMENTS & CONTROLS - 3.5%
<F1> Genlyte Group, Inc. - commercial,
industrial and residential lighting 336,900 7,095,956
<F1> Powell Industries, Inc. - electrical
equipment manufacturer 208,000 2,028,000
------------
9,123,956
SOFTWARE & PROGRAMMING - 0.4%
Timberline Software Corporation -
computer software developer 167,600 1,225,575
35
------------
THIRTY-FIVE
SHARES MARKET
HELD VALUE
-------- --------
TRANSPORTATION - 0.9%
MISCELLANEOUS TRANSPORTATION - 0.3%
<F1> Aviall, Inc. - aviation parts distributor 170,430 $841,498
TRUCKING - 0.6%
USFreightways Corporation -
global transportation 57,700 1,417,256
UTILITIES - 1.2%
NATURAL GAS UTILITIES - 1.2%
UGI Corporation - distributor of natural
gas, electricity and propane 156,800 3,214,400
------------
TOTAL COMMON STOCKS (Cost $243,444,124) 247,661,744
WARRANTS - 0.0%
Healthcare Financial Partners REIT,
expires 4/28/01 (Cost $0) 12,562 -
PAR
AMOUNT
--------
SHORT TERM INVESTMENTS - 5.9%
Repurchase agreement with State Street
Bank and Trust Company, 5.25%, dated
06/30/2000, due 7/3/2000, maturity value
$15,419,743, collateralized by $15,727,994
market value U.S. Treasury Bond, 10.625%
due 08/15/2015 (Cost $15,413,000) $15,413,000 15,413,000
-------------
TOTAL INVESTMENTS - 100.6% (Cost $258,857,124) 263,074,744
OTHER ASSETS LESS LIABILITIES - (0.6%) (1,417,740)
-------------
TOTAL NET ASSETS - 100.0%<F2> $261,657,004
=============
<F1> Non-income producing securities.
<F2> Percentages for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
36
----------
THIRTY-SIX
FINANCIAL STATEMENTS
37
-------------
THIRTY-SEVEN
ARTISAN FUNDS, INC.
Statements of Assets & Liabilities - June 30, 2000
<TABLE>
<CAPTION>
INTERNATIONAL MID CAP SMALL CAP SMALL CAP
FUND FUND FUND VALUE FUND
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in securities, at value $4,928,495,564 $ 225,829,919 $ 186,954,906 $ 263,074,744
Cash 641 594 776 492
Receivable from investments sold 36,445,332 6,595,785 2,783,187 392,537
Receivable from forward currency contracts 117,287,872 - - -
Receivable from fund shares sold 59,544,976 671,637 338,850 425,963
Interest receivable 40,984 1,735 896 2,248
Dividends receivable 6,046,195 15,003 7,402 266,901
Organizational costs 3,660 11,344 - 15,918
Other assets - - - 847
---------------- ---------------- ---------------- ----------------
TOTAL ASSETS 5,147,865,224 233,126,017 190,086,017 264,179,650
LIABILITIES:
Payable for investments purchased 149,954,260 7,949,383 4,546,235 1,670,281
Payable for forward currency contracts 117,398,956 - - -
Payable for fund shares redeemed 6,082,782 63,537 19,920 646,804
Payable for organizational costs 3,660 11,344 - 15,918
Payable for operating expenses 2,883,999 122,878 127,120 189,643
Other liabilities 565,489 - - -
---------------- ---------------- ---------------- ----------------
TOTAL LIABILITIES 276,889,146 8,147,142 4,693,275 2,522,646
---------------- ---------------- ---------------- ----------------
TOTAL NET ASSETS $4,870,976,078 $ 224,978,875 $ 185,392,742 $ 261,657,004
================ ================ ================ ================
NET ASSETS CONSIST OF:
Fund shares issued and outstanding $3,744,328,365 $ 167,168,751 $ 158,422,537 $ 249,669,586
Net unrealized appreciation (depreciation)
on investments and foreign currency
related transactions 488,633,769 44,027,397 21,737,437 4,217,620
Accumulated undistributed
net investment income (loss) (2,599,311) - - 567,242
Accumulated undistributed net realized
gains (losses) on investments and foreign
currency related transactions 640,613,255 13,782,727 5,232,768 7,202,556
---------------- ---------------- ---------------- ----------------
$4,870,976,078 $ 224,978,875 $ 185,392,742 $ 261,657,004
================ ================ ================ ================
SUPPLEMENTARY INFORMATION:
Net assets
Investor Shares $3,734,813,199 $224,978,875 $185,392,742 $261,657,004
Institutional Shares $1,136,162,879
Number of shares outstanding
Investor Shares 123,846,322 8,158,890 12,617,824 24,611,562
Institutional Shares 37,590,641
Net asset value, offering price
and redemption price per share
Investor Shares $30.16 $27.57 $14.69 $10.63
Institutional Shares $30.22
Cost of securities held $4,439,931,708 $181,802,522 $165,217,469 $258,857,124
</TABLE>
The accompanying notes are an integral part of the financial statements.
38
-------------
THIRTY-EIGHT
ARTISAN FUNDS, INC.
Statements of Operations - For the Year Ended June 30, 2000
<TABLE>
<CAPTION>
INTERNATIONAL MID CAP SMALL CAP SMALL CAP
FUND FUND FUND VALUE FUND
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 7,040,049 $ 331,458 $ 226,530 $ 645,134
Dividends 27,344,688<F1> 317,851 764,256 2,307,077
--------------- --------------- --------------- ---------------
TOTAL INVESTMENT INCOME 34,384,737 649,309 990,786 2,952,211
EXPENSES:
Advisory fees 27,952,915 1,063,517 1,763,380 1,532,665
Transfer agent fees
Investor Shares 4,081,462 183,909 232,376 216,159
Institutional Shares 24,178
Shareholder communications
Investor Shares 465,581 24,928 55,587 43,973
Institutional Shares 7,448
Custodian fees 2,211,334 50,446 71,497 55,191
Accounting fees 81,083 44,027 43,837 45,634
Professional fees 160,330 30,644 31,029 41,614
Registration fees
Investor Shares 618,467 63,642 111,600 70,686
Institutional Shares 227,000
Directors' fees 15,000 15,000 15,000 15,000
Organizational costs 7,317 5,673 10,396 7,073
Other operating expenses 140,089 8,706 27,278 15,606
--------------- --------------- --------------- ---------------
TOTAL OPERATING EXPENSES 35,992,204 1,490,492 2,361,980 2,043,601
--------------- --------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS) (1,607,467) (841,183) (1,371,194) 908,610
NET REALIZED AND UNREALIZED GAINS
(LOSSES) ON INVESTMENTS:
Net realized gain (loss) on:
Investments 762,210,703 18,317,700 47,504,368 10,515,241
Foreign currency related transactions (3,264,458) - - -
--------------- --------------- --------------- ---------------
758,946,245 18,317,700 47,504,368 10,515,241
Net increase (decrease) in unrealized
appreciation on:
Investments 327,576,193 35,776,647 2,030,693 1,889,663
Foreign currency related transactions 29,364 - - -
--------------- --------------- --------------- ---------------
327,605,557 35,776,647 2,030,693 1,889,663
--------------- --------------- --------------- ---------------
NET GAIN (LOSS) ON INVESTMENTS 1,086,551,802 54,094,347 49,535,061 12,404,904
--------------- --------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $1,084,944,335 $53,253,164 $48,163,867 $13,313,514
=============== =============== =============== ===============
</TABLE>
<F1> Net of foreign taxes withheld of $4,576,229.
The accompanying notes are an integral part of the financial statements.
39
------------
THIRTY-NINE
ARTISAN FUNDS, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
INTERNATIONAL FUND MID CAP FUND
---------------------------------- ---------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/00 6/30/99 6/30/00 6/30/99
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,607,467) $ 4,109,783 $ (841,183) $ (258,932)
Net realized gain (loss) on:
Investments 762,210,703 38,449,100 18,317,700 1,711,886
Foreign currency related transactions (3,264,458) (677,233) - -
Net increase (decrease) in unrealized
appreciation on:
Investments 327,576,193 79,783,283 35,776,647 7,469,075
Foreign currency related transactions 29,364 (137,818) - -
--------------- --------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 1,084,944,335 121,527,115 53,253,164 8,922,029
DISTRIBUTIONS PAID
TO SHAREHOLDERS:
Net investment income:
Investor Shares (1,579,375) (944,186) - -
Institutional Shares (1,166,198) (257,100)
Net realized gains on investment transactions:
Investor Shares (36,202,670) (6,509,837) (2,623,181) (1,185,407)
Institutional Shares (10,501,625) (1,271,446)
--------------- --------------- --------------- ---------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS (49,449,868) (8,982,569) (2,623,181) (1,185,407)
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES 2,711,977,012 513,780,438 131,029,274 22,802,060
--------------- --------------- --------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,747,471,479 626,324,984 181,659,257 30,538,682
Net assets, beginning of period 1,123,504,599 497,179,615 43,319,618 12,780,936
--------------- --------------- --------------- ---------------
NET ASSETS, END OF PERIOD $4,870,976,078 $1,123,504,599 $ 224,978,875 $ 43,319,618
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
---------
FORTY
---------------------------------------------STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SMALL CAP FUND SMALL CAP VALUE FUND
------------------------------ -------------------------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
6/30/00 6/30/99 6/30/00 6/30/99
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,371,194) $ (1,330,119) $ 908,610 $ (233,182)
Net realized gain (loss) on:
Investments 47,504,368 (40,422,189) 10,515,241 1,468,035
Futures contracts - 645,230 - -
Net increase (decrease) in unrealized
appreciation on:
Investments 2,030,693 (15,181,024) 1,889,663 651,867
--------------- --------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 48,163,867 (56,288,102) 13,313,514 1,886,720
DISTRIBUTIONS PAID
TO SHAREHOLDERS:
Net investment income - - (284,790) -
Net realized gains on investment transactions - (17,843,098) (3,661,649) (2,325,801)
--------------- --------------- --------------- ---------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS - (17,843,098) (3,946,439) (2,325,801)
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES (37,327,000) (55,455,086) 174,489,907 31,009,275
--------------- --------------- --------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 10,836,867 (129,586,286) 183,856,982 30,570,194
Net assets, beginning of period 174,555,875 304,142,161 77,800,022 47,229,828
--------------- --------------- --------------- ---------------
NET ASSETS, END OF PERIOD $185,392,742 $174,555,875 $ 261,657,004 $ 77,800,022
=============== =============== =============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
41
------------
FORTY-ONE
ARTISAN FUNDS, INC.
Financial Highlights - for a share outstanding throughout each period
<TABLE>
<CAPTION>
NET ASSET NET NET REALIZED TOTAL INCOME DIVIDENDS DISTRIBUTIONS
YEAR OR VALUE INVESTMENT AND UNREALIZED (LOSS) FROM FROM NET FROM NET
PERIOD BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT REALIZED
ENDED OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME GAINS
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ARTISAN INTERNATIONAL FUND
INVESTOR ----------------------------------------------------------------------------------------------------
SHARES 6/30/00 $18.67 $(0.03)<F1> $12.08 $12.05 $(0.02) $(0.54)
----------------------------------------------------------------------------------------------------
6/30/99 16.25 0.08<F1> 2.62 2.70 (0.04) (0.24)
----------------------------------------------------------------------------------------------------
6/30/98 14.48 0.06<F1> 3.04 3.10 (0.20) (1.13)
----------------------------------------------------------------------------------------------------
6/30/97 12.08 0.07 2.44 2.51 (0.02) (0.09)
----------------------------------------------------------------------------------------------------
6/30/96<F2> 10.00 0.04 2.04 2.08 - -
----------------------------------------------------------------------------------------------------
INSTITUTIONAL
SHARES ----------------------------------------------------------------------------------------------------
6/30/00 $18.70 $0.03<F1> $12.09 $12.12 $(0.06) $(0.54)
----------------------------------------------------------------------------------------------------
6/30/99 16.26 0.11<F1> 2.62 2.73 (0.05) (0.24)
----------------------------------------------------------------------------------------------------
6/30/98 14.48 0.09<F1> 3.04 3.13 (0.22) (1.13)
----------------------------------------------------------------------------------------------------
ARTISAN MID CAP FUND
----------------------------------------------------------------------------------------------------
6/30/00 $16.67 $(0.18)<F1> $ 11.91 $ 11.73 $ - $ (0.83)
----------------------------------------------------------------------------------------------------
6/30/99 13.69 (0.16)<F1> 4.41 4.25 - (1.27)
----------------------------------------------------------------------------------------------------
6/30/98 10.00 (0.08) 4.56 4.48 - (0.79)
----------------------------------------------------------------------------------------------------
6/30/97<F6> 10.00 - - - - -
----------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND
----------------------------------------------------------------------------------------------------
6/30/00 $ 11.09 $ (0.10)<F1> $ 3.70 $ 3.60 $ - $ -
----------------------------------------------------------------------------------------------------
6/30/99 14.66 (0.08) (2.53) (2.61) - (0.96)
----------------------------------------------------------------------------------------------------
6/30/98 15.11 (0.10) 2.23 2.13 - (2.58)
----------------------------------------------------------------------------------------------------
6/30/97 14.67 (0.04) 1.55 1.51 - (1.07)
----------------------------------------------------------------------------------------------------
6/30/96 11.52 (0.07) 3.32 3.25 - (0.10)
----------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
----------------------------------------------------------------------------------------------------
6/30/00 $ 10.59 $ 0.06<F1> $ 0.36 $ 0.42 $ (0.03) $ (0.35)
----------------------------------------------------------------------------------------------------
6/30/99 11.37 (0.03) (0.21)<F7> (0.24) - (0.54)
----------------------------------------------------------------------------------------------------
6/30/98<F8> 10.00 (0.03) 1.40 1.37 - -
----------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
RATIO NET OF
NET ASSET NET ASSETS RATIO OF INVESTMENT
VALUE END OF EXPENSES INCOME (LOSS) PORTFOLIO
TOTAL END TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
DISTRIBUTIONS OF PERIOD RETURN (MILLIONS) NET ASSETS NET ASSETS RATE
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ARTISAN INTERNATIONAL FUND
INVESTOR $(0.56) $30.16 65.6% $3,734.8 1.27% (0.10%) 99.02%
SHARES ----------------------------------------------------------------------------------------------------
(0.28) 18.67 17.4 943.9 1.38 0.59 79.41
----------------------------------------------------------------------------------------------------
(1.33) 16.25 24.1 414.5 1.45 0.37 109.42
----------------------------------------------------------------------------------------------------
(0.11) 14.48 20.9 449.2 1.61 1.07 103.66
----------------------------------------------------------------------------------------------------
- 12.08 20.8<F3> 71.5 2.50<F4> 1.60<F4> 57.00<F3>
----------------------------------------------------------------------------------------------------
INSTITUTIONAL
SHARES ----------------------------------------------------------------------------------------------------
$(0.60) $ 30.22 66.0% $1,136.2 1.08% 0.09% 99.02%
----------------------------------------------------------------------------------------------------
(0.29) 18.70 17.6 179.6 1.17 0.68 79.41
----------------------------------------------------------------------------------------------------
(1.35) 16.26 24.4 82.6 1.25 0.68 109.42
----------------------------------------------------------------------------------------------------
ARTISAN MID CAP FUND
----------------------------------------------------------------------------------------------------
$(0.83) $ 27.57 72.9% $ 225.0 1.40% (0.79%) 245.69%
----------------------------------------------------------------------------------------------------
(1.27) 16.67 35.8 43.3 2.00<F5> (1.13)<F5> 202.84
----------------------------------------------------------------------------------------------------
(0.79) 13.69 46.1 12.8 2.00<F5> (0.77)<F5> 235.65
----------------------------------------------------------------------------------------------------
- 10.00 0.0<F3> 1.8 0.00<F4> 0.00<F4> 0.00<F3>
----------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND
----------------------------------------------------------------------------------------------------
$ - $ 14.69 32.5% $ 185.4 1.35% (0.79%) 193.76%
----------------------------------------------------------------------------------------------------
(0.96) 11.09 (17.0) 174.6 1.37 (0.67) 155.38
----------------------------------------------------------------------------------------------------
(2.58) 14.66 14.7 304.1 1.33 (0.74) 134.67
----------------------------------------------------------------------------------------------------
(1.07) 15.11 11.3 267.8 1.41 (0.73) 87.18
----------------------------------------------------------------------------------------------------
(0.10) 14.67 28.3 400.0 1.52 (0.75) 105.19
----------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
----------------------------------------------------------------------------------------------------
$ (0.38) $ 10.63 4.2% $ 261.7 1.35% 0.60% 38.19%
----------------------------------------------------------------------------------------------------
(0.54) 10.59 (1.0) 77.8 1.66 (0.45) 49.29
----------------------------------------------------------------------------------------------------
- 11.37 13.7<F3> 47.2 1.93<F4> (0.50)<F4> 52.58<F3>
----------------------------------------------------------------------------------------------------
</TABLE>
<F1> Computed based on average shares outstanding.
<F2> For the period from commencement of operations (December 28, 1995) through
June 30, 1996.
<F3> Not annualized.
<F4> Annualized.
<F5> The ratios of expenses to average net assets and net investment loss to
average net assets exclude fees paid by the Adviser. Absent fees paid by
the Adviser, the ratios of expenses to average net assets and net
investment loss to average net assets would have been 2.12% and (1.25%) for
the year ended June 30, 1999 and 3.64% and (2.41%) for the year ended June
30, 1998, respectively.
<F6> For the period from commencement of operations (June 27, 1997) through June
30, 1997.
<F7> The amount shown may not correlate with the aggregate gains and losses of
portfolio securities due to the timing of subscriptions and redemptions of
fund shares.
<F8> For the period from commencement of operations (September 29, 1997) through
June 30, 1998.
The accompanying notes are an integral part of the financial statements.
43
--------------
FORTY-THREE
ARTISAN FUNDS, INC.
Notes to Financial Statements - June 30, 2000
(1) ORGANIZATION:
Artisan Funds, Inc. ("Artisan Funds" ) was incorporated on January 5, 1995,
as a Wisconsin corporation and is registered under the Investment Company
Act of 1940, as amended. Artisan Funds is a series comprised of four open-
end, diversified mutual funds (each a "Fund" and collectively the "Funds"):
Artisan International Fund ("International Fund"), Artisan Mid Cap Fund
("Mid Cap Fund"), Artisan Small Cap Fund ("Small Cap Fund") and Artisan
Small Cap Value Fund ("Small Cap Value Fund"). International Fund, Mid Cap
Fund, Small Cap Fund, and Small Cap Value Fund commenced operations on
December 28, 1995, June 27, 1997, March 28, 1995 and September 29, 1997,
respectively.
The International Fund and Mid Cap Fund began offering two classes of
capital shares effective July 1, 1997 and July 1, 2000, respectively. The
share classes for International Fund and Mid Cap Fund were renamed to
Investor Shares and Institutional Shares effective April 27, 2000. The
share classes for Small Cap Fund and Small Cap Value Fund were renamed to
Investor Shares effective July 1, 2000. 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, shareholder communication expenses and registration fees, are
allocated directly to that class.
The International Fund Investor Shares, International Fund Institutional
Shares, Mid Cap Fund Investor Shares, Small Cap Fund and Small Cap Value
Fund each have an indefinite number of shares authorized with a $0.01 par
value.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds.
(a) Security valuation - Each security is valued at the last sales price
reported by the principal securities exchange on which the issue is
traded, or if no sale is reported on the principal exchange, the last
sale on a secondary exchange. The last bid price reported is utilized
if no sales have taken place. Securities for which prices are not
readily available, or which management believes that the latest sales
or bid price is not reflective of the fair value of the security, are
valued as determined in good faith under consistently applied
procedures established by and under the general supervision of the
Board of Directors. Short-term investments maturing within sixty days
of their purchase date are valued at amortized cost which approximates
market.
The International Fund, Mid Cap Fund, Small Cap Fund and Small Cap
Value Fund each own certain securities which are valued at their fair
value as determined using procedures established by the Fund's Board
of Directors, aggregating $4,000,000, $137,400, $2,989,800 and
$471,075, respectively, representing 0.1%, 0.1%, 1.6% and 0.2%,
respectively, of the net assets of each of the Funds.
44
-----------
FORTY-FOUR
-------------------------------------------NOTES TO FINANCIAL STATEMENTS (CONT.)
(b) Income taxes - No provision has been made for federal income taxes
since each Fund intends to 1) distribute to its shareholders
substantially all of its taxable income as well as realized gains from
the sale of investment securities and 2) comply with all provisions of
the Internal Revenue Code applicable to regulated investment
companies.
(c) Portfolio transactions - Security and shareholder transactions are
recorded on trade date. Net realized gains and losses on securities
are computed on specific security lot identification.
(d) Foreign currency translation - Values of investments denominated in
foreign currencies are converted into U.S. dollars using the spot
market rate of exchange at the time of valuation. Purchases and sales
of investments and dividend and interest income are translated to U.S.
dollars using the spot market rate of exchange prevailing on the
respective dates of such transactions. The portion of security gains
or losses resulting from changes in foreign exchange rates is included
with net realized and unrealized gain or loss from investments, as
appropriate, for both financial reporting and tax purposes.
The International Fund enters into forward currency contracts to hedge
the foreign currency exposure on open payables and receivables. The
forward currency contracts are recorded at market value and any
related realized and unrealized gains and losses are reported as
foreign currency related transactions for financial reporting
purposes. For tax purposes, these foreign exchange gains and losses
are treated as ordinary income. The International Fund could be
exposed to loss if the counterparties fail to perform under these
contracts.
(e) Futures Contracts - Each Fund is authorized to enter into futures
contracts. A purchase or sale of a futures contract may result in
losses in excess of the amount invested and there can be no guarantee
that there will be a correlation between price movements in the
futures contract and in the portfolio exposure sought. In addition,
there can be no assurance that a liquid market will exist at a time
when the Fund seeks to close out a futures position and there is a
risk that the counterparty to the futures contract will not be able to
meet the terms of the contract. Futures contracts are valued based
upon their quoted daily settlement prices. Fluctuations in the value
of these contracts are recorded as unrealized appreciation
(depreciation) until terminated, at which time realized gains and
losses are recognized.
(f) Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
(g) Other - Dividend income is recorded on the ex-dividend date, except
that certain dividends from private placements and foreign securities
are recorded as soon as the information becomes available to the
Funds. Interest income is reported on the accrual basis. Distributions
to shareholders are recorded on the ex-dividend date. Generally
accepted accounting principles require that permanent financial
reporting and tax differences be reclassified in the capital accounts.
45
-----------
FORTY-FIVE
NOTES TO FINANCIAL STATEMENTS (CONT.)-------------------------------------------
(3) TRANSACTIONS WITH AFFILIATES:
Artisan Partners Limited Partnership (the "Adviser"), with which certain
officers and directors of the Funds are affiliated, provides investment
advisory and administrative services to the Funds. In exchange for these
services, each Fund pays a monthly management fee to the Adviser as
follows:
Average Daily Net Assets Annual Rate
---------------------------- -----------
Less than $500 million 1.000%
$500 million to $750 million 0.975%
$750 million to $1 billion 0.950%
Greater than $1 billion 0.925%
Each Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports. The
Adviser has undertaken to reimburse the Mid Cap Fund, Small Cap Fund, and
Small Cap Value Fund for any ordinary operating expenses in excess of 2.00%
of average net assets annually, and the International Fund for ordinary
operating expenses in excess of 2.50% of average net assets annually.
Each director who is not an interested person of Artisan Funds, Inc. or
Artisan Partners Limited Partnership receives an annual retainer fee of
$5,000 per Fund, plus reimbursement of expenses related to their duties as
a director of Artisan Funds, Inc.
(4) ORGANIZATIONAL COSTS:
Organizational costs are amortized over sixty months. These expenses were
paid by the Adviser and will be reimbursed by the Funds over the same time
period.
46
----------
FORTY-SIX
------------------------------------------(NOTES TO FINANCIAL STATEMENTS (CONT.)
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 $50 million. Artisan Funds, Inc. pays a
commitment fee of 0.10% on the unused portion of the line of credit. This
fee is allocated to each Fund based on relative net assets. Interest is
charged on any borrowings at the current Federal funds rate plus 0.50%. The
use of the line of credit is generally restricted to temporary borrowing
for extraordinary or emergency purposes. Maximum borrowings under the line
of credit for the fiscal year ended June 30, 2000 were as follows:
Fund Maximum Borrowings
---- ------------------
International Fund -
Mid Cap Fund -
Small Cap Fund $1,826,682
Small Cap Value Fund -
(6) INVESTMENT TRANSACTIONS:
The cost of securities purchased and the proceeds from the sale of
securities (excluding short-term securities) for the year ended June 30,
2000 were as follows:
Fund Security Purchases Security Sales
---- ------------------ --------------
International $5,278,134,639 $2,808,257,546
Mid Cap 372,900,210 255,219,315
Small Cap 330,491,998 371,457,107
Small Cap Value 213,752,064 54,372,255
47
------------
FORTY-SEVEN
NOTES TO FINANCIAL STATEMENTS (CONT.)-------------------------------------------
(7) FUND SHARE ACTIVITIES:
Capital share transactions for the Funds were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL FUND
-----------------------------------------
INVESTOR INSTITUTIONAL MID CAP
FISCAL YEAR ENDED JUNE 30, 2000 SHARES SHARES FUND
-------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C> <C>
Proceeds from shares issued $3,361,034,086 $ 732,197,055 $ 156,775,953
Net asset value of shares issued in
reinvestment of distributions 35,772,431 11,657,657 2,587,556
Cost of shares redeemed (1,386,071,200) (42,613,017) (28,334,235)
------------------ ------------------ ------------------
Net increase (decrease) from fund share activities $2,010,735,317 $ 701,241,695 $ 131,029,274
================== ================== ==================
SMALL CAP SMALL CAP
FISCAL YEAR ENDED JUNE 30, 2000 FUND VALUE FUND
-------------------------------------------------------------------------- ------------------ ------------------
Proceeds from shares issued $ 40,911,154 $ 224,777,188
Net asset value of shares issued in
reinvestment of distributions - 3,681,445
Cost of shares redeemed (78,238,154) (53,968,726)
------------------ ------------------
Net increase (decrease) from fund share activities $ (37,327,000) $ 174,489,907
================== ==================
INTERNATIONAL FUND
-----------------------------------------
INVESTOR INSTITUTIONAL MID CAP
FISCAL YEAR ENDED JUNE 30, 2000 SHARES SHARES FUND
-------------------------------------------------------------------------- ------------------ ------------------
Shares sold 121,721,356 28,963,140 6,614,713
Shares issued from reinvestment of distributions 1,613,817 525,593 142,017
Shares redeemed (50,050,726) (1,500,866) (1,195,955)
------------------ ------------------ ------------------
Net increase (decrease) in capital shares 73,284,447 27,987,867 5,560,775
================== ================== ==================
SMALL CAP SMALL CAP
FISCAL YEAR ENDED JUNE 30, 2000 FUND VALUE FUND
-------------------------------------------------------------------------- ------------------ ------------------
Shares sold 3,079,071 22,250,750
Shares issued from reinvestment of distributions - 375,264
Shares redeemed (6,201,323) (5,359,491)
------------------ ------------------
Net increase (decrease) in capital shares (3,122,252) 17,266,523
================== ==================
</TABLE>
48
------------
FORTY-EIGHT
-------------------------------------------NOTES TO FINANCIAL STATEMENTS (CONT.)
(7) FUND SHARE ACTIVITIES (continued):
<TABLE>
<CAPTION>
INTERNATIONAL FUND
-----------------------------------------
INVESTOR INSTITUTIONAL MID CAP
FISCAL ENDED JUNE 30, 1999 SHARES SHARES FUND
-------------------------------------------------------------------------- ------------------ ------------------
<S> <C> <C> <C>
Proceeds from shares issued $ 808,115,881 $ 108,430,376 $ 31,529,435
Net asset value of shares issued in
reinvestment of distributions 7,211,053 1,448,132 1,156,779
Cost of shares redeemed (376,463,582) (34,961,422) (9,884,154)
------------------ ------------------ ------------------
Net increase (decrease) from fund share activities $ 438,863,352 $ 74,917,086 $ 22,802,060
================== ================== ==================
SMALL CAP SMALL CAP
FISCAL YEAR ENDED JUNE 30, 1999 FUND VALUE FUND
-------------------------------------------------------------------------- ------------------ ------------------
Proceeds from shares issued $ 41,079,632 $ 57,373,478
Net asset value of shares issued in
reinvestment of distributions 17,337,992 2,161,775
Cost of shares redeemed (113,872,710) (28,525,978)
------------------ ------------------
Net increase (decrease) from fund share activities $ (55,455,086) $ 31,009,275
================== ==================
INTERNATIONAL FUND
-----------------------------------------
INVESTOR INSTITUTIONAL MID CAP
FISCAL ENDED JUNE 30, 1999 SHARES SHARES FUND
-------------------------------------------------------------------------- ------------------ ------------------
Shares sold 47,804,591 6,392,854 2,275,136
Shares issued from reinvestment of distributions 558,569 112,258 105,353
Shares redeemed (23,304,036) (1,985,942) (715,659)
------------------ ------------------ ------------------
Net increase (decrease) in capital shares 25,059,124 4,519,170 1,664,830
================== ================== ==================
SMALL CAP SMALL CAP
FISCAL YEAR ENDED JUNE 30, 1999 FUND VALUE FUND
-------------------------------------------------------------------------- ------------------ ------------------
Shares sold 3,778,821 6,026,910
Shares issued from reinvestment of distributions 1,753,078 253,135
Shares redeemed (10,534,310) (3,088,372)
------------------ ------------------
Net increase (decrease) in capital shares (5,002,411) 3,191,673
================== ==================
</TABLE>
49
----------
FORTY-NINE
NOTES TO FINANCIAL STATEMENTS (CONT.)-------------------------------------------
(8) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
Aggregate Aggregate Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation/
Cost of Appreciation Depreciation (Depreciation)
Fund Securities on Investments on Investments on Investments
----- -------------- -------------- -------------- --------------
International $4,440,590,636 $654,601,215 $(166,696,287) $487,904,928
Mid Cap 184,515,105 44,186,801 (2,871,987) 41,314,814
Small Cap 167,122,105 33,658,527 (13,825,726) 19,832,801
Small Cap Value 258,935,481 27,838,510 (23,699,247) 4,139,263
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. Certain Funds also utilized
earnings and profits distributed to shareholders on redemption of shares as
part of the dividends paid deduction. Losses from foreign currency related
transactions for the International Fund of $2,710,395 from November 1, 1999
to June 30, 2000 are not recognized for federal income tax purposes until
fiscal 2001.
The Small Cap Fund utilized $29,613,980 in capital loss carryforwards and
$9,559,925 in Post-October Losses during the fiscal year ended June 30,
2000.
(9) OTHER TAX INFORMATION (UNAUDITED):
For the year ended June 30, 2000, ordinary income distributions paid by Mid
Cap Fund and Small Cap Value Fund, of 3% and 25%, respectively, are
eligible for the dividend received deduction available to corporate
shareholders.
Each Fund hereby designates the following amounts as long term capital gain
distributions for purposes of the dividends paid deduction.
Long Term Capital Gains
------------------------
International Fund $55,751,437
Mid Cap Fund 465,148
Small Cap Fund 401,030
Small Cap Value Fund 264,152
The amounts above include earnings and profits distributed to shareholders on
redemptions of fund shares.
--------------------------------------------------------------------------------
NOTES ON PORTFOLIO STATISTICS
The letters to shareholders included in this annual report include statistical
information about the portfolios of each of the Artisan Funds. That information
is as of June 30, 2000, it varies with changes in a Fund's portfolio
investments.
DEFINITIONS
The MEDIAN MARKET CAP provides a measure of the market capitalization value of
the companies in a portfolio. An equal number of companies in the portfolio have
a market capitalization higher than the median and an equal number have a market
capitalization lower than the median. The WEIGHTED AVERAGE GROWTH RATE measures
the growth of earnings per share for each stock in a portfolio over the next 12
months divided by the reported earnings per share over the last 12 months,
weighted by the size of each stock's position within the portfolio. The WEIGHTED
AVERAGE P/E RATIO measures the average of the ratios of portfolio stock prices
divided by each stock's earnings per share, weighted by the size of each stock's
position within the portfolio. The MEDIAN PRICE/BOOK VALUE measures the median
ratio of portfolio stock prices to each stock's book value of equity per share.
The MEDIAN P/E RATIO measures the median ratio of portfolio stock prices to each
stock's earnings per share.
--------------------------------------------------------------------------------
50
-------------
FIFTY
PRICEWATERHOUSECOOPERS, LLC
--------------------------------------------------------------------------------
PricewaterhouseCoopers, LLC
100 EAST WISCONSIN AVENUE
SUITE 1500
MILWAUKEE, WI 53202
TELEPHONE (414) 212 1500
PricewaterhouseCoopers, LLC
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Artisan Funds, Inc.
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Artisan International Fund, Artisan
Mid Cap Fund, Artisan Small Cap Fund and Artisan Small Cap Value Fund
(constituting Artisan Funds, Inc., hereafter referred to as the "Funds") at June
30, 2000, the results of each of their operations, the changes in each of their
net assets and the financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, 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, 2000 by correspondence with the custodian and brokers,
provide a reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers, LLC
July 20, 2000
51
----------
FIFTY-ONE
APPENDIX
---------
DESCRIPTION OF BOND RATINGS
A rating of a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Fund's investment adviser believes that the quality of
debt securities in which the Fund invests should be continuously reviewed and
that individual analysts give different weightings to the various factors
involved in credit analysis. A rating is not a recommendation to purchase, sell
or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating should be evaluated independently.
Ratings are based on current information furnished by the issuer or obtained by
the ratings services from other sources which they consider reliable. Ratings
may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
The following is a description of the characteristics of rating used by Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P").
RATINGS BY MOODY'S
Aaa--Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt-edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa bonds.
A--Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
A-1
Ba--Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high degree.
Such bonds are often in default or have other marked shortcomings.
S&P RATINGS
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and interest and
differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation among such bonds and CC the highest
degree of speculation. Although such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
A-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. Exhibits
EXHIBIT
NUMBER DESCRIPTION
(a)(1) Amended and Restated Articles of Incorporation of the
Registrant. (a)
(a)(2) Articles of Amendment dated October 12, 1995. (a)
(a)(3) Articles of Amendment dated January 16, 1997. (b)
(a)(4) Articles of Amendment dated April 10, 1997. (c)
(a)(5) Articles of Amendment dated June 5, 1997. (d)
(a)(6) Articles of Amendment dated April 27, 2000. (f)
(b) Bylaws, as amended. (a)
(c) None. (Registrant does not issue share certificates.)
(d)(1) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan Small Cap Fund.
(a)
(d)(2) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan International
Fund. (a)
(d)(3) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan Mid Cap Fund.
(c)
(d)(4) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan Small Cap Value
Fund.
(e) Distribution Agreement between the Registrant and Artisan
Distributors LLC.
(f) None.
(g)(1) Custodian Agreement and Accounting Services Agreement between
the Registrant and State Street Bank and Trust Company. (a)
(g)(2) Notification to custodian regarding addition of Artisan Mid Cap
Fund. (c)
(g)(3) Notification to custodian regarding addition of Artisan Small
Cap Value Fund. (d)
(g)(4) Amendment No. 1 to Custodian Agreement.
(h)(1) Transfer Agency Agreement between the Registrant and State
Street Bank and Trust Company. (a)
C-1
EXHIBIT
NUMBER DESCRIPTION
(h)(2) Amendment No. 1 to Transfer Agency Agreement. (b)
(h)(3) Notification to transfer agent regarding addition of Artisan Mid
Cap Fund. (c)
(h)(4) Notification to transfer agent regarding addition of Artisan
Small Cap Value Fund. (d)
(h)(5) Amendment No. 2 to Transfer Agency Agreement.
(i)(1) Consent of Godfrey & Kahn, S.C.
(i)(2) Consent of Bell, Boyd & Lloyd LLC
(j) Consent of Independent Accountants.
(k) None.
(l) Subscription Agreement between the Registrant and Andrew A.
Ziegler and Carlene Murphy Ziegler relating to Artisan Small Cap
Fund. (a)
(m) None.
(n) Multiple Class Plan pursuant to Rule 18f-3 for Artisan
International Fund and Artisan Mid Cap Fund. (f)
(p) Artisan Funds, Inc. Code of Ethics for Outside Directors. (f)
(p)(1) Artisan Funds, Inc., Artisan Partners Limited Partnership, Artisan
Distributors LLC Code of Ethics and Policy and Procedures to
Prevent Misuse of Inside Information.
----------------------------------
(a) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 3 to Registrant's
registration statement, Securities Act file number 33-88316 (the
"Registration Statement"), filed on November 27, 1995.
(b) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 5 to the Registration
Statement, filed on January 21, 1997.
(c) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 6 to the Registration
Statement, filed on April 11, 1997.
(d) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 7 to the Registration
Statement, filed on June 6, 1997.
(e) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 10 to the Registration
Statement, filed on August 31, 1998.
(f) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 12 to the Registration
Statement, filed on April 28, 2000.
C-2
ITEM 24. Persons Controlled by or Under Common Control With Registrant.
The Registrant does not consider that there are any persons directly or
indirectly controlling, controlled by, or under common control with, the
Registrant within the meaning of this item. The information in the statement of
additional information under the caption "Principal Shareholders" is
incorporated herein by reference.
ITEM 25. Indemnification.
Article VIII of Registrant's Amended Articles of Incorporation (Exhibits
1.1, 1.2, 1.3, 1.4, 1.5 and 1.6, which are incorporated herein by reference)
provides that the Registrant shall indemnify and advance expenses to its
currently acting and its former directors and officers to the fullest extent
that indemnification of directors and officers is permitted by the Wisconsin
Statutes, and the Board of Directors may by bylaw, resolution or agreement make
further provision for indemnification of directors, officers, employees and
agents to the fullest extent permitted by the Wisconsin Statutes; provided
however, that nothing therein shall be construed to protect any director or
officer of the Registrant against any liability to the Corporation or its
security holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer, or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The Registrant will not advance attorneys' fees or other expenses incurred
by the person to be indemnified unless the Registrant shall have received an
undertaking by or on behalf of such person to repay the advance unless it is
ultimately determined that such person is entitled to indemnification and one of
the following conditions shall have occurred: (i) such person shall provide
security for his undertaking, (ii) the Registrant shall be insured against
losses arising by reason of any lawful advances, or (iii) a majority of the
disinterested, non-party directors of the Registrant, or an independent legal
counsel in a written opinion, shall have determined that based on a review of
readily available facts there is reason to believe that such person ultimately
will be found entitled to indemnification.
C-3
Registrant and its directors and officers are insured under a policy of
insurance maintained by Registrant, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities that might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such directors or officers. The
policy expressly excludes coverage for any director or officer whose personal
dishonesty, fraudulent breach of trust, lack of good faith, or intention to
deceive or defraud has been finally adjudicated or may be established or who
willfully fails to act prudently.
ITEM 26. Business and Other Connections of Investment Adviser.
The information in the prospectus under the caption "Organization,
Management & Management Fees" and in the statement of additional information
under the caption "Investment Advisory Services" is incorporated herein by
reference. For a description of other business, profession, vocation or
employment of a substantial nature in which any general partner, managing
general partner, director or officer of Artisan Partners Limited Partnership has
engaged during the last two years for his account or in the capacity of
director, officer, employee, partner or trustee, see the information under the
caption "Directors and Officers" in the statement of additional information.
ITEM 27. Principal Underwriters.
(a) Artisan Distributors LLC acts as principal underwriter for Artisan
Funds.
(b) NAME POSITIONS AND OFFICES POSITIONS AND OFFICES
WITH UNDERWRITER WITH FUND
Andrew A. Ziegler Chairman and Principal Chairman, Director and
Chief Executive Officer
Michael C. Roos President and Principal President
Lawrence A. Totsky Chief Financial Officer, Chief Financial Officer,
Treasurer and Secretary Treasurer and Secretary
Carlene Murphy Ziegler Registered Representative Director and Vice
President
Scott C. Satterwhite Registered Representative Vice President
Andrew C. Stephens Registered Representative Vice President
Mark L. Yockey Registered Representative Vice President
Marina T. Carlson Registered Representative Vice President
James C. Kieffer Registered Representative Vice President
C-4
The principal business address of each officer of Artisan Distributors
LLC is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin
53202.
(c) There are no commissions or other compensation received from the
Registrant directly or indirectly, by any principal underwriter who is
not an affiliated person of the Registrant or an affiliated person of
an affiliated person.
ITEM 28. Location of Accounts and Records.
(1) State Street Bank & Trust Company
66 Brooks Drive
Braintree, MA 02184
Rule 31a-1(a); Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
(2) Artisan Partners Limited Partnership (on its own behalf,
or on behalf of Artisan Funds, Inc. or Artisan Distributors LLC)
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
Rule 31a-1(a); Rule 31a-1(b)(4), (9), (10), (11);
Rule 31a-1(d); Rule 31a-1(f); Rule 31a-2(a);
Rule 31a-2(c); Rule 31a-2(e)
ITEM 29. Management Services.
Not applicable.
ITEM 30. Undertakings.
Not applicable.
C-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirement for effectiveness of this registration statement under Rule
485(b) under the Securities Act and has duly caused this amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Milwaukee and State of Wisconsin on October 31, 2000.
ARTISAN FUNDS, INC.
By /s/ Andrew A. Ziegler
-------------------------------
Andrew A. Ziegler
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this post-
effective amendment to the registration statement has been signed below by the
following persons in the capacities and on the date indicated.
Name Title Date
/s/ Andrew A. Ziegler Director, Chairman of )
-------------------------- the Board and Chief )
Andrew A. Ziegler Executive Officer )
(principal executive )
officer) )
)
/s/ Carlene Murphy Ziegler Director and )
-------------------------- Vice President )
Carlene Murphy Ziegler )
)
/s/ David A. Erne Director )
-------------------------- )
David A. Erne )
) October 31, 2000
/s/ Thomas R. Hefty Director )
-------------------------- )
Thomas R. Hefty )
)
/s/ Howard B. Witt Director )
-------------------------- )
Howard B. Witt )
)
/s/ Michael C. Roos President )
-------------------------- )
Michael C. Roos )
)
/s/ Lawrence A. Totsky Chief Financial Officer,)
-------------------------- Treasurer and Secretary )
Lawrence A. Totsky (principal financial and)
accounting officer) )
6
Index of Exhibits Filed with this Registration Statement
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Exhibit
Number Description
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(d)(4) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan Small Cap Value Fund.
(e) Distribution Agreement between the Registrant and Artisan Distributors
LLC.
(g)(4) Amendment No. 1 to Custodian Agreement.
(h)(5) Amendment No. 2 to Transfer Agency Agreement.
(i)(1) Consent of Godfrey & Kahn, S.C.
(i)(2) Consent of Bell, Boyd & Lloyd LLC
(j) Consent of Independent Accountants
(p)(1) Artisan Funds, Inc., Artisan Partners Limited Partnership, Artisan
Distributors LLC Code of Ethics and Policy and Procedures to Prevent
Misuse of Inside Information.
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