<PAGE>
(ARTISAN LOGO)
ANNUAL
REPORT
June 30, 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)
<PAGE>
--------------------------------------------------------- TABLE OF CONTENTS ---
TABLE OF CONTENTS
LETTER FROM THE PRESIDENT 38 STATEMENTSOF ASSETS & LIABILITIES
2 LETTERS TO SHAREHOLDERS 39 STATEMENTS OF OPERATIONS
2 Artisan International Fund
6 Artisan Mid Cap Fund 40 STATEMENTS OF CHANGES IN
10 Artisan Small Cap Fund NET ASSETS
14 Artisan Small Cap Value Fund
42 FINANCIAL HIGHLIGHTS
18 SCHEDULES OF INVESTMENTS
18 Artisan International Fund 44 NOTES TO FINANCIAL STATEMENTS
24 Artisan Mid Cap Fund
28 Artisan Small Cap Fund 51 REPORT OF
32 Artisan Small Cap Value Fund INDEPENDENT ACCOUNTANTS
------------------------------------------------------ WWW.ARTISANFUNDS.COM ---
Website Offers Fast Access To Fund Information, Forms
The Artisan Funds website, WWW.ARTISANFUNDS.COM, offers shareholders nearly
immediate access to portfolio information, such as this annual report, in
addition to performance information, portfolio manager profiles and comments,
the combined prospectus, account applications and forms. The website is the
most direct way to obtain information and forms because we revise the site
the day information is available. Waiting for delivery is eliminated.
We urge you to explore the site to view what it offers and visit often,
because we strive to continually update and improve its content. We
anticipate adding online account access in the near future.
ARTISANFUNDS
P.O. Box 8412
BostoN, MA 02266-8412
This report and the financial statements contained herein are provided for
the general information of the shareholders of Artisan Funds. This report is
not authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. For more information on any Fund,
including fees and expenses, please call 800.344.1770 or visit our website at
WWW.ARTISANFUNDS.COM for a free prospectus. Read it carefully before you
invest or send money.
Company discussions are for illustration only and are not intended as
recommendations of individual stocks. The discussions present information
about the companies believed to be accurate, and the views of each respective
portfolio manager(s), as of June 30, 2000. That information and those views
may change and the Fund disclaims any obligation to advise shareholders of
any such changes.
Artisan Funds offered through Artisan Distributors LLC, 1000 North Water
Street, Milwaukee, WI 53202, member NASD.
800.344.1770 * WWW.ARTISANFUNDS.COM
<PAGE>
Dear Fellow Shareholders,
Our fiscal year ended June 30, 2000, was noteworthy for several reasons.
Especially memorable was the recognition presented to our portfolio teams who
excelled in spite of seemingly endless volatility in markets throughout the
world.
Artisan Mid Cap Fund celebrated its three-year anniversary ranked #1 since
inception (June 27, 1997) and #9 for one-year, based on total return, out of 82
and 155 Mid-Cap Core Funds, respectively, for the periods ended June 30, 2000,
as tracked by Lipper Inc. The Fund also received a ***** Morningstar RatingTM
for the three-year and overall periods ended June 30, 2000, out of 3,642
domestic equity funds. We are pleased that the Fund received this ranking the
first quarter it was eligible for ranking by Morningstar.<F1>
Artisan International Fund continued its record of high achievement. As of June
30, 2000, the Fund ranked #1 out of 301 and #10 out of 653 International Funds,
respectively, based on total return, for the since inception (December 28, 1995)
and one-year periods as tracked by Lipper Inc. Additionally, the Fund received
a ***** Morningstar RatingTM for the three-year and overall periods ended June
30, 2000, out of 1,148 international equity funds.<F1>
In addition, our small-cap strategies had noteworthy accomplishments. Artisan
Small Cap Fund continued its turnaround and outperformed its benchmark index,
the Russell 2000 Index, in each of the four quarters. Artisan Small Cap Value
Fund outperformed its benchmark index, the Russell 2000 Value Index, for the
fiscal year.
In addition to rankings and performance, other activities deserve mention.
Artisan Small Cap Value Fund closed to new investors and named Jim Kieffer, an
analyst on the Fund since its inception, as portfolio co-manager. We are proud
to announce that we successfully, and in some cases substantially, reduced
expense ratios for all four of our Funds. This redesigned Annual Report is our
initial effort to refine our shareholder communications materials. Response to
our website has been tremendous and we anticipate adding online account access
in the near future. And, we plan to pay our annual capital gains and dividend
distributions in November.
Recent market volatility caught the attention of investors. Although market
swings are unsettling, we urge investors to maintain a long-term perspective. In
our opinion, volatility is inescapable in investing and the potential rewards of
long-term investing involve risk. With a long-term approach, investors generally
resist the temptation to react emotionally to short-term market movements.
As always, thank you for investing in Artisan Funds. Rest assured that we
continually strive to lower fund expenses, provide you with more timely
information about your investments and of course, work hard to seek out
promising investment opportunities for you.
Sincerely,
/s/ Michael C. Roos
Michael C. Roos
President
(HEAD SHOT)
Michael C. Roos
President
"Rest assured, that we continually
strive to lower fund expenses, provide
you with more timely information about
your investments and of course, work
hard to seek out promising investment
opportunities for you."
<F1>Important Morningstar Information. Morningstar proprietary ratings reflect
historical risk-adjusted performance as of 6/30/00. The ratings are subject
to change every month. The Overall Morningstar RatingTM is a weighted average
of the fund's 3-, 5- and 10-year annual returns (if applicable) in excess of
90-day T-bill returns with appropriate fee adjustments, and a risk factor
that reflects fund performance below 90-day T-bill returns. The top 10% of
the funds in an investment class receives 5 stars.
<PAGE>
A FEW HIGHLIGHTS TO NOTE
---------------------------------------------- AVERAGE ANNUAL TOTAL RETURNS ---
<TABLE>
<CAPTION>
Since
1-Year 3-Year 5-Year Inception
------ ------- ------ ---------
<S> <C> <C> <C> <C>
Artisan International Fund (inception 12/28/95) 65.65% 34.06% N/A 32.21%
-----------------------------------------------------------------------------------------------
Artisan Mid Cap Fund (inception 6/27/97) 72.88 50.75 N/A 50.53
-----------------------------------------------------------------------------------------------
Artisan Small Cap Fund (inception 3/28/95) 32.46 8.04 12.48% 14.88
-----------------------------------------------------------------------------------------------
Artisan Small Cap Value Fund (inception 9/29/97) 4.22 N/A N/A 5.97
-----------------------------------------------------------------------------------------------
</TABLE>
As of 6/30/00.
--------------------------------------------- RECOGNITION FOR FUND MANAGERS ---
BARRON'S/VALUE LINE SURVEY
The annual Barron's/Value Line Fund Survey ranked Artisan Mid Cap Fund Portfolio
Manager Andrew Stephens the #1 fund manager out of 213 funds in the Growth Fund
Category, based on performance and volatility since the Fund's inception
(6/27/97) through June 30, 2000.
The Survey also ranked Artisan International Fund Portfolio Manger Mark Yockey
the #1 fund manager out of 93 funds in the Foreign Fund Category, based on
performance and volatility since the Fund's inception (12/28/95) through June
30, 2000.
The article may be viewed on our website, WWW.ARTISANFUNDS.COM.
---------------------------------------------------- UPDATED EXPENSE RATIOS ---
Ratio Of Expenses
To Average Net Assets
---------------------
Artisan International Fund 1.27%
-----------------------------------------------------------------------------
Artisan Mid Cap Fund 1.40
-----------------------------------------------------------------------------
Artisan Small Cap Fund 1.35
-----------------------------------------------------------------------------
Artisan Small Cap Value Fund 1.35
-----------------------------------------------------------------------------
Annualized as of 6/30/00. A complete year-by-year table of the expense ratios
for each fund is located on page 42.
PERFORMANCE INFORMATION IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS.
PLEASE READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST OR SEND MONEY. IN
1999, THE ARTISAN INTERNATIONAL FUND AND ARTISAN MID CAP FUND PERFORMANCES
WERE ACHIEVED DURING A PERIOD OF UNUSUALLY FAVORABLE MARKET CONDITIONS.
INVESTORS SHOULD MAINTAIN REALISTIC EXPECTATIONS FOR FUTURE PERFORMANCE. SUCH
PERFORMANCE MAY NOT BE SUSTAINABLE. IN TIMES OF MARKET VOLATILITY THE FUNDS'
RETURNS MAY VARY GREATLY OVER SHORT PERIODS OF TIME. Investment return and
principal value of an investment in the Funds will fluctuate, so that an
investor's shares in the Fund, when redeemed, may be worth more or less than
their original cost.
ARTISAN INTERNATIONAL FUND: INTERNATIONAL INVESTMENTS INVOLVE SPECIAL RISKS,
INCLUDING CURRENCY FLUCTUATION, SOMETIMES LOWER LIQUIDITY, ECONOMIC AND
POLITICAL RISKS, DIFFERENT ACCOUNTING METHODS AND HIGHER TRANSACTION COSTS.
ARTISAN MID CAP FUND: STOCKS OF MID-SIZED COMPANIES, AS AN ASSET CLASS, TEND
TO BE MORE VOLATILE THAN THOSE OF LARGE COMPANIES AND HAVE UNDERPERFORMED THE
STOCKS OF SMALL AND LARGE COMPANIES DURING SOME PERIODS. ARTISAN SMALL CAP
FUND AND ARTISAN SMALL CAP VALUE FUND: AN INVESTMENT IN A MUTUAL FUND THAT
CONCENTRATES ITS PORTFOLIO IN THE STOCKS OF SMALLER COMPANIES MAY PRESENT
ADDITIONAL RISK, INCLUDING A SHORTER HISTORY OF OPERATIONS, HIGHER VOLATILITY
AND LESS LIQUIDITY. THE ARTISAN SMALL CAP VALUE FUND INVESTS IN VALUE STOCKS,
WHICH MAY FALL OUT OF FAVOR WITH INVESTORS AND UNDERPERFORM OTHER ASSET TYPES
DURING A GIVEN PERIOD. ALL OF THESE RISKS ARE DISCUSSED IN THE FUND'S
PROSPECTUS. Please read it carefully before you invest or send money.
The annual "Barron's/Value Line Fund Survey," published in the July 17, 2000
issue of "Barron's," ranked Portfolio Manager Andrew Stephens the #1 overall
fund manager and ranked Portfolio Manager Mark Yockey the #10 overall fund
manager out of 630 fund managers, based on performance and volatility during
the fund manager's tenure through 6/30/2000. "Barron's/Value Line Fund
Survey" scanned 6,000 equity funds, screening out those with more than three
managers. Then it gave each manager a score reflecting how much value he or
she added versus his or her peer group. Points came off for funds that are
too volatile and were added for funds with stable returns. (If a fund is
judged to be 25% more volatile, it's expected to have 25% greater return than
a peer group). A manager with an average performance and volatility got a
score of zero. Superior managers received positive scores, inferior ones,
negative scores. The longer a manager held the job, the more data used for
his or her ranking. Ten diversified stock categories were looked at,
specialized funds were tossed out. Eventually, only 630 managers qualified
for the rankings. While the rankings are risk-adjusted, they may be swayed by
short time periods, and over time, the manager's score may revert to the
mean.
800.344.1770 * WWW.ARTISANFUNDS.COM
<PAGE>
ARTISAN
INTERNATIONAL
FUND
--- INVESTMENT APPROACH -------------------------------------------------------
The Fund seeks to provide investors with diversified exposure to the
international equity markets, across capitalizations and regions, with a
focus on well-managed growth companies. Because foreign markets may provide
investors with growth opportunities that are distinct from those in the U.S.,
we look to identify attractive growth themes. Once identified, we combine
intensive fundamental analysis with extensive international travel to find
companies that appear well positioned to capitalize on these themes.
Important company criteria include sustainable growth, reasonable valuation,
strong industry presence and effective management with a focus on shareholder
value. We pick our stocks one-at-a-time. As a result, we make no effort to
mimic the composition of any index.
--- PERFORMANCE ---------------------------------------------------------------
Despite volatile overseas markets, Artisan International Fund gained 5.82%
during the six months ended June 30, 2000, finishing well ahead of its
benchmark, the EAFE Index, which lost 4.06% through mid-year. For the year
ended June 30, 2000, the Fund was up 65.65%, outdistancing the EAFE Index,
which returned a solid 17.16% over the same 12-month period.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (12/28/95 to 6/30/00)
+----------------------------- GRAPHIC ------------------------------+
| Line chart showing growth to current levels for : |
| |
| International EAFE Lipper International |
| Fund Index Fund Index |
| |
| 12/28/95 $10,000 $10,000 $10,000 |
| 12/96 13,437 10,605 11,472 |
| 12/97 13,902 10,793 12,303 |
| 12/98 18,376 12,952 13,861 |
| 12/99 33,314 16,444 19,105 |
| 6/00 35,254 15,766 18,320 |
+--------------------------------------------------------------------+
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/00)
-------------------------------------------------------------------------------
Since
Fund / Index 1-Year 3-Year Inception
-------------------------------------------------------------------------------
Artisan International Fund 65.65% 34.06% 32.21%
-------------------------------------------------------------------------------
EAFE Index 17.16% 10.16% 10.63%
-------------------------------------------------------------------------------
Lipper International Fund Index 23.63% 11.89% 14.36%
-------------------------------------------------------------------------------
PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS. YEAR-TO-DATE
THROUGH AUGUST 18, 2000, ARTISAN INTERNATIONAL FUND HAD GAINED 1.79%. 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. IN TIMES OF
MARKET VOLATILITY THE FUND'S RETURN MAY VARY GREATLY OVER SHORT PERIODS OF
TIME. INTERNATIONAL INVESTMENTS INVOLVE SPECIAL RISK CONSIDERATIONS,
INCLUDING CURRENCY FLUCTUATION, SOMETIMES LOWER LIQUIDITY, ECONOMIC AND
POLITICAL RISKS, AND DIFFERENT ACCOUNTING METHODS, WHICH ARE DISCUSSED IN THE
PROSPECTUS. Please read it carefully before you invest or send money.
Investment return and principal value will fluctuate so that an investor's
shares in the Fund, when redeemed, may be worth more or less than their
original cost. The graph compares the results of $10,000 invested in the
Artisan International Fund on December 28, 1995 (the date the Fund began
operations) 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 including Artisan International Fund. All index returns include
reinvested dividends but do not include the payment of sales commissions or
other expenses incurred in the purchase of the securities included in the
index.
For the since inception and one-year
periods ended June 30, 2000, Artisan
International Fund ranked #1 out of 301
and #10 out of 653 international funds,
respectively, for total return as
tracked by Lipper Inc.
02
TWO
<PAGE>
----------------------------------------------------------- 12 MONTH REVIEW ---
Given the volatility seen in overseas markets over the 12 months ended June
30, 2000, investors must have felt as though they were on a roller coaster
ride for much of the Fund's fiscal year. In this review, we'll provide you
with some context for events that drove overseas markets during our fiscal
year, discuss some portfolio strategies we employed to combat volatility and
review where the portfolio stood on June 30, 2000.
LAST 6 MONTHS OF 1999
While 1999's third quarter brought rather mixed market movements, with many
developed markets rising, and most of the emerging markets correcting - many
significantly; the fourth quarter of 1999 saw European stock markets rise on
a wave of optimism about the economic outlook and continued enthusiasm for
telecom shares. Leading indices hit new record peaks in numerous European
markets. Investors appeared impressed by a European Commission report
forecasting strong economic growth. A reversal in "doomsday" predictions
concerning the millennium computer bug seemed to allay investors fears across
the globe as no significant disruption was expected.
The fourth quarter was not without its share of newsworthy events. The Euro
approached parity with the dollar. Wireless shares surged as investors paid
attention to the potential for revenue and profit growth exhibited by NTT
DoCoMo's success with their I-mode service, which allows users to access the
Internet through cellular phones. Mannesmann's rejection of Vodafone's
takeover offer set the stage for the world's largest takeover battle. In this
context, Artisan International Fund achieved two of its three highest monthly
returns (November and December) since inception. A strong fourth quarter
helped to propel the EAFE Index to its highest one-year return since 1993.
FIRST 6 MONTHS OF 2000
After three consecutive months of strong performance, international markets
took a breather in January.reflecting in part the uncertainty in U.S. markets
over interest rates and possibly due to some profit taking after 1999's
particularly strong 4th quarter.but roared back to life in February. The Fund
capped off February with a 19.32% return, its second best monthly return
since inception, partially driven by Vodafone's successful takeover of
Mannesmann which may have sparked renewed enthusiasm among investors over the
long-term growth prospects of telecom and technology companies.
However, March was a challenging month for investors across the globe, as
international markets seemed to reflect the volatility and uncertainty in
U.S. markets over "Old Economy" versus "New Economy" shares. Given this
change in investor sentiment, the Fund's "TMT" stocks (an acronym reflecting
the perceived synergies among Technology, Media and Telecommunications
companies) did not have an easy time of it, and contributed to the Fund's
first month of underperformance versus the EAFE Index since August 1999.
While this may have helped to cause a broadening of the market and rotation
among sectors, we saw no clear new leaders emerge at quarter-end.
Overseas markets followed-up late March losses with more of the same
throughout April and May. During this time, no major region seemed to have
been spared nor appeared to offer a "safe haven." Similar to U.S. markets, a
reevaluation of the technology sector and concerns about increased
inflationary pressures and possible higher interest rates were contributing
factors to global market declines. And like our Federal Reserve, the European
Central Bank preemptively increased interest rates. In fact, there were even
indications that the Bank of Japan may consider an end to their zero interest
rate policy.
(HEAD SHOT)
Mark L. Yockey
Portfolio Manager
"Despite difficult market conditions, we
did not initiate any major portfolio
changes over the last six months -
however, we did begin to selectively
reposition the portfolio. While we
remained committed to our major themes
of telecommunications, financials,
advertising and media, restructuring and
outsourcing, we continued to work to
validate our holdings in terms of
current and future earnings visibility."
800.344.1770 * WWW.ARTISANFUNDS.COM
03
THREE
<PAGE>
--- PORTFOLIO STRATEGIES ------------------------------------------------------
Despite difficult market conditions, we did not initiate any major portfolio
changes over the last six months - however, we did begin to selectively
reposition the portfolio. While we remained committed to our major themes of
telecommunications, financials, advertising and media, restructuring and
outsourcing, we continued to work to validate our holdings in terms of
current and future earnings visibility. Where concerned, we replaced holdings
with what we viewed as more attractive alternatives.
An example of repositioning has been our shift to selective Korean stocks,
mostly blue chip telecom and technology names. We believe companies such as
SK Telecom Co., Ltd. and Samsung Electronics are at par with their peers in
other countries or among the world leaders, but trade at more attractive
valuations.
Our TMT names corrected in part due to substantial auction (multi-billion
dollar costs for successful bidders) results for the third generation
portable phone licenses in the U.K. Despite attractive industry fundamentals
and forecasts of strong subscriber growth, additional auctions slated for
later this year contributed to near-term profitability concerns. While we
couldn't fully escape the price correction of TMT stocks, we were helped by
having started to trim our exposure late in the first quarter. Additionally,
we diversified by adding some holdings in regions other than Europe where we
felt valuations were still reasonable. We believe the market overreacted and
we plan to stay the course.
REGION ALLOCATION
<F1> As of 6/30/00. <F2>As of 12/31/99. ---------------------------------
- Graphic of world map -
- Points indicate target region -
---------------------------------
<F1> North America 7.9% ___________________ ______*
<F2> North America 16.0%
<F1> Europe 55.3% _________________________ __________________*
<F2> Europe 51.7%
<F1> Asia/Pacific 28.6% ___________________ ________________________*
<F2> Asia/Pacific 22.7%
<F1> Latin America 3.6% ___________________ _____*
<F2> Latin America 4.8%
Portfolio equities as a percentage of Fund total net assets.
Beyond TMT, we increased our positions in some of our European financials and
added new names,
such as Lloyds TSB Group in the U.K. We believe the European financial stocks
are attractive, due to ongoing consolidation, restructuring and demographics.
Going forward, we anticipate our stock picking focus will remain largely on
the same themes we have featured over the last year. While there may be some
areas of over-extended valuations, we believe that our stocks represent
companies with strong and growing earnings potential.
On June 30, 2000, total net assets in the Fund were $4.9 billion, of which
$3.7 billion were in the Investor share class. On December 31, 1999, Fund
total net assets stood at $3.1 billion. Due to our selective repositioning,
the median market cap of our holdings rose to $7.4 billion from $4.6 billion.
Based on 2000 estimates, our weighted average growth rate of 25.5% fell below
our weighted average P/E of 27.8x, as valuations, though down from year-end,
remained in the upper-end of our ranges. On June 30, we were approximately
95.4% invested in equities, which we consider fully invested. The Fund held
109 stocks located in 23 countries. Our Top 10 Holdings, largely centered on
our telecommunications and financial services themes, comprised 23.0% of the
portfolio.*
Top 5 Country Allocations
United Kingdom................... 19.4%
Japan............................ 16.6%
Canada............................ 7.9%
France............................ 7.0%
Switzerland....................... 6.5%
As of 6/30/00.
For a more detailed look at
Region/Country Allocations please view
the "Schedule of Investments," starting
on page 18.
* For definitions of portfolio statistics please reference Notes on Portfolio
Statistics on page 50.
04
FOUR
<PAGE>
------------------------------------------------- PORTFOLIO CHARACTERISTICS ---
TOP 10 HOLDINGS
COMPANY NAME COUNTRY %
------------------------------------------------------------------------------
China Mobile (Hong Kong) Ltd. Hong Kong 2.8
------------------------------------------------------------------------------
Lloyds TSB Group PLC United Kingdom 2.8
------------------------------------------------------------------------------
AT&T Canada, Inc. Canada 2.7
------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corporation Japan 2.5
------------------------------------------------------------------------------
Samsung Electronics Korea 2.2
------------------------------------------------------------------------------
Granada Group PLC United Kingdom 2.2
------------------------------------------------------------------------------
UnitedGlobalCom, Inc. Netherlands 2.1
------------------------------------------------------------------------------
Promise Co., Ltd. Japan 1.9
------------------------------------------------------------------------------
UBS AG Switzerland 1.9
------------------------------------------------------------------------------
Abbey National PLC United Kingdom 1.9
------------------------------------------------------------------------------
TOTAL 23.0%
As a percentage of total net assets as of June 30, 2000. Portfolio holdings
are subject to change.
Not surprisingly, some of the best returns over the last year originated in
the telecommunications arena, as witnessed by four of the top five gainers in
the period. We believe the outlook for the industry remains attractive with
future growth coming from additional services and applications as
technologies continue to advance. Finmatica, an Italian software maker,
benefited from Italian banks upgrading their technology.
GOOD IDEAS THAT WORKED % GOOD IDEAS AT THE TIME %
----- -----
Finmatica SPA.................. 324.0 Nichiei Co., Ltd. ............... -74.1
BCE, Inc. ..................... 140.0 Stagecoach Holdings PLC.......... -63.6
Nortel Networks Corp. ......... 115.1 Global Telesystems Group......... -49.4
NTT DoCoMo, Inc. ............... 91.9 NTL Incorporated................. -20.9
China Mobile (Hong Kong) Ltd. .. 81.8 British Telecommunications PLC .. -19.7
For the year ended June 30, 2000, these are the holdings that made the
largest dollar difference in the portfolio. While some minor 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. Past performance of these specific holdings is historical
and does not guarantee future results.
Unfortunately, some of our stocks did not work out as planned. Nichiei was
caught in a negative public relations situation following embarrassing media
reports on one of its loan collectors. Beyond negative company sentiment, the
stock also suffered from the risk of government intervention in the Japanese
consumer finance sector. Stagecoach Holdings suffered from an ill-timed
acquisition, and Global Telesystems, NTL and British Telecom were all
affected by the downdraft in TMT stocks.
As always, thank you for the continued confidence you've shown in our team.
/s/ Mark Gochez
Top 5 Sectors
Consumer Cyclical ............... 22.8%
Financial ....................... 21.1%
Telecommunications .............. 16.5%
Industrial ....................... 9.4%
Utilities ........................ 9.3%
As of 6/30/00.
For a more detailed look at Sector
Diversification please see "Portfolio
Diversification" on page 23.
Effective July 1, 1997, the Fund began offering an institutional class of
shares for institutional investors meeting certain minimum investment
requirements. A report on the institutional class is available under separate
cover.
800.344.1770 * WWW.ARTISANFUNDS.COM
05
FIVE
<PAGE>
ARTISAN
MID CAP FUND
--- INVESTMENT APPROACH -------------------------------------------------------
Artisan Mid Cap Fund pursues long-term capital growth through a diversified
portfolio of stocks of mid-sized companies - which the Fund broadly defines
as market capitalizations between $600 million and $6 billion - that exhibit
franchise characteristics. Companies with an established franchise often
possess a proprietary technology, an established brand name or another
competitive advantage that allows them to achieve a dominant position in
their marketplace. From these companies, the Fund seeks firms with strong
growth characteristics - including accelerating earnings, expanding profit
margins and increasing market share - that are reasonably priced by the
market.
--- PERFORMANCE ---------------------------------------------------------------
Artisan Mid Cap Fund solidly outperformed both its benchmark index and its
peer group for both the six-month and fiscal year periods ended June 30,
2000. For the six-month period, the Fund rose 27.11% compared to an 8.97%
increase for its benchmark index, the S&P 400 MidCap Index, and a gain of
10.66% by its peer group, the Lipper Mid-Cap Core Fund Index.
For the fiscal year, the Fund posted a gain of 72.88%, while its benchmark
index moved up 16.98% and its peer group gained 32.06%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (6/27/97 to 6/30/00)
+----------------------------- GRAPHIC ------------------------------+
| Line chart showing growth to current levels for : |
| |
| Mid Cap S&P 400 Lipper Mid-Cap |
| Fund MidCap Index Core Fund Index |
| |
| 6/27/97 $10,000 $10,000 $10,000 |
| 12/97 12,814 11,669 11,193 |
| 12/98 17,090 13,899 12,063 |
| 12/99 26,984 15,945 15,464 |
| 6/00 34,299 17,376 17,113 |
+--------------------------------------------------------------------+
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/00)
-------------------------------------------------------------------------------
Since
Fund / Index 1-Year 3-Year Inception
-------------------------------------------------------------------------------
Artisan Mid Cap Fund 72.88% 50.75% 50.53%
-------------------------------------------------------------------------------
S&P 400 MidCap Index 16.98% 20.32% 20.12%
-------------------------------------------------------------------------------
Lipper Mid-Cap Core Fund Index 32.06% 19.31% 19.52%
-------------------------------------------------------------------------------
PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS. YEAR-TO-DATE
THROUGH AUGUST 18, 2000, ARTISAN MID CAP FUND HAD GAINED 38.73%. 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. IN TIMES OF MARKET
VOLATILITY THE FUND'S RETURN MAY VARY GREATLY OVER SHORT PERIODS OF TIME.
STOCKS OF MID-SIZED COMPANIES, AS AN ASSET CLASS, TEND TO BE MORE VOLATILE
THAN THOSE OF LARGE COMPANIES AND HAVE UNDERPERFORMED THE STOCKS OF SMALL AND
LARGE COMPANIES DURING SOME PERIODS. Please read the prospectus carefully
before you invest or send money. Investment return and principal value will
fluctuate so that an investor's shares in the Fund, when redeemed, may be
worth more or less than their original cost. The graph compares the results
of $10,000 invested in Artisan Mid Cap Fund on June 27, 1997 (the date the
Fund began operations) with the S&P 400 MidCap Index and the Lipper Mid-Cap
Core Fund Index. The S&P 400 MidCap Index is an unmanaged, market-weighted
index of 400 mid-cap companies. The Lipper Mid-Cap Core Fund Index reflects
the net asset weighted return of the 30 largest mid-cap core 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.
For the since inception and one-year
periods ended June 30, 2000, Artisan Mid
Cap Fund ranked #1 out of 82 and #9 out
of 155 Mid-Cap Core Funds, respectively,
based on total return as tracked by
Lipper Inc.
800.344.1770 * WWW.ARTISANFUNDS.COM
06
SIX
<PAGE>
----------------------------------------------------------- 12 MONTH REVIEW ---
+-----------------------------------------------------------------------------+
| |
| MID CAP FUND RECOGNITION |
| |
| TOP RATING FROM MORNINGSTAR |
| The Artisan Mid Cap Fund received a ***** Morningstar RatingTM for the |
| three-year and overall periods ended June 30, 2000, out of 3,642 |
| domestic equity funds.<F1> |
| |
| BARRON'S/VALUE LINE SURVEY |
| The annual Barron's/Value Line Fund Survey ranked Artisan Mid Cap Fund |
| Portfolio Manager Andrew Stephens the #1 fund manager out of 213 funds |
| in the Growth Fund Category based on performance and volatility since |
| the Fund's inception (6/27/97) through June 30, 2000.<F2> |
| |
+-----------------------------------------------------------------------------+
The 12-month period ended June 30, 2000, was notable for several reasons. One
was the volatility in the market despite a period of strong growth and low
inflation. Another was investors' fascination with technology securities,
especially those of Internet and telecommunications companies.
The technology sector dominated the final six months of 1999, surging ahead
even as other sectors experienced volatility that resulted, in part, from two
interest rate increases by the Federal Reserve. Market volatility continued
into the New Year, as the share price instability the market experienced during
the first quarter of 2000 accelerated in the second quarter. In particular,
we saw the technology and healthcare sectors of the mid-cap market drift
downward after experiencing a vigorous run that lasted through the early part
of March.
We were not immune to the volatility. However, we believe the portfolio
emerged from the period in sound shape. In our view, our attention to risk
management and cautious approach regarding narrow investment trends and
sector concentrations helped us negotiate this minefield and allowed us to
outperform our index in every quarter.
Even with the volatility in technology during the period, our participation
in the sector benefited the Fund. For example, in February, the Fund roared
ahead 15.52%, and our technology holdings played an important role in the
portfolio's performance. Our top gainers list is populated with technology
issues. Included are SDL, Inc., a manufacturer of semiconductor lasers, fiber
optic related products and optoelectric systems; SanDisk Corporation, which
manufactures flash memory data storage chips; and Powerwave Technologies,
Inc., a producer of power amplifiers for wireless communications.
(HEAD SHOT)
Andrew C. Stephens
Portfolio Manager
"Recognition like this is gratifying,
but it raises the bar that much higher.
No doubt our analysts, Jim Hamel and Tom
Wooden will be up to the challenge;
their research helped make the
difference."
<F1>Morningstar proprietary ratings reflect historical risk-adjusted performance
as of 6/30/00. The ratings are subject to change every month. The Overall
Morningstar RatingTM is a weighted average of the fund's 3-, 5- and 10-year
annual returns (if applicable) in excess of 90-day T-bill returns with
appropriate fee adjustments, and a risk factor that reflects fund performance
below 90-day T-bill returns. The top 10% of the funds in an investment class
receives 5 stars.
<F2>The annual "Barron's/Value Line Fund Survey," published in the July 17, 2000
issue of "Barron's," ranked Portfolio Manager Andrew Stephens the #1 overall
fund manager out of 630 fund managers, based on performance and volatility
during the fund manager's tenure through 6/30/2000. "Barron's/Value Line Fund
Survey" scanned 6,000 equity funds, screening out those with more than three
managers. Then it gave each manager a score reflecting how much value he or she
added versus his or her peer group. Points came off for funds that are too
volatile and were added for funds with stable returns. (If a fund is judged to
be 25% more volatile, it's expected to have 25% greater return than a peer
group). A manager with an average performance and volatility got a score of
zero. Superior managers received positive scores, inferior ones, negative
scores. The longer a manager held the job, the more data used for his or her
ranking. Ten diversified stock categories were looked at, specialized funds were
tossed out. Eventually, only 630 managers qualified for the rankings. While the
rankings are risk-adjusted, they may be swayed by short time periods, and over
time, the manager's score may revert to the mean.
800.344.1770 * WWW.ARTISANFUNDS.COM
07
SEVEN
<PAGE>
--- PORTFOLIO STRATEGIES ------------------------------------------------------
Other technology holdings that proved valuable were Network Solutions, which
we believe has a near-monopoly in providing services for establishing
Internet addresses, and Exodus Communications, which is helping to define the
market for outsourced web hosting to leading e-commerce companies. MIPS
Technologies and Handspring, Inc., companies riding the trend toward wireless
mobile data, are other positions that proved beneficial.
<TABLE>
<CAPTION>
GOOD IDEAS THAT WORKED % GOOD IDEAS AT THE TIME %
----- ------
<S> <C> <S> <C>
SDL, Inc. ............................. 94.7 American Superconductor Corporation .. -54.8
Varian, Inc............................ 74.8 Internet.com Corporation ............. -49.5
SanDisk Corporation.................... 74.4 REMEC, Inc. .......................... -38.7
Powerwave Technologies, Inc............ 64.3 Williams Sonoma, Inc. ................ -38.4
Dynegy, Inc............................ 57.3 RealNetworks, Inc. ................... -28.9
</TABLE>
For the year ended June 30, 2000, these are the holdings that made the
largest dollar difference in the portfolio. While some minor 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. Past performance of these specific holdings is historical
and does not guarantee future results.
Technology was not the only theme we followed. We are exploring convergence
in financial services and energy, two areas that had a positive impact on the
Fund in the second quarter of 2000. The worldwide convergence of financial
services is being propelled largely, we believe, by two factors. The demand
for investment advice, wealth management and retirement planning is
increasing, driven by groups such as the baby boomers. And now, with the
repeal of the Glass-Steagal laws in 1999, banks, insurance companies and
brokerage firms are not as restricted from combining and delivering
integrated financial products. The Fund benefited by owning Reliastar
Financial, which is being acquired by Dutch insurer ING. And, this theme led
us to Neuberger Berman, Lincoln National Corp., and Fiserv, Inc.
Additionally, we believe ongoing deregulation and consolidation of the
nation's energy industry provides convergence opportunities. Several years
ago, natural gas production and distribution was deregulated, and now we see
the same thing happening to electricity providers. With convergence, these
separate industries are forming single energy services companies that may
provide energy at lower costs to consumers and businesses nationwide.
TOP 10 HOLDINGS
Company Name %
---------------------------------------------------------------------------
Kinder Morgan, Inc. 3.4
---------------------------------------------------------------------------
National Semiconductor Corporation 3.2
---------------------------------------------------------------------------
SunGard Data Systems, Inc. 3.1
---------------------------------------------------------------------------
Integrated Device Technology, Inc. 3.0
---------------------------------------------------------------------------
Voicestream Wireless Corporation 2.8
---------------------------------------------------------------------------
Citizens Communications Company 2.5
---------------------------------------------------------------------------
United Stationers, Inc. 2.4
---------------------------------------------------------------------------
Veeco Instruments, Inc. 2.4
---------------------------------------------------------------------------
Watson Pharmaceuticals, Inc. 2.4
---------------------------------------------------------------------------
American Power Conversion Corporation 2.2
---------------------------------------------------------------------------
TOTAL 27.4%
As a percentage of total net assets as of June 30, 2000. Portfolio holdings
are subject to change.
"Companies in our universe are
experiencing dramatic change and growth
as they attempt to capture new
opportunities and respond to new
competition."
08
EIGHT
<PAGE>
------------------------------------------------- PORTFOLIO CHARACTERISTICS ---
We continued our exploration of other areas. We began to research the
unlocking of the human genome and the possibilities for improvements in
healthcare and quality of life. Some of our
initial investments in this area are Pe Corporation-Celera Genomics Group,
Affymetrix, Inc. and Pharmacopeia, Inc. Our research in this area is focused
on finding franchise business models.
On June 30, 2000, the Fund had total net assets of $225.0 million, a
significant increase from the
$98.0 million in assets at the end of 1999. The median market cap of our 61
stocks was $4.1 billion, up from $2.7 billion at the end of the calendar
year. The Top 10 Holdings represented 27.4% of net assets and based on 2000
estimates, the weighted average P/E was 21x and the weighted average growth
rate was 15.0%. On June 30, the Fund was 95.1% invested in equities, which we
consider fully invested.*
SECTOR DIVERSIFICATION
<TABLE>
<CAPTION>
SECTOR 12/31/99 6/30/00 SECTOR 12/31/99 6/30/00
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <S> <C> <C>
Basic Materials 7.4% 3.7% Real Estate Investment Trusts 0.2 0.1
-----------------------------------------------------------------------------------------------------------------
Capital Goods 11.6 9.3 Services
----------------------------------------------------- Business Services 4.0 1.8
Conglomerates 0.0 0.0 Consumer Services 9.2 3.3
-----------------------------------------------------------------------------------------------------------------
Consumer Cyclical 2.6 3.2 Technology 30.9 30.8
-----------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclical 1.0 2.4 Telecommunications 11.1 10.7
-----------------------------------------------------------------------------------------------------------------
Energy 7.5 7.2 Transportation 0.0 0.0
-----------------------------------------------------------------------------------------------------------------
Financial 4.0 8.3 Utilities 4.0 7.5
-----------------------------------------------------------------------------------------------------------------
Healthcare 1.7 6.8 Other assets less liabilities 4.8 4.9
-----------------------------------------------------------------------------------------------------------------
TOTAL 100.0% 100.0%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
As a percentage of total net assets as of December 31, 1999, and June 30,
2000, respectively.
We deploy our assets in securities that we believe are entering accelerating
profit cycles because, in our view, progress in business is cyclical, not
linear. So we want to own firms at the beginning of a profit cycle where
revenues are growing, costs are fixed and we believe profitability may grow
exponentially. Our portfolio adjustments since the end of 1999 reflect these
convictions. For example, we placed more emphasis in Financial, Healthcare
and Utilities; reduced our exposure in Basic Materials, Capital Goods and
Consumer and Business Services. Our technology position remained about the
same.
Ahead we see challenges and opportunities. Interest rates and inflation will
be the major influences on the market, in our opinion. Until the Federal
Reserve clarifies its interest rate intentions, we see more uncertainty for
the markets and perhaps more volatility. However, we believe market
volatility can provide opportunities for our strategy. We experienced this
before, in 1998 and 1999. As the market corrects, our favorite investments
can become less expensive and we may be able to place our assets in areas in
which we have confidence. In an upturn, the portfolio may benefit from those
purchases.
Thank you for your confidence in our team.
/s/ Andrew C. Stevens
"Our goal is to continually improve the
way we execute our process...to provide
high value-added return whatever the
investment environment."
* For definitions of portfolio statistics please reference Notes on Portfolio
Statistics on page 50.
800.344.1770 * WWW.ARTISANFUNDS.COM
09
NINE
<PAGE>
ARTISAN
SMALL CAP FUND
--- INVESTMENT APPROACH -------------------------------------------------------
Artisan Small Cap Fund pursues long-term capital growth through a diversified
portfolio of underfollowed, small growth companies. The Fund strives to
identify those companies between
$100 million and $1.5 billion in market capitalization with the greatest
prospects for growth. Through intensive research, the Fund determines a
company's "intrinsic value" - the price a strategic buyer would pay to own
the entire company. In general, the Fund purchases stocks that are currently at
a substantial discount to this intrinsic value. Due to the Fund's attention
to stock valuations, this strategy is often characterized as
"growth-at-a-reasonable-price."
--- PERFORMANCE ---------------------------------------------------------------
Artisan Small Cap Fund weathered the market volatility of the past 12 months
to outperform its benchmark index and its peer group for the fiscal year
ended June 30, 2000. Artisan Small Cap Fund gained 32.46% for the period
while its benchmark index, the Russell 2000 Index, gained 14.32% and the
Fund's peer group, the Lipper Small-Cap Core Fund Index, gained 23.62%.
Also, the Fund outperformed both its benchmark index and peer group for the
six-month period ended June 30, 2000, gaining 10.45%, compared to gains of
3.04% by its index and 8.55% by the peer group.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (3/28/95 to 6/30/00)
+----------------------------- GRAPHIC ------------------------------+
| Line chart showing growth to current levels for : |
| |
| Small Cap Russel 2000 Lipper Small-Cap |
| Fund Index Core Fund Index |
| |
| 3/28/95 $10,000 $10,000 $10,000 |
| 12/95 13,283 12,305 12,193 |
| 12/96 14,858 14,335 14,474 |
| 12/97 18,226 17,541 17,692 |
| 12/98 15,771 17,094 17,049 |
| 12/99 18,794 20,728 20,488 |
| 6/00 20,759 21,357 22,240 |
+--------------------------------------------------------------------+
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/00)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Since
Fund / Index 1-Year 5-Year Inception
------------------------------------------------------------------------------------
<S> <C> <C> <C>
Artisan Small Cap Fund 32.46% 12.48% 14.88%
------------------------------------------------------------------------------------
Russell 2000 Index 14.32% 14.25% 15.50%
------------------------------------------------------------------------------------
Lipper Small-Cap Core Fund Index 23.62% 15.72% 16.39%
------------------------------------------------------------------------------------
</TABLE>
Artisan Small Cap Fund outperformed its
benchmark index, the Russell 2000 Index,
in each quarter during the fiscal year
ended June 30, 2000.
PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS. YEAR-TO-DATE
THROUGH AUGUST 18, 2000, ARTISAN SMALL CAP FUND HAD GAINED 5.34%. AN
INVESTMENT IN A MUTUAL FUND THAT CONCENTRATES ITS PORTFOLIO IN THE STOCKS OF
SMALLER COMPANIES MAY PRESENT ADDITIONAL RISKS INCLUDING A SHORTER HISTORY OF
OPERATION, HIGHER VOLATILITY AND LESS LIQUIDITY, ALL OF WHICH ARE DISCUSSED
IN THE PROSPECTUS. Please read it carefully before you invest or send money.
Investment return and principal value will fluctuate so that an investor's
shares in the Fund, when redeemed, may be worth more or less than their
original cost. The graph compares the results of $10,000 invested in Artisan
Small Cap Fund on March 28, 1995 (the date the Fund began operations) with
the Russell 2000 Index and the Lipper Small-Cap Core Fund Index. The Russell
2000 Index is an unmanaged, market-weighted index of 2,000 small companies.
The Lipper Small-Cap Core Fund Index reflects the net asset weighted return
of the 30 largest small-cap core 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.
10
TEN
<PAGE>
----------------------------------------------------------- 12 MONTH REVIEW ---
The Fund's performance was achieved in spite of challenging conditions that
tested the vigor of our small-cap strategy. As "growth-at-a-reasonable-price"
investors, stock valuations play a pivotal role in our security selection.
Yet, the market displayed an almost singular focus on technology/Internet
securities where valuations were seemingly ignored. Additionally, rising
interest rates and the fear of inflation combined to create market volatility
that was not rewarding to our broad sector diversification and intrinsic
value strategy.
Nonetheless, we adapted and persevered. As we discussed in the Semi-Annual
Report dated December 31, 1999, the Fund rallied in late 1999 and finished
the year strongly, benefiting significantly, we believe, from our portfolio
restructuring activity and the influence of Marina Carlson, who joined the
management team in March 1999.
We believe our restructuring tactics strengthened our performance. We sold a
number of smaller, less liquid and under-followed stocks, and reduced our
exposure to consumer services, a group that tends to be vulnerable in a
rising interest rate environment. We also increased our positions in "direct"
technology companies, invested in a number of "Old Economy" companies
successfully managing the transition to a "New Economy" business model and
adhered to a stricter sell trigger on market underperformers. We did not
change our investment process, but refined it to allow, we believe, our
stock-picking strength to show through.
Holdings that helped the portfolio included these top gainers. Tekelec
benefited from the strength in data communications. Apex, Inc. saw the demand
for servers in e-commerce grow. Actel Corporation profited from growth in
digital products such as DVD players. Also, Medicis Pharmaceutical
Corporation reaped the fruits of a strong pipeline in dermatology products.
GOOD IDEAS THAT WORKED % GOOD IDEAS AT THE TIME %
------ ------
Tekelec....................... 103.2 Wesco International, Inc. ...... -48.1
Actel Corp..................... 93.4 Wet Seal, Inc. ................. -46.6
Medicis Pharmaceutical Corp.... 85.1 ITT Educational Services, Inc. . -43.1
Apex, Inc...................... 84.2 ShopKo Stores, Inc. ............ -34.6
Veeco Instruments, Inc. ....... 70.8 AVT Corp. ...................... -26.5
For the year ended June 30, 2000, these are the holdings that made the
largest dollar difference in the portfolio. While some minor 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. Past performance of these specific holdings is historical
and does not guarantee future results.
Conversely, a slowing in consumer spending hurt sales at ShopKo Stores, Inc.,
while retailer
Wet Seal found itself on the wrong side of junior fashion trends. Wesco
International experienced slower growth in its industrial and construction
markets, ITT Educational Services, Inc., experienced slower enrollment growth
and a drop in enterprise phone systems purchases hurt earnings at
AVT Corporation.
The Internet offers enticing investment possibilities and we believe our
approach to its potential was prudent. In our opinion, we tapped into the
Internet's promise without vacating our valuation discipline and exposing the
portfolio to what we consider unwelcome risk. Some of our best performers were
companies that supply equipment or infrastructure to the Internet, companies
such as Com-21, Inc., Tekelec and Galileo Technology Limited. We saw potential
in companies such as Bell & Howell Company, Daisytek International Corporation
and Penton Media, Inc., which played upon core competencies to participate in
the Internet.
(HEAD SHOT)
Carlene Murphy Ziegler
Portfolio Co-Manager
(HEAD SHOT)
Marina T. Carlson
Portfolio Co-Manager
"Our ideas - and behind them, our modes
of thinking - complement each other. We
believe this refines the quality of
thought that determines our investment
decisions."
800.344.1770 * WWW.ARTISANFUNDS.COM
11
ELEVEN
<PAGE>
--- PORTFOLIO STRATEGIES ------------------------------------------------------
During the first quarter of 2000, we believed that technology and biotech
offered some of the best growth opportunities. However, the valuations in
both areas were in our opinion excessive, so we focused on other sectors that
we considered less speculative.
The market volatility of March and April led us to what we view as
high-quality, growing companies in market sectors that are often considered
fairly defensive. Purchases included Duane Reade, Inc., a leading drugstore
chain in New York; and Delta & Pine Land Company, the leading manufacturer of
genetically enhanced cottonseed.
Additionally, this volatility allowed us to pick up some potentially
high-growth tech and biotech related companies at valuations that we viewed
as more acceptable. Examples include Clarus Corporation, which provides
Internet marketplace software; Invitrogen Corporation, a supplier of test
kits to the biotech industry; and Globix Corporation, a leading Internet
connectivity provider.
Because we believe technology is a potent area in the economy, we now have
about one-third of the portfolio in technology and telecom equipment stocks.
For example, companies such as Apex, Inc., Systems & Computer Technology
Corporation, Technology Solutions Company and Veeco Instruments, Inc., are
Top 10 Holdings. The portfolio's technology weighting is an approximate match
to the technology weighting of the Russell 2000 Index.
TOP 10 HOLDINGS
COMPANY NAME %
-------------------------------------------------------------------------------
Barr Laboratories, Inc. 2.2
-------------------------------------------------------------------------------
StanCorp Financial Group, Inc. 2.0
-------------------------------------------------------------------------------
Apex, Inc. 1.9
-------------------------------------------------------------------------------
Systems & Computer Technology Corp. 1.9
-------------------------------------------------------------------------------
Rayovac Corporation 1.9
-------------------------------------------------------------------------------
Technology Solutions Co. 1.8
-------------------------------------------------------------------------------
Energen Corp. 1.8
-------------------------------------------------------------------------------
Motient Corp. 1.8
-------------------------------------------------------------------------------
Veeco Instruments, Inc. 1.8
-------------------------------------------------------------------------------
Progressive Software Corp. 1.8
-------------------------------------------------------------------------------
TOTAL 18.9%
As a percentage of total net assets as of June 30, 2000. Portfolio holdings
are subject to change.
Our performance through the first two quarters of 2000 reflects our often-stated
strategy to attempt to participate meaningfully when small-cap stocks are rising
and to try and hold as much of our gain as possible if the market turns down.
February and March provide good examples of our strategy in action. In February,
small-cap stocks surged ahead; however, much of the gain in the Russell 2000
Index was very narrowly focused in technology and biotech securities. With very
little biotech exposure, we looked to our technology holdings to keep the Fund
in play and, in our opinion, they did very well, keeping us just off pace.
"We attribute the Fund's out-
performance of its index to our ongoing
restructuring of the portfolio during
the year."
12
TWELVE
<PAGE>
------------------------------------------------- PORTFOLIO CHARACTERISTICS ---
March, with its market volatility, provided a sharp contrast. In the second
half of the month, as volatility led to significant price declines among
high-flying healthcare and technology securities, our relative outperformance
compared to the Russell 2000 was largely due in part, we believe, to our
valuation discipline which precludes a heavy weighting in momentum-type
holdings.
The portfolio restructuring we discussed earlier altered the profile of the
portfolio that was presented in the Semi-Annual Report. The number of
portfolio holdings was reduced to 73 on June 30, 2000, from 82 on December
31, 1999 and the median market cap rose to $811 million from $764 million. On
June 30, 2000, the Fund's Top 10 Holdings represented 18.9% of net assets and
our median P/E was 22.6x our 2000 estimates.*
We believe the market is likely to lack direction until the Fed has clearly
finished raising rates. This leaves us with what is often described as a
"stock picker's market," a good situation for us, because our focus is stock
selection as opposed to macro, top-down calls on the economy and the market.
SECTOR DIVERSIFICATION
<TABLE>
<CAPTION>
SECTOR 12/31/99 6/30/00 SECTOR 12/31/99 6/30/00
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <S> <C> <C>
Basic Materials 4.9% 1.1% Real Estate Investment Trusts 3.2 1.6
-----------------------------------------------------------------------------------------------------------------
Capital Goods 2.8 1.5 Services
----------------------------------------------------- Business Services 10.9 8.0
Conglomerates 0.0 0.0 Consumer Services 15.2 15.4
-----------------------------------------------------------------------------------------------------------------
Consumer Cyclical 0.0 0.0 Technology 21.6 27.5
-----------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclical 5.5 3.6 Telecommunications 9.6 12.6
-----------------------------------------------------------------------------------------------------------------
Energy 7.4 6.8 Transportation 1.4 1.9
-----------------------------------------------------------------------------------------------------------------
Financial 6.5 6.3 Utilities 1.4 1.8
-----------------------------------------------------------------------------------------------------------------
Healthcare 8.5 9.4 Other assets less liabilities 1.1 2.5
-----------------------------------------------------------------------------------------------------------------
TOTAL 100.0% 100.0%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
As a percentage of total net assets as of December 31, 1999, and June 30,
2000, respectively.
We are pursuing a few broad themes that extend over different sectors. In
addition to our "users of the Internet" theme, we are finding companies that
benefit from the trends we see to outsource non-core functions. Other investment
themes we are following include the deregulation of the energy markets, the
growth in healthcare information technology and companies positioning themselves
to supply the expanding biotech industry. As we commented earlier, we continue
to see high-quality franchise businesses selling at attractive valuations.
We look forward to another year of investing on your behalf. Thank you for
your continued support.
/s/ Carlene M. Ziegler /s/ Marina T. Carlson
"We believe the current economic
environment plays to our strength.
Simply put, we're stock pickers. That's
where we add value to the process for
our investors."
* For definitions of portfolio statistics please reference Notes on Portfolio
Statistics on page 50.
800.344.1770 * WWW.ARTISANFUNDS.COM
13
THIRTEEN
<PAGE>
ARTISAN
SMALL CAP VALUE
FUND
--- INVESTMENT APPROACH -------------------------------------------------------
Artisan Small Cap Value Fund pursues long-term capital growth through a
diversified portfolio of small company stocks that it believes are
undervalued and offer an adequate margin of safety. The Fund invests chiefly
in companies with a market capitalization of less than $1.5 billion. The
management team looks for stocks that are significantly underpriced in the
marketplace. From among these undervalued companies, the Fund looks for those
firms that provide an additional margin of safety. It does so through
in-depth analysis, looking for financial strength and favorable economics.
--- PERFORMANCE ---------------------------------------------------------------
The Fund returned 4.22% for the twelve months ended June 30, 2000, while its
benchmark index, the Russell 2000 Value declined 0.94%. Its peer group, the
Lipper Small-Cap Value Fund Index, was up 1.05%. For the six-months ended
June 30, 2000, Artisan Small Cap Value Fund rose 4.63%, slightly trailing
both the benchmark index that was up 5.85% and its peer group that had a gain
of 5.55%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (9/29/97 to 6/30/00)
+--------------------------------- GRAPHIC -----------------------------------+
| Line chart showing growth to current levels for : |
| |
| Small Cap Russel 2000 Lipper Small-Cap Russel 2000 |
| Value Fund Index Core Fund Index Value Index |
| |
| 9/29/97 $10,000 $10,000 $10,000 $10,000 |
| 12/97 10,310 9,722 9,841 10,220 |
| 12/98 9,717 9,474 9,180 9,560 |
| 12/99 11,215 11,488 9,301 9,418 |
| 6/00 11,733 11,837 9,818 9,969 |
+-----------------------------------------------------------------------------+
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/00)
-------------------------------------------------------------------------------
Since
Fund / Index 1-Year Inception
-------------------------------------------------------------------------------
Artisan Small Cap Value Fund 4.22% 5.97%
-------------------------------------------------------------------------------
Russell 2000 Index 14.32% 6.31%
-------------------------------------------------------------------------------
Lipper Small-Cap Value Fund Index 1.05% -0.67%
-------------------------------------------------------------------------------
Russell 2000 Value Index -0.94% -0.11%
-------------------------------------------------------------------------------
Artisan Small Cap Value Fund
outperformed its benchmark index during
a 12-month period in which small-cap
value investors faced a nearly
continuous unfavorable investing
environment.
PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS. YEAR-TO-DATE
THROUGH AUGUST 18, 2000, ARTISAN SMALL CAP VALUE FUND HAD GAINED 9.35%. THE
FUND INVESTS IN VALUE STOCKS, WHICH MAY FALL OUT OF FAVOR WITH INVESTORS AND
UNDERPERFORM OTHER ASSET TYPES DURING A GIVEN PERIOD. AN INVESTMENT IN A
MUTUAL FUND THAT CONCENTRATES ITS PORTFOLIO IN THE STOCKS OF SMALLER
COMPANIES MAY PRESENT ADDITIONAL RISKS INCLUDING A SHORTER HISTORY OF
OPERATIONS, HIGHER VOLATILITY AND LESS LIQUIDITY, ALL OF WHICH ARE DISCUSSED
IN THE PROSPECTUS. Please read it carefully before you invest or send money.
Investment return and principal value will fluctuate so that an investor's
shares in the Fund, when redeemed, may be worth more or less than their
original cost. The graph compares the results of $10,000 invested in Artisan
Small Cap Value Fund on September 29, 1997 (the date the Fund began
operations) with the Russell 2000 Index, the Lipper Small-Cap Value Fund
Index and the Russell 2000 Value Index. The Russell 2000 Index is an
unmanaged, market-weighted index of 2,000 small companies and serves as a
proxy for the overall small-cap market. The Russell 2000 Value Index measures
the performance of those Russell 2000 companies with lower price-to-book
ratios and lower forecasted growth values. The Lipper Small-Cap Value Fund
Index reflects the net asset weighted return of the 30 largest small-cap
value 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.
14
FOURTEEN
<PAGE>
----------------------------------------------------------- 12 MONTH REVIEW ---
+-----------------------------------------------------------------------------+
| |
| ARTISAN SMALL CAP VALUE FUND CLOSES |
| PORTFOLIO CO-MANAGER NAMED |
| |
| Artisan Small Cap Value Fund closed to new investors on June 30, 2000, |
| after reaching its pre-announced closing level of about $250 million |
| in assets under management. Existing shareholders may make additional |
| purchases and reinvest dividends and capital gain distributions into |
| their accounts. |
| |
| We believe existing shareholders are best served if we limit Fund |
| assets. Generally, we believe that the ability of a small-cap value |
| strategy to be successful diminishes as the amount of assets under |
| management increases. We purposely selected the $250 million level to |
| provide for what we consider manageable asset growth. We believe that |
| closing the Fund to new investors will allow additional investments by |
| existing shareholders and investors who satisfy new account |
| eligibility requirements, yet preserve the integrity of the Fund's |
| investment process. |
| |
| The Fund will accept new accounts from investors who satisfy |
| eligibility requirements that are discussed in the Artisan Funds |
| prospectus dated October 29, 1999, as supplemented July 1, 2000, in |
| the section titled "Who is Eligible to Invest in a Closed Artisan |
| Fund?" |
| |
| Additionally, on July 1, 2000, James C. Kieffer, CFA, was named |
| portfolio co-manager of the Fund, joining Scott C. Satterwhite, who |
| has been portfolio manager of the Fund since its inception on |
| September 29, 1997. Jim is a Managing Director of Artisan Partners |
| Limited Partnership, the Fund's investment adviser, and served as a |
| research analyst for the Fund since its inception. |
| |
+-----------------------------------------------------------------------------+
Artisan Small Cap Value Fund outperformed its benchmark index during a
12-month period in which small-cap value investors faced a nearly continuous
unfavorable investing environment. For much of this period we were unable to
participate meaningfully in the market as technology, with its inflated
valuations, ruled the day.
Despite the market's overall disregard for small-cap value securities, we
were active. As the period began, rising interest rates and the
underperformance of small-cap value strategies initiated a sell-off of
companies in the segment. For the first time in quite a while, we had
opportunities to purchase what we considered better quality small-cap value
businesses at attractive prices. We found many interesting valuations in
sectors considered interest-rate sensitive such as cyclicals and financials.
Among others, we purchased Top 10 Holdings Modine Manufacturing, Carlisle
Companies, Inc., and Jacobs Engineering. The sector sell-off also turned our
attention to Regal-Beloit, John Nuveen, Champion Enterprises, Intermet,
Ralcorp Holdings, Kaydon Company and IPC Holdings.
Many of these companies are considered cyclical and became available at
attractive valuations because they failed to display the currently
fashionable ingredients for success. We believe that to the market, they
lacked the proper industry affiliation - technology - or earnings momentum.
(HEAD SHOT)
Scott C. Satterwhite
Portfolio Co-Manager
(HEAD SHOT)
James C. Kieffer
Portfolio Co-Manager
"Jim and I have invested together, with
a brief hiatus, for over 11 years now,
and believe we are a good team. Jim has
been with Artisan since the beginning of
the Fund, and his promotion is a
well-deserved recognition of the value
he has created here."
800.344.1770 * WWW.ARTISANFUNDS.COM
15
FIFTEEN
<PAGE>
--- PORTFOLIO STRATEGIES ------------------------------------------------------
TOP 10 HOLDINGS
COMPANY NAME %
-------------------------------------------------------------------------------
Genlyte Group, Inc. 2.7
-------------------------------------------------------------------------------
ADVO, Inc. 2.7
-------------------------------------------------------------------------------
Mueller Industries, Inc. 2.6
-------------------------------------------------------------------------------
White Mountains Insurance Group, Ltd. 2.5
-------------------------------------------------------------------------------
Modine Manufacturing Co. 2.4
-------------------------------------------------------------------------------
EMCOR Group, Inc. 2.4
-------------------------------------------------------------------------------
Carlisle Companies, Inc. 2.4
-------------------------------------------------------------------------------
Hilb, Rogal & Hamilton Company 2.3
-------------------------------------------------------------------------------
Cleveland-Cliffs, Inc. 2.2
-------------------------------------------------------------------------------
Jacobs Engineering Group, Inc. 2.1
-------------------------------------------------------------------------------
TOTAL 24.3%
As a percentage of total net assets as of June 30, 2000. Portfolio holdings
are subject to change.
Despite the market focus on technology and later biotech, several industries
served the portfolio well. One was information technology services (IT), a
beaten-down industry that we believed would revive and did. In our view, we
gained a diversified slice of the IT industry with Mastech, Metamor Worldwide,
Complete Business Solutions and Technology Solutions because these firms had
different business models, product offerings and target markets.
Energy also helped the portfolio. It seemed to us that natural gas prices
were lagging demand and that prices could rise, benefiting reserve owners. As
gas supplies tightened, prices did rise and some portfolio holdings
approached our price objectives. We took some profits; however, we continued
to hold Forest Oil, increased our Cabot Oil & Gas holding and added Tom Brown
and Prima Energy to the portfolio. Forest Oil and Tom Brown were top gainers
for the 12-month period.
<TABLE>
<CAPTION>
GOOD IDEAS THAT WORKED % GOOD IDEAS AT THE TIME %
---- -----
<S> <C> <S> <C>
ADVO, Inc. .............................. 93.8 Acceptance Insurance Companies, Inc. .. -66.7
Forest Oil Corp. ........................ 52.8 Aviall, Inc. .......................... -51.9
Tom Brown, Inc. ......................... 52.7 Guilford Mills, Inc. .................. -51.3
Santa Fe Snyder Corp. ................... 43.6 AK Steel Holding Corporation .......... -31.9
Hilb, Rogal & Hamilton Company .......... 41.1 Lincoln Electric Holdings, Inc. ....... -23.3
</TABLE>
For the year ended June 30, 2000, these are the holdings that made the
largest dollar difference in the portfolio. While some minor 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. Past performance of these specific holdings is historical
and does not guarantee future results.
Takeovers played a role in the Fund's performance during this 12-month period.
Like us, corporate and financial buyers are driven by fundamental factors such
as financial resources, market position, cash flow, and management talent. We
believe this accounts for a string of takeovers in the portfolio during the
year. We feel these buyers recognize the value of fundamentals and their
purchases provide some validation that our small-cap value process can be
successful without the attention of the general market.
Our portfolio activity since the beginning of the year generally was a
continuation of the strategy we discussed in the Semi-Annual Report. We
maintained a focus on buying better quality businesses that we believed were
selling at attractive valuations and commonly were selling positions that
reached our price objectives or subject to merger or acquisition activity.
"Our portfolio activity since the
beginning of the year generally was a
continuation of the strategy we
discussed in the Semi-Annual Report. We
maintained a focus on buying better
quality businesses that we believed were
selling at attractive valuations..."
16
SIXTEEN
<PAGE>
------------------------------------------------- PORTFOLIO CHARACTERISTICS ---
This selective approach raised the portfolio's median market capitalization to
$353 million on June 30, 2000, from $317 million on December 31, 1999, while the
number of holdings in the portfolio decreased to 87 from 92. On June 30, 2000,
the Fund's Top Ten Holdings represented 24.3% of net assets, our median P/E was
10.4x our 2000 estimates and our median price/book value was 1.3x.*
The market was highly volatile in the second quarter of 2000. Considering
everything, we thought the Fund held up well during this period where
expectations shifted fairly dramatically. In April, we sensed a consensus in the
market that a continuing strong economy might keep interest rates rising into
the fourth quarter. However, as the period ended, we believe that market
sentiment shifted, viewing economic activity as weakening fairly quickly with
interest rate expectations nearing a peak. In our view earnings expectations,
particularly for the more credit-sensitive areas of the economy, are starting to
fall.
SECTOR DIVERSIFICATION
<TABLE>
<CAPTION>
SECTOR 12/31/99 6/30/00 SECTOR 12/31/99 6/30/00
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <S> <C> <C>
Basic Materials 16.8% 16.8% Real Estate Investment Trusts 1.3 0.6
-----------------------------------------------------------------------------------------------------------------
Capital Goods 14.2 15.6 Services
----------------------------------------------------- Business Services 4.0 1.5
Conglomerates 0.0 0.0 Consumer Services 4.7 6.7
-----------------------------------------------------------------------------------------------------------------
Consumer Cyclical 13.7 14.9 Technology 8.7 4.1
-----------------------------------------------------------------------------------------------------------------
Consumer Non-Cyclical 1.5 0.8 Telecommunications 0.0 0.0
-----------------------------------------------------------------------------------------------------------------
Energy 5.2 10.4 Transportation 1.0 0.9
-----------------------------------------------------------------------------------------------------------------
Financial 17.2 19.5 Utilities 1.1 1.2
-----------------------------------------------------------------------------------------------------------------
Healthcare 0.3 1.7 Other assets less liabilities 10.3 5.3
-----------------------------------------------------------------------------------------------------------------
TOTAL 100.0% 100.0%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
As a percentage of total net assets as of December 31, 1999, and June 30,
2000, respectively.
From our perspective, several issues need resolution to give small-cap value
investors a better investment environment. To us a major issue to be settled
is the Federal Reserve's campaign to slow the economy. Will the Fed continue
to raise interest rates and be able to engineer a "soft landing" for the
economy without applying the restraint that could lead to a general business
recession? While the question usually does not receive a truly definitive
answer, greater investor certainty regarding interest rate direction should
bolster investor confidence.
Another ingredient is a reduction or redirection of the wildly speculative
capital that has characterized this market cycle. Even after the recent
correction, most market attention remained focused on sectors with high
growth expectations. Once this obsession ends, a greater emphasis on true
investing fundamentals should follow. Sometime, we believe, earnings
visibility will become important and bring attention to the small-cap value
market.
We remain optimistic about the small-cap value segment of the market and our
portfolio in particular. Thank you for your continued support.
/s/ Scott C. Satterwhite /s/ James C. Kieffer
"In April, we sensed a consensus in the
market that the continuing strong
economy meant that interest rates might
keep on rising into the fourth quarter.
However, as we ended the period, we
believe that market sentiment shifted..."
* For definitions of portfolio statistics please reference Notes on Portfolio
Statistics on page 50.
800.344.1770 * WWW.ARTISANFUNDS.COM
17
SEVENTEEN
<PAGE>
ARTISAN
INTERNATIONAL FUND
(ARTIX)
Schedule of Investments - June 30, 2000
<TABLE>
<CAPTION>
Shares Market
Held Value
------------ --------------
<S> <C> <C>
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
</TABLE>
18
EIGHTEEN
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------ --------------
<S> <C> <C>
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
</TABLE>
19
NINETEEN
<PAGE>
--- SCHEDULE OF INVESTMENTS ---------------------------------------------------
<TABLE>
<CAPTION>
Shares Market
Held Value
------------ --------------
<S> <C> <C>
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
</TABLE>
20
TWENTY
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------ --------------
<S> <C> <C>
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
</TABLE>
21
TWENTY-ONE
<PAGE>
--- SCHEDULE OF INVESTMENTS ---------------------------------------------------
<TABLE>
<CAPTION>
Par Market
Amount Value
------------- ---------------
<S> <C> <C>
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%(5) $4,870,976,078
===============
</TABLE>
<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
<PAGE>
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
<PAGE>
ARTISAN
MID CAP FUND
(ARTMX)
Schedule of Investments - June 30, 2000
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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%
AmericanPower 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
</TABLE>
24
TWENTY-FOUR
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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 processes 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
</TABLE>
25
TWENTY-FIVE
<PAGE>
--- SCHEDULE OF INVESTMENTS ---------------------------------------------------
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
TECHNOLOGY - 30.8%
COMPUTER HARDWARE - 2.5%
<F1>Handsprng, 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
</TABLE>
26
TWENTY-SIX
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
==============
</TABLE>
<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
<PAGE>
ARTISAN
SMALL CAP FUND
(ARTSX)
Schedule of Investments - June 30, 2000
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
</TABLE>
28
TWENTY-EIGHT
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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. - men's 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
</TABLE>
29
TWENTY-NINE
<PAGE>
--- SCHEDULE OF INVESTMENTS ---------------------------------------------------
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
</TABLE>
30
THIRTY
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
==============
</TABLE>
<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
<PAGE>
ARTISAN
SMALL CAP VALUE FUND
(ARTVX)
Schedule of Investments - June 30, 2000
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
</TABLE>
32
THIRTY-TWO
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
</TABLE>
33
THIRTY-THREE
<PAGE>
--- SCHEDULE OF INVESTMENTS ---------------------------------------------------
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
</TABLE>
34
THIRTY-FOUR
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
</TABLE>
35
THIRTY-FIVE
<PAGE>
--- SCHEDULE OF INVESTMENTS ---------------------------------------------------
<TABLE>
<CAPTION>
Shares Market
Held Value
------------- --------------
<S> <C> <C>
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
==============
</TABLE>
<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
<PAGE>
FINANCIAL STATEMENTS
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
--------------------------------------- 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
<PAGE>
ARTISAN FUNDS, INC.
FINANCIAL HIGHLIGHTS - for a share outstanding throughout each period
<TABLE>
<CAPTION>
Net Asset Net Net Realized Total Income Dividends
Year or Value Investment and Unrealized (Loss) from from Net
Period Beginning Income Gain (Loss) on Investment Investment
Ended of Period (Loss) Investments Operations Income
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ARTISAN INTERNATIONAL FUND
-------------------------------------------------------------------------------------------------
Investor 6/30/00 $ 18.67 $ (0.03)<F1> $ 12.08 $ 12.05 $ (0.02)
Shares -------------------------------------------------------------------------------------------------
6/30/99 16.25 0.08<F1> 2.62 2.70 (0.04)
-------------------------------------------------------------------------------------------------
6/30/98 14.48 0.06<F1> 3.04 3.10 (0.20)
-------------------------------------------------------------------------------------------------
6/30/97 12.08 0.07 2.44 2.51 (0.02)
-------------------------------------------------------------------------------------------------
6/30/96<F2> 10.00 0.04 2.04 2.08 -
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Institutional 6/30/00 $ 18.70 $ 0.03<F1> $ 12.09 $ 12.12 $ (0.06)
Shares -------------------------------------------------------------------------------------------------
6/30/99 16.26 0.11<F1> 2.62 2.73 (0.05)
-------------------------------------------------------------------------------------------------
6/30/98 14.48 0.09<F1> 3.04 3.13 (0.22)
-------------------------------------------------------------------------------------------------
ARTISAN MID CAP FUND
-------------------------------------------------------------------------------------------------
6/30/00 $ 16.67 $ (0.18)<F1> $ 11.91 $ 11.73 $ -
-------------------------------------------------------------------------------------------------
6/30/99 13.69 (0.16)<F1> 4.41 4.25 -
-------------------------------------------------------------------------------------------------
6/30/98 10.00 (0.08) 4.56 4.48 -
-------------------------------------------------------------------------------------------------
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) -
-------------------------------------------------------------------------------------------------
6/30/98 15.11 (0.10) 2.23 2.13 -
-------------------------------------------------------------------------------------------------
6/30/97 14.67 (0.04) 1.55 1.51 -
-------------------------------------------------------------------------------------------------
6/30/96 11.52 (0.07) 3.32 3.25 -
-------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
-------------------------------------------------------------------------------------------------
6/30/00 $ 10.59 $ 0.06<F1> $ 0.36 $ 0.42 $ (0.03)
-------------------------------------------------------------------------------------------------
6/30/99 11.37 (0.03) (0.21)<F7> (0.24) -
-------------------------------------------------------------------------------------------------
6/30/98<F8> 10.00 (0.03) 1.40 1.37 -
-------------------------------------------------------------------------------------------------
</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.
The accompanying notes are an integral part of the financial statements.
42
FORTY-TWO
<PAGE>
<TABLE>
<CAPTION>
Ratio of Net
Distributions Net Asset Net Assets Ratio of Investment
from Net Value End of Expenses Income (Loss) Portfolio
Realized Total End Total Period to Average to Average Turnover
Gains Distributions of Period Return (millions) Net Assets Net Assets Rate
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ARTISAN INTERNATIONAL FUND
-------------------------------------------------------------------------------------------------------
Investor $ (0.54) $ (0.56) $ 30.16 65.6% $3,734.8 1.27% (0.10%) 99.02%
Shares (0.24) (0.28) 18.67 17.4 943.9 1.38 0.59 79.41
-------------------------------------------------------------------------------------------------------
(1.13) (1.33) 16.25 24.1 414.5 1.45 0.37 109.42
-------------------------------------------------------------------------------------------------------
(0.09) (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 $ (0.54) $ (0.60) $ 30.22 66.0% $1,136.2 1.08% 0.09% 99.02%
Shares -------------------------------------------------------------------------------------------------------
(0.24) (0.29) 18.70 17.6 179.6 1.17 0.68 79.41
-------------------------------------------------------------------------------------------------------
(1.13) (1.35) 16.26 24.4 82.6 1.25 0.68 109.42
-------------------------------------------------------------------------------------------------------
ARTISAN MID CAP FUND
-------------------------------------------------------------------------------------------------------
$ (0.83) $ (0.83) $ 27.57 72.9% $ 225.0 1.40% (0.79%) 245.69%
-------------------------------------------------------------------------------------------------------
(1.27) (1.27) 16.67 35.8 43.3 2.00<F5> (1.13)<F5> 202.84
-------------------------------------------------------------------------------------------------------
(0.79) (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) (0.96) 11.09 (17.0) 174.6 1.37 (0.67) 155.38
-------------------------------------------------------------------------------------------------------
(2.58) (2.58) 14.66 14.7 304.1 1.33 (0.74) 134.67
-------------------------------------------------------------------------------------------------------
(1.07) (1.07) 15.11 11.3 267.8 1.41 (0.73) 87.18
-------------------------------------------------------------------------------------------------------
(0.10) (0.10) 14.67 28.3 400.0 1.52 (0.75) 105.19
-------------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
-------------------------------------------------------------------------------------------------------
$ (0.35) $ (0.38) $ 10.63 4.2% $ 261.7 1.35% 0.60% 38.19%
-------------------------------------------------------------------------------------------------------
(0.54) (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>
<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
<PAGE>
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 theprincipal 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
<PAGE>
------------------------------------- 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
<PAGE>
--- 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
<PAGE>
------------------------------------- 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
<PAGE>
--- 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
<PAGE>
------------------------------------- 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
<PAGE>
--- NOTES TO FINANCIAL STATEMENTS (CONT.) -------------------------------------
(8) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
<TABLE>
<CAPTION>
Aggregate Aggregate Net
Gross Gross Unrealized
Unrealized Unrealized Appreciation/
Cost of Appreciation Depreciation (Depreciation)
Fund Securities on Investments on Investments on Investments
------------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
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
</TABLE>
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
<PAGE>
(PricewaterhouseCoopers Logo)
------------------------------------------+------------------------------------
| PricewaterhouseCoopers LLP
| 100 East Wisconsin Avenue
| Suite 1500
| Milwaukee, WI 53202
| Telephone (414) 212 1600
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Artisan Funds, Inc.
In our opinion, the accompanying 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 LLP
July 20, 2000
51
FIFTY-ONE
<PAGE>
(Artisan Logo) +-----------------+
ARTISAN FUNDS | |
P.O. BOX 8412 | PRSRT STD |
BOSTON, MA 02266-8412 | U.S. POSTAGE |
| PAID |
800.344.1770 | MILWAUKEE, WI |
WWW.ARTISANFUNDS.COM | PERMIT NO. 4134 |
| |
+-----------------+
8/25/00 - A0026
<PAGE>
(ARTISAN LOGO)
ANNUAL
REPORT
June 30, 2000
Artisan International Fund
Institutional Shares
<PAGE>
--- TABLE OF CONTENTS ---------------------------------------------------------
TABLE OF CONTENTS
LETTER TO SHAREHOLDERS................................................. 2
SCHEDULE OF INVESTMENTS................................................ 6
STATEMENT OF ASSETS & LIABILITIES..................................... 12
STATEMENT OF OPERATIONS............................................... 13
STATEMENTS OF CHANGES IN NET ASSETS................................... 14
FINANCIAL HIGHLIGHTS.................................................. 15
NOTES TO FINANCIAL STATEMENTS......................................... 16
REPORT OF INDEPENDENT ACCOUNTANTS..................................... 20
ARTISAN FUNDS
P.O. BOX 8412
BOSTON, MA 02266-8412
This report and the financial statements contained herein are provided for
the general information of the shareholders of 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 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.
Company discussions are for illustration only and are not intended as
recommendations of individual stocks. The discussions present information
about the companies believed to be accurate, and the views of the Fund's
portfolio manager as of June 30, 2000. That information and those views may
change and the Fund disclaims any obligation to advise shareholders of any
such changes.
Artisan Funds offered through Artisan Distributors LLC, 1000 North Water
Street, Milwaukee, WI 53202, member NASD. Date of first use: 8/28/00.
800.399.1770 * ARTISAN FUNDS, INC.
<PAGE>
ARTISAN
INTERNATIONAL FUND
INSTITUTIONAL SHARES
(A Series of Artisan Funds, Inc.)
------------------------------------------------------- INVESTMENT APPROACH ---
The Fund seeks to provide investors with diversified exposure to the
international equity markets, across capitalizations and regions, with a
focus on well-managed growth companies. Because foreign markets may provide
investors with growth opportunities that are distinct from those in the U.S.,
we look to identify attractive growth themes. Once identified, we combine
intensive fundamental analysis with extensive international travel to find
companies that appear well-positioned to capitalize on these themes.
Important company criteria include sustainable growth, reasonable valuation,
strong industry presence and effective management with a focus on shareholder
value. We pick our stocks one-at-a-time. As a result, we make no effort to
mimic the composition of any index.
--------------------------------------------------------------- PERFORMANCE ---
Despite volatile overseas markets, Artisan International Fund gained 5.92%
during the six months ended June 30, 2000, finishing well ahead of its
benchmark, the EAFE Index, which lost 4.06% through mid-year. For the year
ended June 30, 2000, the Fund was up 65.97%, outdistancing the EAFE Index,
which returned a solid 17.16% over the same 12-month period.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (12/28/95 to 6/30/00)
+----------------------------- GRAPHIC ------------------------------+
| Line chart showing growth to current levels for : |
| |
| International EAFE Lipper International |
| Fund Index Fund Index |
| |
| 12/28/95 $10,000 $10,000 $10,000 |
| 12/96 13,437 10,605 11,472 |
| 12/97 13,913 10,793 12,303 |
| 12/98 18,436 12,952 13,861 |
| 12/99 33,491 16,444 19,105 |
| 6/00 35,474 15,766 18,320 |
+--------------------------------------------------------------------+
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/00)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Since
Fund / Index 1-Year 3-Year Inception
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Artisan International Fund - Institutional Shares 65.97% 34.34% 32.39%
----------------------------------------------------------------------------------------------------
EAFE Index 17.16% 10.16% 10.63%
----------------------------------------------------------------------------------------------------
Lipper International Fund Index 23.63% 11.89% 14.36%
----------------------------------------------------------------------------------------------------
</TABLE>
PERFORMANCE IS HISTORICAL AND DOES NOT GUARANTEE FUTURE RESULTS. YEAR-TO-DATE
THROUGH AUGUST 18, 2000, ARTISAN INTERNATIONAL FUND'S INSTITUTIONAL SHARES
HAD GAINED 1.93%. 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. IN TIMES OF MARKET VOLATILITY THE FUND'S RETURN MAY VARY GREATLY
OVER SHORT PERIODS OF TIME. INTERNATIONAL INVESTMENTS INVOLVE SPECIAL RISK
CONSIDERATIONS, INCLUDING CURRENCY FLUCTUATION, SOMETIMES LOWER LIQUIDITY,
ECONOMIC AND POLITICAL RISKS, AND DIFFERENT ACCOUNTING METHODS, WHICH ARE
DISCUSSED IN THE PROSPECTUS. Please read it carefully before you invest or
send money. Investment return and principal value will fluctuate so that an
investor's shares in the Fund, when redeemed, may be worth more or less than
their original cost. The graph compares the results of $10,000 invested in
the Artisan International Fund Investor Shares on December 28, 1995 (the date
the Fund began operations) to June 30, 1997, and in the Institutional Shares
from July 1, 1997 to June 30,2000, 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 including Artisan International Fund. All index
returns include reinvested dividends but do not include the payment of sales
commissions or other expenses incurred in the purchase of the securities
included in the index.
2
<PAGE>
----------------------------------------------------------- 12 MONTH REVIEW ---
Given the volatility seen in overseas markets over the 12 months ended June
30, 2000, investors must have felt as though they were on a roller coaster
ride for much of the Fund's fiscal year. In this review, we'll provide you
with some context for events that drove overseas markets during our fiscal
year, discuss some portfolio strategies we employed to combat volatility and
review where the portfolio stood on June 30, 2000.
LAST 6 MONTHS OF 1999
While 1999's third quarter brought rather mixed market movements, with many
developed markets rising, and most of the emerging markets correcting - many
significantly; the fourth quarter of 1999 saw European stock markets rise on
a wave of optimism about the economic outlook and continued enthusiasm for
telecom shares. Leading indices hit new record peaks in numerous European
markets. Investors appeared impressed by a European Commission report
forecasting strong economic growth. A reversal in "doomsday" predictions
concerning the millennium computer bug seemed to allay investors fears across
the globe as no significant disruption was expected.
The fourth quarter was not without its share of newsworthy events. The Euro
approached parity with the dollar. Wireless shares surged as investors paid
attention to the potential for revenue and profit growth exhibited by NTT
DoCoMo's success with their I-mode service, which allows users to access the
Internet through cellular phones. Mannesmann's rejection of Vodafone's
takeover offer set the stage for the world's largest takeover battle. In this
context, Artisan International Fund achieved two of its three highest monthly
returns (November and December) since inception. A strong fourth quarter
helped to propel the EAFE Index to its highest one-year return since 1993.
FIRST 6 MONTHS OF 2000
After three consecutive months of strong performance, international markets
took a breather in January.reflecting in part the uncertainty in U.S. markets
over interest rates and possibly due to some profit taking after 1999's
particularly strong 4th quarter.but roared back to life in February. The Fund
capped off February with a 19.36% return, its second best monthly return
since inception, partially driven by Vodafone's successful takeover of
Mannesmann which may have sparked renewed enthusiasm among investors over the
long-term growth prospects of telecom and technology companies.
However, March was a challenging month for investors across the globe, as
international markets seemed to reflect the volatility and uncertainty in
U.S. markets over "Old Economy" versus "New Economy" shares. Given this
change in investor sentiment, the Fund's "TMT" stocks (an acronym reflecting
the perceived synergies among Technology, Media and Telecommunications
companies) did not have an easy time of it, and contributed to the Fund's
first month of underperformance versus the EAFE Index since August 1999.
While this may have helped to cause a broadening of the market and rotation
among sectors, we saw no clear new leaders emerge at quarter-end.
Overseas markets followed-up late March losses with more of the same
throughout April and May. During this time, no major region seemed to have
been spared nor appeared to offer a "safe haven." Similar to U.S. markets, a
reevaluation of the technology sector and concerns about increased
inflationary pressures and possible higher interest rates were contributing
factors to global market declines. And like our Federal Reserve, the European
Central Bank preemptively increased interest rates. In fact, there were even
indications that the Bank of Japan may consider an end to their zero interest
rate policy.
(HEAD SHOT)
Mark L. Yockey
Portfolio Manager
"Despite difficult market conditions, we
did not initiate any major portfolio
changes over the last six months -
however, we did begin to selectively
reposition the portfolio. While we
remained committed to our major themes
of telecommunications, financials,
advertising and media, restructuring and
outsourcing, we continued to work to
validate our holdings in terms of
current and future earnings visibility."
800.399.1770 * ARTISAN FUNDS, INC.
3
<PAGE>
------------------------------------------------------ PORTFOLIO STRATEGIES ---
Despite difficult market conditions, we did not initiate any major portfolio
changes over the last six months - however, we did begin to selectively
reposition the portfolio. While we remained committed to our major themes of
telecommunications, financials, advertising and media, restructuring and
outsourcing, we continued to work to validate our holdings in terms of
current and future earnings visibility. Where concerned, we replaced holdings
with what we viewed as more attractive alternatives.
An example of repositioning has been our shift to selective Korean stocks,
mostly blue chip telecom and technology names. We believe companies such as
SK Telecom Co., Ltd. and Samsung Electronics are at par with their peers in
other countries or among the world leaders, but trade at more attractive
valuations.
Our TMT names corrected in part due to substantial auction (multi-billion
dollar costs for successful bidders) results for the third generation
portable phone licenses in the U.K. Despite attractive industry fundamentals
and forecasts of strong subscriber growth, additional auctions slated for
later this year contributed to near-term profitability concerns. While we
couldn't fully escape the price correction of TMT stocks, we were helped by
having started to trim our exposure late in the first quarter. Additionally,
we diversified by adding some holdings in regions other than Europe where we
felt valuations were still reasonable. We believe the market overreacted and
we plan to stay the course.
REGION ALLOCATION
<F1> As of 6/30/00. <F2>As of 12/31/99. ---------------------------------
- Graphic of world map -
- Points indicate target region -
---------------------------------
<F1> North America 7.9% ___________________ ______*
<F2> North America 16.0%
<F1> Europe 55.3% _________________________ __________________*
<F2> Europe 51.7%
<F1> Asia/Pacific 28.6% ___________________ ________________________*
<F2> Asia/Pacific 22.7%
<F1> Latin America 3.6% ___________________ _____*
<F2> Latin America 4.8%
Portfolio equities as a percentage of Fund total net assets.
Beyond TMT, we increased our positions in some of our European financials and
added new names,
such as Lloyds TSB Group in the U.K. We believe the European financial stocks
are attractive, due to ongoing consolidation, restructuring and demographics.
Going forward, we anticipate our stock picking focus will remain largely on
the same themes we have featured over the last year. While there may be some
areas of over-extended valuations, we believe that our stocks represent
companies with strong and growing earnings potential.
On June 30, 2000, total net assets in the Fund were $4.9 billion, of which
$1.1 billion were in the Institutional share class. On December 31, 1999, the
Fund's total net assets stood at $3.1 billion. Due to our selective
repositioning, the median market cap of our holdings rose to $7.4 billion
from $4.6 billion. Based on 2000 estimates, our weighted average growth rate
of 25.5% fell below our weighted average P/E of 27.8x, as valuations, though
down from year-end, remained in the upper-end of our ranges. On June 30, we
were approximately 95.4% invested in equities, which we consider fully
invested. The Fund held 109 stocks located in 23 countries. Our Top 10
Holdings, largely centered on our telecommunications and financial services
themes, comprised 23.0% of the portfolio.*
Top 5 Country Allocations
United Kingdom................... 19.4%
Japan............................ 16.6%
Canada............................ 7.9%
France............................ 7.0%
Switzerland....................... 6.5%
As of 6/30/00.
For a more detailed look at
Region/Country Allocations please view
the "Schedule of Investments," starting
on page 6.
* For definitions of portfolio statistics please reference Notes on Portfolio
Statistics on page 19.
4
<PAGE>
--- PORTFOLIO CHARACTERISTICS -------------------------------------------------
TOP 10 HOLDINGS
COMPANY NAME COUNTRY %
------------------------------------------------------------------------------
China Mobile (Hong Kong) Ltd. Hong Kong 2.8
------------------------------------------------------------------------------
Lloyds TSB Group PLC United Kingdom 2.8
------------------------------------------------------------------------------
AT&T Canada, Inc. Canada 2.7
------------------------------------------------------------------------------
Nippon Telegraph & Telephone Corporation Japan 2.5
------------------------------------------------------------------------------
Samsung Electronics Korea 2.2
------------------------------------------------------------------------------
Granada Group PLC United Kingdom 2.2
------------------------------------------------------------------------------
UnitedGlobalCom, Inc. Netherlands 2.1
------------------------------------------------------------------------------
Promise Co., Ltd. Japan 1.9
------------------------------------------------------------------------------
UBS AG Switzerland 1.9
------------------------------------------------------------------------------
Abbey National PLC United Kingdom 1.9
------------------------------------------------------------------------------
TOTAL 23.0%
As a percentage of total net assets as of June 30, 2000. Portfolio holdings
are subject to change.
Not surprisingly, some of the best returns over the last year originated in
the telecommunications arena, as witnessed by four of the top five gainers in
the period. We believe the outlook for the industry remains attractive with
future growth coming from additional services and applications as
technologies continue to advance. Finmatica, an Italian software maker,
benefited from Italian banks upgrading their technology.
Good Ideas that worked % Good ideas at the time %
Finmatica SPA.................. 324.0 Nichiei Co., Ltd. ............... -74.1
BCE, Inc. ..................... 140.0 Stagecoach Holdings PLC.......... -63.6
Nortel Networks Corp. ......... 115.1 Global Telesystems Group......... -49.4
NTT DoCoMo, Inc. ............... 91.9 NTL Incorporated................. -20.9
China Mobile (Hong Kong) Ltd. .. 81.8 British Telecommunications PLC .. -19.7
For the year ended June 30, 2000, these are the holdings that made the
largest dollar difference in the portfolio. While some minor holdings experien
ced 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. Past performance of these specific holdings is historical and
does not guarantee future results of that holding or the Fund.
Unfortunately, some of our stocks did not work out as planned. Nichiei was
caught in a negative public relations situation following embarrassing media
reports on one of its loan collectors. Beyond negative company sentiment, the
stock also suffered from the risk of government intervention in the Japanese
consumer finance sector. Stagecoach Holdings suffered from an ill-timed
acquisition, and Global Telesystems, NTL and British Telecom were all
affected by the downdraft in TMT stocks.
As always, thank you for the continued confidence you've shown in our team.
/s/ Mark Gochez
Top 5 Sectors
Consumer Cyclical ............... 22.8%
Financial ....................... 21.1%
Telecommunications .............. 16.5%
Industrial ....................... 9.4%
Utilities ........................ 9.3%
As of 6/30/00.
For a more detailed look at Sector
Diversification please see "Portfolio
Diversification" on page 11.
Effective July 1, 1997, the Fund began offering an institutional class of
shares for institutional investors meeting certain minimum investment
requirements. A report on the Investor Share class is available under
separate cover. Performance data herein relates to the Investor Shares prior
to July 1, 1997 and to the Institutional Shares subsequent to July 1, 1997.
800.399.1770 * ARTISAN FUNDS, INC.
5
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Schedule of Investments - June 30, 2000
<TABLE>
<CAPTION>
Shares Market
Held Value
------------ --------------
<S> <C> <C>
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
</TABLE>
6
<PAGE>
--- SCHEDULE OF INVESTMENTS ---------------------------------------------------
<TABLE>
<CAPTION>
Shares Market
Held Value
------------ --------------
<S> <C> <C>
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
</TABLE>
7
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Shares Market
Held Value
------------ --------------
<S> <C> <C>
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
</TABLE>
8
<PAGE>
--- SCHEDULE OF INVESTMENTS ---------------------------------------------------
<TABLE>
<CAPTION>
Shares Market
Held Value
------------ --------------
<S> <C> <C>
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
</TABLE>
9
<PAGE>
--------------------------------------------------- SCHEDULE OF INVESTMENTS ---
<TABLE>
<CAPTION>
Par Market
Amount Value
------------- ---------------
<S> <C> <C>
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%(5) $4,870,976,078
===============
</TABLE>
<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.
10
<PAGE>
ARTISAN
INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
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.
11
<PAGE>
ARTISAN
INTERNATIONAL FUND, INC.
(A Series of Artisan Funds, Inc.)
Statement of Assets & Liabilities - June 30, 2000
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $4,439,931,708) $4,928,495,564
Cash 641
Receivable from investments sold 36,445,332
Receivable from forward currency contracts 117,287,872
Receivable from fund shares sold 59,544,976
Interest receivable 40,984
Dividends receivable 6,046,195
Organizational costs 3,660
---------------
Total assets 5,147,865,224
LIABILITIES:
Payable for investments purchased 149,954,260
Payable for forward currency contracts 117,398,956
Payable for fund shares redeemed 6,082,782
Payable for organizational costs 3,660
Payable for operating expenses 2,883,999
Other liabilities 565,489
---------------
Total liabilities 276,889,146
---------------
Total net assets $4,870,976,078
===============
NET ASSETS CONSIST OF:
Fund shares issued and outstanding $3,744,328,365
Net unrealized appreciation (depreciation)
on investments and foreign currency
related transactions 488,633,769
Accumulated undistributed
net investment income (loss) (2,599,311)
Accumulated undistributed net realized
gains (losses) on investments and foreign
currency related transactions 640,613,255
---------------
$4,870,976,078
===============
INVESTOR SHARES:
Net assets $3,734,813,199
Shares issued and outstanding 123,846,322
Net asset value, offering and redemption price per share $30.16
======
INSTITUTIONAL SHARES:
Net assets $1,136,162,879
Shares issued and outstanding 37,590,641
Net asset value, offering and redemption price per share $30.22
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE>
ARTISAN
INTERNATIONAL FUND, INC.
(A Series of Artisan Funds, Inc.)
Statement of Operations - For the Year Ended June 30, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest $7,040,049
Dividends (net of foreign taxes withheld of $4,576,229) 27,344,688
---------------
Total investment income 34,384,737
EXPENSES:
Advisory fees 27,952,915
Transfer agent fees:
Investor Shares 4,081,462
Institutional Shares 24,178
Shareholder communications
Investor Shares 465,581
Institutional Shares 7,448
Custodian fees 2,211,334
Accounting fees 81,083
Professional fees 160,330
Registration fees
Investor Shares 618,467
Institutional Shares 227,000
Director's fees 15,000
Organizational costs 7,317
Other operating expenses 140,089
---------------
Total operating expenses 35,992,204
---------------
Net investment (loss) (1,607,467)
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gain (loss) on:
Investments 762,210,703
Foreign currency related transactions (3,264,458)
---------------
758,946,245
Net increase (decrease) in unrealized appreciation on:
Investments 327,576,193
Foreign currency related transactions 29,364
---------------
327,605,557
---------------
Net gain (loss) on investments 1,086,551,802
---------------
Net increase (decrease) in net assets resulting from operations $1,084,944,335
===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
ARTISAN
INTERNATIONAL FUND, INC.
(A Series of Artisan Funds, Inc.)
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended Year Ended
6/30/00 6/30/99
------------------ ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss) $(1,607,467) $4,109,783
Net realized gain (loss) on:
Investments 762,210,703 38,449,100
Foreign currency related transactions (3,264,458) (677,233)
Net increase (decrease) in unrealized appreciation on:
Investments 327,576,193 79,783,283
Foreign currency related transactions 29,364 (137,818)
------------------ ------------------
Net increase (decrease) in net assets resulting
from operations 1,084,944,335 121,527,115
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)
Institutional Shares (10,501,625) (1,271,446)
------------------ ------------------
Total distributions paid to shareholders (49,449,868) (8,982,569)
FUND SHARE ACTIVITIES:
Net increase (decrease) in net assets resulting from fund
share activities 2,711,977,012 513,780,438
------------------ ------------------
Total increase (decrease) in net assets 3,747,471,479 626,324,984
Net assets, beginning of period 1,123,504,599 497,179,615
------------------ ------------------
Net assets, end of period $4,870,976,078 $1,123,504,599
================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE>
ARTISAN INTERNATIONAL FUND
(A Series of Artisan Funds, Inc.)
Financial Highlights
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended Year Ended Period Ended
June 30, 2000 June 30, 1999 June 30, 1998 June 30, 1997 June 30, 1996
For a share outstanding Institutional Institutional Institutional Investor Investor
throughout each period Shares Shares Shares Shares Shares<F1>
------------------------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <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) 0.03 <F2> 0.11 <F2> 0.09 <F2> 0.07 0.04
Net realized and unrealized gains on
on securities and foreign
currency transactions 12.09 2.62 3.04 2.44 2.04
------------- ------------- ------------- ------------- -------------
Total from investment operations 12.12 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 $30.22 $18.70 $16.26 $14.48 $12.08
============= ============= ============= ============= =============
Total return 66.0% 17.6% 24.4% 20.9% 20.8%<F3>
Ratios/supplemental data:
Net assets,
end of period (millions) $1,136.2 $179.6 $82.6 $449.2 $71.5
Ratio of expenses to
average net assets 1.08% 1.17% 1.25% 1.61% 2.50%<F4>
Ratio of net investment
income (loss) to
average net assets 0.09% 0.68% 0.68% 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.
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
ARTISAN
INTERNATIONAL FUND, INC.
(A Series of 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. The Artisan
International Fund ("the Fund") commenced operations on December 28,
1995.
The Fund began offering two classes of capital shares effective
July 1, 1997. The share classes for the Fund were renamed Investor
Shares and Institutional Shares effective April 27, 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 and International Fund
Institutional Shares 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 Fund.
(a) Security valuation - Each security is valued at the last sales price
reported by the principal securities exchange on which the issue is
traded, or if no sale is reported on the principal exchange, the last
sale on a secondary exchange. The last bid price reported is utilized
if no sales have taken place. Securities for which prices are not
readily available, or which management believes that the latest sales
or bid price is not reflective of the fair value of the security, are
valued as determined in good faith under consistently applied
procedures established by and under the general supervision of the
Board of Directors. Short-term investments maturing within sixty days
of their purchase date are valued at amortized cost which approximates
market.
The Fund owns a security which is valued at fair value as determined
using procedures established by the Fund's Board of Directors in the
amount of $4,000,000 or 0.1% of total net assets.
(b) Income taxes - No provision has been made for federal income taxes
since the Fund intends to 1) distribute to its shareholders
substantially all of its taxable income as well as realized gains from
the sale of investment securities and 2) comply with all provisions of
the Internal Revenue Code applicable to regulated investment
companies.
(c) Portfolio transactions - Security and shareholder transactions are
recorded on trade date. Net realized gains and losses on securities
are computed on specific security lot identification.
16
<PAGE>
--- NOTES TO FINANCIAL STATEMENTS (Cont.) -------------------------------------
(2) Summary of significant accounting policies (continued):
(d) Foreign currency translation - Values of investments denominated in
foreign currencies are converted into U.S. dollars using the spot
market rate of exchange at the time of valuation. Purchases and sales
of investments and dividend and interest income are translated to U.S.
dollars using the spot market rate of exchange prevailing on the
respective dates of such transactions. The portion of security gains
or losses resulting from changes in foreign exchange rates is included
with net realized and unrealized gain or loss from investments, as
appropriate, for both financial reporting and tax purposes.
The Fund enters into forward currency contracts to hedge the foreign
currency exposure on open payables and receivables. The forward
currency contracts are recorded at market value and any related
realized and unrealized gains and losses are reported as foreign
currency related transactions for financial reporting purposes. For
tax purposes, these foreign exchange gains and losses are treated as
ordinary income. The Fund could be exposed to loss if the
counterparties fail to perform under these contracts.
(e) Use of estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results
could differ from those estimates.
(f) Other - Dividend income is recorded on the ex-dividend date, except
that certain dividends from private placements and foreign securities
are recorded as soon as the information becomes available to the Fund.
Interest income is reported on the accrual basis. Distributions to
shareholders are recorded on the ex-dividend date. Generally accepted
accounting principles require that permanent financial reporting and
tax differences be reclassified in the capital accounts.
(3) Transactions with affiliates:
Artisan Partners Limited Partnership (the "Adviser"), with which
certain officers and directors of the Fund are affiliated, provides
investment advisory and administrative services to the Fund. In exchange
for these services, the Fund pays a monthly management fee to the
Adviser as follows:
Average Daily Net Assets Annual Rate
----------------------------- -----------
Less than $500 million 1.000%
$500 million to $750 million 0.975%
$750 million to $1 billion 0.950%
Greater than $1 billion 0.925%
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
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.
17
<PAGE>
------------------------------------- NOTES TO FINANCIAL STATEMENTS (Cont.) ---
(4) Organizational costs:
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 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. During the year ended June 30, 2000 the Fund made no
borrowings under the line of credit.
(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 $5,278,134,639 and $2,808,257,546, respectively.
(7) Fund share activities:
Capital share transactions for the Fund were as follows:
<TABLE>
<CAPTION>
Investor Institutional
Fiscal year ended June 30, 2000 Shares Shares
---------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
Proceeds from shares issued $3,361,034,086 $ 732,197,055
Net asset value of shares issued in reinvestment of distributions 35,772,431 11,657,657
Cost of shares redeemed (1,386,071,200) (42,613,017)
---------------- ------------------
Net increase (decrease) from fund share activities $2,010,735,317 $ 701,241,695
================ ==================
<CAPTION>
Investor Institutional
Fiscal year ended June 30, 2000 Shares Shares
---------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
Shares sold 121,721,356 28,963,140
Shares issued from reinvestment of distributions 1,613,817 525,593
Shares redeemed (50,050,726) (1,500,866)
---------------- ------------------
Net increase (decrease) in capital shares 73,284,447 27,987,867
================ ==================
</TABLE>
18
<PAGE>
--- NOTES TO FINANCIAL STATEMENTS (Cont.) -------------------------------------
(7) Fund share activities (continued):
<TABLE>
<CAPTION>
Investor Institutional
Fiscal ended June 30, 1999 Shares Shares
---------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
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
================ ==================
<CAPTION>
Investor Institutional
Fiscal ended June 30, 1999 Shares Shares
---------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
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
================ ==================
</TABLE>
(8) Information for Federal income tax purposes: Aggregate gross
unrealized appreciation (depreciation) on investments as of June 30,
2000, based on investment cost of $4,440,590,636 for federal income tax
purposes, is as follows:
Aggregate gross unrealized appreciation on investments $ 654,601,215
Aggregate gross unrealized depreciation on investments (166,696,287)
---------------
Net unrealized appreciation $ 487,904,928
===============
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. The Fund 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 of $2,710,395 from November 1, 1999 to June 30,
2000 are not recognized for federal income tax purposes until fiscal
2001.
(9) Other tax information (unaudited):
The Fund hereby designates $55,751,437 as long term capital gain
distributions, which includes 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 Fund. That information is as of June |
| 30, 2000, it varies with changes in the 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. |
| |
+-----------------------------------------------------------------------------+
19
<PAGE>
(PricewaterhouseCoopers Logo)
------------------------------------------+------------------------------------
| PricewaterhouseCoopers LLP
| 100 East Wisconsin Avenue
| Suite 1500
| Milwaukee, WI 53202
| Telephone (414) 212 1600
Report of Independent Accountants
To the Board of Directors and Shareholders of Artisan Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of Artisan
International Fund (one of the portfolios comprising Artisan Funds, Inc.,
hereafter referred to as the "Fund") at June 30, 2000, the results of its
operations, the changes in its 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 Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with auditing
standards generally accepted in the United States, which require that we plan
and perform the audit to obtain reasonable assurance about whether the financi-
al 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 LLP
July 20, 2000
20
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