SEMI-ANNUAL
REPORT
INTERNATIONAL FUND (LOGO) INSTITUTIONAL SHARES
ARTISAN FUNDS
DECEMBER 31, 1999
2/24/00 - A0017
<PAGE>
ARTISAN INTERNATIONAL FUND
INSTITUTIONAL SHARES
(A Series of Artisan Funds, Inc.)
Table of Contents
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LETTER TO SHAREHOLDERS...........................3
SCHEDULE OF INVESTMENTS..........................9
PORTFOLIO DIVERSIFICATION.......................13
STATEMENT OF ASSETS & LIABILITIES...............14
STATEMENT OF OPERATIONS.........................15
STATEMENTS OF CHANGES IN NET ASSETS.............16
FINANCIAL HIGHLIGHTS............................17
NOTES TO FINANCIAL STATEMENTS...................18
--------------------------------------------------
ARTISAN FUNDS
SUITE 1700
1000 NORTH WATER STREET
MILWAUKEE, WI 53202-3197
800.399.1770
This report and the financial statements contained herein are provided for the
general information of the shareholders of the Artisan International Fund
Institutional Shares. THIS REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO
PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
FOR MORE INFORMATION ON THE INSTITUTIONAL SHARES OF THE FUND, INCLUDING FEES AND
EXPENSES, PLEASE CALL 800.399.1770 FOR A FREE PROSPECTUS. READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY.
Artisan Funds offered through Artisan Distributors LLC, 1000 North Water Street,
Milwaukee, WI 53202, member NASD.
<PAGE>
ARTISAN
INTERNATIONAL FUND
(Institutional Shares)
Letter to Shareholders - December 31, 1999
Effective July 1, 1997, the Artisan International Fund began offering two
classes of capital shares: International Shares and Institutional Shares.
Additional information regarding each class of shares is available in the Fund's
prospectus. Performance data herein relates to the International Shares prior to
July 1, 1997 and the Institutional Shares subsequent to July 1, 1997.
THE FUND'S PERFORMANCE
The Fund gained 56.69% during the six months ended December 31, 1999, and
significantly outperformed its benchmark, the Morgan Stanley EAFE Index, which
rose 22.12%. Also, the Fund posted results for the six-month period that were
greater than its peer group, the Lipper International Fund Index, which returned
28.93%.
COMPARATIVE PERFORMANCE
Artisan Lipper
International International
Fund EAFE Index Fund Index
--------- ---------- ----------
12/28/95 $10,000 $10,000 $10,000
3/31/96 10,910 10,289 10,467
6/30/96 12,080 10,452 10,895
9/30/96 12,220 10,439 10,903
12/31/96 13,437 10,605 11,472
3/31/97 14,153 10,439 11,756
6/30/97 14,607 11,793 13,072
9/30/97 14,850 11,710 13,322
12/31/97 13,913 10,793 12,303
3/31/98 16,730 12,381 14,129
6/30/98 18,171 12,512 14,249
9/30/98 14,744 10,734 12,000
12/31/98 18,436 12,952 13,861
3/31/99 20,516 13,132 14,039
6/30/99 21,374 13,465 14,818
9/30/99 22,460 14,056 15,317
12/31/99 33,490 16,444 19,105
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AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR 3-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan International Fund 81.65% 35.54% 35.14%
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EAFE Index 26.96% 15.73% 13.19%
- --------------------------------------------------------------------------------
Lipper International Fund Index 37.83% 18.51% 17.50%
- --------------------------------------------------------------------------------
PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS. INTERNATIONAL
INVESTMENTS INVOLVE SPECIAL RISK CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATION,
SOMETIMES LOWER LIQUIDITY, ECONOMIC AND POLITICAL RISKS, AND DIFFERENT
ACCOUNTING METHODS, WHICH ARE DISCUSSED IN THE PROSPECTUS. PLEASE READ IT
CAREFULLY BEFORE YOU INVEST OR SEND MONEY. Investment return and principal value
will fluctuate so that an investor's shares in the Fund, when redeemed, may be
worth more or less than their original cost. The graph compares the results of
$10,000 invested in Artisan International Fund International Shares on December
28, 1995 (the date the Fund began operations) to June 30, 1997, and in the
Institutional Shares from July 1, 1997 to December 31, 1999, with the Morgan
Stanley Capital International Europe, Australasia and Far East (EAFE) Index and
the Lipper International Fund Index. EAFE performance, when used in comparison
to the Fund's inception date, is calculated starting 12/31/95. The EAFE Index is
an unmanaged index of companies throughout the world in proportion to world
stock market capitalization, excluding the U.S. and Canada. The Lipper
International Fund Index reflects the net asset weighted return of the 30
largest international funds. All index returns include reinvested dividends but
do not include the payment of sales commissions or other expenses incurred in
the purchase of the securities included in the index. All information on
performance of the Artisan International Fund included in this report is for
International Shares (retail) prior to July 1, 1997 and Institutional Shares
subsequent to July 1, 1997.
<PAGE>
The Fund's Institutional Shares paid a total distribution of $0.5993 per share
on November 11, 1999, to shareholders of record on November 10, 1999. The
distribution included $0.2751 of short-term capital gains, $0.2643 of long-term
capital gains and $0.0599 of ordinary income. The reinvestment NAV was $22.18.
No other distributions were paid in 1999.
OUR INVESTMENT APPROACH
The complexity of international investing lends itself to many investment
approaches. As we initiate our review of the Fund for the past six months, we
believe it's appropriate to survey how we select securities for the Fund's
portfolio.
We maintain that international markets may provide investors with growth
opportunities that are discrete from those obtainable in the U.S. The Fund seeks
to identify companies that we believe are well positioned to capitalize on these
opportunities.
In the global market, a number of factors may influence this process. Attractive
companies may emerge in countries experiencing political or economic change.
Others invite attention due to business trends including deregulation and
privatization, corporate restructuring and consolidation or technological
expansion. These were themes with which we experienced success during 1999.
We are fundamentally stock pickers, attempting to assemble a broadly diversified
portfolio of stocks that are not allocated according to set percentages with
regard to regions or countries. For example, we will not maintain a specific
position in Japan simply because it represents a specific portion of the EAFE
Index - our regional and country weightings are a residual of our stock
selections.
Intensive research and analysis are primary elements in our process, with our
portfolio management team traveling widely to meet with company management, its
customers, suppliers and bankers. We are looking for companies that exhibit
specific, essential characteristics. We look for companies with effective
management displaying a focus on shareholder value, a dominant or accelerating
position in their industry and the ability to provide significant and
sustainable growth. Also, we pursue firms trading at what we consider a
reasonable valuation.
SIX MONTH REVIEW
The Artisan International Fund's Institutional Shares ended the year with its
best quarter ever, up 49.11%, and December marked its best month since inception
as these shares gained 21.56%. For the month, nearly half of the portfolio
holdings gained 20% or more as the rally in international markets that began in
early 1999 accelerated during the second half of the year. In our opinion, what
was especially significant as the year ended was the buying surge in
telecommunications and technology shares.
We contend that the performance of international markets throughout the year
reflected the substantially improved condition of these markets from a year ago
and, in part, from the failure of frequently predicted adverse events to emerge.
For example, emerging markets rebounded strongly as the year began and
maintained their rally through the second half of the year, avoiding the year-
end sell off that was predicted because of Y2K concerns.
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
Developed markets also participated in the international comeback, with some,
such as the United Kingdom and Germany, staging late year rallies. France also
displayed a strong economy and participated in the year's closing rally in
technology and telecommunications.
This worldwide surge in technology and telecommunications shares in the fourth
quarter provided the Fund with significant gains. Also, during the period our
holdings in financial services and global media had a positive impact on the
Fund's portfolio.
A notable story for the Fund during the second half of the year was the
increased exposure to Japan. In August, we nearly doubled our Japan weighting as
our research uncovered several attractive opportunities. Some were in industries
where secular growth was strong and others resided in areas where restructuring
offered increased earnings potential.
We made these investments despite our concerns with Japan's continuing
macroeconomic problems, because in our view, Japanese companies were starting to
display increased shareholder friendliness, innovation and restructuring.
PORTFOLIO CHARACTERISTICS
On December 31, 1999, total net assets in the Fund were $3.1 billion, of which
$776.2 million were in Institutional Shares. As of June 30, Fund total net
assets stood at $1.1 billion. Reflecting, in part, strong performance throughout
the portfolio and a shift in portfolio makeup, the median market cap of our
holdings rose to $4.6 billion from $3.7 billion, and the weighted average market
cap rose to $40.4 billion from $17.6 billion.
- -------------------------------------------
REGION/COUNTRY ALLOCATION (%)<F1>
- -------------------------------------------
EUROPE 51.7%
- -------------------------------------------
UNITED KINGDOM 10.6
ITALY 10.0
NETHERLANDS 7.8
FRANCE 5.6
GERMANY 5.6
FINLAND 4.3
SWEDEN 3.3
SWITZERLAND 2.6
SPAIN 1.1
IRELAND 0.3
NORWAY 0.2
AUSTRIA 0.2
PORTUGAL 0.1
DENMARK 0.0<F2>
- -------------------------------------------
ASIA/PACIFIC 22.7%
- -------------------------------------------
JAPAN 15.4
AUSTRALIA 2.4
HONG KONG 2.3
SINGAPORE 2.0
KOREA 0.3
NEW ZEALAND 0.3
- -------------------------------------------
LATIN AMERICA 4.8%
- -------------------------------------------
BRAZIL 3.6
MEXICO 1.2
- -------------------------------------------
NORTH AMERICA 16.0%
- -------------------------------------------
CANADA 13.7
BERMUDA 2.3
- -------------------------------------------
OTHER ASSETS LESS LIABILITIES 4.8%
- -------------------------------------------
TOTAL 100.0%
- -------------------------------------------
<F1> As a percentage of total net assets as of December 31, 1999.
<F2> Less than 0.1%.
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
Based on 2000 estimates, our weighted average growth rate of 23.9% fell below
our weighted average P/E of 32X, as the upward movement of many of our holdings
lifted P/E ratios. On December 31, we were 95.2% invested in equities, which we
consider fully invested.
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SECTOR DIVERSIFICATION (%)<F3>
- --------------------------------------------------------------------------------
SECTOR 6/30/99 12/31/99
- --------------------------------------------------------------------------------
Consumer Cyclical 17.9 18.5
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Consumer Non-Cyclical 11.5 2.7
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Diversified 0.0 0.3
- --------------------------------------------------------------------------------
Financial 21.8 12.7
- --------------------------------------------------------------------------------
Industrial 5.9 9.1
- --------------------------------------------------------------------------------
Technology 6.2 12.6
- --------------------------------------------------------------------------------
Telecommunications (Equipment and Services) 25.1 27.5
- --------------------------------------------------------------------------------
Utilities 8.5 11.8
- --------------------------------------------------------------------------------
Other assets less liabilities 3.1 4.8
- --------------------------------------------------------------------------------
TOTAL 100.0% 100.0%
- --------------------------------------------------------------------------------
<F3> As a percentage of total net assets as of June 30, 1999 and December 31,
1999, respectively.
Concerning sector diversification, there were some notable changes in emphasis
from June 30. A move into media companies boosted Consumer Cyclicals, while
profit taking in food and pharmaceuticals lowered our exposure to Consumer Non-
Cyclicals. The Financial sector de-emphasis reflected the sale of a number of
bank holdings. Our commitment to software companies, in large part, accounted
for the increase in the Technology sector. And increased positions in telephone
utilities accounted for the jump in the Utilities sector. The Telecommunications
sector - equipment and services - also rose. Deregulation, privatization,
technological advances and the growing acceptance of the Internet continued to
create exceptional opportunities in this sector.
Media companies performed quite well for the Fund during this period. Tokyo
Broadcasting System (TBS)<F1> reflects our growing exposure to the media
industry and our renewed interest in Japan. TBS is a leading nationwide
broadcaster in Japan and, in our opinion, appears well positioned to benefit
from both an increase in spending by advertisers and technological change.
We anticipate a recovery in ad spending within Japan. Recent deregulation may
also create increased advertising spending by international companies. With the
launch of a broadcast satellite later this year, TBS may become a multi-channel
broadcaster. Thus, in both content and distribution platforms, the company could
generate growth by exploiting new media opportunities.
<F1> The discussion of Tokyo Broadcasting System (TBS) is for illustration only
and is not intended as a recommendation.
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
OUTLOOK AND STRATEGY
We are very optimistic about the potential for long-term capital growth in
markets abroad, believing the investment themes we pursued for most of 1999,
such as restructuring, privatization, deregulation, communications and
information technology, will continue to lead us to investment opportunities.
Restructuring in Europe is having a positive impact in several areas. It's a
subject we discussed in the Fund's most recent quarterly update. As we
mentioned, our projection for increased European merger and acquisition (M&A)
activity in 1999 was validated with examples such as the pending hostile
takeover of Mannesman AG, a German telecommunications service provider and one
of the Fund's top holdings, by Vodafone AirTouch, a British mobile
telecommunications firm. Although hostile takeover actions are common in the
U.S., they are only beginning to emerge in Europe. In October, the Financial
Times reported that the third quarter was the first time in seven years that
Europe had more M&A activity than the U.S. From our perspective, increased M&A
activity should promote beneficial changes that may promote Europe's growth and
global competitiveness.
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TOP TEN HOLDINGS (%)<F4>
- --------------------------------------------------------------------------
COMPANY NAME COUNTRY %
- --------------------------------------------------------------------------
AT&T Canada, Inc. Canada 3.1
- --------------------------------------------------------------------------
Trans Cosmos, Inc. Japan 2.9
- --------------------------------------------------------------------------
Mannesmann AG Germany 2.8
- --------------------------------------------------------------------------
BCE, Inc. Canada 2.7
- --------------------------------------------------------------------------
Nortel Networks Corp. Canada 2.4
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Global Telesystems Group, Inc. Bermuda 2.3
- --------------------------------------------------------------------------
Colt Telecom Group PLC United Kingdom 2.3
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UnitedGlobalCom, Inc. Netherlands 2.2
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Telecom Italia Mobile SPA Italy 2.1
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BIPOP Carire SPA Italy 2.0
- --------------------------------------------------------------------------
TOTAL 24.8%
- --------------------------------------------------------------------------
<F4> As a percentage of total net assets as of December 31, 1999.
We believe increased M&A activity may also stimulate the equity culture that is
appearing in Europe. In our opinion, the privatization and deregulation
activities in Europe have broadened the attractiveness of investing to European
residents. We believe it's a very healthy change, and one that may also be
occurring in Japan.
Other actions may spur development of the European equity culture. Consider a
recent proposal in Germany to eliminate the capital gains tax on equity sales by
corporations. We believe that if this proposal should become law - and we
believe there's great support for it - untold tens of billions of dollars could
be released from Germany's banks, stimulating growth in what is generally
considered Europe's largest economy.
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
- --------------------------------------------------------------------------------
TOP 5 GAINERS<F5> TOP 5 LOSERS<F5>
- --------------------------------------------------------------------------------
SECURITY % SECURITY %
- --------------------------------------------------------------------------------
Trans Cosmos, Inc. 316.6 Nichiei Co., Ltd. -74.1
NTT Mobile Communications Network 218.7 Call-Net Enterprises, Inc. -43.7
Colt Telecom Group PLC 119.1 Promise Co. Ltd. -20.0
Nortel Networks Corp. 114.1 Pharmacia & Upjohn, Inc. -19.7
BCE, Inc. 75.9 UBS AG -10.5
- --------------------------------------------------------------------------------
<F5> For the six months ended December 31, 1999, these are the holdings that
made the largest dollar difference in the portfolio. While some smaller
holdings experienced greater percentage changes in price, the change in
their dollar value did not, on an individual basis, have as meaningful an
effect on the Fund's net assets.
As we discussed earlier, we are beginning to see changes we like in Japan.
Additionally, the Japanese economy may be experiencing a changing of the guard,
as industries like steel and autos - traditional engines of the country's growth
- - are giving ground to technology, telecommunications and Internet firms. The
recent shift in focus in Japan has attracted new foreign investment.
Nonetheless, we've been highly selective in our investments there because its
equity market has been much like our own recently, with its strength narrowly
defined.
The fourth quarter of 1999 was noteworthy for two reasons. The Fund posted its
best quarter of performance since inception, and we were managing the greatest
amount of assets we've had in the Fund thus far. We are aware of the cautious
discussion about fund size and performance. We firmly believe, however, that
international markets provide us with opportunities that may not be available to
other investment strategies, and we consider the quality of the stocks in a
portfolio far more important to fund performance than the size of the assets
under management.
Although we are unable to predict future performance for the Fund, we believe
the themes we discussed earlier - restructuring, privatization, deregulation,
communications and information technology - should continue to provide us with
investment opportunities that will assist us as we seek to achieve our long-term
investment goals. We look to the future with enthusiasm.
Thank you for your confidence. We will continue doing our very best to justify
your investment.
Sincerely,
/s/ Mark L. Yockey
Mark L. Yockey
Portfolio Manager
Effective July 1, 1997, the Fund began offering Institutional Shares for
institutional investors meeting certain minimum investment requirements. A
report on the International Shares is available under separate cover.
LETTER TO SHAREHOLDERS
ARTISAN INTERNATIONAL FUND
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Schedule of Investments - December 31, 1999 (Unaudited)
SHARES MARKET
HELD VALUE
------ ------
COMMON AND PREFERRED STOCKS - 95.2%
AUSTRALIA - 2.4%
<F1>Cable & Wireless Optus Limited -
telecommunication services 8,274,600 $27,650,284
Colonial Limited - diversified financial services 6,432,382 28,757,672
<F1>LibertyOne Limited - internet content provider 15,300,000 16,874,679
-----------
73,282,635
AUSTRIA - 0.2%
Bank Austria AG - diversified financial services 80,000 4,512,926
BERMUDA - 2.3%
<F1>Global Telesystems Group, Inc.<F2> -
telecommunication services 2,040,160 70,640,540
BRAZIL - 3.6%
<F1>Celular CRT Participacoes S.A. -
telecommunication services 89,859,900 15,668,900
Cia de Saneamento Basico de Estado de Sao Paulo -
water and sewage utility 53,890,000 6,327,190
Cia Riograndense Telecomunicacoes - Preferred -
telecommunication services 63,204,900 19,592,994
Empresa Brasileira Aeronautica S.A. -
aircraft manufacturer 1,941,000 8,756,795
Telecomunicacoes Brasileiras S.A. (ADR) -
telecommunication services 267,500 34,373,750
Telecomunicacoes de Sao Paulo S.A. (ADR) -
telecommunication services 474,000 11,583,375
Telesp Celular Participacoes S.A. (ADR) -
cellular telecommunication services 346,500 14,682,938
----------
110,985,942
CANADA - 13.7%
<F1>AT&T Canada, Inc.<F2> -
telecommunication services 2,376,400 95,650,100
<F1>BCE Emergis, Inc. - information
technology services 77,500 4,160,894
BCE, Inc. - telecommunication services 912,000 82,860,270
<F1>Certicom Corporation - computer software 160,700 9,574,091
<F1>Clearnet Communications, Inc. - Class A<F2> -
cellular telecommunication services 1,540,500 52,954,688
<F1>Cognos, Inc.<F2> - computer software 286,700 13,224,038
<F1>Corus Entertainment, Inc. - Class B - multimedia 939,850 19,207,187
Nortel Networks Corporation<F2> -
telecommunications equipment 727,000 73,427,000
Shaw Communications Inc. - Class B - cable television 774,500 25,566,280
<F1>Telesystem International Wireless, Inc. -
cellular telecommunication services 1,199,050 44,107,761
-----------
420,732,309
DENMARK - 0.0%<F3>
NESA A/S - electric utility 8,438 687,474
<PAGE>
SHARES MARKET
HELD VALUE
------ ------
FINLAND - 4.3%
<F1>Comptel Oyj - communications software 24,200 $1,702,550
Helsingin Puhelin Oyj - telecommunication services 239,200 19,927,229
Nokia Corporation (ADR) - telecommunication equipment 200,800 38,152,000
PMJ Automec Oyj - electronic components 118,850 1,397,173
Sonera Group Oyj - telecommunication services 634,200 43,474,501
Tietoenator Oyj - information technology services 438,900 27,411,796
-----------
132,065,249
FRANCE - 5.6%
Axa - multi-line insurance 80,000 11,153,375
Bouygues SA - building and construction 68,500 43,541,177
Groupe Danone - food and beverage producer 77,200 18,197,569
Hachette Filipacchi Medias - publishing
and periodicals 195,319 12,395,535
Havas Advertising S.A. - advertising 99,094 42,224,834
Suez-Lyonnaise des Eaux S.A. - building
and construction 79,500 12,741,411
Unilog SA - information technology services 283,800 30,961,435
-----------
171,215,336
GERMANY - 5.6%
<F1>1&1 Aktiengesellschaft & Co. -
advertising services 114,691 17,099,022
Deutsche Bank AG - money center bank 209,000 17,653,450
<F1>LHS Group, Inc.<F2> - communications software 103,500 2,542,219
Mannesmann AG - machinery/general industry 361,200 87,143,197
Marseille-Kliniken AG - healthcare services 144,457 1,586,154
<F1>PrimaCom AG - cable television 150,500 9,126,688
ProSieben Media AG - television content 136,700 7,945,561
SAP AG-Vorzug - enterprise software & services 12,000 7,228,741
<F1>Software AG - enterprise software & services 346,407 21,111,654
-----------
171,436,686
HONG KONG - 2.3%
<F1>China Telecom (Hong Kong) Limited - cellular
telecommunication services 9,417,100 58,754,661
<F1>Founder Hong Kong Limited - computer-
integrated systems and software applications 10,162,900 12,420,087
-----------
71,174,748
IRELAND - 0.3%
Bank of Ireland - commercial bank 976,600 7,771,843
ITALY - 10.0%
Autogrill SPA - restaurants 1,923,000 24,214,167
Autostrade Concessioni e Construzioni
Autostrade SPA, Roma - transportation services 2,226,700 15,163,122
BIPOP Carire SPA - financial services 680,800 60,247,848
Class Editori SPA - publishing 851,900 14,846,188
<F1>Finmatica SPA - enterprise software/services 1,082,100 34,336,670
Gucci Group NV<F2> - apparel manufacturer 333,200 38,151,400
<F1>Olivetti SPA - telecommunication services 8,707,500 25,218,053
Telecom Italia Mobile SPA - cellular
telecommunication services 5,674,000 63,387,133
Unicredito Italiano SPA - commercial bank 6,000,000 29,495,197
-----------
305,059,778
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
<PAGE>
SHARES MARKET
HELD VALUE
------ ------
JAPAN - 15.4%
Asatsu-DK Inc. - advertising agencies 354,500 $23,940,981
Banyu Pharmaceutical Co., Ltd. - pharmaceuticals 770,300 11,949,942
Daiwa Securities Group, Inc. -
brokerage/investment banking 672,800 10,529,580
Fujitsu Limited - computer manufacturer/information
technology services 852,500 38,882,745
ISB Corporation - software 1,000 33,278
KDD Corporation - telecommunication services 213,250 29,554,860
NEC Corporation - electronic manufacturer/
information technology services 1,071,100 25,527,342
Nihon Unisys, Ltd. - computer integrated
services/information technology services 330,600 11,389,958
Nippon Telegraph & Telephone Corporation -
integrated telephone services 3,398 58,202,018
Nippon Television Network Corporation -
television broadcasting 9,160 10,758,540
NTT Mobile Communications Network, Inc. -
cellular telecommunication services 1,479 56,890,184
Promise Co. Ltd. - consumer finance 498,700 25,381,619
Takefuji Corporation - consumer finance 232,200 29,067,613
Tokyo Broadcasting System, Inc. -
television broadcasting 910,000 30,817,266
Toyo Information Systems Co., Ltd. -
information technology services 284,000 20,013,703
Trans Cosmos, Inc. - outsourcing/information
technology services 209,300 89,316,632
-----------
472,256,261
KOREA - 0.3%
SK Telecom Co. Ltd. (ADR) - cellular
telecommunication services 265,328 10,181,962
MEXICO - 1.2%
<F1>Cifra S.A. de C.V. Series V - department stores 11,055,000 22,168,338
<F1>Grupo Financiero Inbursa S.A. de C.V. -
Class O - brokerage, insurance and
financial services 1,826,489 7,479,448
<F1>Seguros Comercial America - Class B -
multi-line insurance 927,500 3,475,066
Sigma Alimentos S.A. - Class B - food producer 1,270,077 2,680,901
-----------
35,803,753
NETHERLANDS - 7.8%
ASR Verzekeringsgroep N.V. - multi-line
insurance company 140,000 8,913,029
Athlon Groep NV - automobile leasing 325,025 7,055,768
Koninklijke KPN NV - telecommunications services 613,807 59,915,038
<F1>MIH Ltd.<F2> - cable & satellite television 589,800 34,798,200
<F1>UnitedGlobalCom, Inc.<F2> - cable television 943,000 66,599,375
<F1>Versatel Telecom International NV -
telecommunication services 937,300 33,046,608
VNU NV - publishing-newspapers 563,100 29,598,509
-----------
239,926,527
NEW ZEALAND - 0.3%
Contact Energy Limited - electric utility 4,231,500 7,406,710
NORWAY - 0.2%
P4 Radio Hele Norge ASA - radio stations 1,139,600 5,834,980
PORTUGAL - 0.1%
<F1>PT Multimedia - Servicos de Telecomunicacoes e
Multimedia, S.A. - internet service provider 60,200 3,424,479
SINGAPORE - 2.0%
DBS Group Holdings Limited - money center banks 2,402,807 39,385,548
Oversea Chinese Banking Corporation Ltd. -
money center banks 2,525,750 23,202,627
-----------
62,588,175
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
<PAGE>
SHARES MARKET
HELD VALUE
------ ------
SPAIN - 1.1%
Argentaria, Caja Postal y Banco Hipotecario de
Espana S.A. - commercial bank 592,000 $13,912,868
Banco Santander Central Hispano, S.A. -
money center bank 1,669,000 18,897,436
-----------
32,810,304
SWEDEN - 3.3%
Alfaskop AB - information technology services 187,900 2,550,529
<F1>Connecta AB - information technology services 156,000 5,316,723
<F1>Information Highway AB - information
technology services 189,050 31,326,889
Pharmacia & Upjohn, Inc.<F2> - pharmaceuticals 295,000 13,275,000
Telefonaktiebolaget LM Ericsson - Class B (ADR)-
telecommunications equipment 758,650 49,833,822
-----------
102,302,963
SWITZERLAND - 2.6%
ABB Limited - engineering services 311,354 38,080,884
<F1>Geberit International AG - building and
construction products 41,959 14,361,399
Julius Baer Holding AG - Class B - commercial bank 9,314 28,135,615
-----------
80,577,898
UNITED KINGDOM - 10.6%
Carlton Communications PLC - television content 2,750,400 26,789,610
<F1>Colt Telecom Group PLC -
telecommunication services 1,341,800 69,270,416
<F1>Easynet Group PLC - internet service provider 593,400 16,534,454
<F1>Energis PLC - telecommunication services 355,959 17,105,673
Granada Group PLC - television content 890,000 8,985,107
Pearson PLC - publisher 675,000 21,970,101
Railtrack Group PLC - rail transportation 964,000 16,194,353
Reckitt & Colman PLC - household products 1,679,000 15,892,841
Saatchi & Saatchi PLC - advertising/media services 4,485,100 26,878,143
Schroders PLC - international merchant banking group 938,000 18,878,788
Stagecoach Holdings PLC - transportation services 9,751,000 25,043,758
<F1>Telewest Communications PLC - cable television 5,171,304 27,440,288
<F1>Thus PLC - telecommunication services 1,718,000 10,850,585
WPP Group PLC - advertising agency 1,465,000 22,954,222
-----------
324,788,339
TOTAL COMMON AND PREFERRED STOCKS (Cost $1,858,866,262) 2,917,467,817
SHORT TERM INVESTMENTS - 4.2%
Repurchase agreement with State Street Bank
and Trust Company, 2.5%, dated 12/31/99, due
1/3/2000, maturity value $129,660,007, Par
collateralized by $132,231,450 market value Amount
U.S. Treasury Bond, 8.750%, due 8/15/2020 ------
(Cost $129,633,000) $129,633,000 129,633,000
-----------
TOTAL INVESTMENTS - 99.4% (Cost $1,988,499,262) 3,047,100,817
OTHER ASSETS LESS LIABILITIES - 0.6% 19,671,291
-----------
TOTAL NET ASSETS - 100.0%<F4> $3,066,772,108
==============
<F1> Non-income producing security.
<F2> Principally traded in the United States.
<F3> Represents less than 0.1% of net assets.
<F4> Percentages for the various classifications relate to total net assets.
(ADR) American Depository Receipt.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
PORTFOLIO DIVERSIFICATION - DECEMBER 31, 1999 (Unaudited)
MARKET VALUE PERCENTAGE
------------ ----------
Consumer Cyclical $568,381,185 18.5%
Consumer Non-Cyclical 83,596,110 2.7%
Diversified 8,985,106 0.3%
Financial 386,851,551 12.7%
Industrial 279,193,816 9.1%
Technology 385,656,856 12.6%
Telecommunications (Equipment and Services) 842,213,313 27.5%
Utilities 362,589,880 11.8%
---------------------------
TOTAL COMMON AND PREFERRED STOCKS 2,917,467,817 95.2%
Total short-term investments 129,633,000 4.2%
---------------------------
TOTAL INVESTMENTS 3,047,100,817 99.4%
OTHER ASSETS LESS LIABILITIES 19,671,291 0.6%
---------------------------
TOTAL NET ASSETS $3,066,772,108 100.0%
===========================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
SCHEDULE OF INVESTMENTS
ARTISAN INTERNATIONAL FUND
<PAGE>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Statement of Assets and Liabilities
December 31, 1999
(Unaudited)
ASSETS:
Investments in securities, at value
(cost $1,988,499,262) $3,047,100,817
Cash 186
Receivable from investments sold 17,282,394
Receivable from forward currency contracts 29,167,930
Receivable from fund shares sold 20,917,726
Interest receivable 9,002
Dividends receivable 2,141,165
Organizational costs 7,320
Other assets 2,005
--------------
Total assets 3,116,628,545
LIABILITIES:
Payable for investments purchased 18,784,977
Payable for forward currency contracts 29,150,385
Payable for fund shares redeemed 473,790
Payable for organizational costs 7,320
Payable for operating expenses 1,287,970
Other liabilities 151,995
--------------
Total liabilities 49,856,437
--------------
Total net assets $3,066,772,108
==============
NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding $1,967,844,344
Net unrealized appreciation on investments
and foreign currency related transactions 1,058,490,803
Accumulated undistributed net investment loss (5,697,533)
Accumulated undistributed net realized gains
on investments and foreign currency
related transactions 46,134,494
--------------
$3,066,772,108
==============
INTERNATIONAL SHARES:
Net assets $2,290,574,818
Shares authorized ($0.01 par value) 5,000,000,000
Shares issued and outstanding 80,381,784
Net asset value, offering and redemption
price per share $28.50
------
INSTITUTIONAL SHARES:
Net assets $776,197,290
Shares authorized ($0.01 par value) 5,000,000,000
Shares issued and outstanding 27,204,710
Net asset value, offering and redemption price per share $28.53
------
<PAGE>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Statement of Operations
For the Six Months Ended December 31, 1999
(Unaudited)
INVESTMENT INCOME:
Interest $1,062,679
Dividends (net of foreign taxes withheld of $601,842) 4,527,713
--------------
Total investment income 5,590,392
EXPENSES:
Advisory fees 8,155,058
Transfer agent fees:
International Shares 1,095,742
Institutional Shares 10,021
Shareholder communications:
International Shares 145,316
Institutional Shares 4,957
Custodian fees 563,469
Accounting fees 37,363
Professional fees 68,017
Registration fees 227,682
Director's fees 7,500
Organizational costs 3,660
Other operating expenses 98,056
--------------
Total operating expenses 10,416,841
--------------
Net investment loss (4,826,449)
NET REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gain (loss) on:
Investments 60,250,914
Foreign currency related transactions (952,889)
--------------
59,298,025
Net increase in unrealized appreciation on: Investments 897,397,920
Foreign currency related transactions 64,671
--------------
897,462,591
--------------
Net gain on investments 956,760,616
--------------
Net increase in net assets resulting from operations $951,934,167
==============
<PAGE>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Statements of Changes in Net Assets
Six Months
Ended Year Ended
December 31, June 30,
1999<F1> 1999
------------ ------------
OPERATIONS:
Net investment income (loss) $(4,826,449) $4,109,783
Net realized gain (loss) on:
Investments 60,250,914 38,449,100
Foreign currency related transactions (952,889) (677,233)
Net increase (decrease) in unrealized
appreciation on:
Investments 897,397,920 79,783,283
Foreign currency related transactions 64,671 (137,818)
-------------- --------------
Net increase in net assets resulting
from operations 951,934,167 121,527,115
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
International Shares (1,581,063) (944,186)
Institutional Shares (1,166,198) (257,100)
Net realized gains on investment
transactions:
International Shares (36,202,670) (6,509,837)
Institutional Shares (10,501,625) (1,271,446)
-------------- --------------
Total distributions paid to shareholders (49,451,556) (8,982,569)
FUND SHARE ACTIVITIES:
Net increase in net assets resulting
from fund share activities 1,040,784,898 513,780,438
-------------- --------------
Total increase in net assets 1,943,267,509 626,324,984
Net assets, beginning of period 1,123,504,599 497,179,615
-------------- --------------
Net assets, end of period $3,066,772,108 $1,123,504,599
============== ==============
<F1> Unaudited.
<PAGE>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Financial Highlights
<TABLE>
<CAPTION>
Six Months Year Year Year Period
Ended Ended Ended Ended Ended
December 31, June 30, June 30, June 30, June 30,
1999 1999 1998 1997 1996
Institutional Institutional Institutional International International
For a share outstanding throughout each period Shares<F1> Shares Shares Shares Shares<F2>
- ---------------------------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.70 $16.26 $14.48 $12.08 $10.00
Income from investment operations:
Net investment income (loss) (0.05) 0.11<F3> 0.09<F3> 0.07 0.04
Net realized and unrealized gains on securities
and foreign currency transactions 10.48 2.62 3.04 2.44 2.04
--------- --------- --------- --------- ---------
Total from investment operations 10.43 2.73 3.13 2.51 2.08
--------- --------- --------- --------- ---------
Distributions paid to shareholders:
Net investment income (0.06) (0.05) (0.22) (0.02) -
Net realized gains on investment transactions (0.54) (0.24) (1.13) (0.09) -
--------- --------- --------- --------- ---------
Total distributions paid to shareholders (0.60) (0.29) (1.35) (0.11) -
========= ========= ========= ========= =========
Net asset value, end of period $28.53 $18.70 $16.26 $14.48 $12.08
Total return 56.7%<F4> 17.6% 24.4% 20.9% 20.8%<F4>
Ratios/supplemental data:
Net assets, end of period (millions) $776.2 $179.6 $82.6 $449.2 $71.5
Ratio of expenses to average net assets 1.07%<F5> 1.17% 1.25% 1.61% 2.50%<F5>
Ratio of net investment income (loss) to
average net assets (0.42%)<F5> 0.68% 0.68% 1.07% 1.60%<F5>
Portfolio turnover rate 40.88%<F4> 79.41% 109.42% 103.66% 57.00%<F4>
</TABLE>
<F1> Unaudited.
<F2> For the period from commencement of operations (December 28, 1995) through
June 30, 1996.
<F3> Computed based on average shares outstanding.
<F4> Not annualized.
<F5> Annualized.
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - December 31, 1999 (Unaudited)
(1) ORGANIZATION:
The Artisan International Fund (the "Fund") is a series of Artisan Funds,
Inc. ("Artisan Funds" ) which was incorporated on January 5, 1995, as a
Wisconsin corporation and is registered under the Investment Company Act of
1940, as amended. Artisan Funds is a series company comprised of four open-
end, diversified mutual funds. The Fund commenced operations on December
28, 1995.
Effective July 1, 1997, the Fund began offering two classes of capital
shares, International Shares and Institutional Shares. Institutional Shares
are sold to institutional investors meeting certain minimum investment
requirements. Each class of shares has equal rights with respect to
portfolio assets and voting privileges. Each class has exclusive voting
rights with respect to any matters involving only that class. Income, non-
class specific expenses, realized and unrealized gains and losses are
allocated daily to each class of shares based upon the relative net asset
value of outstanding shares. Expenses attributable to a particular class of
shares, such as transfer agency fees and shareholder communication
expenses, are allocated directly to that class.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Fund.
(a) Security valuation - Each security is valued at the last sales price
reported by the principal securities exchange on which the issue is
traded, or if no sale is reported on the principal exchange, the last
sale on a secondary exchange. The last bid price reported is utilized
if no sales have taken place. Securities for which prices are not
readily available, or for which management believes that the latest
sales or bid price is not reflective of a fair value of the security,
are valued as determined in good faith under consistently applied
procedures established by and under the general supervision of the
Board of Directors. Short-term investments maturing within sixty days
of their purchase date are valued at amortized cost which approximates
market.
(b) Income taxes - No provision has been made for federal income taxes
since the Fund intends to 1) distribute to its shareholders
substantially all of its taxable income as well as realized gains from
the sale of investment securities and 2) comply with all provisions of
the Internal Revenue Code applicable to regulated investment
companies.
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - December 31, 1999 (Unaudited)
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued):
(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 Fund enters into forward currency contracts to hedge the foreign
currency exposure on open payables and receivables. The forward
currency contracts are recorded at market value and any related
realized and unrealized gains and losses are reported as foreign
currency related transactions for financial reporting purposes. For
tax purposes, these foreign exchange gains and losses are treated as
ordinary income. The Fund could be exposed to loss if the
counterparties fail to perform under these contracts.
(e) Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
(f) Other - Dividend income is recorded on the ex-dividend date, except
that certain dividends from private placements and foreign securities
are recorded as soon as the information becomes available to the Fund.
Interest income is reported on the accrual basis. Distributions to
shareholders are recorded on the ex-dividend date. Generally accepted
accounting principles require that permanent financial reporting and
tax differences be reclassified in the capital accounts.
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - December 31, 1999 (Unaudited)
(3) TRANSACTIONS WITH AFFILIATES:
Artisan Partners Limited Partnership (the "Adviser"), with which certain
officers and directors of the Fund are affiliated, provides investment
advisory and administrative services to the Fund. In exchange for these
services, the Fund pays a monthly management fee to the Adviser as follows:
Average Daily Net Assets Annual Rate
------------------------ -----------
Less than $500 million 1.000%
$500 million to $750 million 0.975%
$750 million to $1 billion 0.950%
Greater than $1 billion 0.925%
The 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 Fund for any ordinary operating
expenses in excess of 2.50% of average net assets annually.
Each director who is not an interested person of Artisan Funds, Inc. or
Artisan Partners Limited Partnership receives an annual retainer fee of
$5,000 per Fund, plus reimbursement of expenses related to their duties as
a director of Artisan Funds, Inc.
(4) ORGANIZATIONAL COSTS AND PREPAID REGISTRATION EXPENSES:
Organizational costs are amortized over sixty months. These expenses were
paid by the Adviser and will be reimbursed by the Fund over the same time
period.
(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 the 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 the Fund based on relative net assets. Interest is
charged on any borrowings at the current federal funds rate plus 0.75%. The
use of the line of credit is generally restricted to temporary borrowing
for extraordinary or emergency purposes. There were no borrowings made by
the Fund during the six month period ended December 31, 1999.
(6) INVESTMENT TRANSACTIONS:
The cost of securities purchased and the proceeds from the sale of
securities (excluding short-term securities) for the six months ended
December 31, 1999 were $1,570,007,220 and $698,265,059, respectively.
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - December 31, 1999 (Unaudited)
(7) FUND SHARE ACTIVITIES:
Capital share transactions for the Fund were as follows:
INTERNATIONAL FUND
-----------------------------
INTERNATIONAL INSTITUTIONAL
SIX MONTHS ENDED DECEMBER 31, 1999 SHARES SHARES
------------- -------------
Proceeds from shares issued $925,298,946 $390,654,273
Net asset value of shares issued in
reinvestment of distributions 35,747,848 11,635,093
Cost of shares redeemed (309,135,191) (13,416,071)
------------- -------------
NET INCREASE (DECREASE) FROM FUND
SHARE ACTIVITIES $651,911,603 $388,873,295
============= =============
INTERNATIONAL FUND
-----------------------------
INTERNATIONAL INSTITUTIONAL
SIX MONTHS ENDED DECEMBER 31, 1999 SHARES SHARES
------------- -------------
Shares sold 42,832,548 17,657,599
Shares issued from reinvestment of distributions 1,613,170 524,576
Shares redeemed (14,625,809) (580,239)
------------- -------------
Net increase (decrease) in capital shares 29,819,909 17,601,936
============= =============
INTERNATIONAL FUND
-----------------------------
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1999 SHARES SHARES
------------- -------------
Proceeds from shares issued $808,115,881 $108,430,376
Net asset value of shares issued in
reinvestment of distributions 7,211,053 1,448,132
Cost of shares redeemed (376,463,582) (34,961,422)
------------- -------------
NET INCREASE (DECREASE) FROM FUND
SHARE ACTIVITIES $438,863,352 $74,917,086
============= =============
INTERNATIONAL FUND
-----------------------------
INTERNATIONAL INSTITUTIONAL
FISCAL YEAR ENDED JUNE 30, 1999 SHARES SHARES
------------- -------------
Shares sold 47,804,591 6,392,854
Shares issued from reinvestment of distributions 558,569 112,258
Shares redeemed (23,304,036) (1,985,942)
------------- -------------
Net increase (decrease) in capital shares 25,059,124 4,519,170
============= =============
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements - December 31, 1999 (Unaudited)
(8) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
Aggregate gross unrealized appreciation (depreciation) on investments as of
December 31, 1999, based on an investment cost of $1,989,707,953 for
federal tax purposes is as follows:
Aggregate gross unrealized
appreciation on investments $1,082,412,413
Aggregate gross unrealized
depreciation on investments (25,019,549)
---------------
Net unrealized appreciation $1,057,392,864
===============
The difference between cost amounts for financial reporting and tax purposes is
due primarily to timing differences in recognizing certain gains and losses
on security transactions and passive foreign investment company (PFIC)
value adjustments. Losses from foreign currency related transactions of
$487,619 from November 1, 1998 to June 30, 1999 are recognized for federal
income tax purposes in fiscal 2000.
- --------------------------------------------------------------------------------
NOTES ON PORTFOLIO STATISTICS
The letter to shareholders included in this semi-annual report include
statistical information about the portfolio of the Fund. The information is
as of December 31, 1999; it varies with changes in the Fund's portfolio
investments.
- --------------------------------------------------------------------------------
