UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-08932
Artisan Funds, Inc.
(Exact name of registrant as specified in charter)
1000 North Water Street, Suite 1770
Milwaukee, WI 53202
(Address of principal executive offices) (Zip Code)
Janet D. Olsen Cameron S. Avery
Artisan Funds, Inc. Bell, Boyd & Lloyd LLC
1000 North Water Street, #1770 Three First National Plaza, #3300
Milwaukee, Wisconsin 53202 Chicago, IL 60602
(Name and address of agents for service)
Registrant's telephone number, including area code: (414) 390-6100
Date of fiscal year end: 06/30/03
Date of reporting period: 06/30/03
ITEM 1. REPORTS TO SHAREHOLDERS.
[ARTISAN LOGO]
---------------------
ANNUAL
REPORT
JUNE 30, 2003
---------------------
INTERNATIONAL FUND
---------------------
INTERNATIONAL
SMALL CAP FUND
---------------------
INTERNATIONAL
VALUE FUND
---------------------
MID CAP FUND
---------------------
MID CAP VALUE FUND
---------------------
SMALL CAP FUND
---------------------
SMALL CAP VALUE FUND
---------------------
INVESTOR SHARES
- --------------------------------------------------------------------------------
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 Funds. This report is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. For more complete 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 the portfolio
manager(s), as of June 30, 2003. That information and those views may change and
the Funds disclaim any obligation to advise shareholders of any such changes.
Artisan International Fund and Artisan Mid Cap Fund offer institutional classes
of shares for institutional investors meeting certain minimum investment
requirements. A report on each institutional class is available under separate
cover.
Artisan Funds offered through Artisan Distributors LLC, member NASD.
- -----------------------------------------------------------TABLE OF CONTENTS----
- ----------------------------------------------
02 MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
- ----------------------------------------------
02 Artisan International Fund
- ----------------------------------------------
06 Artisan International Small Cap Fund
- ----------------------------------------------
10 Artisan International Value Fund
- ----------------------------------------------
14 Artisan Mid Cap Fund
- ----------------------------------------------
18 Artisan Mid Cap Value Fund
- ----------------------------------------------
22 Artisan Small Cap Fund
- ----------------------------------------------
26 Artisan Small Cap Value Fund
- ----------------------------------------------
- ----------------------------------------------
30 SCHEDULES OF INVESTMENTS
- ----------------------------------------------
30 Artisan International Fund
- ----------------------------------------------
34 Artisan International Small Cap Fund
- ----------------------------------------------
38 Artisan International Value Fund
- ----------------------------------------------
41 Artisan Mid Cap Fund
- ----------------------------------------------
46 Artisan Mid Cap Value Fund
- ----------------------------------------------
49 Artisan Small Cap Fund
- ----------------------------------------------
54 Artisan Small Cap Value Fund
- ----------------------------------------------
- ----------------------------------------------
60 STATEMENTS OF ASSETS & LIABILITIES
- ----------------------------------------------
- ----------------------------------------------
62 STATEMENTS OF OPERATIONS
- ----------------------------------------------
- ----------------------------------------------
64 STATEMENTS OF
CHANGES IN NET ASSETS
- ----------------------------------------------
- ----------------------------------------------
66 FINANCIAL HIGHLIGHTS
- ----------------------------------------------
- ----------------------------------------------
70 NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------
- ----------------------------------------------
78 REPORT OF
INDEPENDENT AUDITORS
- ----------------------------------------------
- ----------------------------------------------
79 NOTES ON
MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
- ----------------------------------------------
- ----------------------------------------------
80 DIRECTORS AND OFFICERS
- ----------------------------------------------
- ------------------------------------------------AVERAGE ANNUAL TOTAL RETURNS----
SINCE
1-YEAR 5-YEAR INCEPTION
-------- -------- ---------
Artisan International Fund (inception 12/28/95) -13.30% 3.45% 10.72%
- --------------------------------------------------------------------------------
Artisan International Small Cap Fund
(inception 12/21/01) 15.53 NA 13.52
- --------------------------------------------------------------------------------
Artisan International Value Fund
(inception 9/23/02) NA NA 30.10*
- --------------------------------------------------------------------------------
Artisan Mid Cap Fund(inception 6/27/97) -1.45 14.01 18.79
- --------------------------------------------------------------------------------
Artisan Mid Cap Value Fund (inception 3/28/01) 7.58 NA 7.37
- --------------------------------------------------------------------------------
Artisan Small Cap Fund (inception 3/28/95) -0.11 -1.10 7.28
- --------------------------------------------------------------------------------
Artisan Small Cap Value Fund
(inception 9/29/97) 1.90 8.23 9.54
- --------------------------------------------------------------------------------
As of 6/30/03. *Not Annualized.
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. IN TIMES OF MARKET
VOLATILITY, A FUND'S RETURN MAY VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY
BE MATERIALLY DIFFERENT BY THE TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT
PERFORMANCE INFORMATION, VISIT WWW.ARTISANFUNDS.COM OR CALL 800.344.1770. A
FUND'S HISTORICAL PERFORMANCE, PARTICULARLY OVER SHORT TIME PERIODS, SHOULD NOT
BE THE SOLE FACTOR IN AN INVESTMENT DECISION. INVESTORS SHOULD MAINTAIN
REALISTIC EXPECTATIONS FOR FUTURE PERFORMANCE. Investment return and principal
value will fluctuate so that an investor's shares in a Fund, when redeemed, may
be worth more or less than their original cost. The performance information
shown for Artisan International Small Cap Fund and Artisan International Value
Fund does not reflect the deduction of a 2% redemption fee on shares held by an
investor for 90 days or less that, if reflected, would reduce the performance
quoted. The performance information for Artisan International Value Fund and
Artisan Mid Cap Value Fund reflects the adviser's undertaking to limit each
Fund's expenses, which may be terminated at any time, has been in effect since
the Fund's inception, and has had a material impact on each Fund's performance,
which would have been lower in its absence. Although the undertaking for Artisan
Mid Cap Value Fund remained in effect during the fiscal year ended June 30,
2003, the Fund's expenses during that period were below the limitation and no
reimbursement was required.
ARTISAN INTERNATIONAL, INTERNATIONAL SMALL CAP & INTERNATIONAL VALUE FUNDS:
International investments involve special risks, including currency fluctuation,
lower liquidity, different accounting methods and economic and political systems
and higher transaction costs. These risks typically are greater in emerging
markets. ARTISAN INTERNATIONAL and INTERNATIONAL SMALL CAP FUNDS invest in
growth stocks, which may underperform other asset types during a given period.
ARTISAN INTERNATIONAL SMALL CAP FUND invests in the stocks of smaller companies,
which may be more volatile and less liquid than those of large companies, have
underperformed the stocks of larger companies during some periods and may have a
shorter history of operations than larger companies. ARTISAN INTERNATIONAL VALUE
FUND invests in value stocks, which may underperform other assets during some
periods. In addition, the Fund may invest a significant portion of its assets in
small and medium-sized companies, which may be more volatile and less liquid
than those of large companies, have underperformed the stocks of larger
companies during some periods and may have a shorter history of operations than
larger companies.
ARTISAN MID CAP & MID CAP VALUE FUNDS: Stocks of medium-sized companies tend to
be more volatile than those of large companies, and have underperformed the
stocks of small and large companies during some periods. ARTISAN MID CAP FUND
invests primarily in growth stocks, which may underperform other asset types
during a given period. ARTISAN MID CAP VALUE FUND invests primarily in value
stocks, which may underperform other asset types during a given period.
ARTISAN SMALL CAP & ARTISAN SMALL CAP VALUE FUNDS: Stocks of smaller companies
may be more volatile and less liquid than those of large companies, have
underperformed the stocks of larger companies during some periods and may have a
shorter history of operations than larger companies. ARTISAN SMALL CAP FUND
invests primarily in growth stocks, which may underperform other asset types
during a given period. ARTISAN SMALL CAP VALUE FUND invests primarily in value
stocks, which may underperform other asset types during a given period.
All of these risks are discussed in the Funds' prospectus. Please read it
carefully before you invest or send money.
800.344.1770 o WWW.ARTISANFUNDS.COM
ARTISAN
INTERNATIONAL
FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o For the 12 months ended June 30, 2003, Artisan International Fund trailed
the MSCI EAFE/R Index.
o Our stocks in the financials and materials sectors were most costly to
performance.
o Our energy sector stocks and a favorable currency environment contributed
positively to returns.
- ----INVESTMENT APPROACH---------------------------------------------------------
We use a bottom-up investment process to construct a portfolio of international
growth companies of all market capitalizations. The investment team conducts its
own fundamental analysis with particular emphasis on:
1) Well-managed companies focused on increasing shareholder value;
2) Sustainable growth prospects;
3) Reasonable valuations;
4) Dominant or increasing market shares or direct exposure to an identified
theme.
- ----PERFORMANCE REVIEW----------------------------------------------------------
Artisan International Fund underperformed during the first nine months of the
fiscal year ended June 30, 2003, but strongly outperformed the MSCI EAFE/R Index
during the final three months.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (12/28/95 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN INTERNATIONAL FUND ($21,482)
MSCI EAFE/R Index ($10,203)
Lipper International Funds Index ($12,366)
Lipper
ARTISAN MSCI International
INTERNATIONAL EAFE/R Funds
FUND Index Index
------ ------- -------
12/28/95 (inception) 10,000 10,000 10,000
10,000 10,000 10,025
10,910 10,289 10,467
12,080 10,452 10,895
12,220 10,439 10,903
12/96 13,437 10,605 11,472
14,153 10,439 11,756
14,607 11,793 13,072
14,839 11,710 13,322
12/97 13,902 10,793 12,303
16,714 12,381 14,129
18,131 12,512 14,249
14,717 10,734 12,000
12/98 18,376 12,952 13,861
20,439 13,132 14,039
21,283 13,465 14,818
22,343 14,056 15,318
12/99 33,314 16,444 19,105
39,182 16,427 19,223
35,254 15,776 18,320
31,338 14,503 16,976
12/00 29,787 14,114 16,293
25,965 12,176 14,168
26,564 12,015 14,251
22,823 10,365 12,120
12/01 25,064 11,088 13,144
25,282 11,144 13,467
24,777 10,908 13,212
19,480 8,755 10,621
12/02 20,327 9,320 11,326
17,455 8,555 10,329
6/03 21,482 10,203 12,366
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan International Fund -13.30% 3.45% 10.72%
- --------------------------------------------------------------------------------
MSCI EAFE/R Index -6.46 -4.00 0.27
- --------------------------------------------------------------------------------
Lipper International Funds Index -6.40 -2.79 2.87
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE
DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON
DISTRIBUTIONS OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S
RETURN MAY VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY
DIFFERENT BY THE TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE
INFORMATION, VISIT WWW.ARTISANFUNDS.COM OR CALL 800.344.1770. INVESTORS SHOULD
MAINTAIN REALISTIC EXPECTATIONS FOR FUTURE PERFORMANCE. INTERNATIONAL
INVESTMENTS INVOLVE SPECIAL RISKS, INCLUDING CURRENCY FLUCTUATION, LOWER
LIQUIDITY, DIFFERENT ACCOUNTING METHODS AND ECONOMIC AND POLITICAL SYSTEMS, AND
HIGHER TRANSACTION COSTS. THESE RISKS TYPICALLY ARE GREATER IN EMERGING
MARKETS. THE FUND INVESTS IN GROWTH STOCKS, WHICH MAY UNDERPERFORM OTHER ASSET
TYPES DURING A GIVEN PERIOD. THESE RISKS 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. See page 79 for a
description of each index.
02
- ----
TWO
- --------------------------------------------------ARTISAN INTERNATIONAL FUND----
PERFORMANCE DISCUSSION
During the first three months of our fiscal year ended June 30, 2003,
international equity markets experienced an extremely rough time. After the lows
recorded in July 2002, the markets stabilized somewhat in August only to fall
again in September. Apparent signs of a global economic slowdown, and the
possibility of a military conflict in Iraq, added to the gloom of markets
already shaken by corporate governance issues and concerns about quality of
earnings. The next three months saw the markets rally during October and
November, only to fall back in December. As the markets shifted they also went
through rotations, with some previously underperforming sectors, such as
technology, rallying as the markets rebounded. Moving into 2003, the European
Central Bank cut interest rates for the second time in three months, but
European markets again performed poorly. In addition to all the concerns about
the Iraq conflict and the economic outlook, markets in the Netherlands, and in
Europe generally, were further depressed by the specter of financial fraud that
followed the announcement of major accounting irregularities by the Dutch
retailer Ahold (which we didn't own). As anticipated, the international equity
markets turned around as soon as military action in Iraq began. Typical for a
bounce back, we saw some of the strongest recoveries from sectors that had been
hit the hardest prior to the market's low on March 12.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02 Q3 02
- --------------------------------------------------------------------------------
Artisan International Fund 23.07% -14.13% 4.35% -21.38%
- --------------------------------------------------------------------------------
MSCI EAFE/R Index 19.27 -8.21 6.45 -19.73
- --------------------------------------------------------------------------------
Returns are not annualized.
The fiscal year ended June 30, 2003 represented a highly volatile period for
equity investors. The only consolation is that it ended much better than it
started. The performance of the Fund was no different.
SECTOR REVIEW
The stocks we owned in the financials and materials sectors were the largest
negative contributors to performance during the period. More specifically,
German insurers, Allianz AG and Muenchener Rueckversicherungs-Gesellschaft AG
(Munich RE), and our chemical stocks were our biggest drags on performance.
Insurance companies in the U.S. and overseas were under stress during most of
the period. Many firms struggled to maintain their capital adequacy ratios as
their investment portfolios were plagued by falling market prices. During the
first three months of the fiscal year, the stocks of Munich RE and Allianz AG
were particularly affected and those stocks were down considerably. Allianz was
also affected by losses at its Dresdner Kleinwort Wasserstein investment banking
subsidiary due in part to slow capital market activities and higher debt
provisions. Following the rough beginning to the fiscal year, both Munich RE and
Allianz put in place plans to improve their structures and operations. For
example, each company reduced its shareholding in the other, conducted asset
write-downs, announced actions to bolster capital structure, and improved the
core insurance business by demonstrating greater underwriting discipline and
cost controls. Those factors and a stronger stock market late in the period,
among other things, caused those stock prices to recover somewhat and we still
held both stocks as of June 30, 2003.
[PHOTO]
MARK L. YOCKEY
Portfolio Manager
800.344.1770 o WWW.ARTISANFUNDS.COM
03
-----
THREE
- ----ARTISAN INTERNATIONAL FUND--------------------------------------------------
The returns of our specialty chemical companies were depressed by an overriding
macro factor - high oil and gas prices. Cost of goods sold for many chemical
firms is largely determined by the prices of both commodities. The most damaging
stocks were Clariant AG and Imperial Chemical Industries PLC (ICI), which in
our view, also suffered as management made mistakes in strategic positioning and
business execution. However, Clariant replaced its chief executive and we
believe that ICI took steps to improve its operations. On the other hand, our
energy holdings benefited from high oil and gas prices. EnCana Corporation and
Repsol YPF S.A. were the two largest contributors.
Looking beyond insurance and chemicals, Telefonica S.A., a Spanish
telecommunications company, was one of the larger positive contributors to Fund
performance. Among the catalysts for strong performance were the resumption of
dividend payments, an improved situation in Brazil, and strong cash flow
generation in the core Spanish wireline and wireless businesses. A number of
retailers such as Next PLC (British apparel), Wal-Mart de Mexico S.A. de C.V.,
and Tesco PLC (British supermarkets) also contributed strongly. Next was
supported by its stock buyback program and strong cash flow generation, while
Wal-Mart de Mexico and Tesco each reported strong sales growth.
COUNTRY & CURRENCY DISCUSSION
An important factor that positively influenced absolute Fund returns over the
course of the fiscal year was the weakening dollar. The trade-weighted dollar,
which measures the dollar against a basket of other currencies, depreciated
significantly during the fiscal year. This meant that when foreign holdings were
converted back to U.S. dollars, at the depreciated level, the same unit of
foreign currency could be redeemed for more dollars, resulting in a currency
gain. Were it not for this factor, returns would have been much lower.
We did not own many stocks in Japan because we thought that Japan's high
unemployment, deflationary pressures and historically reactionary policy
measures made the outlook too uncertain. That lack of exposure was a profitable
decision relative to the MSCI EAFE/R during the fiscal year because the Japanese
market performed poorly and did not get the currency boost of many other
overseas markets.
BIGGEST GAINERS %
---
Next PLC............................................... 30.2%
Repsol YPF, S.A. ...................................... 28.7
Deutsche Boerse AG..................................... 28.5
EnCana Corporation..................................... 22.3
UBS AG................................................. 18.9
BIGGEST LOSERS %
---
Clariant AG........................................... -52.6%
BAE Systems PLC....................................... -43.6
Muenchener Rueckversicherungs-Gesellschaft AG......... -42.6
Imperial Chemical Industries PLC...................... -41.4
Allianz AG............................................ -28.4
For the year ended 6/30/03, these are the holdings that made the largest dollar
difference in the portfolio. While some holdings may have 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. The
percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
FUND CHANGES
We think chasing short-term market sentiment almost ensures short-term and long-
term underperformance. So, we made few major changes in the Fund, leaving the
geographic diversification and sector allocation of the Fund in many areas
largely unchanged. Eight of our Top 10 Holdings at the beginning of the fiscal
year remained at the end.
TOP 5 COUNTRY ALLOCATIONS
United Kingdom............. 22.0%
Switzerland................ 15.2
Germany.................... 12.7
Netherlands................ 9.4
France..................... 7.4
As a percentage of total net assets as of 6/30/03.
REGION ALLOCATION
6/03 6/02
----- -----
Europe...................... 79.1% 75.7%
Latin America............... 8.4 6.4
Asia/Pacific................ 8.0 12.8
North America............... 3.3 0.6
As a percentage of total net assets as of 6/30/03 and 6/30/02, respectively.
04
- ----
FOUR
- --------------------------------------------------ARTISAN INTERNATIONAL FUND----
TOP 10 HOLDINGS
COMPANY NAME COUNTRY %
- --------------------------------------------------------------------------------
Allianz AG Germany 3.7%
- --------------------------------------------------------------------------------
Compass Group PLC United Kingdom 3.4
- --------------------------------------------------------------------------------
Nestle S.A., Class B Switzerland 3.3
- --------------------------------------------------------------------------------
Diageo PLC United Kingdom 3.0
- --------------------------------------------------------------------------------
Honda Motor Co., Ltd. Japan 2.9
- --------------------------------------------------------------------------------
Tesco PLC United Kingdom 2.8
- --------------------------------------------------------------------------------
Lloyds TSB Group PLC United Kingdom 2.7
- --------------------------------------------------------------------------------
Fortis (NL) N.V. Netherlands 2.7
- --------------------------------------------------------------------------------
Muenchener Rueckversicherungs-Gesellschaft AG Germany 2.6
- --------------------------------------------------------------------------------
Marks & Spencer Group PLC United Kingdom 2.5
- --------------------------------------------------------------------------------
TOTAL 29.6%
As a percentage of total net assets as of 6/30/03.
On a sector basis, the consumer sectors remained our largest allocation. In
fact, at June 30, 2003, we had a slightly larger commitment to the consumer
discretionary group than we did at the beginning of the period. The increase was
due in part to bigger positions in a number of media stocks. We added to a
number of the retail stocks we own and added Kingfisher PLC, Europe's largest
home improvement retailer, late in the fiscal year. We sold Toyota Motor
Corporation and Italian caterer Autogrill S.p.A. The consumer staples sector as
a percentage of the Fund remained basically the same. However, we added to food
retailers Tesco PLC and Carrefour S.A. British American Tobacco PLC was sold.
Outside of the consumer sectors, we maintained a meaningful number of our
financial stocks. The modestly lower portfolio weighting was partly due to the
poor performance of our insurance stocks in addition to the sale and trimming of
some bank stocks. Some of the capital from the finance area was redeployed into
a number of energy stocks. As of June 30, 2002, we only had two small positions
in the sector. By the close of the fiscal year we had purchased EnCana
Corporation, which also contributed to a higher weighting in Canada, increased
our position in Royal Dutch Petroleum Company, NY Shares, and initiated small
positions in a few emerging markets oil stocks. In the healthcare sector, we
added pharmaceutical companies Roche Holding AG and Sanofi-Synthelabo S.A.
Scanning the Fund by region, European stocks continue to be our largest
weighting. We have not yet found many attractive ideas in Japan. Consequently,
the number of stocks we own in that country has continued to leave us
considerably underweight versus the MSCI EAFE/R and the sale of Toyota Motor
Corporation and Canon, Inc. contributed to an even lower weight.
As always, we appreciate your support.
FUND STATISTICS
Net Assets............................... $8.2 Bil.
Number of Holdings.............................. 88
Weighted Avg. Market Cap................ $24.9 Bil.
Weighted Avg. Growth Rate (3-5 yr)........... 11.1%
Weighted Avg. P/E (2003E).................... 15.6X
All statistics are as of 6/30/03.
TOP 5 SECTORS
Financials................................... 25.1%
Consumer Staples............................. 23.1
Consumer Discretionary....................... 20.0
Telecommunication Services................... 8.8
Healthcare................................... 6.7
As a percentage of total net assets as of 6/30/03.
800.344.1770 o WWW.ARTISANFUNDS.COM
05
----
FIVE
ARTISAN
INTERNATIONAL
SMALL CAP FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o During the 12 months ended June 30, 2003, Artisan International Small Cap
Fund significantly outperformed the MSCI EAFE/R Small Cap Index.
o The primary reason for strong Fund performance was security selection,
particularly in the consumer sectors.
- ----INVESTMENT APPROACH---------------------------------------------------------
We use a bottom-up investment process to construct a portfolio of smaller
international growth companies. The investment team conducts its own fundamental
analysis with particular emphasis on:
1) Well-managed companies focused on increasing shareholder value;
2) Sustainable growth prospects;
3) Reasonable valuations;
4) Strong or increasing market shares or direct exposure to an identified
theme.
- ----PERFORMANCE REVIEW----------------------------------------------------------
Artisan International Small Cap Fund outperformed the MSCI EAFE/R Small Cap
Index during three of the four quarters of the fiscal year ended June 30, 2003.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (12/21/01 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN INTERNATIONAL SMALL CAP FUND ($12,130)
MSCI EAFE/R Small Cap Index ($11,441)
MSCI EAFE/R Index ($9,428)
Lipper International Small-Cap Funds Index ($11,137)
ARTISAN MSCI
INTERNATIONAL EAFE/R Lipper
SMALL Small MSCI International
CAP Cap EAFE/R Small-Cap
FUND Index Index Funds Index
------ ------- ------- ----------
12/21/01 (inception) 10,000 10,000 10,000 10,000
10,080 10,218 10,219 10,245
3/02 10,490 10,806 10,645 10,298
6/02 10,500 11,254 10,925 10,079
9/02 9,090 9,449 9,131 8,090
12/02 9,945 9,420 9,407 8,612
3/03 9,564 9,149 8,999 7,905
6/03 12,130 11,441 11,137 9,428
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR INCEPTION
- --------------------------------------------------------------------------------
International Small Cap Fund 15.53% 13.52%
- --------------------------------------------------------------------------------
MSCI EAFE/R Small Cap Index 1.67 9.24
- --------------------------------------------------------------------------------
MSCI EAFE/R Index -6.46 -3.79
- --------------------------------------------------------------------------------
Lipper International Small-Cap Funds Index 1.94 7.33
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE DO
NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON DISTRIBUTIONS
OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S RETURN MAY
VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY DIFFERENT BY THE
TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE INFORMATION, VISIT
WWW.ARTISANFUNDS.COM OR CALL 800.344.1770. INTERNATIONAL INVESTMENTS INVOLVE
SPECIAL RISKS, INCLUDING CURRENCY FLUCTUATION, LOWER LIQUIDITY, DIFFERENT
ACCOUNTING METHODS AND ECONOMIC AND POLITICAL SYSTEMS, AND HIGHER TRANSACTION
COSTS. THESE RISKS TYPICALLY ARE GREATER IN EMERGING MARKETS. ARTISAN
INTERNATIONAL SMALL CAP FUND INVESTS IN THE STOCKS OF SMALLER COMPANIES, WHICH
MAY BE MORE VOLATILE AND LESS LIQUID THAN THOSE OF LARGE COMPANIES, HAVE
UNDERPERFORMED THE STOCKS OF LARGER COMPANIES DURING SOME PERIODS AND MAY HAVE A
SHORTER HISTORY OF OPERATIONS THAN LARGER COMPANIES. THE FUND INVESTS IN GROWTH
STOCKS, WHICH MAY UNDERPERFORM OTHER ASSET TYPES DURING A GIVEN PERIOD. THESE
RISKS 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 performance information shown does not reflect the
deduction of a 2% redemption fee on shares held by an investor for 90 days or
less that, if reflected, would reduce the performance quoted. See page 79 for a
description of each index.
06
- -----
SIX
- ----------------------------------------ARTISAN INTERNATIONAL SMALL CAP FUND----
PERFORMANCE DISCUSSION
During the first three months of our fiscal year ended June 30, 2003,
international equity markets experienced an extremely rough time. After the lows
recorded in July 2002, the markets stabilized somewhat in August only to fall
again in September. Apparent signs of a global economic slowdown and the
possibility of a military conflict in Iraq added to the gloom of markets already
shaken by corporate governance issues and concerns about quality of earnings.
The next three months saw the markets rally during October and November, only to
fall back in December. As the markets shifted they also went through rotations,
with some previously under-performing sectors, such as technology, rallying as
the markets rebounded. Moving into 2003, the European Central Bank cut interest
rates for the second time in three months, but European markets again performed
poorly. As a possible war with Iraq gained momentum and meaningful economic
growth remained generally elusive, international markets continued to display
weakness. However, small-caps did well relative to large-caps. As anticipated,
the international equity markets turned around at roughly the same time military
action in Iraq began. Typical for a bounce back, we saw some of the strongest
recoveries from sectors that had been hit the hardest prior to the market's low
on March 12.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02 Q3 02
- --------------------------------------------------------------------------------
Artisan International Small Cap Fund 26.83% -3.83% 9.41% -13.43%
- --------------------------------------------------------------------------------
MSCI EAFE/R Small Cap Index 25.06 -2.88 -0.31 -16.04
- --------------------------------------------------------------------------------
Returns are not annualized.
SECTOR DISCUSSION
Within the consumer area, the Fund had strong results in many media, food
retailing and beverage stocks. Leading the way in the media industry were
Trinity Mirror PLC, the U.K. newspaper publisher, and Eniro AB, a Swedish
directories publisher. Food retailing and beverage stocks typically are less
sensitive to economic conditions, which helped performance in the negative
market environment. Dutch retailer Laurus N.V. and Belgian food retailer Colruyt
N.V. were the leading contributors.
The news of potential acquisitions drove favorable returns in Japanese
convenience store retailer C TWO-NETWORK Co., Ltd., U.K. retailer Selfridges PLC
and German personal care products firm Wella AG. C TWO rose sharply after it
received a premium acquisition offer from U.K. supermarket giant Tesco PLC.
Tesco has been considering entry into the Japanese market, and the convenience
store format is expected to grow as a percentage of the overall food retail
market in Japan. The Procter & Gamble Company signed an agreement to purchase a
controlling interest in Wella and launched a tender offer for its voting shares.
Selfridges initially moved higher after receiving a purchase offer from Canadian
billionaire Galen Weston. Speculation about a possible competing offer then
pushed Selfridge's shares up even further. We sold the stock as the price moved
up to our estimate of full value for the company. Although anecdotal, we think
this is evidence that some larger companies used the market downturn of the last
few years to acquire valuable businesses in order to solidify or grow market
share.
Gains outside the consumer area were fairly dispersed. Banco Latinoamericano de
Exportaciones, S.A. (BLADEX), a specialized multinational bank established to
finance trade in Latin America, was the largest individual contributor but it,
too, endured its share of volatility. The stock was down in 2002, due in large
part to the crisis in Argentina. It began to turn around at the end of September
2002 due to a number of factors, including a successful rights offering and the
sale of some Argentine
[PHOTO]
MARK L. YOCKEY
Lead Portfolio Manager
800.344.1770 o WWW.ARTISANFUNDS.COM
07
-----
SEVEN
- ----ARTISAN INTERNATIONAL SMALL CAP FUND----------------------------------------
debt. Stada Arzneimittel AG, a German generic drug maker, benefited to some
extent from potential regulatory reforms in the second calendar quarter of 2003.
Telekom Austria AG, the Austrian telecommunications service company, was another
solid contributor. The company has launched one of the first European 3G
wireless networks and has been disciplined in its use of capital.
Although it turned out to be a very positive fiscal year, we did not escape
without some negative performers. A few of the worst were U.K. investment
manager Aberdeen Asset Management PLC, Swiss chemicals company Clariant AG, and
Greek baked products company Chipita International S.A. Aberdeen was hurt
largely by weak global stock markets, asset outflows, and an investigation by
the U.K. Financial Services Authority into possible regulatory violations.
Clariant, like many other chemicals companies, was depressed by high oil and gas
prices, but management mistakes in strategic positioning and business execution
also contributed to its decline. Early in the fiscal year, Chipita reported
sales and earnings results well below expectations due in part to a stronger
euro that resulted in currency losses at a number of its Eastern European
subsidiaries.
COUNTRY & CURRENCY DISCUSSION
An important factor that influenced absolute Fund returns over the course of the
fiscal year was the weakened dollar. The trade-weighted U.S. dollar, which
measures the dollar against a basket of other currencies, depreciated
significantly during the fiscal year. This meant that when foreign holdings were
converted back to U.S. dollars, at the depreciated level, the same unit of
foreign currency could be redeemed for more dollars, resulting in a currency
gain. Were it not for this factor, returns would have been much lower.
From a regional perspective, we added the most value with our European stocks.
We did not own many stocks in Japan because we thought that Japan's high
unemployment, deflationary pressures and historically reactionary policy
measures made the outlook too uncertain. That lack of exposure was a profitable
decision relative to the MSCI EAFE/R Index during the fiscal year.
BIGGEST GAINERS %
---
Selfridges PLC................................................ 64.7%
Rodriguez Group............................................... 54.5
Stada Arzneimittel AG......................................... 52.5
Radiometer A/S, B Shares...................................... 49.0
Banco Latinoamericano de Exportaciones, S.A. - E Shares....... 37.8
BIGGEST LOSERS %
---
Aberdeen Asset Management PLC................................ -74.0%
Clariant AG.................................................. -23.4
Signet Group PLC............................................. -20.5
Chipita International S.A. .................................. -19.2
Clarins S.A. ................................................ -15.5
For the year ended 6/30/03, 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. The
percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
TOP 5 COUNTRY ALLOCATIONS
United Kingdom............ 15.3%
Switzerland............... 9.5
Netherlands............... 7.3
Canada.................... 7.2
France.................... 5.9
As a percentage of total net assets as of 6/30/03.
REGION ALLOCATION
6/03 6/02
----- -----
Europe.................... 64.5% 63.7%
Asia/Pacific.............. 17.0 7.8
Latin America............. 9.6 6.9
North America............. 7.2 1.3
As a percentage of total net assets as of 6/30/03 and 6/30/02, respectively.
08
- -----
EIGHT
- ----------------------------------------ARTISAN INTERNATIONAL SMALL CAP FUND----
FUND CHANGES
We think chasing short-term market sentiment almost ensures short-term and long-
term underperformance. So, we made relatively few major changes in the Fund. We
focused mainly on our themes of consumer discretionary and staples. On a
regional basis, the majority of our investments are still in Europe. We also
elected to maintain a low commitment, compared to our benchmark, in the Pacific
Basin. We opened the fiscal year with a high cash position because of the
volatility in the market. A number of the changes in exposure we made were the
result of putting that cash to work.
TOP 10 HOLDINGS
COMPANY NAME COUNTRY %
- --------------------------------------------------------------------------------
Banco Latinamericano de Exportaciones, S.A. - E Shares Panama 4.9%
- --------------------------------------------------------------------------------
Straumann Holding AG Switzerland 3.4
- --------------------------------------------------------------------------------
Telekom Austria AG Austria 3.0
- --------------------------------------------------------------------------------
Precision Drilling Corporation Canada 3.0
- --------------------------------------------------------------------------------
Vimpel-Communications - (ADR) Russia 2.7
- --------------------------------------------------------------------------------
Rodriguez Group France 2.6
- --------------------------------------------------------------------------------
J.D. Wetherspoon PLC United Kingdom 2.6
- --------------------------------------------------------------------------------
Fraser & Neave Limited Singapore 2.4
- --------------------------------------------------------------------------------
Stada Arzneimittel AG Germany 2.4
- --------------------------------------------------------------------------------
SMG PLC United Kingdom 2.3
- --------------------------------------------------------------------------------
TOTAL 29.3%
As a percentage of total net assets as of 6/30/03.
In the consumer area, the two industries in which we bought the most stocks were
media and food retailing. We sold all of our specialty retailing stocks. Most of
the media stocks were late period additions including Spanish TV company
Sogecable S.A. and Australian publishing company John Fairfax Holdings Limited.
The food retailers purchased during the fiscal year were Colruyt N.V., The
Seiyu, Ltd., and Laurus N.V.
Other notable changes in the Fund were additions to the telecommunications and
healthcare sectors and an increase in the Fund's emerging markets stocks. Those
changes also resulted in a number of new Top 10 Holdings such as Telekom Austria
AG (Austrian telecommunications), Vimpel-Communications (Russian wireless
telecommunications), Straumann Holding AG (Swiss-based implant dentistry), and
Stada Arzneimittel AG. All but two of our Top 10 Holdings changed during the
fiscal year; only SMG PLC and Fraser & Neave Limited (Singapore beverage
producer) remained as Top 10 Holdings throughout the fiscal year. In the
financial sector we increased our position in BLADEX and purchased Swiss insurer
Baloise Holding Limited, German bank Depfa Bank PLC, and Hong Kong Exchanges &
Clearing Limited.
As always, we appreciate your support.
FUND STATISTICS
Net Assets............................. $238.6 Mil.
Number of Holdings.............................. 61
Median Market Cap........................ $1.2 Bil.
Weighted Avg. Market Cap................. $1.7 Bil.
Weighted Avg. Growth Rate (3-5 yr)........... 17.4%
Weighted Harmonic Avg. P/E (2003E)........... 15.4X
All statistics are as of 6/30/03.
TOP 5 SECTORS
Consumer Discretionary....................... 31.4%
Consumer Staples............................. 26.2
Financials................................... 12.2
Telecommunication Services................... 9.8
Healthcare................................... 8.3
As a percentage of total net assets as of 6/30/03.
800.344.1770 o WWW.ARTISANFUNDS.COM
09
----
NINE
ARTISAN
INTERNATIONAL
VALUE FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o Since inception on September 23, 2002, Artisan International Value Fund has
substantially outperformed the MSCI EAFE/R Index and the MSCI EAFE/R Value
Index.
o The Fund has outperformed its peer group over the same period.
- ----INVESTMENT APPROACH---------------------------------------------------------
We use a bottom-up investment process to construct a portfolio of undervalued
non-U.S. companies. Our focus is on selecting individual companies, not
countries or industries. The investment team conducts its own in-depth
fundamental research with the goal of investing in companies at a significant
discount to the team's estimates of their economic value. Attention is also
given to a company's historic returns on capital, its financial strength and
management. Assessing the tradeoffs among these factors is at the heart of our
investment process.
- ----PERFORMANCE REVIEW----------------------------------------------------------
Artisan International Value Fund outperformed the MSCI EAFE/R Index and the MSCI
EAFE/R Value Index in all three calendar quarters since inception.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (9/23/02 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN INTERNATIONAL VALUE FUND ($13,010)
MCSI EAFE/R Value Index ($11,899)
MCSI EAFE/R Index ($11,689)
Lipper International Funds Index ($11,610)
ARTISAN MSCI Lipper
INTERNATIONAL EAFE/R MSCI International
VALUE Value EAFE/R Funds
FUND Index Index Index
------ ------- ------- --------
9/23/02 (inception) 10,000 10,000 10,000 10,000
9/02 9,920 9,965 10,031 9,971
10/02 10,070 10,473 10,570 10,488
11/02 10,570 11,116 11,049 10,985
12/02 10,600 10,632 10,678 10,633
1/03 10,510 10,269 10,232 10,244
2/03 10,280 10,019 9,997 9,940
3/03 10,210 9,736 9,801 9,697
4/03 11,450 10,797 10,761 10,657
5/03 12,480 11,543 11,413 11,342
6/03 13,010 11,899 11,689 11,610
TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX INCEPTION*
- --------------------------------------------------------------------------------
International Value Fund 30.10%
- --------------------------------------------------------------------------------
MSCI EAFE/R Value Index 18.99
- --------------------------------------------------------------------------------
MSCI EAFE/R Index 16.89
- --------------------------------------------------------------------------------
Lipper International Funds Index 16.10
- --------------------------------------------------------------------------------
*Not Annualized
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE DO
NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON DISTRIBUTIONS
OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S RETURN MAY
VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY DIFFERENT BY THE
TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE INFORMATION, VISIT
WWW.ARTISANFUNDS.COM OR CALL 800.344.1770. INTERNATIONAL INVESTMENTS INVOLVE
SPECIAL RISKS, INCLUDING CURRENCY FLUCTUATION, LOWER LIQUIDITY, DIFFERENT
ACCOUNTING METHODS AND ECONOMIC AND POLITICAL SYSTEMS AND HIGHER TRANSACTION
COSTS. THESE RISKS TYPICALLY ARE GREATER IN EMERGING MARKETS. THE FUND MAY
INVEST A SIGNIFICANT PORTION OF ITS ASSETS IN THE STOCKS OF SMALL AND MEDIUM-
SIZED NON-U.S. COMPANIES, WHICH MAY BE MORE VOLATILE AND LESS LIQUID AND MAY
HAVE A SHORTER HISTORY OF OPERATIONS THAN LARGE COMPANIES. THE FUND INVESTS IN
VALUE STOCKS, WHICH MAY UNDERPERFORM OTHER ASSET TYPES DURING A GIVEN PERIOD.
THESE RISKS ARE DISCUSSED IN THE PROSPECTUS. PLEASE READ IT CAREFULLY BEFORE YOU
INVEST OR SEND MONEY. A Fund's historical performance, particularly over short
time periods, should not be the sole factor in an investment decision. Investors
should maintain realistic expectations for future performance. 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
performance shown reflects the adviser's undertaking to limit the Fund's
expenses, which may be terminated at any time, has been in effect since the
Fund's inception, and has had a material impact on the Fund's performance, which
would have been lower in its absence. The performance shown does not reflect the
deduction of a 2% redemption fee on shares held by an investor for 90 days or
less that, if reflected, would reduce the performance quoted. See page 79 for a
description of each index.
10
- -----
TEN
- --------------------------------------------ARTISAN INTERNATIONAL VALUE FUND----
PERFORMANCE DISCUSSION
The Fund's short lifetime has been a volatile period in world equity markets, as
illustrated by the variation of quarterly performance shown in the table below.
The corporate scandals and slow economic growth that plagued U.S. markets had
parallels overseas. Just as Enron and WorldCom came to represent U.S. corporate
management gone bad, French media giant Vivendi's empire-building CEO Jean-Marie
Messier led his company to the brink of bankruptcy while the management team of
Ahold, a Dutch supermarket chain, was blamed for significantly overstated
profits. These headlines along with a slow down of European and Japanese
economic growth, the Japanese banking crisis, SARS, and the war in Iraq created
an environment that started to hurt markets in the third quarter of 2002 and
largely continued through the end of the first calendar quarter of 2003.
During the final three months of the fiscal year ended June 30, 2003, many of
the concerns surrounding the war dissipated. The SARS outbreak was contained and
the global economy started to show signs of recovery. As a result, the final
quarter of our fiscal year was terrific for international investors with the
MSCI EAFE/R Index climbing more than 19%.
One good thing that happened throughout the year (at least from the point of
view of an international investor) was the weakening of the U.S. dollar. Our
performance got a real boost from the effect of converting the values of our
portfolio securities, which are traded in various currencies throughout the
world, back into U.S. dollars.
Below we provide a discussion of several equities that had a meaningful impact
on performance. In addition, we have highlighted some of the equities that we
have sold and the reasons why, and provided a brief introduction to some of the
stocks that are among the largest holdings in the portfolio.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02
- --------------------------------------------------------------------------------
Artisan International Value Fund 27.42% -3.68% 6.85%
- --------------------------------------------------------------------------------
MSCI EAFE/R Index 19.27 -8.21 6.45
- --------------------------------------------------------------------------------
Returns are not annualized.
The largest dollar contributors to the Fund's performance since its inception
were Amdocs Limited, Ichiyoshi Securities Co., Ltd. and Radiometer A/S. Amdocs
is a global leader in customer care and billing software to the
telecommunications industry. We made Amdocs one of the Fund's initial holdings
in the fall of 2002, when market sentiment toward the telecommunications
industry was depressed. It had a solid balance sheet, an attractive valuation
and had shown the ability to generate strong cash flows. The stock price began
to increase shortly after we purchased the shares, due in part to the company
winning a large outsourcing contract from SBC Communications Inc. Since then, a
gradual recovery in earnings, among other factors, has supported the stock and
we trimmed our position early in the second quarter of 2003 to realize some of
the gains.
Ichiyoshi Securities, a small Japanese stock broker, benefited in part from a
resurgence in the Japanese stock market which helped allow its business to move
toward profits in the most recent quarterly reporting period. We purchased the
stock because it was trading at a significant discount to its per share book
value, and management's history of share repurchases.
Radiometer, the Danish maker of blood gas analyzers and related products, rose
partly on the back of the announcement at the end of 2002 of a high-profile
takeover by GE of another Nordic medical products company. At the time,
Radiometer was trading at a more attractive valuation and benefitted
[PHOTO]
N. DAVID SAMRA
Portfolio Manager
800.344.1770 o WWW.ARTISANFUNDS.COM
11
------
ELEVEN
- ----ARTISAN INTERNATIONAL VALUE FUND--------------------------------------------
from the halo effect. Moreover, the company closed a money-losing subsidiary,
which served to boost margins, and offered a dividend yield among the highest in
Denmark.
Our biggest decliners fortunately were relatively contained. The two stocks on
which we lost the largest dollar amounts during the period were Vontobel Holding
AG and Neopost S.A. Vontobel, a Swiss financial services firm, experienced a
decline in its book value and suffered amid signs that the company, by virtue of
its small size and the nature of its business lines, was becoming strategically
disadvantaged. As a result, we sold the stock in favor of more attractive
alternatives.
Neopost, based in France, provides mailing and logistical equipment to business
customers. During the period, the company became embroiled in a patent dispute
with its much larger US-based competitor, Pitney Bowes Inc., which threw into
doubt the value of the company's intellectual property and contributed to the
decline in its share price.
BIGGEST GAINERS %
---
Amdocs Limited......................................... 91.2%
Ichiyoshi Securities Co., Ltd.......................... 60.1
Radiometer A/S - B Shares.............................. 47.5
Jyske Bank A/S......................................... 43.5
Meitec Corporation..................................... 24.1
BIGGEST LOSERS %
---
Neopost S.A............................................ -16.2%
Vontobel Holding AG - Reg. Shares...................... -10.3
Asatsu-DK Inc.......................................... -7.9
Tower Ltd.............................................. -2.8
Nipponkoa Insurance Company, Ltd. ..................... -2.6
For the year ended 6/30/03, 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. The
percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
FUND CHANGES
Although our portfolio turnover has been modest since inception, there have been
several purchases and sales of note made by the Fund since it became fully
invested last fall. Of the sales, some of the largest positions at the time of
sale, in addition to Vontobel, were Eniro AB, Ekornes ASA, Neopost and Natuzzi
S.p.A.
We generally sell a holding for one of four reasons: the stock price has
approached or reached our estimate of economic value, circumstances have led us
to change our estimate of the company's economic value, we have lost confidence
in the company's management or we have identified a more attractive alternative.
We sold Ekornes and Eniro when their stocks reached our target prices. Eniro,
based in Sweden, is in the directories business. It rose after reporting strong
results and announcing that more of the company's free cash flow would be
returned to shareholders in the form of higher dividends and a significant share
repurchase. Ekornes, a Norwegian producer of high-end leather furniture, saw its
earnings continue to rise during the period and also announced a higher than
expected dividend payout.
We sold Neopost and Natuzzi, an Italian leather furniture manufacturer, when
circumstances led us to change our assessment of their values. We sold Neopost
because its patent dispute with Pitney Bowes made it hard to assess company
value. The increased competition from Chinese and other Asian furniture
manufacturers with low labor costs and its impact on pricing caused us to reduce
our estimate of Natuzzi's economic value.
TOP 5 COUNTRY ALLOCATIONS
United Kingdom............ 19.5%
Switzerland............... 15.3
Japan..................... 12.1
Denmark................... 7.3
Germany................... 7.1
As a percentage of total net assets as of 6/30/03.
REGION ALLOCATION
6/03 12/02
------ ------
Europe........................ 70.1% 71.2%
Asia/Pacific.................. 19.4 16.8
North America................. 3.6 4.3
Latin America................. 2.0 2.9
As a percentage of total net assets as of 6/30/03 and 12/31/02, respectively.
Fund inception: 9/23/02.
12
- ------
TWELVE
- --------------------------------------------ARTISAN INTERNATIONAL VALUE FUND----
The proceeds from those and other sales, plus new subscriptions to the Fund,
were applied toward several new purchases during the period. One new purchase
that had a meaningful impact on performance was Koninklijke Numico N.V., a Dutch
manufacturer and retailer of nutritional products and vitamins. Numico was in
turmoil following two large debt-financed acquisitions during the past several
years. We bought the stock partly due to the attractive financial
characteristics of the company's core nutrition businesses and the background
and initial actions of a new management team put in place during 2002. This new
management has sold off several underperforming businesses, refinanced the
company's debt and, most importantly, improved the company's operating cash
flow. As a result, much of the financial pressure that had depressed the share
price (and the long-term prospects of the business) had been removed.
TOP 10 HOLDINGS
COMPANY NAME COUNTRY %
- --------------------------------------------------------------------------------
Meitec Corporation Japan 4.7%
- --------------------------------------------------------------------------------
Aventis S.A. France 3.5
- --------------------------------------------------------------------------------
Diageo PLC United Kingdom 3.1
- --------------------------------------------------------------------------------
Vivendi Universal S.A. France 3.0
- --------------------------------------------------------------------------------
Carpetright PLC United Kingdom 3.0
- --------------------------------------------------------------------------------
Hunter Douglas N.V. Netherlands 3.0
- --------------------------------------------------------------------------------
Radiometer A/S, B Shares Denmark 3.0
- --------------------------------------------------------------------------------
Pfeiffer Vacuum Technology AG Germany 2.9
- --------------------------------------------------------------------------------
Euronext N.V. Netherlands 2.9
- --------------------------------------------------------------------------------
Brit Insurance Holdings PLC United Kingdom 2.9
- --------------------------------------------------------------------------------
TOTAL 32.0%
As a percentage of total net assets as of 6/30/03.
Two of our top ten positions in the Fund at June 30, 2003 were Aventis S.A. and
Brit Insurance Holdings PLC. Aventis, a large Franco-German pharmaceutical
company, has a strong balance sheet, a number of top-selling drugs, and higher-
than-average corporate profitability. Historically, pharmaceutical companies
have traded at relatively high valuations, but prices became depressed as the
industry began to face an increase in regulatory and legal risks. In addition,
the non-U.S. pharmaceutical industry saw a decline in research and development
productivity, which raised concern about future sales potential and product
pipelines. The confluence of those events presented an opportunity for us to buy
shares of Aventis at an attractive price.
Brit Insurance is one of the largest corporate participants in the famed Lloyds
of London insurance market. What stood out about this company was the fact that
a significant amount of its business had been written over the past two years,
which was a favorable period for insurance pricing. In addition, management was
focused on a strong underwriting discipline and balance sheet conservatism.
We look forward to updating you on our future progress, and thank you for your
continued support and confidence.
FUND STATISTICS
Net Assets........................ $16.3 Mil.
Number of Holdings........................ 41
Median Market Cap.................. $1.4 Bil.
Weighted Avg. Market Cap........... $6.7 Bil.
Median P/B Value........................ 2.2X
Weighted Harmonic Avg. P/E (2003E)..... 14.2X
All statistics are as of 6/30/03.
TOP 5 SECTORS
Financials.............................. 23.5%
Consumer Discretionary.................. 19.2
Industrials............................. 13.8
Healthcare.............................. 10.9
Consumer Staples........................ 9.7
As a percentage of total net assets as of 6/30/03.
800.344.1770 o WWW.ARTISANFUNDS.COM
13
--------
THIRTEEN
ARTISAN
MID CAP FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o For the 12 months ended June 30, 2003, Artisan Mid Cap Fund underperformed
both the Russell Midcap/R Index and the Russell Midcap/R Growth Index.
o The largest contributor to Fund performance was the healthcare sector.
o Our stock selections in technology and materials and processing were two
areas that hurt performance.
- ----INVESTMENT APPROACH---------------------------------------------------------
We use a bottom-up investment process to identify well-managed mid-sized
companies whose growth and profit potential are not yet fully recognized by
investors. Specifically, we spend most of our time answering three questions
about a company before we will invest in it:
1) Does the company exhibit franchise characteristics?
2) Is the company positioned for long-term growth and at an early stage in its
profit cycle?
3) Is the stock of the company trading at a reasonable discount to our estimate
of its private market value?
- ----PERFORMANCE REVIEW----------------------------------------------------------
During a volatile fiscal year ended June 30, 2003, the Artisan Mid Cap Fund
posted a slightly negative return.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (6/27/97 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN MID CAP FUND ($28,132)
Russell Midcap/R Growth Index ($12,000)
Russell Midcap/R Index ($14,694)
Lipper Mid-Cap Core Funds Index ($14,734)
Russell Lipper
ARTISAN Midcap/R Russell Mid-Cap
MID CAP Growth Midcap/R Core
FUND Index Index Funds Index
------ ------- ------- ----------
6/27/97 (inception) 10,000 10,000 10,000 10,000
10,000 9,994 9,969 10,072
12,550 11,393 11,293 11,540
12/97 12,814 11,079 11,418 11,193
14,714 12,402 12,651 12,514
14,607 12,394 12,461 12,144
13,068 10,325 10,614 9,914
12/98 17,090 13,059 12,570 12,063
17,162 13,505 12,512 11,485
19,839 14,912 13,870 12,958
19,601 14,165 12,678 12,123
12/99 26,984 19,757 14,862 15,464
34,037 23,930 16,361 17,707
34,299 22,158 15,623 17,113
38,105 22,717 16,687 17,760
12/00 34,311 17,436 16,088 16,432
30,390 13,062 14,400 14,550
34,092 15,175 15,773 16,378
26,430 10,957 12,956 13,240
12/01 33,266 13,922 15,183 15,627
32,583 13,676 15,828 16,205
28,545 11,179 14,317 14,485
23,386 9,259 11,792 12,114
12/02 25,230 10,107 12,726 12,912
24,418 10,105 12,425 12,421
6/03 28,132 12,000 14,694 14,734
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Mid Cap Fund -1.45% 14.01% 18.79%
- --------------------------------------------------------------------------------
Russell Midcap/R Growth Index 7.35 -0.64 3.08
- --------------------------------------------------------------------------------
Russell Midcap/R Index 2.63 3.35 6.62
- --------------------------------------------------------------------------------
Lipper Mid-Cap Core Funds Index 1.72 3.94 6.66
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE DO
NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON DISTRIBUTIONS
OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S RETURN MAY
VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY DIFFERENT BY THE
TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE INFORMATION, VISIT
WWW.ARTISANFUNDS.COM OR CALL 800.344.1770. INVESTORS SHOULD MAINTAIN REALISTIC
EXPECTATIONS FOR FUTURE PERFORMANCE. THE FUND INVESTS IN STOCKS OF MEDIUM-SIZED
COMPANIES, WHICH TEND TO BE MORE VOLATILE THAN THOSE OF LARGE COMPANIES, AND
HAVE UNDERPERFORMED THE STOCKS OF SMALL AND LARGE COMPANIES DURING SOME PERIODS.
GROWTH STOCKS MAY UNDERPERFORM OTHER ASSET TYPES DURING A GIVEN PERIOD. THESE
RISKS 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. See page 79 for a description of each index.
14
- --------
FOURTEEN
- --------------------------------------------------------ARTISAN MID CAP FUND----
PERFORMANCE REVIEW
The first three months of the year ended June 30, 2003, were a harsh
continuation of an already disappointing period for equity investors. In fact,
within mid-cap equities, the Russell Midcap/R Index was down 36 out of 64
trading days while the Russell Midcap/R Growth Index was down 32 of those days.
There was virtually no place to hide for equity investors during the quarter as
most markets returned negative results. The next quarter saw a bit of a
turnaround when stocks, led by technology, were up strongly during much of
October and November 2002. There was positive news during the rally. The United
Nations joined the U.S. in the search for weapons in Iraq, the Federal Reserve
cut interest rates, and the November mid-term elections provided some hope for
consistent and effective economic policy. However, stock prices retreated
somewhat in December and losses carried over into January and February before
showing some life at about the same time that fighting in Iraq began during
March. The final three months of the fiscal year were a bright contrast to the
first three. Almost all markets had positive returns. Mid-cap growth stocks
outperformed their value counterparts for the fourth consecutive quarter. A
number of factors contributed to market strength, including an end to the war in
Iraq, renewed consumer confidence, record low interest rates, and an increase in
buying of equities.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02 Q3 02
- --------------------------------------------------------------------------------
Artisan Mid Cap Fund 15.21% -3.22% 7.89% -18.08%
- --------------------------------------------------------------------------------
Russell Midcap/R Growth Index 18.76 -0.02 9.16 -17.18
- --------------------------------------------------------------------------------
Returns are not annualized.
SECTOR REVIEW
The 12 months ended June 30, 2003 were marked by extreme lows and extreme highs,
leaving the Fund with widely different quarter-by-quarter results. Our strongest
positive contribution for the fiscal year came from healthcare stocks. We have
mentioned in previous communications to shareholders that the pharmaceutical
industry is in a challenging environment as patents on many popular drugs
expire. However, that did not cause us to shy away from the sector. Instead, we
elected to focus on generic drug makers such as Barr Laboratories, Inc. and
Mylan Laboratories, Inc. Both performed very well during the period. Outside of
the pharmaceutical area, our position in biotech Amgen Inc., which we acquired
as a result of Amgen's acquisition of a prior holding, and medical supply
companies Guidant Corporation and Boston Scientific Corporation also contributed
strongly. Service provider Community Health Systems, Inc. detracted from
performance because of concern over near-term earnings growth after allegations
of fraud surfaced at a competitor.
Our energy stocks also yielded positive results. We held oil service providers
Nabors Industries, Ltd., Smith International, Inc., and Weatherford
International, Ltd. to varying degrees throughout the year and all three
contributed positively. Late in the period we sold natural gas producer Devon
Energy Corporation in favor of gas distributor The Williams Companies, Inc. Each
of those stocks also did well. We maintained our commitment to most energy
positions because we believed that the supply/demand dynamics for both oil and
gas were favorable.
The consumer discretionary sector experienced a rocky 12 months, but closed out
the fiscal year on a strong note. A number of factors held the sector back
early, including geopolitical tensions, weak consumer confidence, poor
employment figures, and uncertain economic activity. All showed signs of life
beginning late in March 2003. This led to the prospect of better earnings for
many of our cyclical companies and created support for improved performance.
Getty Images, Inc. was one stock
[PHOTO]
ANDREW C. STEPHENS
Lead Portfolio Manager
[PHOTO]
JAMES D. HAMEL
Associate Portfolio Manager
800.344.1770 o WWW.ARTISANFUNDS.COM
15
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FIFTEEN
- ----ARTISAN MID CAP FUND--------------------------------------------------------
that was very volatile, posting two very strong quarters and two weak quarters.
Fortunately, the good news ended up outweighing the bad and its stock ended up
being our strongest contributor in the sector. Other stocks that we held
throughout the period such as Lamar Advertising Company and toy maker Mattel,
Inc. were not as fortunate and we ended up lower than where we started the
period in each company. However, our decision to buy more stocks in the sector
turned out to be very timely as a number of them did well. Advertiser Omnicom
Group, Inc., retailer Williams-Sonoma, Inc., and e-commerce company
InterActiveCorp. (formerly USA Interactive), were a few of the success stories.
Some of the worst performing stocks in the Fund came from the materials and
processing sector. Packaging firm Pactiv Corporation was our largest holding on
June 30, 2002, and had the largest negative contribution in the sector.
Specialty chemicals company Rohm and Haas Company and steel company NuCor
Corporation were also poor performers. To a certain degree, those stocks
suffered due to the slow economic recovery and as a higher price for oil, which
is a large part of the input cost for many of these businesses, either directly
or indirectly clouded earnings expectations. Financial services, technology and
telecom related stocks also hurt our relative performance, particularly compared
to the growth index. In financials, the majority of the poor performance can be
attributed to insurance company Arthur J. Gallagher & Company and the few
banking stocks we held. Investment managers SEI Investments Company and T. Rowe
Price Group, Inc. helped to offset some of the slide when investor demand for
riskier assets such as equities returned during the market rally that started in
March 2003.
Within the technology and telecom related areas our stock selection was negative
compared to both indices. That was primarily due to our focus on higher quality
issues, which did not rise as rapidly during the last three months of the period
as some of the stocks we think carry more risk. This was most obvious in the
capacity-heavy telecommunications area, which was up well over 100% in the
Russell Midcap/R Growth Index. In addition, one of our largest holdings at the
beginning of the year, National Semiconductor Corporation (a manufacturer of
analog semiconductors) was hit hard in July 2002 partly on news that weak end-
user demand in PCs and handsets would cause manufacturers to pare back inventory
levels.
BIGGEST GAINERS %
---
Getty Images, Inc............................ 64.4%
Network Appliance, Inc....................... 59.3
Amgen, Inc. ................................. 48.0
Mylan Laboratories, Inc...................... 46.5
EMC Corporation.............................. 43.4
BIGGEST LOSERS %
---
Community Health Systems, Inc................ -26.5%
National Semiconductor Corporation........... -20.7
Rohm and Haas Company........................ -16.6
Comerica, Inc................................ -15.9
Pactiv Corporation........................... -14.1
For the year ended June 30, 2003, 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.
The percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
FUND CHANGES
The most significant change in the Fund during the fiscal year was an increase
in the amount of capital we had in consumer discretionary stocks. Consumer
spending remained positive for virtually the whole period even as other economic
variables were mixed. That presented an excellent backdrop for us to add a
number of quality franchises with improving profit cycles to the Fund. Some of
our large purchases were Starwood Hotels & Resorts Worldwide, Inc., The Estee
Lauder Companies, Inc.,
SECTOR DIVERSIFICATION
6/03 6/02
------ ------
Auto & Transportation............................. 4.4% 4.1%
Consumer Discretionary............................ 24.8 15.3
Consumer Staples.................................. 1.4 1.4
Financial Services................................ 12.4 15.7
Healthcare........................................ 13.7 11.2
Integrated Oils................................... 0.0 0.0
Materials & Processing............................ 3.7 9.9
Other............................................. 0.8 2.3
Other Energy...................................... 6.5 6.5
Producer Durables................................. 9.6 6.0
Technology........................................ 17.5 19.1
Utilities......................................... 1.0 1.7
Other assets less liabilities..................... 4.2 6.8
TOTAL............................................. 100% 100%
As a percentage of total net assets as of 6/30/03 and 6/30/02, respectively.
16
- -------
SIXTEEN
- --------------------------------------------------------ARTISAN MID CAP FUND----
Williams-Sonoma, Inc., and Costco Wholesale Corporation. Our belief in cycles
also drove us to several firms in the sector that rely on business advertising
as part of their revenue streams. For example, we purchased Omnicom Group, Inc.,
InterActiveCorp. and The New York Times Company. That same premise of business
spending was also an important factor in the Fund's increased exposure to
producer durables as we added W.W. Grainger, Inc., KLA - Tencor Corporation, and
Molex, Inc.
Within healthcare, the key additions to the Fund were Mylan Laboratories, Inc.,
pharmacy benefit manager Caremark Rx, Inc., and Boston Scientific Corporation. A
merger of two of our biotech holdings (Biogen, Inc. and IDEC Pharmaceuticals
Corporation) was announced in June 2003. We did not believe that the merger
would be beneficial and we reduced our combined exposure at the end of the
period.
Some of the capital reallocated to consumer discretionary, producer durables and
healthcare stocks was from materials and processing and financial services
stocks. We significantly sold down Pactiv Corporation and completely liquidated
Rohm and Haas Company. In each instance, we believed the company's profit cycle
was slowing and stock price performance was weak. In the finance area, we sold
off almost all of our banking stocks for the same reason. However, some capital
was moved within the sector to data processors Fiserv, Inc. and Paychex, Inc.
Technology was a fairly active sector for the Fund. Only three stocks (Adobe
Systems, Inc., Ingram Micro, Inc. and Network Associates, Inc.) remained as
holdings throughout the year. In the software space, we sold long-time holding
Intuit, Inc. as we believed its profit cycle began to slow and Peoplesoft, Inc.
was sold after it announced a potential merger with rival J.D. Edwards &
Company. Seagate Technology, BEA Systems, Inc., and VERITAS Software Corporation
received part of the reallocation of capital. In the semi-conductor industry, we
sold National Semiconductor Corporation and Linear Technology Corporation, which
manufactures high performance linear integrated circuits, was added.
TOP 10 HOLDINGS
COMPANY NAME %
- ---------------------------------------------------
Southwest Airlines Co. 2.3%
- ---------------------------------------------------
Nabors Industries, Ltd. 2.0
- ---------------------------------------------------
W.W. Grainger, Inc. 1.9
- ---------------------------------------------------
Omnicom Group, Inc. 1.8
- ---------------------------------------------------
Weatherford International, Ltd. 1.7
- ---------------------------------------------------
Lamar Advertising Company 1.6
- ---------------------------------------------------
Danaher Corporation 1.6
- ---------------------------------------------------
SEI Investments Company 1.6
- ---------------------------------------------------
Smith International, Inc. 1.6
- ---------------------------------------------------
Mylan Laboratories, Inc. 1.6
- ---------------------------------------------------
TOTAL 17.7%
As a percentage of total net assets as of 6/30/03.
The fiscal year ended with our GARDEN/SM holdings remaining the largest part of
the portfolio.
Thank you for the trust you have placed in us as we endeavor to be respectful of
your capital and work diligently to enhance its value.
FUND STATISTICS
Net Assets.............................. $3.1 Bil.
Number of Holdings............................. 97
Median Market Cap....................... $5.0 Bil.
Weighted Avg. Market Cap................ $8.0 Bil.
Weighted Avg. Growth Rate (3-5 yr).......... 16.2%
Weighted Harmonic Avg. P/E (2003E).......... 24.1X
Fund statistics are as of 6/30/03.
800.344.1770 o WWW.ARTISANFUNDS.COM
17
---------
SEVENTEEN
ARTISAN
MID CAP VALUE
FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o For the 12 months ended June 30, 2003, Artisan Mid Cap Value Fund
outperformed the Russell Midcap/R Index and Russell Midcap/R Value Index by
a wide margin.
o Our security selection within the financial services sector contributed the
most to our return during the one-year period as a number of our stocks
posted strong gains.
o The largest drags on performance were our holdings in the electric utilities
and semi-conductor industries and a few stocks with company-specific
problems.
- ----INVESTMENT APPROACH---------------------------------------------------------
Our goal is to invest in companies that are priced below our estimate of the
value of the business and that provide a controlled level of risk. It is
important to complement stock price value with a company that is financially
strong and possesses favorable economics. Our focus is on individual companies,
rather than on economic or market trends.
The Fund often finds investment opportunities in companies that are in the midst
of a turnaround, are undiscovered or unsponsored, have hidden assets, and/or are
in the process of a major change.
- ----PERFORMANCE REVIEW----------------------------------------------------------
Artisan Mid Cap Value Fund outperformed the Russell Midcap/R Value Index in
three of the four quarters during our fiscal year ended June 30, 2003 and the
one period of underperformance was slight.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (3/28/01 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN MID CAP VALUE FUND ($11,742)
Russell Midcap/R Value Index ($11,003)
Russell Midcap/R Index ($10,304)
Lipper Mid-Cap Value Funds Index ($10,916)
ARTISAN Russell Lipper
MID CAP Midcap/R Russell Mid-Cap
VALUE Value Midcap/R Value
FUND Index Index Funds Index
------ ------- ------- ----------
3/28/01 (inception) 10,000 10,000 10,000 10,000
10,070 10,150 10,098 10,093
6/01 11,180 10,865 11,061 11,146
9/01 9,150 9,610 9,085 9,777
12/01 10,693 10,766 10,647 11,206
3/02 11,328 11,616 11,099 11,904
6/02 10,915 11,074 10,040 10,870
9/02 9,331 9,086 8,269 8,972
12/02 10,279 9,728 8,924 9,563
3/03 10,088 9,333 8,713 9,159
6/03 11,742 11,003 10,304 10,916
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Mid Cap Value Fund 7.58% 7.37%
- --------------------------------------------------------------------------------
Russell Midcap/R Value Index -0.64 4.33
- --------------------------------------------------------------------------------
Russell Midcap/R Index 2.63 1.34
- --------------------------------------------------------------------------------
Lipper Mid-Cap Value Funds Index 0.42 3.96
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE
DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON
DISTRIBUTIONS OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S
RETURN MAY VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY
DIFFERENT BY THE TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE
INFORMATION, VISIT WWW.ARTISANFUNDS.COM OR CALL 800.344.1770. INVESTORS SHOULD
MAINTAIN REALISTIC EXPECTATIONS FOR FUTURE PERFORMANCE. THE FUND INVESTS IN
STOCKS OF MEDIUM-SIZED COMPANIES, WHICH TEND TO BE MORE VOLATILE THAN THOSE OF
LARGE COMPANIES, AND HAVE UNDERPERFORMED THE STOCKS OF SMALL AND LARGE
COMPANIES DURING SOME PERIODS. VALUE STOCKS MAY UNDERPERFORM OTHER ASSET TYPES
DURING A GIVEN PERIOD. THESE RISKS 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 Fund's performance
reflects the adviser's undertaking to limit the Fund's expenses, which may be
terminated at any time, has been in effect since the Fund's inception and has
had a material impact on the Fund's performance, which would have been lower in
its absence. Although the undertaking remained in effect during the fiscal year
ended June 30, 2003, the Fund's expenses during that period were below the
limitation and no reimbursement was required. See page 79 for a description of
each index.
18
- --------
EIGHTEEN
- --------------------------------------------------ARTISAN MID CAP VALUE FUND----
PERFORMANCE REVIEW
July, August and September 2002 were a rough start to our fiscal year ended June
30, 2003 as most areas of the market posted negative results. Technology was the
worst performer, but most sectors, market caps, and styles were hurt as
volatility remained high. There were plenty of market factors that influenced
performance including an uncertain economy, lower investor confidence, the
threat of war and concerns about corporate governance. The downward trend
continued into September 2002, but a number of signs indicated that risk-taking
returned to favor in October as the market surged with tighter corporate yield
spreads, better performance for technology stocks and strong performance in low-
priced stocks. Unfortunately, the market gave up some of the gains in December.
After a brief rally in early January, investor concern about the geopolitical
ramifications of war and apprehension about the strength of the economy appeared
to impact the stock market as it traded lower until March when the fighting in
Iraq began. After a quick conclusion to the war in Iraq, investor sentiment
shifted rapidly and aggressively. This likely contributed to the solid gains
realized by virtually every area of the market in the April to June 2003 time
period.
As demonstrated by the variance in quarterly returns, the fiscal year ended June
30, 2003 was a volatile period. We are pleased that we were able to provide
shareholders with a positive return as it has been some time since the market
has been in the black.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02 Q3 02
- --------------------------------------------------------------------------------
Artisan Mid Cap Value Fund 16.40% -1.86% 10.16% -14.51%
- --------------------------------------------------------------------------------
Russell Midcap/R Value Index 17.89 -4.06 7.07 -17.95
- --------------------------------------------------------------------------------
Returns are not annualized.
SECTOR REVIEW
Throughout the year we maintained a large commitment to financial services
stocks. Several of our financial services holdings performed very well and
contributed strongly to our outperformance. Two of our largest positions in the
sector, Countrywide Financial Corporation, a residential mortgage banker, and
The Student Loan Corporation, which originates loans for higher education, were
outstanding performers. Countrywide has, in part, benefited from record low
mortgage rates and refinancing activity. Student Loan rose for most of the
period, but was particularly strong from March to June 2003. Within that time
frame, the company reported strong earnings and record loan volume. Capital One
Financial Corporation, a credit card issuer, was another stock that was strong
in the March to June time period. It recovered from a fairly depressed valuation
to post over a 50% gain in those months partly due to an announcement of record
earnings. The Fund also received strong contributions during the fiscal year
from most of our insurance holdings and from Nuveen Investments, Inc., an
investment management firm.
We didn't own many technology or healthcare stocks, but most of those we did own
contributed strongly to Fund performance. Our increased investment in technology
stocks was a brief, but profitable decision during the year. Electronic Data
Systems Corporation, Amdocs Limited and Rational Software Corporation each
posted solid gains for the Fund. Our only position in the healthcare sector was
Mylan Laboratories, Inc., a generic drug producer. Two potential government
reforms, clarity about its product pipeline and improved sales results were
among the factors that led to considerable gains in the stock.
[PHOTO]
JAMES C. KIEFFER
Portfolio Co-Manager
[PHOTO]
SCOTT C. SATTERWHITE
Portfolio Co-Manager
800.344.1770 o WWW.ARTISANFUNDS.COM
19
--------
NINETEEN
- ----ARTISAN MID CAP VALUE FUND--------------------------------------------------
Energy stocks remained an outsized portion of the portfolio for the full period
because we have believed that the sector would benefit from better product
pricing due to a tightening supply/demand situation. Apache Corporation, an oil
and gas exploration company, remains our largest position in the Fund. Apache
contributed the most to our returns in the sector, but we also received a
meaningful contribution from XTO Energy, Inc., a natural gas producer. In the
consumer area we owned stocks in a variety of industries and our exposure was on
average in line with our benchmark. A few of the standout performers were
Michaels Stores, Inc., Polo Ralph Lauren Corporation, and Furniture Brands
International, Inc. Michaels was the strongest of the group. Late in our fiscal
year the company reported a rise in earnings and same store sales, and declared
its first dividend, all helping to push the share price higher.
In a very volatile year, we were pleased to have avoided a number of the land
mines. Unfortunately, we did not emerge entirely unscathed. There were a few
trouble spots in the Fund. Although our financial stocks were very successful
overall, real estate investment trust Trizec Properties, Inc. was an exception.
Trizec disappointed early in the fiscal year and we sold it because we were
concerned that company fundamentals might deteriorate further. In the materials
sector, paper company MeadWestvaco Corporation tumbled, in part after news
surfaced that it was party to a variety of asbestos lawsuits. Gas pipeline
utility El Paso Corporation was a stock we thought was selling at an attractive
price relative to its asset value. The market apparently did not share our view
and we ended up selling our position at a loss. In the consumer area, business
consultant BearingPoint, Inc. (formerly KPMG Consulting) was the Fund's largest
negative contributor. The stocks we owned in the semi-conductor industry
slightly offset some of our technology gains.
BIGGEST GAINERS %
---
Michaels Stores, Inc......................... 45.1%
Mylan Laboratories, Inc. .................... 45.0
The Student Loan Corporation................. 35.4
Countrywide Financial Corporation............ 31.1
Apache Corporation .......................... 17.6
BIGGEST LOSERS %
---
BearingPoint, Inc. .......................... -52.5%
El Paso Corporation.......................... -45.3
Trizec Properties, Inc. ..................... -34.4
Teco Energy, Inc. ........................... -33.8
Allegheny Energy, Inc. ...................... -28.4
For the year ended June 30, 2003, 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.
The percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
FUND CHANGES
We make all of our investment decisions stock by stock, but it's interesting to
see where those company-specific decisions take us. The percentages of the
portfolio invested in financial services and energy were just about the same at
the end of the fiscal year as they were at the beginning. The same could also be
said for technology. However, our technology exposure was vastly different at
various points during the 12 months as we opportunistically bought names at what
we thought were reasonable prices only to sell shortly thereafter as those
prices recovered.
SECTOR DIVERSIFICATION
6/03 6/02
------ ------
Auto & Transportation........................ 3.6% 1.3%
Consumer Discretionary....................... 15.5 9.7
Consumer Staples............................. 5.6 0.0
Financial Services........................... 31.9 30.3
Healthcare................................... 1.0 1.7
Integrated Oils.............................. 0.0 0.0
Materials & Processing....................... 7.2 8.3
Other........................................ 1.6 0.0
Other Energy................................. 14.0 15.2
Producer Durables............................ 8.0 10.0
Technology................................... 2.6 2.2
Utilities.................................... 2.6 12.2
Other assets less liabilities................ 6.4 9.1
TOTAL........................................ 100% 100%
As a percentage of total net assets as of 6/30/03 and 6/30/02, respectively.
20
- ------
TWENTY
- --------------------------------------------------ARTISAN MID CAP VALUE FUND----
We moved away from utilities as a group throughout the period due to a
combination of target price realization and individual company disappointments.
The most notable disappointments in the sector were Allegheny Energy, Inc. and
Teco Energy, Inc. Each company was sold at a loss during the first six months of
the period after it became apparent that our investment thesis was wrong.
TOP 10 HOLDINGS
COMPANY NAME %
- ---------------------------------------------------------
Apache Corporation 5.1%
- ---------------------------------------------------------
The Student Loan Corporation 4.7
- ---------------------------------------------------------
Countrywide Financial Corporation 4.7
- ---------------------------------------------------------
Furniture Brands International, Inc. 3.6
- ---------------------------------------------------------
White Mountains Insurance Group, Ltd. 3.4
- ---------------------------------------------------------
Polo Ralph Lauren Corporation 2.9
- ---------------------------------------------------------
Republic Services, Inc. 2.7
- ---------------------------------------------------------
Nuveen Investments, Inc. 2.7
- ---------------------------------------------------------
Zale Corporation 2.6
- ---------------------------------------------------------
XTO Energy Inc. 2.5
- ---------------------------------------------------------
TOTAL 34.9%
As a percentage of total net assets as of 6/30/03.
Much of the capital we took out of utilities we put back to work in consumer
discretionary stocks. The three new additions to this sector were Furniture
Brands, Michaels, and Polo. Each stock, as noted in the performance review,
contributed to results.
The Fund's weight in financial services did not change much during the twelve
months ended June 30, 2003 as our buying activity offset our selling. We reduced
our position in property-casualty insurance stocks and sold Trizec and Alliance
Capital Management Holding L.P., which had disappointed, and Fidelity National
Financial, Inc., which had reached our target price. Most of the offsetting
purchases were made during the final three months of the fiscal year. Included
in the list of purchases were Washington Federal, Inc., TCF Financial
Corporation and Wesco Financial Corporation. Nuveen was one of the exceptions
that we added early in the year.
Thank you for your continued support and confidence in our process.
FUND STATISTICS
Net Assets............................. $64.5 Mil.
Number of Holdings............................. 49
Median Market Cap....................... $3.2 Bil.
Weighted Avg. Market Cap................ $4.1 Bil.
Weighted Avg. Growth Rate (3-5 yr).......... 12.6%
Weighted Harmonic Avg. P/E (2003E).......... 12.4X
Fund statistics are as of 6/30/03.
800.344.1770 o WWW.ARTISANFUNDS.COM
21
----------
TWENTY-ONE
ARTISAN
SMALL CAP FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o For the 12 months ended June 30, 2003, Artisan Small Cap Fund outperformed
the Russell 2000/R Index and slightly underperformed the Russell 2000/R
Growth Index.
o Our security selection within technology added the most value to returns
during the course of the year as many of our stocks posted strong gains.
o A poor performing retail industry and many weak financial services companies
detracted the most from performance during the last 12 months.
- ----INVESTMENT APPROACH---------------------------------------------------------
We use a bottom-up investment process to identify well-managed small companies
whose growth and profit potential are not yet fully recognized by investors.
During the security selection process, our analysis is aimed at addressing four
questions about a company:
1) Is the company growing earnings?
2) Does the company have a competitive advantage?
3) Is the company investing capital wisely?
4) Is the company's stock trading at a reasonable price?
- ----PERFORMANCE REVIEW----------------------------------------------------------
Despite an extraordinary amount of volatility during the 12 months ended June
30, 2003, small-cap stocks ended the year just about where they began it.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (3/28/95 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN SMALL CAP FUND ($17,865)
Russell 2000/R Growth Index ($13,202)
Russell 2000/R Index ($19,311)
Lipper Small-Cap Core Funds Index ($21,674)
ARTISAN Russell Lipper
SMALL 2000/R Russell Small-Cap
CAP Growth 2000/R Core
FUND Index Index Funds Index
------ ------- ------- ----------
3/28/95 (inception) 10,000 10,000 10,000 10,000
10,050 9,963 10,022 10,005
11,520 10,951 10,962 10,707
12,650 12,197 12,044 11,874
12/95 13,283 12,377 12,305 12,193
14,059 13,088 12,933 13,036
14,785 13,853 13,580 13,903
14,160 13,735 13,626 13,989
12/96 14,858 13,771 14,335 14,475
14,150 12,326 13,594 13,683
16,459 14,490 15,797 16,003
18,627 16,942 18,149 18,686
12/97 18,226 15,554 17,541 17,693
19,566 17,401 19,305 19,618
18,883 16,402 18,405 18,712
13,976 12,735 14,697 14,595
12/98 15,771 15,745 17,094 17,049
13,891 15,480 16,167 15,610
15,672 17,763 18,681 17,992
15,530 16,889 17,500 17,224
12/99 18,795 22,529 20,728 20,489
21,211 24,621 22,196 22,602
20,759 22,806 21,357 22,241
19,685 21,900 21,594 22,866
12/00 18,531 17,476 20,102 21,909
17,744 14,819 18,794 20,243
20,774 17,483 21,479 23,353
16,571 12,574 17,014 19,268
12/01 20,795 15,864 20,602 23,471
20,481 15,553 21,422 24,308
17,886 13,112 19,633 22,199
13,575 10,290 15,431 17,919
12/02 14,833 11,063 16,382 18,957
14,427 10,634 15,646 17,978
6/03 17,865 13,202 19,311 21,674
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Small Cap Fund -0.11% -1.10% 7.28%
- --------------------------------------------------------------------------------
Russell 2000/R Index -1.64 0.97 8.30
- --------------------------------------------------------------------------------
Russell 2000/R Growth Index 0.69 -4.25 3.42
- --------------------------------------------------------------------------------
Lipper Small-Cap Core Funds Index -2.37 2.98 9.82
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE
DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON
DISTRIBUTIONS OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S
RETURN MAY VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY
DIFFERENT BY THE TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE
INFORMATION, VISIT WWW.ARTISANFUNDS.COM OR CALL 800.344.1770. INVESTORS SHOULD
MAINTAIN REALISTIC EXPECTATIONS FOR FUTURE PERFORMANCE. STOCKS OF SMALLER
COMPANIES MAY BE MORE VOLATILE AND LESS LIQUID THAN THOSE OF LARGE COMPANIES,
HAVE UNDERPERFORMED THE STOCKS OF LARGER COMPANIES DURING SOME PERIODS AND MAY
HAVE A SHORTER HISTORY OF OPERATIONS THAN LARGE COMPANIES. THE FUND INVESTS IN
GROWTH STOCKS, WHICH MAY UNDERPERFORM OTHER ASSET TYPES DURING A GIVEN PERIOD.
THESE RISKS 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. See page 79 for a description of each index.
22
- ----------
TWENTY-TWO
- ------------------------------------------------------ARTISAN SMALL CAP FUND----
PERFORMANCE REVIEW
The fiscal year ended June 30, 2003 concluded better than it started. The first
three months of the period experienced disappointing performance, due in part to
selling pressure driven by weaker earnings, a poor economic outlook and the fear
of war. The market rallied strongly through October and November 2002 and the
Federal Reserve once again lowered interest rates in early November, but
corporate spending remained muted. Unfortunately, the rally was short-lived and
the market retreated in December 2002. Uncertainty appeared to drive lackluster
performance as capital spending and consumer confidence slumped prior to the
war, resulting in a poor beginning to 2003. Once it was apparent that the
conflict in Iraq was coming to an end in April, consumer confidence rose and was
supported further by record lows on mortgage rates, a new tax bill and a
somewhat better profit picture for a number of companies. This resulted in a
meaningful market rally and very strong returns for the last three months of the
period.
SECTOR REVIEW
For the most part, our performance zigged and zagged with the broader market.
The best performing sectors in the market were healthcare, technology and
financials. However, both healthcare and technology followed the volatility of
the market before finding strength. Both sectors began the year ended June 30,
2003 among the worst performers. Some of the early pressure in healthcare was
due to pharmaceutical companies, but the industry performed relatively well for
the rest of period. The technology area was less discriminating as most
industries did poorly early on, but that same breadth also held true when the
sector recovered as most industries performed very well to close out the period.
The financial sector performed relatively well for most of the year, as banks
and real estate companies among others benefited from the tailwinds associated
with low interest rates and a booming housing market.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02 Q3 02
- --------------------------------------------------------------------------------
Artisan Small Cap Fund 23.83% -2.73% 9.27% -24.10%
- --------------------------------------------------------------------------------
Russell 2000/R Growth Index 24.15 -3.88 7.51 -21.52
- --------------------------------------------------------------------------------
Returns are not annualized.
After a rocky start, a number of our technology stocks posted solid gains and
ended up adding the most value to the Fund. As a group, the stocks we invested
in were up significantly more than the benchmark, realizing the lion's share of
gains after the war ended, consumer confidence turned and earnings reports began
to improve during the second quarter of 2003. We took advantage of opportunities
to add to a number of ideas during the market downturn in the third calendar
quarter of 2002. The largest contributors were broadband components provider
GlobespanVirata, Inc., switching systems manufacturer Avocent Corporation,
network solutions firm Tekelec and enterprise applications provider SERENA
Software, Inc. Partially offsetting this success was an announcement of fraud by
HPL Technologies. We exited the position, but not before getting hurt
considerably.
Healthcare also represented a pocket of strength in the portfolio, led by
managed care providers Mid Atlantic Medical Services, Inc. and Cobalt
Corporation. A number of new purchases in this sector also performed very well,
including generic drug company Taro Pharmaceutical Industries, Ltd. Taro tacked
on a large part of its gains in the second quarter of 2003 after news of two
pieces of potential reform that might benefit generic drug companies.
Unfortunately, not all of our healthcare stocks were winners - First Horizon
Pharmaceutical Corporation fell short of projections on a key drug and
TheraSense, Inc. lost market share.
[PHOTO]
CARLENE M. ZIEGLER
Portfolio Co-Manager
[PHOTO]
MARINA T. CARLSON
Portfolio Co-Manager
800.344.1770 o WWW.ARTISANFUNDS.COM
23
------------
TWENTY-THREE
- ----ARTISAN SMALL CAP FUND------------------------------------------------------
A number of our other positive contributors were less concentrated, coming from
a variety of sectors. Shuffle Master, Inc. and Alliance Gaming Corporation, both
gaming machine suppliers, performed strongly as the soft economic environment
left most of the gaming industry unaffected. Oil and gas exploration firm
Cimarex Energy Company and security consultant Kroll, Inc. also performed very
well.
The financial services sector, while strong for our benchmark, hurt Fund
results. Compared to our benchmark, we did not own many stocks in that sector
and most of the stocks we held posted weak returns. The most damaging was real
estate company MeriStar Hospitality Corporation. It dropped considerably, due in
part to low hotel occupancies that reduced cash flow and raised concerns about
the company's ability to service its debt.
Some of the worst performing areas of the market were those whose results
typically hinge on a strong economy, including a number of consumer-related
industries, industrials, and transportation. Companies in consumer-related
businesses had a variety of factors working against them. First, the stock
market wrapped up its third calendar year of negative returns in 2002, hurting
overall consumer wealth. Second, the overhang of a potential conflict in Iraq
and ultimately a lot of uncertainty about its outcome hurt consumer confidence.
Third, the employment situation was poor as many companies imposed layoffs in an
effort to control costs. Taken together, the average consumer was hesitant to
spend, hurting sales and earnings for many companies that rely on their
purchases. As a result, a number of our retail stocks ended up performing
poorly. Excluding some recent successes, such as Christopher & Banks
Corporation, as the market has rallied and sales have begun to improve, results
in this area were largely disappointing as consumers spent with caution.
Industrial companies are generally more reliant on business spending.
Consequently, an uncertain economic outlook that contributed to lower capacity
utilization rates and sluggish capital expenditures hurt these companies. The
Manitowoc Company, Inc., Technitrol, Inc., and Axcelis Technologies, Inc. were a
few of our industrials holdings that were hurt by these economic headwinds. The
transportation area was hurt by lower travel since 9/11 and weaker business
trends, which weighed on trucker USF Corporation and Atlantic Coast Airlines
Holdings, Inc.
BIGGEST GAINERS %
--
GlobespanVirata, Inc......................... 61.2%
Christopher & Banks Corporation.............. 48.8
Avocent Corporation.......................... 41.3
Tekelec...................................... 32.5
Mid Atlantic Medical Services, Inc........... 31.2
BIGGEST LOSERS %
---
HPL Technologies, Inc........................ -81.6%
MeriStar Hospitality Corporation............. -57.2
First Horizon Pharmaceutical Corporation..... -56.2
Duane Reade Inc.............................. -54.6
Insight Enterprises, Inc..................... -53.0
For the year ended June 30, 2003, 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.
The percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
SECTOR DIVERSIFICATION
6/03 6/02
------ ------
Auto & Transportation........................ 4.2% 4.4%
Consumer Discretionary....................... 21.4 22.0
Consumer Staples............................. 2.0 1.9
Financial Services........................... 9.8 13.3
Healthcare................................... 17.0 13.3
Integrated Oils.............................. 1.2 0.0
Materials & Processing....................... 4.8 4.6
Other Energy................................. 5.6 8.2
Producer Durables............................ 9.1 10.6
Technology................................... 18.9 16.8
Utilities.................................... 2.8 3.1
Other assets less liabilities................ 3.2 1.8
TOTAL........................................ 100% 100%
As a percentage of total net assets as of 6/30/03 and 6/30/02, respectively.
24
- -----------
TWENTY-FOUR
- ------------------------------------------------------ARTISAN SMALL CAP FUND----
FUND CHANGES
A snapshot of the portfolio at the beginning and end of the last 12 months does
not provide a complete picture of the changes made during the year, but it does
give an indication of how we responded to changing market conditions.
Technology and healthcare stocks have increased as a percentage of the
portfolio. The additions to technology were primarily in the semi-conductor and
electronics industries. Two notable examples are Plexus Corporation and Semtech
Corporation. In the communications area, we sold WebEx Communications, Inc.
after it reached our price target and reduced Avocent Corporation and Tekelec
after both rose considerably. In the healthcare sector, we added names in the
medical systems and services areas as well as the instrument and supplies
industry. American Medical Systems Holdings, Inc. (medical device supplier for
urological disorders) was one of the new additions in the instrument and
supplies industry and as of June 30, 2003 it was a Top 10 Holding. VCA Antech,
Inc., an animal healthcare services company, was another addition.
TOP 10 HOLDINGS
COMPANY NAME %
- --------------------------------------------------------------------------------
Charles River Laboratories International, Inc. 2.1%
- --------------------------------------------------------------------------------
Axcelis Technologies, Inc. 2.0
- --------------------------------------------------------------------------------
RARE Hospitality International, Inc. 2.0
- --------------------------------------------------------------------------------
Kroll, Inc. 1.9
- --------------------------------------------------------------------------------
Waste Connections, Inc. 1.9
- --------------------------------------------------------------------------------
Alliance Gaming Corporation 1.9
- --------------------------------------------------------------------------------
American Medical Systems Holdings, Inc. 1.8
- --------------------------------------------------------------------------------
DRS Technologies, Inc. 1.8
- --------------------------------------------------------------------------------
Selective Insurance Group, Inc. 1.7
- --------------------------------------------------------------------------------
Linens 'n Things, Inc. 1.7
- --------------------------------------------------------------------------------
TOTAL 18.8%
As a percentage of total net assets as of 6/30/03.
In the retail industry we sold Insight Enterprises, Inc., Tweeter Home
Entertainment Group, Inc. and ValueVision Media, Inc., all based on reduced
growth prospects. Within financial services, we reallocated some capital from
banks to property-casualty insurers, securities firm Jefferies Group, Inc. and
services company FactSet Research Systems, Inc. In addition, we eliminated most
of our real estate exposure by selling Medical Office Properties, Inc. and
MeriStar Hospitality Corporation. Our energy exposure fell after we sold
Willbros Group, Inc., an engineering and construction company, because projects
were delayed.
As always, we thank you for your continued support and confidence.
FUND STATISTICS
Net Assets............................ $116.0 Mil.
Number of Holdings............................. 78
Median Market Cap....................... $755 Mil.
Weighted Avg. Market Cap................ $854 Mil.
Weighted Avg. Growth Rate (3-5 yr).......... 18.4%
Weighted Harmonic Avg. P/E (2003E).......... 19.5X
Median P/E (2003E).......................... 21.6X
Fund statistics are as of 6/30/03.
800.344.1770 o WWW.ARTISANFUNDS.COM
25
-----------
TWENTY-FIVE
ARTISAN
SMALL CAP VALUE
FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o For the 12 months ended June 30, 2003, Artisan Small Cap Value Fund
outperformed the Russell 2000/R Index and the Russell 2000/R Value Index.
o Consumer discretionary, financial services, as well as the oil industry,
contributed positively to performance.
o The largest drags on performance were our holdings in the materials and
processing sector.
- ----INVESTMENT APPROACH---------------------------------------------------------
Our goal is to invest in companies that are priced below our estimate of the
value of the business and that provide a controlled level of risk. It is
important to complement stock price value with a company that is financially
strong and possesses favorable economics. Our focus is on individual companies,
rather than on economic or market trends.
The Fund often finds investment opportunities in companies that are in the midst
of a turnaround, are undiscovered or unsponsored, have hidden assets, and/or are
in the process of a major change.
- ----PERFORMANCE REVIEW----------------------------------------------------------
During the twelve months ended June 30, 2003, Artisan Small Cap Value Fund
outperformed the Russell 2000/R Value Index in three of four quarters.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (9/29/97 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN SMALL CAP VALUE FUND ($16,887)
Russell 2000/R Value Index ($13,610)
Russell 2000/R Index ($10,703)
Lipper Small-Cap Value Funds Index ($13,135)
ARTISAN Russell Lipper
SMALL CAP 2000/R Russell Small-Cap
VALUE Value 2000/R Value
FUND Index Index Funds Index
------ ------- ------- ----------
9/29/97 (inception) 10,000 10,000 10,000 10,000
9,990 10,051 10,058 10,041
10,310 10,220 9,722 9,881
11,220 11,073 10,700 10,769
11,370 10,673 10,201 10,295
9,079 8,765 8,146 8,277
12/98 9,717 9,560 9,474 9,218
9,270 8,634 8,960 8,247
11,258 10,063 10,354 9,755
10,790 9,276 9,699 9,015
12/99 11,215 9,418 11,488 9,339
11,391 9,778 12,302 9,730
11,733 9,969 11,837 9,858
12,517 10,700 11,968 10,535
12/00 13,550 11,568 11,141 10,904
13,794 11,680 10,416 11,175
15,114 13,040 11,904 12,595
13,330 11,301 9,430 10,781
12/01 15,589 13,190 11,418 12,781
17,052 14,454 11,873 13,801
16,573 14,147 10,881 13,238
13,856 11,135 8,553 10,745
12/02 14,896 11,683 9,079 11,349
14,306 11,090 8,671 10,695
6/03 16,887 13,610 10,703 13,135
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Small Cap Value Fund 1.90% 8.23% 9.54%
- --------------------------------------------------------------------------------
Russell 2000/R Value Index -3.80 4.98 5.51
- --------------------------------------------------------------------------------
Russell 2000/R Index -1.64 0.97 1.19
- --------------------------------------------------------------------------------
Lipper Small-Cap Value Funds Index -0.78 4.99 4.86
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE DO
NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON
DISTRIBUTIONS OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S
RETURN MAY VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY
DIFFERENT BY THE TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE
INFORMATION, VISIT WWW.ARTISANFUNDS.COM OR CALL 800.344.1770. INVESTORS SHOULD
MAINTAIN REALISTIC EXPECTATIONS FOR FUTURE PERFORMANCE. STOCKS OF SMALLER
COMPANIES MAY BE MORE VOLATILE AND LESS LIQUID, HAVE UNDERPERFORMED THE STOCKS
OF LARGER COMPANIES DURING SOME PERIODS AND MAY HAVE A SHORTER HISTORY OF
OPERATIONS THAN LARGER COMPANIES. THE FUND INVESTS IN VALUE STOCKS, WHICH MAY
UNDERPERFORM OTHER ASSET TYPES DURING A GIVEN PERIOD. THESE RISKS 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. See page 79 for a description of each index.
26
- ----------
TWENTY-SIX
- ------------------------------------------------ARTISAN SMALL CAP VALUE FUND----
PERFORMANCE DISCUSSION
Since 1945, the third quarter of the calendar year has tended to be the toughest
quarter of the year for stocks. That quarter happens to coincide with the first
quarter of our fiscal year ended June 30, 2003 and history repeated itself in a
harsh fashion. In an uncertain economic environment, just about every area of
the market suffered as earnings broadly disappointed, contributing to high
volatility. That downward trend in performance continued through September 2002
and into October before recovering. The one piece of good news that may receive
some credit for the rebound was another interest rate cut by the Federal
Reserve. However, that occurred in November and we were unimpressed by the rest
of the news. The market moved higher in the early part of January, after tailing
off some in December. The grim realities of geopolitical strife and economic
stress then appeared to reassert their influence on expectations and valuations,
driving the market lower into March. Performance then turned strongly upward
during April, coincident with the end of the war in Iraq and a return of
investor optimism. In glaring contrast to the first three months of the fiscal
year, the last three months saw just about every area of the market show
positive results. After all of the activity, the Russell 2000/R Value Index
ended the fiscal year off from where it started.
The 12 months ended June 30, 2003 was a rough period to be an investor. We are
glad that we were able to produce a positive return for our shareholders. Our
goal is to add value by being individual stock selectors. In fact, as discussed
below, the best performing areas of the market were generally where we were
underweighted. However, our security selection was strong enough to offset that
disadvantage.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02 Q3 02
- --------------------------------------------------------------------------------
Artisan Small Cap Value Fund 18.04% -3.97% 7.51% -16.39%
- --------------------------------------------------------------------------------
Russell 2000/R Value Index 22.72 -5.08 4.92 -21.29
- --------------------------------------------------------------------------------
Returns are not annualized.
SECTOR REVIEW
Consumer confidence was low through most of the fiscal year ended June 30, 2003,
but ended on a higher note. As a result, a number of stocks in the consumer
discretionary sector performed well for the Fund, generating most of their gains
in the last three months of the period. The end of the war in Iraq, the signing
of a new tax bill and low mortgage rates were a few factors that created a
foundation for increased consumer spending. That helped fuel demand for stocks
that would stand to benefit from increased spending, such as Fund holdings ADVO,
Inc., Zale Corporation, Ethan Allen Interiors, Inc., and IHOP Corporation, which
provided solid performance in an otherwise weak sector. The main disappointment
in the consumer area was Footstar, Inc.
Energy stocks started and ended the period as the largest overweight relative to
our benchmark. Our commitment to that area has been based on our opinion that
the supply/demand dynamics for oil and gas were favorable. Oil and gas prices
have been high relative to recent history, providing a positive platform for
earnings growth. On an industry basis we own a broad basket of production
companies as opposed to the more leveraged service companies. The group of
production firms we owned contributed appreciably to Fund returns. Forest Oil
Corporation, one of our larger holdings, offset some of the gains after falling
due, in part, to the sale of shares by certain large stockholders.
[PHOTO]
SCOTT C. SATTERWHITE
Portfolio Co-Manager
[PHOTO]
JAMES C. KIEFFER
Portfolio Co-Manager
800.344.1770 o WWW.ARTISANFUNDS.COM
27
------------
TWENTY-SEVEN
- ----ARTISAN SMALL CAP VALUE FUND------------------------------------------------
The number of financial services stocks we owned throughout the course of the
fiscal year was light relative to the Russell 2000/R Value Index. At various
points during the year, that posture hurt our relative performance. Banks and
REIT's, both large weights in the index, on average performed well, but we held
a limited number of them. However, we did not miss out entirely on gains in
financial services. Two of our larger holdings, title insurance companies
LandAmerica Financial Group, Inc. and Stewart Information Services Corporation,
performed very strongly, more than offsetting that allocation disadvantage. Both
were helped, to a large degree, by the favorable interest rate environment that
encouraged a significant amount of mortgage refinancing activity.
Our materials and transportation stocks were the largest drag on Fund
performance. In the early part of 2003, AK Steel sank dramatically for a variety
of reasons and deteriorated to the point we no longer felt comfortable holding
the stock, but not before realizing a large loss on the sale. The significant
appreciation of Schnitzer Steel helped to cushion this blow, but we nonetheless
lost money in the materials sector. Our transportation stocks, such as trucker
USF Corporation, recreational vehicle manufacturer Fleetwood Enterprises, Inc.
and thermal systems company Modine Manufacturing, were all under the pressure of
a soft economy that hurt demand for their products and services.
Healthcare, technology and utilities, while all strong contributors for our
benchmark, posted mixed results for the Fund. We were underweight each sector
compared to the Russell 2000/R Value Index. Our healthcare stocks, with one
exception, were all positive and contributed to results. Technology stock
performance in the Fund was more balanced. We had a number of winners and losers
that netted out to a small positive contribution. Our best performing stock in
the sector was Internet Security Systems, Inc., a provider of network security
software and services. It turned out to be a well-timed purchase that
appreciated significantly during the October and November 2002 market rally. The
utilities positions in the Fund, as a group, lost money.
BIGGEST GAINERS %
---
Schnitzer Steel Industries Inc. - Class A......... 89.5%
Internet Security Systems, Inc.................... 53.7
LandAmerica Financial Group, Inc.................. 41.8
IHOP Corporation.................................. 33.8
Stewart Information Services Corporation.......... 32.8
BIGGEST LOSERS %
---
Footstar, Inc..................................... -82.3%
AK Steel Holding Corporation...................... -74.7
Fleetwood Enterprises, Inc........................ -52.5
Modine Manufacturing Company...................... -41.0
USF Corporation................................... -21.4
For the year ended 6/30/03, 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. The
percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
FUND CHANGES
The most significant change in sector exposure from the beginning to the end of
the fiscal year ended June 30, 2003 was in consumer discretionary. Throughout
the period we found a number of new ideas in the sector. Some of the new
investment in the sector was driven by a reallocation of capital from utilities,
producer durables and to a smaller extent materials and processing and
technology stocks. Our commitment to energy stocks was relatively unchanged.
SECTOR DIVERSIFICATION
6/03 6/02
------ ------
Auto & Transportation........................ 9.1% 7.3%
Consumer Discretionary....................... 26.3 12.0
Consumer Staples............................. 0.5 1.2
Financial Services........................... 13.0 15.4
Healthcare................................... 1.7 0.8
Integrated Oils.............................. 1.0 0.0
Materials & Processing....................... 16.2 18.3
Other........................................ 0.0 1.4
Other Energy................................. 16.3 16.2
Producer Durables............................ 5.4 9.0
Technology................................... 2.0 3.4
Utilities.................................... 3.0 8.0
Other assets less liabilities................ 5.5 7.0
TOTAL........................................ 100% 100%
As a percentage of total net assets as of 6/30/03 and 6/30/02, respectively.
28
- ------------
TWENTY-EIGHT
- ------------------------------------------------ARTISAN SMALL CAP VALUE FUND----
In the consumer discretionary sector, the majority of the changes were made in
the final nine months of the period. A number of factors were in play that
provided an opportunity for us to buy stocks that met our investment parameters.
Some examples include sagging consumer confidence, the threat of war and a
number of earnings and/or sales disappointments. We added restaurant firm IHOP,
information management company ProQuest, household furnisher Ethan Allen
Interiors, and shoe retailer Payless ShoeSource, Inc. IHOP ended the period as a
Top 10 Holding. Among other factors, we liked its new franchise model,
management's authorization to repurchase shares and its announced dividend.
TOP 10 HOLDINGS
COMPANY NAME %
- -----------------------------------------------------------------
Kellwood Company 3.6%
- -----------------------------------------------------------------
Zale Corporation 3.5
- -----------------------------------------------------------------
Centex Construction Products, Inc. 2.9
- -----------------------------------------------------------------
ADVO, Inc. 2.8
- -----------------------------------------------------------------
Stewart Information Services Corporation 2.5
- -----------------------------------------------------------------
LandAmerica Financial Group, Inc. 2.5
- -----------------------------------------------------------------
Forest Oil Corporation 2.4
- -----------------------------------------------------------------
IHOP Corporation 2.2
- -----------------------------------------------------------------
Scottish Annuity & Life Holdings, Ltd. 2.1
- -----------------------------------------------------------------
Stone Energy Corporation 2.0
- -----------------------------------------------------------------
TOTAL 26.5%
As a percentage of total net assets as of 6/30/03.
The stocks we sold in utilities, producer durables, materials and processing,
and technology were generally the result of target price realization, discovery
of a more intriguing alternative, or investment case deterioration. From the
durables sector we sold Briggs & Stratton Corporation, which was one of our top
ten positions at the beginning of the period, when it hit our target price
range.
In the technology sector, our holdings increased before being pared back. In the
past, we haven't found many opportunities to buy stocks of companies in the
vanguard of technological change. However, prices had fallen considerably in the
period leading up to June 30, 2002 and even more so during July, August and
September, so we stepped up our buying accordingly. Our emphasis in the area was
more on software and fee-oriented companies and less on chip or hardware-
oriented firms. One of the largest and most profitable holdings in technology
was Internet Security Systems, Inc., discussed above, which we sold during the
fiscal year.
In general, we were sellers of utility stocks starting in October 2002. Our
purchases of those stocks were made primarily during the first two calendar
quarters of 2002. Our financial services weight is slightly lower mainly due to
the sale of John Hancock Bank & Thrift and two REIT's, Essex Property Trust,
Inc. and Federal Realty Investment Trust.
Thank you for your continued support and confidence in our process.
FUND STATISTICS
Net Assets............................ $702.5 Mil.
Number of Holdings............................. 94
Median Market Cap....................... $686 Mil.
Weighted Avg. Market Cap................ $832 Mil.
Median P/B Value............................. 1.5X
Median P/E Ratio (2003E).................... 14.0X
Fund statistics are as of 6/30/03.
800.344.1770 o WWW.ARTISANFUNDS.COM
29
-----------
TWENTY-NINE
-----
ARTIX
-----
ARTISAN
INTERNATIONAL FUND
(ARTIX)
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
============ ============
COMMON AND PREFERRED STOCKS - 98.8%
AUSTRALIA - 1.1%
Commonwealth Bank of Australia 2,945,390 $ 58,440,513
National Australia Bank Ltd. 1,484,491 33,391,514
--------------
91,832,027
BELGIUM - 1.8%
Colruyt N.V. 11,576 801,581
Interbrew 6,596,708 146,825,194
--------------
147,626,775
BRAZIL - 1.1%
Banco Bradesco S.A. 3,767,729,000 14,098,514
Banco Itau Holding Financeira S.A. 178,301,400 11,879,693
Companhia de Bebidas das Americas - (ADR) 158,400 3,223,440
Petroleo Brasileiro S.A. - (ADR) 982,500 19,414,200
Telesp Celular Participacoes S.A.,
Preferred - (ADR)(1) 9,544,900 37,225,110
--------------
85,840,957
CANADA - 3.3%
CanWest Global Communications
Corporation(1)(2) 4,004,998 25,552,818
Corus Entertainment, Inc., Class B(1)(2) 2,929,750 49,162,318
EnCana Corporation 3,712,600 141,575,822
Research In Motion Limited(1)(3) 728,771 15,748,741
Telus Corporation 2,313,400 40,799,110
--------------
272,838,809
CHINA - 0.4%
PetroChina Company Ltd. 94,868,500 28,588,957
DENMARK - 0.9%
A P Moller - Maersk A/S 1,566 8,483,995
Novo-Nordisk A/S, Class B 1,811,550 63,512,488
--------------
71,996,483
FRANCE - 7.4%
Axa 4,901,785 76,173,158
Carrefour S.A. 3,988,968 195,829,140
JC Decaux S.A.(1) 8,355,316 104,756,681
Orange S.A.(1) 951,733 8,462,272
Rhodia S.A.(2) 8,837,821 57,232,926
Sanofi-Synthelabo S.A. 1,694,711 99,416,433
Technip - Coflexip S.A. 138,149 12,108,632
Vivendi Universal S.A. 2,537,011 46,253,433
--------------
600,232,675
30
- ------
THIRTY
-----
ARTIX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
GERMANY - 12.7%
Allianz AG 3,600,002 $ 299,718,585
Deutsche Boerse AG 2,415,989 128,194,904
Deutsche Telekom AG(1) 5,718,400 87,416,188
Henkel KGaA 2,901,743 179,937,064
KDG Investors, L.P.(1)(4)(5) 400,000
Linde AG 3,492,083 129,500,649
Muenchener Rueckversicherungs-
Gesellschaft AG 2,084,405 212,857,815
--------------
1,038,025,205
IRELAND - 0.0%(6)
Allied Irish Banks PLC 42,831 640,955
ITALY - 2.1%
Banca Nazionale del Lavoro S.p.A.(1) 14,142,007 23,749,598
Mediaset S.p.A. 1,391,245 11,794,063
Telecom Italia S.p.A. 25,341,043 139,038,546
--------------
174,582,207
JAPAN - 5.6%
Honda Motor Co., Ltd. 6,256,300 237,505,027
Japan Tobacco, Inc. 17,364 94,023,912
Promise Co., Ltd. 2,068,250 77,480,643
Yamanouchi Pharmaceutical Co., Ltd. 1,801,300 47,040,749
--------------
456,050,331
KOREA - 0.0%(6)
KT Corporation - (ADR) 45,700 900,747
LUXEMBOURG - 0.5%
RTL Group 849,486 40,648,255
MEXICO - 7.3%
Fomento Economico Mexicano S.A. de C.V. (ADR) 1,796,334 74,008,961
Grupo Modelo S.A. de C.V., Series C (ADR)(2) 33,674,300 76,697,291
Grupo Televisa S.A. (ADR) 3,592,600 123,944,700
Telefonos de Mexico S.A. de C.V. (ADR) 6,247,840 196,307,133
Wal-Mart de Mexico S.A. de C.V., Series V 40,927,400 120,673,065
--------------
591,631,150
NETHERLANDS - 9.4%
ABN Amro Holding N.V. 8,140,800 155,909,894
ASML Holding N.V.(1) 7,754,346 73,763,759
Fortis (NL) N.V. 12,541,576 216,389,272
Heineken N.V. 653,756 23,236,276
Royal Dutch Petroleum Company, NY Shares(3) 3,136,160 146,207,779
Unilever N.V. 1,356,550 72,900,582
Wolters Kluwer N.V. 6,251,112 75,498,606
--------------
763,906,168
POLAND - 0.3%
Bank Pekao S.A. 999,864 25,925,822
PORTUGAL - 0.7%
Portugal Telecom, SGPS, S.A. 7,892,332 56,647,701
31
----------
THIRTY-ONE
-----
ARTIX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
RUSSIA - 0.5%
LUKOIL - (ADR) 561,600 $ 44,422,560
SINGAPORE - 0.9%
DBS Group Holdings Ltd. 12,301,807 71,962,864
SPAIN - 5.6%
Banco Bilbao Vizcaya Argentaria, S.A. 822,400 8,655,587
Industria de Diseno Textil, S.A. 5,380,748 135,543,633
Promotora de Informaciones, S.A. 8,287,886 75,407,164
Repsol YPF, S.A. 6,230,412 101,191,449
Telefonica, S.A.(1) 11,823,080 137,490,958
--------------
458,288,791
SWITZERLAND - 15.2%
CIBA Specialty Chemicals AG(1) 2,342,272 142,102,918
Compagnie Financiere Richemont AG 253,900 4,113,946
Clariant AG(1)(2) 8,999,193 82,561,404
Credit Suisse Group 5,125,600 135,193,578
Julius Baer Holding Ltd., Class B 260,306 63,940,213
Nestle S.A., Class B 1,312,811 271,478,747
Novartis AG 3,535,453 140,204,410
Roche Holding AG, Bearer 68,500 8,438,332
Roche Holding AG - Genusschein 1,407,200 110,620,746
Swiss Re 642,333 35,666,685
Serono S.A. 123,925 72,983,353
UBS AG 3,130,510 174,521,995
--------------
1,241,826,327
UNITED KINGDOM - 22.0%
BAE Systems PLC 49,938,951 117,625,385
BT Group PLC 1,453,500 4,895,076
Carlton Communications PLC 17,470,084 43,747,617
Compass Group PLC 51,429,309 277,762,149
Diageo PLC 22,924,551 245,161,290
Granada PLC 88,967,620 133,819,728
Imperial Chemical Industries PLC 54,671,863 110,925,694
Kingfisher PLC 15,357,614 70,378,836
Lloyds TSB Group PLC 31,519,006 224,150,737
Marks & Spencer Group PLC 38,724,724 202,105,657
Next PLC 7,492,682 127,128,532
mmO2 PLC(1) 7,498,600 7,033,846
Tesco PLC 62,293,968 225,752,400
--------------
1,790,486,947
--------------
TOTAL COMMON AND PREFERRED STOCKS (Cost $8,772,143,546) 8,054,902,713
32
- ----------
THIRTY-TWO
------
ARTIX
------
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
PAR
AMOUNT VALUE
============ ============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 0.7%
Repurchase agreement with State Street Bank
and Trust Company, 0.75%, dated 6/30/03,
due 7/1/03, maturity value $60,201,254
collateralized by $61,408,547 market
value Federal Home Loan Bank Note,
1.40% due 5/4/04. (Cost $60,200,000) $60,200,000 $ 60,200,000
TOTAL INVESTMENTS - 99.5% (cost $8,832,343,546) 8,115,102,713
OTHER ASSETS LESS LIABILITIES - 0.5% 42,735,011
--------------
TOTAL NET ASSETS - 100.0%(7) $8,157,837,724
==============
(1) Non-income producing security.
(2) Affiliated company as defined by the Investment Company Act of 1940. See
Note 7 to the financial statements.
(3) Principally traded in the United States.
(4) Valued at a fair value in accordance with procedures established by the
Fund's Board of Directors.
(5) Private investment partnership which is restricted as to resale. Total
investment cost of $10 million, made through capital contributions on
3/6/00, 7/10/00 and 5/15/01. Value at June 30, 2003 represents less than
0.01% of total net assets.
(6) Represents less than 0.1% of total net assets.
(7) Percentages for the various classifications relate to total net assets.
(ADR) American Depository Receipt.
- --------------------------------------------------------------------------------
Portfolio Diversification - June 30, 2003
VALUE PERCENTAGE
============ ============
Consumer Discretionary $1,628,434,080 20.0%
Consumer Staples 1,887,638,026 23.1
Energy 493,509,399 6.1
Financials 2,048,942,540 25.1
Healthcare 542,216,511 6.7
Industrials 126,109,380 1.5
Information Technology 89,512,500 1.1
Materials 522,323,590 6.4
Telecommunication Services 716,216,687 8.8
Utilities - 0.0
--------------- --------------
TOTAL COMMON AND PREFERRED STOCKS 8,054,902,713 98.8
Total short-term investments 60,200,000 0.7
--------------- --------------
TOTAL INVESTMENTS 8,115,102,713 99.5
OTHER ASSETS LESS LIABILITIES 42,735,011 0.5
--------------- --------------
TOTAL NET ASSETS $ 8,157,837,724 100.0%
=============== ==============
The accompanying notes are an integral part of the financial statements.
33
------------
THIRTY-THREE
-----
ARTJX
-----
ARTISAN INTERNATIONAL
SMALL CAP FUND (ARTJX)
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
============ ============
COMMON AND PREFERRED STOCKS - 98.3%
AUSTRALIA - 2.9%
John Fairfax Holdings Limited 2,434,400 $ 4,707,585
RG Capital Radio Limited 1,273,900 2,146,954
--------------
6,854,539
AUSTRIA - 3.0%
Telekom Austria AG(1) 639,776 7,270,717
BELGIUM - 3.4%
Agfa Gevaert N.V. 136,030 2,893,103
Colruyt N.V. 76,322 5,284,922
--------------
8,178,025
BRAZIL - 1.4%
Telesp Celular Participacoes S.A., -
Preferred - (ADR)(1) 838,600 3,270,540
CANADA - 7.2%
Agrium, Inc. 28,031 304,966
CanWest Global Communications Corporation(1)(2) 364,800 2,327,509
Corus Entertainment, Inc., Class B(1)(2) 178,800 3,000,332
Four Seasons Hotels, Inc.(3) 97,700 4,226,502
Precision Drilling Corporation(1) 193,500 7,253,306
--------------
17,112,615
CHILE - 1.1%
Compania Cervecerias Unidas S.A. - (ADR) 163,700 2,633,933
DENMARK - 1.1%
Radiometer A/S, B shares 38,550 2,625,534
FRANCE - 5.9%
Clarins S.A. 58,000 2,723,954
JC Decaux S.A.(1) 359,958 4,513,056
Rodriguez Group 114,466 6,260,649
Tonnellerie Francois Freres 39,261 695,464
--------------
14,193,123
GERMANY - 4.1%
Celanese AG 14,133 344,312
Depfa Bank PLC 47,772 3,722,846
Stada Arzneimittel AG 89,200 5,684,169
--------------
9,751,327
GREECE - 2.4%
Chipita International S.A. 540,550 2,300,541
Coca-Cola Hellenic Bottling Company S.A. 214,500 3,547,959
--------------
5,848,500
34
- -----------
THIRTY-FOUR
-----
ARTJX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
HONG KONG - 2.4%
Hong Kong Exchanges & Clearing Limited 2,488,000 $ 3,605,265
Vitasoy International Holdings Limited 8,732,000 2,060,345
--------------
5,665,610
ITALY - 3.1%
Davide Campari-Milano S.p.A. 118,500 4,545,760
Gruppo Editoriale L'Espresso S.p.A. 703,000 2,789,760
--------------
7,335,520
JAPAN - 4.3%
C TWO-NETWORK Co., Ltd. 124,500 3,510,992
The Seiyu, Ltd.(1) 1,460,000 3,581,327
Yamaha Motor Co., Ltd. 376,500 3,182,133
--------------
10,274,452
KOREA - 2.1%
LG Household & Health Care Ltd. 198,000 5,113,688
MEXICO - 2.2%
Grupo Modelo S.A. de C.V., Series C(2) 2,365,100 5,386,801
NETHERLANDS - 7.3%.
Euronext N.V. 156,800 3,893,956
Koninklijke Grolsch N.V. 200,290 5,096,086
Laurus N.V. (1) 2,773,266 4,338,332
N.V. Holdingmaatschappij De Telegraaf 248,750 4,005,747
--------------
17,334,121
PANAMA - 4.9%.
Banco Latinoamericano de Exportaciones,
S.A., E Shares(1)(2)(3) 1,458,614 11,625,154
PORTUGAL - 1.4%
Brisa-Auto Estradas de Portugal, S.A. 583,921 3,291,111
RUSSIA - 4.1%
Vimpel-Communications - (ADR)(1) 140,100 6,506,244
Wimm-Bill-Dann Foods OJSC - (ADR)(1) 163,700 3,323,110
--------------
9,829,354
SINGAPORE - 2.6%
Fraser & Neave Limited 1,164,600 5,688,235
Singapore Post Limited(1) 1,200,000 463,439
--------------
6,151,674
SPAIN - 3.4%
Baron de Ley S.A.(1) 97,134 3,454,642
Sogecable S.A.(1) 244,705 4,621,770
--------------
8,076,412
SWEDEN - 0.5%
Elekta AB, B shares(1) 106,800 1,322,443
35
-----------
THIRTY-FIVE
------
ARTJX
------
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
SWITZERLAND - 9.5%
Baloise Holding Limited 146,500 $ 4,774,582
Bank Sarasin & Cie AG, B shares 1,122 1,394,614
Clariant AG(1)(2) 265,600 2,436,697
Schindler Holding AG,
Participation Certificates(1) 22,860 3,687,097
Straumann Holding AG 90,110 8,166,969
Synthes-Stratec, Inc. 2,950 2,123,668
--------------
22,583,627
THAILAND - 2.7%
TelecomAsia Corporation Public
Company Limited(1) 18,616,300 3,075,429
TT&T Public Company Limited(1) 39,561,000 3,272,457
--------------
6,347,886
UNITED KINGDOM - 15.3%
The Berkeley Group PLC 370,700 4,599,338
Bovis Homes Group PLC 634,000 4,462,020
Capital Radio PLC 299,700 2,551,178
GWR Group PLC 550,287 2,009,694
Intertek Group PLC 483,400 3,471,708
J.D. Wetherspoon PLC 1,591,078 6,153,952
Maiden Group PLC 586,594 2,278,517
SMG PLC(1) 4,023,640 5,553,316
Trinity Mirror PLC 764,700 5,428,765
--------------
36,508,488
--------------
TOTAL COMMON AND PREFERRED STOCKS (Cost $206,768,005) 234,585,194
Par
Amount
============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 2.4%
Repurchase agreement with
State Street Bank and Trust
Company, 0.75%, dated 6/30/03,
due 7/1/03, maturity value
$5,641,118, collateralized by
$5,756,738 market value Federal
Home Loan Bank Note, 1.40%,
due 5/4/04 (Cost $5,641,000) $ 5,641,000 5,641,000
--------------
TOTAL INVESTMENTS - 100.7% (Cost $212,409,005) 240,226,194
OTHER ASSETS LESS LIABILITIES - (0.7)% (1,644,757)
--------------
TOTAL NET ASSETS - 100.0%(4) $238,581,437
==============
(1) Non-income producing security.
(2) Affiliated company as defined by the Investment Company Act of 1940. See
Note 7 to the financial statements.
(3) Principally traded in the United States.
(4) Percentages for the various classifications relate to total net assets.
(ADR) American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
36
- ----------
THIRTY-SIX
-----
ARTJX
-----
ARTISAN INTERNATIONAL
SMALL CAP FUND (ARTJX)
Portfolio Diversification - June 30, 2003
VALUE PERCENTAGE
============ ============
Consumer Discretionary $74,818,777 31.4%
Consumer Staples 62,590,627 26.2
Energy 7,253,306 3.0
Financials 29,016,417 12.2
Healthcare 19,922,783 8.3
Industrials 10,913,355 4.6
Information Technology 2,893,103 1.2
Materials 3,781,439 1.6
Telecommunication Services 23,395,387 9.8
--------------- --------------
TOTAL COMMON AND PREFERRED STOCKS 234,585,194 98.3
Total short-term investments 5,641,000 2.4
--------------- --------------
TOTAL INVESTMENTS 240,226,194 100.7
OTHER ASSETS LESS LIABILITIES (1,644,757) (0.7)
--------------- --------------
TOTAL NET ASSETS $238,581,437 100.0%
=============== ==============
The accompanying notes are an integral part of the financial statements.
37
------------
THIRTY-SEVEN
-----
ARTKX
-----
ARTISAN INTERNATIONAL
VALUE FUND (ARTKX)
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 95.1%
BERMUDA - 2.0%
Accenture, Ltd., Class A(1)(2) 18,250 $ 330,142
CANADA - 1.6%
Toronto Stock Exchange 6,200 125,761
Toronto Stock Exchange, 144A 6,350 128,803
--------------
254,564
DENMARK - 7.3%
Jyske Bank A/S 10,325 417,130
Radiometer A/S, B Shares 7,060 480,837
Topdanmark A/S 8,070 295,424
--------------
1,193,391
FRANCE - 6.5%
Aventis S.A. 10,345 570,097
Vivendi Universal S.A. 26,660 486,051
--------------
1,056,148
GERMANY - 7.1%
Henkel KGaA 5,900 334,573
Pfeiffer Vacuum Technology AG 17,670 477,636
Schering AG 7,130 349,211
--------------
1,161,420
HONG KONG - 2.6%
Asia Satellite Telecommunications
Holdings, Ltd. 260,500 429,259
ITALY - 4.8%
Caltagirone Editore S.p.A. 52,659 331,324
Cementir S.p.A. Cementerie del Tirreno 158,600 445,128
--------------
776,452
JAPAN - 12.1%
Ichiyoshi Securities Co., Ltd. 135,000 409,995
Meitec Corporation 25,400 773,518
Nipponkoa Insurance Company, Ltd. 137,000 462,934
Tokyo Broadcasting System, Inc. 27,000 329,573
--------------
1,976,020
MEXICO - 2.0%
Grupo Aeroportuario del
Sureste S.A. de C.V. (ADR) 21,690 317,325
NETHERLANDS - 6.8%
Euronext N.V. 19,184 476,414
Hunter Douglas N.V. 14,455 482,179
Koninklijke Numico N.V. 10,000 154,133
--------------
1,112,726
38
- ------------
THIRTY-EIGHT
------
ARTKX
------
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
NEW ZEALAND - 4.7%
Telecom Corporation of New Zealand, Ltd. 146,913 $ 451,694
Tower, Ltd. 355,639 313,007
--------------
764,701
NORWAY - 2.8%
Statoil ASA 54,195 462,040
SWITZERLAND - 15.3%
Givaudan S.A. 1,073 452,508
Gurit-Heberlein AG 491 243,393
Pargesa Holding AG 219 447,365
PubliGroupe S.A. 1,902 320,847
Schindler Holding AG 2,259 397,782
Tamedia AG 4,265 258,753
Tecan Group AG 13,000 373,187
--------------
2,493,835
UNITED KINGDOM - 19.5%
Amdocs Limited(1)(2) 6,000 144,000
Brit Insurance Holdings PLC 358,800 467,035
Cable & Wireless PLC (ADR) 79,380 434,209
Carpetright PLC 48,360 486,001
Diageo PLC 47,290 505,732
Lloyds TSB Group PLC 40,000 284,464
Michael Page International PLC 40,000 72,728
Rotork PLC 38,900 202,538
Signet Group PLC 291,950 435,514
Somerfield PLC 66,200 138,145
--------------
3,170,366
--------------
TOTAL COMMON STOCKS (Cost $13,173,152) 15,498,389
Par
Amount
============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 7.4%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%, dated
6/30/03, due 7/1/03, maturity value
$1,204,025, collateralized by
$1,173,412 market value Federal Home
Loan Bank Note, 1.40%, due 5/4/04 and
$55,345 market value Federal National
Mortgage Association Note, 1.72%,
due 3/24/05 (Cost $1,204,000) $1,204,000 1,204,000
--------------
TOTAL INVESTMENTS - 102.5% (Cost $14,377,152) 16,702,389
OTHER ASSETS LESS LIABILITIES - (2.5)% (412,933)
--------------
TOTAL NET ASSETS - 100.0%(3) $ 16,289,456
==============
(1) Non-income producing security.
(2) Principally traded in the United States.
(3) Percentages for the various classifications relate to total net assets.
(ADR) American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
39
------------
THIRTY-NINE
-----
ARTKX
-----
ARTISAN INTERNATIONAL
VALUE FUND (ARTKX)
Portfolio Diversification - June 30, 2003
VALUE PERCENTAGE
=============== ==============
Consumer Discretionary $ 3,130,241 19.2%
Consumer Staples 1,585,092 9.7
Energy 462,040 2.8
Financials 3,828,332 23.5
Healthcare 1,773,332 10.9
Industrials 2,241,526 13.8
Information Technology 474,143 2.9
Materials 688,521 4.2
Telecommunication Services 1,315,162 8.1
Utilities - -
--------------- --------------
TOTAL COMMON STOCKS 15,498,389 95.1
Total short-term investments 1,204,000 7.4
--------------- --------------
TOTAL INVESTMENTS 16,702,389 102.5
OTHER ASSETS LESS LIABILITIES (412,933) (2.5)
--------------- --------------
TOTAL NET ASSETS $16,289,456 100.0%
=============== ==============
The accompanying notes are an integral part of the financial statements.
40
- -----
FORTY
-----
ARTMX
-----
ARTISAN
MID CAP FUND
(ARTMX)
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 95.8%
AUTO & TRANSPORTATION - 4.4%
AIR TRANSPORT - 3.4%
Expeditors International of Washington, Inc. 459,700 $15,924,008
FedEx Corporation 294,100 18,243,023
Southwest Airlines Co. 4,217,100 72,534,120
--------------
106,701,151
TRUCKERS - 1.0%
Swift Transportation Co., Inc.(1) 1,658,800 30,886,856
CONSUMER DISCRETIONARY - 24.8%
ADVERTISING AGENCIES - 3.4%
Lamar Advertising Company(1) 1,455,000 51,230,550
Omnicom Group, Inc. 772,800 55,409,760
--------------
106,640,310
CABLE TELEVISION SERVICES - 0.8%
EchoStar Communications Corporation(1) 772,800 26,754,336
COSMETICS - 1.3%
The Estee Lauder Companies, Inc. 1,225,800 41,101,074
CONSUMER ELECTRONICS - 1.1%
Electronic Arts, Inc.(1) 116,800 8,642,032
Yahoo!, Inc.(1) 760,200 24,904,152
--------------
33,546,184
ENTERTAINMENT - 0.5%
Pixar, Inc.(1) 239,800 14,589,432
HOTEL/MOTEL - 1.5%
Starwood Hotels & Resorts Worldwide, Inc. 1,620,000 46,315,800
JEWELRY WATCHES & GEMSTONES - 0.8%
Tiffany & Company 726,200 23,732,216
PUBLISHING: NEWSPAPERS - 1.1%
The New York Times Company 786,200 35,772,100
RADIO & TV BROADCASTING - 1.8%
Entercom Communications Corporation(1) 550,900 26,999,609
Univision Communications, Inc.(1) 1,007,800 30,637,120
--------------
57,636,729
41
---------
FORTY-ONE
-----
ARTMX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
CONSUMER DISCRETIONARY (CONTINUED)
RESTAURANTS - 1.5%
Darden Restaurants, Inc. 786,100 $14,920,178
Wendy's International, Inc. 1,059,300 30,687,921
--------------
45,608,099
RETAIL - 6.4%
Abercrombie & Fitch Company Class A(1) 879,300 24,980,913
AnnTaylor Stores Corporation(1) 471,400 13,647,030
Costco Wholesale Corporation(1) 1,067,000 39,052,200
InterActiveCorp(1) 706,100 27,940,377
Kohl's Corporation(1) 548,200 28,166,516
Staples, Inc.(1) 1,147,500 21,056,625
Williams-Sonoma, Inc.(1) 1,359,000 39,682,800
Zale Corporation(1) 104,800 4,192,000
--------------
198,718,461
SERVICES: COMMERCIAL - 3.7%
Accenture, Ltd. Class A(1) 1,726,300 31,228,767
ARAMARK Corporation Class B(1) 624,500 14,001,290
Getty Images, Inc.(1) 613,900 25,354,070
Robert Half International, Inc.(1) 2,301,287 43,586,376
--------------
114,170,503
TOYS - 0.9%
Mattel, Inc. 1,524,600 28,845,432
CONSUMER STAPLES - 1.4%
FOODS - 1.4%
Dean Foods Company(1) 1,378,950 43,436,925
FINANCIAL SERVICES - 12.4%
BANKS: OUTSIDE NEW YORK CITY - 0.9%
Comerica, Inc. 626,200 29,118,300
FINANCIAL DATA PROCESSING SERVICES &
SYSTEMS - 3.1%
Fiserv, Inc.(1) 1,152,500 41,040,525
Paychex, Inc. 1,289,900 37,806,969
SunGard Data Systems, Inc.(1) 707,800 18,339,098
--------------
97,186,592
FINANCIAL MISCELLANEOUS - 1.2%
MGIC Investment Corporation 772,800 36,043,392
INSURANCE: MULTI-LINE - 0.7%
Arthur J. Gallagher & Company 846,700 23,030,240
INSURANCE: PROPERTY-CASUALTY - 2.3%
Platinum Underwriters Holdings, Ltd. 923,800 25,071,932
XL Capital Limited 567,300 47,085,900
--------------
72,157,832
INVESTMENT MANAGEMENT COMPANIES - 2.7%
SEI Investments Company 1,545,700 49,462,400
T. Rowe Price Group, Inc. 892,800 33,703,200
--------------
83,165,600
42
- ---------
FORTY-TWO
-----
ARTMX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
FINANCIAL SERVICES (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS (REIT) - 0.1%
American Financial Realty Trust 138,700 $ 2,068,017
SECURITIES BROKERAGE & SERVICES - 1.4%
LaBranche & Co., Inc. 1,093,000 22,614,170
The Charles Schwab Corporation 2,196,900 22,166,721
--------------
44,780,891
HEALTHCARE - 13.7%
BIOTECHNOLOGY RESEARCH & PRODUCTION - 3.6%
Amgen, Inc.(1) 501,540 33,322,317
Biogen, Inc.(1) 358,300 13,615,400
IDEC Pharmaceuticals Corporation(1) 379,400 12,899,600
Invitrogen Corporation(1) 747,400 28,677,738
Millennium Pharmaceuticals, Inc.(1) 1,431,100 22,511,203
--------------
111,026,258
DRUGS & PHARMACEUTICALS - 2.3%
Allergan, Inc. 306,500 23,631,150
Mylan Laboratories, Inc. 1,389,000 48,295,530
--------------
71,926,680
ELECTRONICS: MEDICAL SYSTEMS - 0.9%
Affymetrix, Inc.(1) 1,419,000 27,968,490
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES - 2.6%
Becton, Dickinson and Company 579,600 22,517,460
Boston Scientific Corporation(1) 699,500 42,739,450
Zimmer Holdings, Inc.(1) 337,000 15,181,850
--------------
80,438,760
MISCELLANEOUS HEALTH CARE - 1.0%
Alcon, Inc. 691,300 31,592,410
HEALTHCARE MANAGEMENT SERVICES - OTHER - 3.3%
Anthem, Inc.(1) 422,100 32,565,015
Caremark Rx, Inc.(1) 1,877,300 48,209,064
WebMD Corporation(1) 2,151,000 23,295,330
--------------
104,069,409
MATERIALS & PROCESSING - 3.7%
CONTAINERS & PACKAGING: PAPER & PLASTIC - 2.4%
Pactiv Corporation(1) 2,119,700 41,779,287
Smurfit-Stone Container Corporation(1) 2,664,800 34,722,344
--------------
76,501,631
ENGINEERING & CONTRACTING SERVICES - 0.5%
Fluor Corporation 456,800 15,366,752
PAINTS & COATINGS - 0.8%
RPM International, Inc. 1,781,200 24,491,500
OTHER - 0.8%
MULTI-SECTOR COMPANIES - 0.8%
Brunswick Corporation 970,000 24,269,400
43
-----------
FORTY-THREE
-----
ARTMX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
OTHER ENERGY - 6.5%
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 5.3%
Nabors Industries, Ltd.(1) 1,565,400 $ 61,911,570
Smith International, Inc.(1) 1,343,700 49,367,538
Weatherford International, Ltd.(1) 1,281,600 53,699,040
--------------
164,978,148
UTILITIES: GAS PIPELINES - 1.2%
The Williams Companies, Inc. 4,803,200 37,945,280
PRODUCER DURABLES - 9.6%
AEROSPACE - 0.6%
Alliant Techsystems, Inc.(1) 373,600 19,393,576
DIVERSIFIED PRODUCTION - 1.6%
Danaher Corporation 731,800 49,798,990
ELECTRICAL EQUIPMENT & COMPONENTS - 1.1%
Molex, Inc. 1,225,800 33,084,342
ELECTRONICS: INSTRUMENTS GAUGES & METERS - 1.5%
Mettler-Toledo International, Inc.(1) 319,800 11,720,670
Thermo Electron Corporation(1) 1,582,800 33,270,456
--------------
44,991,126
IDENTIFICATION CONTROL & FILTER DEVICES - 0.4%
Parker-Hannifin Corporation 316,200 13,277,238
MISCELLANEOUS EQUIPMENT - 1.9%
W.W. Grainger, Inc. 1,258,400 58,842,784
PRODUCTION TECHNOLOGY EQUIPMENT - 2.5%
KLA - Tencor Corporation(1) 852,700 39,642,023
Novellus Systems, Inc.(1) 1,048,900 38,411,767
--------------
78,053,790
TECHNOLOGY - 17.5%
COMMUNICATIONS TECHNOLOGY - 5.8%
Advanced Fibre Communications, Inc.(1) 1,406,600 22,885,382
Corning, Inc.(1) 5,023,200 37,121,448
Juniper Networks, Inc.(1) 2,214,200 27,389,654
Network Associates, Inc.(1) 3,004,600 38,098,328
Research In Motion Limited(1) 329,900 7,129,139
Symbol Technologies, Inc. 2,325,100 30,249,551
Tellabs, Inc.(1) 2,811,300 18,470,241
--------------
181,343,743
COMPUTER SERVICES SOFTWARE & SYSTEMS - 5.6%
Adobe Systems, Inc. 1,492,300 47,858,061
BEA Systems, Inc.(1) 3,524,000 38,270,640
Cognos, Inc.(1) 787,100 21,251,700
Seagate Technology(1) 2,098,500 37,038,525
VERITAS Software Corporation(1) 1,066,000 30,562,220
--------------
174,981,146
44
- ----------
FORTY-FOUR
-----
ARTMX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
TECHNOLOGY (CONTINUED)
COMPUTER TECHNOLOGY - 2.8%
EMC Corporation(1) 3,201,900 $ 33,523,893
Ingram Micro, Inc.(1) 1,531,200 16,843,200
Network Appliance, Inc.(1) 2,311,800 37,474,278
--------------
87,841,371
ELECTRONICS: TECHNOLOGY - 1.1%
Rockwell Automation, Inc. 1,392,400 33,194,816
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 2.2%
Linear Technology Corporation 1,264,800 40,739,208
Xilinx, Inc.(1) 1,033,700 26,162,947
--------------
66,902,155
UTILITIES - 1.0%
UTILITIES: GAS DISTRIBUTORS - 1.0%
Kinder Morgan, Inc. 594,500 32,489,425
--------------
TOTAL COMMON STOCKS (Cost $2,651,643,965) $2,986,775,692
Par
Amount
============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 3.1%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%, dated
6/30/03, due 7/1/03, maturity value
$95,991,000, collateralized by
$97,914,689 market value Federal
Home Loan Bank Note, 1.40%, due 5/4/04
(Cost $95,989,000) $95,989,000 95,989,000
-------------
TOTAL INVESTMENTS - 98.9% (Cost $2,747,632,965) 3,082,764,692
OTHER ASSETS LESS LIABILITIES - 1.1% 32,836,387
--------------
TOTAL NET ASSETS - 100.0%(2) $3,115,601,079
==============
(1) Non-income producing security.
(2) Percentages for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
45
----------
FORTY-FIVE
-----
ARTQX
-----
ARTISAN
MID CAP VALUE FUND
(ARTQX)
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 93.6%
AUTO & TRANSPORTATION - 3.6%
TRANSPORTATION MISCELLANEOUS - 1.8%
Tidewater, Inc. 40,000 $ 1,174,800
TRUCKERS - 1.8%
Swift Transportation Co., Inc.(1) 60,900 1,133,958
CONSUMER DISCRETIONARY - 15.5%
HOUSEHOLD FURNISHINGS - 3.6%
Furniture Brands International, Inc.(1) 87,800 2,291,580
RESTAURANTS - 0.5%
Brinker International, Inc.(1) 8,500 306,170
RETAIL - 4.7%
Michaels Stores, Inc. 35,800 1,362,548
Zale Corporation(1) 42,500 1,700,000
--------------
3,062,548
SERVICES: COMMERCIAL - 2.7%
Republic Services, Inc.(1) 77,300 1,752,391
TEXTILES: APPAREL MANUFACTURERS - 4.0%
Liz Claiborne, Inc. 20,800 733,200
Polo Ralph Lauren Corporation 71,800 1,851,722
--------------
2,584,922
CONSUMER STAPLES - 5.6%
DRUG & GROCERY STORE CHAINS - 1.9%
Safeway, Inc.(1) 59,600 1,219,416
FOODS - 1.9%
Tyson Foods, Inc. - Class A 117,800 1,251,036
TOBACCO - 1.8%
Loews Corporation - Carolina Group 43,600 1,177,200
FINANCIAL SERVICES - 31.9%
BANKS: OUTSIDE NEW YORK CITY - 1.8%
TCF Financial Corporation 29,200 1,163,328
FINANCE: SMALL LOAN - 4.7%
The Student Loan Corporation 24,100 3,036,600
46
- ---------
FORTY-SIX
-----
ARTQX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
FINANCIAL SERVICES (CONTINUED)
INSURANCE: MULTI-LINE - 5.3%
Alleghany Corporation(1) 5,200 $ 993,200
Loews Corporation 26,000 1,229,540
Old Republic International Corporation 34,100 1,168,607
--------------
3,391,347
INSURANCE: PROPERTY-CASUALTY - 6.8%
Arch Capital Group, Ltd.(1) 15,100 524,423
Everest Re Group, Ltd. 7,900 604,350
PartnerRe, Ltd 20,500 1,047,755
White Mountains Insurance Group, Ltd. 5,600 2,212,000
--------------
4,388,528
REAL ESTATE INVESTMENT TRUSTS (REIT) - 2.2%
Avalonbay Communities, Inc. 25,600 1,091,584
ProLogis 11,297 308,408
--------------
1,399,992
SAVINGS & LOANS - 3.7%
Golden West Financial Corporation. 14,200 1,136,142
Washington Federal, Inc. 55,200 1,276,776
--------------
2,412,918
SECURITIES BROKERAGE & SERVICES - 7.4%
Countrywide Financial Corporation 43,400 3,019,338
Nuveen Investments, Inc. - Class A 64,300 1,751,532
--------------
4,770,870
HEALTHCARE - 1.0%
DRUGS & PHARMACEUTICALS - 1.0%
Mylan Laboratories, Inc. 17,900 622,383
MATERIALS & PROCESSING - 7.2%
PAPER - 3.8%
Domtar, Inc. 107,100 1,183,455
MeadWestvaco Corporation 51,319 1,267,579
--------------
2,451,034
REAL ESTATE - 1.3%
Catellus Development Corporation(1) 37,100 816,200
STEEL - 2.1%
Harsco Corporation 38,700 1,395,135
OTHER - 1.6%
MULTI-SECTOR COMPANIES - 1.6%
Wesco Financial Corporation 3,400 1,060,800
OTHER ENERGY - 14.0%
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 0.9%
Weatherford International, Ltd.(1) 12,800 536,320
OFFSHORE DRILLING - 1.4%
Diamond Offshore Drilling, Inc. 43,700 917,263
OIL: CRUDE PRODUCERS - 11.7%
Apache Corporation 50,473 3,283,774
EOG Resources, Inc. 33,300 1,393,272
Newfield Exploration Company(1) 33,300 1,250,415
XTO Energy, Inc. 81,366 1,636,270
--------------
7,563,731
47
-----------
FORTY-SEVEN
-----
ARTQX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
PRODUCER DURABLES - 8.0%
DIVERSIFIED PRODUCTION - 3.4%
Dover Corporation 39,300 $ 1,177,428
Pentair, Inc. 26,800 1,046,808
--------------
2,224,236
HOMEBUILDING - 0.5%
Centex Corporation 4,000 311,160
IDENTIFICATION CONTROL & FILTER DEVICES - 2.0%
Waters Corporation(1) 43,700 1,272,981
MACHINERY: INDUSTRIAL/SPECIALTY - 2.1%
Ingersoll-Rand Company Limited - Class A 29,100 1,377,012
TECHNOLOGY - 2.6%
COMPUTER SERVICES SOFTWARE & SYSTEMS - 0.4%
Cadence Design Systems, Inc.(1) 21,300 256,878
COMPUTER TECHNOLOGY - 0.4%
Electronic Data Systems Corporation 11,200 240,240
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 1.8%
Arrow Electronics, Inc.(1) 77,200 1,176,528
UTILITIES - 2.6%
UTILITIES: GAS DISTRIBUTORS - 1.1%
Sempra Energy 24,200 690,426
UTILITIES: TELECOMMUNICATIONS - 1.5%
Telephone And Data Systems, Inc. 19,800 984,060
--------------
TOTAL COMMON STOCKS (Cost $53,288,948) 60,413,991
Par
Amount
============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 6.2%
Repurchase agreement with State Street Bank
and Trust Company, 0.75%, dated 6/30/03,
due 7/1/03, maturity value $3,986,083,
collateralized by $4,066,824 market
value Federal Home Loan Bank Note,
1.40%, due 5/4/04 (Cost $3,986,000) $ 3,986,000 3,986,000
--------------
TOTAL INVESTMENTS - 99.8% (Cost $57,274,948) 64,399,991
OTHER ASSETS LESS LIABILITIES - 0.2% 98,072
--------------
TOTAL NET ASSETS - 100.0%(2) $64,498,063
==============
(1) Non-income producing security.
(2) Percentages for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
48
- -----------
FORTY-EIGHT
-----
ARTSX
-----
ARTISAN
SMALL CAP FUND
(ARTSX)
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 96.8%
AUTO & TRANSPORTATION - 4.2%
AIR TRANSPORT - 0.9%
AirTran Holdings, Inc.(1) 99,400 $ 1,040,718
RAILROADS - 0.9%
Genesee & Wyoming, Inc.(1) 51,500 1,059,355
TRUCKERS - 2.4%
Pacer International, Inc.(1) 97,200 1,833,192
USF Corporation 34,600 933,162
--------------
2,766,354
CONSUMER DISCRETIONARY - 21.4%
CASINOS & GAMBLING - 1.1%
Shuffle Master, Inc.(1) 44,600 1,310,794
EDUCATION SERVICES - 0.5%
Bright Horizons Family Solutions, Inc.(1) 16,500 553,740
ENTERTAINMENT - 1.9%
Alliance Gaming Corporation(1) 115,900 2,191,669
RADIO & TV BROADCASTING - 3.1%
LIN TV Corporation, Class A(1) 74,700 1,759,185
Regent Communications, Inc.(1) 323,700 1,909,830
--------------
3,669,015
RESTAURANTS - 2.0%
RARE Hospitality International, Inc.(1) 69,900 2,284,332
RETAIL - 6.1%
Christopher & Banks Corporation(1) 45,100 1,668,249
Linens 'n Things, Inc.(1) 81,300 1,919,493
Men's Wearhouse, Inc.(1) 75,200 1,643,120
Stage Stores, Inc.(1) 77,200 1,814,200
--------------
7,045,062
SERVICES: COMMERCIAL - 6.7%
The Advisory Board Company(1) 27,100 1,098,092
FTI Consulting, Inc.(1) 60,350 1,506,940
Harris Interactive, Inc.(1) 110,300 726,877
Kroll, Inc.(1) 83,400 2,256,804
Waste Connections, Inc.(1) 63,900 2,239,695
--------------
7,828,408
49
----------
FORTY-NINE
-----
ARTSX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
CONSUMER STAPLES - 2.0%
BEVERAGE: BREWERS (WINERIES) - 0.1%
The Boston Beer Company, Inc.(1) 11,600 $ 167,040
BEVERAGE: SOFT DRINKS - 0.5%
Peet's Coffee & Tea, Inc.(1) 30,800 537,768
FOODS - 1.4%
American Italian Pasta Company, Class A(1) 39,200 1,632,680
FINANCIAL SERVICES - 9.8%
BANKS: OUTSIDE NEW YORK CITY - 2.5%
Community First Bankshares, Inc. 53,800 1,468,740
Greater Bay Bancorp 70,300 1,435,526
--------------
2,904,266
FINANCIAL INFORMATION SERVICES - 1.1%
FactSet Research Systems, Inc. 27,200 1,198,160
INSURANCE: PROPERTY-CASUALTY - 4.1%
IPC Holdings, Ltd. 51,700 1,731,950
Platinum Underwriters Holdings, Ltd. 39,700 1,077,458
Selective Insurance Group, Inc. 78,600 1,968,930
--------------
4,778,338
REAL ESTATE INVESTMENT TRUSTS (REIT) - 0.8%
Innkeepers USA Trust 141,500 962,200
SECURITIES BROKERAGE & SERVICES - 1.3%
Jefferies Group, Inc. 29,900 1,488,721
HEALTHCARE - 17.0%
BIOTECHNOLOGY RESEARCH & PRODUCTION - 2.1%
Charles River Laboratories
International, Inc.(1) 75,700 2,436,026
DRUGS & PHARMACEUTICALS - 2.5%
Priority Healthcare Corporation, Class B(1) 86,100 1,597,155
Taro Pharmaceutical Industries, Ltd.(1) 23,900 1,311,632
--------------
2,908,787
ELECTRONICS: MEDICAL SYSTEMS - 2.4%
Affymetrix, Inc.(1) 69,700 1,373,787
Zoll Medical Corporation(1) 40,700 1,365,892
--------------
2,739,679
HEALTH CARE FACILITIES - 1.3%
United Surgical Partners International,
Inc.(1) 65,500 1,479,645
HEALTH CARE MANAGEMENT SERVICES - 1.6%
Cobalt Corporation(1) 17,200 353,460
Mid Atlantic Medical Services, Inc.(1) 29,200 1,527,160
--------------
1,880,620
50
- -----
FIFTY
-----
ARTSX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
HEALTHCARE (CONTINUED)
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES - 5.6%
American Medical Systems Holdings, Inc.(1) 123,400 $ 2,081,758
CTI Molecular Imaging, Inc.(1) 89,500 1,692,445
Respironics, Inc.(1) 47,900 1,797,208
Techne Corporation(1) 31,800 964,812
--------------
6,536,223
MEDICAL SERVICES - 1.5%
VCA Antech, Inc.(1) 87,400 1,710,418
INTEGRATED OILS - 1.2%
OIL: INTEGRATED DOMESTIC - 1.2%
Cimarex Energy Company(1) 58,800 1,396,500
MATERIALS & PROCESSING - 4.8%
BUILDING MATERIALS - 1.6%
Hughes Supply, Inc. 53,900 1,870,330
BUILDING: ROOFING & WALLBOARD - 0.7%
ElkCorp 36,300 816,750
DIVERSIFIED MATERIALS & PROCESSING - 1.0%
Olin Corporation 68,400 1,169,640
PLASTICS - 1.5%
Spartech Corporation 82,000 1,739,220
OTHER ENERGY - 5.6%
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 4.5%
Global Industries, Ltd.(1) 299,900 1,445,518
Pride International, Inc.(1) 64,500 1,213,890
Varco International, Inc.(1) 86,100 1,687,560
W-H Energy Services, Inc.(1) 45,600 888,288
--------------
5,235,256
OIL: CRUDE PRODUCERS - 1.1%
Unit Corporation(1) 59,400 1,242,054
PRODUCER DURABLES - 9.1%
ELECTRICAL EQUIPMENT & COMPONENTS - 1.6%
Technitrol, Inc.(1) 123,400 1,857,170
IDENTIFICATION CONTROL & FILTER DEVICES - 1.6%
ESCO Technologies, Inc.(1) 41,200 1,812,800
MACHINERY: INDUSTRIAL/SPECIALTY - 1.6%
Actuant Corporation, Class A(1) 40,400 1,911,728
PRODUCTION TECHNOLOGY EQUIPMENT - 3.4%
Axcelis Technologies, Inc.(1) 382,400 2,340,288
Photronics, Inc.(1) 95,300 1,662,985
--------------
4,003,273
TELECOMMUNICATIONS EQUIPMENT - 0.9%
Tollgrade Communications, Inc.(1) 54,500 1,016,425
51
---------
FIFTY-ONE
-----
ARTSX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
TECHNOLOGY - 18.9%
COMMUNICATIONS TECHNOLOGY - 1.2%
Avocent Corporation(1) 24,800 $ 742,264
Tekelec(1) 63,700 719,810
--------------
1,462,074
COMPUTER SERVICES SOFTWARE & SYSTEMS - 5.9%
Anteon International Corporation(1) 65,500 1,828,105
Borland Software Corporation(1) 136,200 1,330,674
Hyperion Solutions Corporation(1) 26,000 877,760
Manhattan Associates, Inc.(1) 44,700 1,160,859
Progress Software Corporation(1) 29,500 611,535
SERENA Software, Inc.(1) 47,700 995,976
--------------
6,804,909
ELECTRICAL & ELECTRONICS - 1.5%
Plexus Corporation(1) 149,200 1,720,276
ELECTRONICS - 2.6%
Aeroflex, Inc.(1) 226,600 1,753,884
Semtech Corporation(1) 87,200 1,241,728
--------------
2,995,612
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 5.9%
DSP Group, Inc.(1) 71,800 1,545,854
Lattice Semiconductor Corporation(1) 183,600 1,511,028
ParthusCeva, Inc.(1) 132,800 1,082,320
Planar Systems, Inc.(1) 81,400 1,592,184
Skyworks Solutions, Inc.(1) 167,700 1,135,329
--------------
6,866,715
ELECTRONICS: TECHNOLOGY - 1.8%
DRS Technologies, Inc.(1) 73,400 2,049,328
UTILITIES - 2.8%
UTILITIES: TELECOMMUNICATIONS - 2.8%
Boston Communications Group, Inc.(1) 82,000 1,404,660
Commonwealth Telephone Enterprises, Inc.(1) 41,200 1,811,564
--------------
3,216,224
--------------
TOTAL COMMON STOCKS (Cost $92,157,239) 112,296,302
52
- ---------
FIFTY-TWO
-----
ARTSX
-----
- ----------------------------------------------------SCHEDULE OF INVESTMENTS-----
PAR
AMOUNT VALUE
============ ============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 4.5%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%, dated
6/30/03, due 7/1/03, maturity value
$5,268,110, collateralized by $5,375,630
market value Federal Home Loan Bank Note,
1.40%, due 5/4/04 (Cost $5,268,000) $5,268,000 $ 5,268,000
--------------
TOTAL INVESTMENTS - 101.3% (Cost $97,425,239) 117,564,302
OTHER ASSETS LESS LIABILITIES - (1.3)% (1,527,540)
--------------
TOTAL NET ASSETS - 100.0%(2) $116,036,762
==============
(1) Non-income producing securities.
(2) Percentages for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
53
-----------
FIFTY-THREE
-----
ARTVX
-----
ARTISAN
SMALL CAP VALUE FUND
(ARTVX)
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 94.5%
AUTO & TRANSPORTATION - 9.1%
AUTO PARTS: AFTER MARKET - 1.5%
Superior Industries International, Inc. 258,200 $ 10,766,940
AUTO PARTS: ORIGINAL EQUIPMENT - 1.8%
BorgWarner, Inc. 193,400 12,454,960
RECREATIONAL VEHICLES & BOATS - 1.1%
Polaris Industries, Inc. 124,000 7,613,600
SHIPPING - 1.9%
Kirby Corporation(1) 363,400 10,247,880
Teekay Shipping Corporation 70,000 3,003,000
--------------
13,250,880
TRUCKERS - 2.8%
Arkansas Best Corporation 317,300 7,548,567
USF Corporation 444,200 11,980,074
--------------
19,528,641
CONSUMER DISCRETIONARY - 26.3%
ADVERTISING AGENCIES - 2.8%
ADVO, Inc.(1) 436,100 19,362,840
COMMERCIAL INFORMATION SERVICES - 1.9%
ProQuest Company(1) 509,000 13,132,200
CONSUMER ELECTRONICS - 0.9%
Register.com, Inc.(1) 500,600 2,933,516
THQ, Inc.(1) 184,200 3,315,600
--------------
6,249,116
HOUSEHOLD FURNISHINGS - 1.8%
Ethan Allen Interiors, Inc. 364,400 12,812,304
PUBLISHING: MISCELLANEOUS - 0.5%
Courier Corporation 63,563 3,273,495
RADIO & TV BROADCASTING - 0.5%
World Wrestling Entertainment, Inc. 361,200 3,716,748
RESTAURANTS - 2.7%
IHOP Corporation 496,100 15,661,877
Papa John's International, Inc.(1) 120,200 3,371,610
--------------
19,033,487
54
- ----------
FIFTY-FOUR
-----
ARTVX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
CONSUMER DISCRETIONARY (CONTINUED)
RETAIL - 7.4%
Neiman Marcus Group, Inc., Class A(1) 99,800 $ 3,652,680
Neiman Marcus Group, Inc., Class B(1) 9,800 338,100
Payless ShoeSource, Inc.(1) 997,300 12,466,250
School Specialty, Inc.(1) 389,300 11,079,478
Zale Corporation(1) 609,800 24,392,000
--------------
51,928,508
SERVICES: COMMERCIAL - 3.0%
BearingPoint, Inc.(1) 964,700 9,309,355
Cross Country Healthcare, Inc.(1) 265,800 3,505,902
Medical Staffing Network Holdings, Inc.(1) 342,500 2,397,500
Roto-Rooter, Inc. 152,600 5,820,164
--------------
21,032,921
TEXTILES APPAREL MANUFACTURERS - 3.6%
Kellwood Company 809,150 25,593,415
WHOLESALERS -1.2%
United Stationers, Inc.(1) 236,000 8,536,120
CONSUMER STAPLES - 0.5%
FOODS - 0.5%
Ralcorp Holdings, Inc.(1) 134,900 3,367,104
FINANCIAL SERVICES - 13.0%
FINANCIAL MISCELLANEOUS - 4.9%
LandAmerica Financial Group, Inc. 363,100 17,247,250
Stewart Information Services Corporation(1) 628,900 17,514,865
--------------
34,762,115
INSURANCE: LIFE - 2.1%
Scottish Annuity & Life Holdings, Ltd. 722,100 14,593,641
INSURANCE: MULTI-LINE - 0.9%
PICO Holdings, Inc.(1) 475,700 6,184,100
INSURANCE: PROPERTY-CASUALTY - 3.0%
Arch Capital Group, Ltd.(1) 137,900 4,789,267
IPC Holdings, Ltd. 272,300 9,122,050
White Mountains Insurance Group, Ltd. 18,000 7,110,000
--------------
21,021,317
INVESTMENT MANAGEMENT COMPANIES - 0.9%
Capital Southwest Corporation 105,800 6,073,978
REAL ESTATE INVESTMENT TRUSTS (REIT) - 1.0%
Chateau Communities, Inc. 58,400 1,728,056
Cousins Properties, Inc. 188,100 5,247,990
--------------
6,976,046
SAVINGS & LOANS - 0.2%
Superior Financial Corporation 74,000 1,776,000
55
----------
FIFTY-FIVE
-----
ARTVX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
HEALTHCARE - 1.7%
HEALTH CARE FACILITIES - 0.4%
LifePoint Hospitals, Inc.(1) 149,400 $ 3,128,436
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES - 0.6%
National Dentex Corporation(1)(2) 189,900 3,883,645
MEDICAL SERVICES - 0.7%
America Service Group, Inc.(1) 279,200 4,997,680
INTREGRATED OILS - 1.0%
OIL: INTREGRATED DOMESTIC - 1.0%
Cimarex Energy Company(1) 286,400 6,802,000
MATERIALS & PROCESSING - 16.2%
AGRICULTURE FISHING & RANCHING - 0.4%
Delta & Pine Land Company 126,500 2,780,470
BUILDING: CEMENT - 2.9%
Centex Construction Products, Inc. 514,800 20,638,332
BUILDING MATERIALS - 2.7%
Butler Manufacturing Company 136,600 2,257,998
LSI Industries, Inc. 230,450 2,557,995
Simpson Manufacturing Company, Inc.(1) 382,000 13,981,200
--------------
18,797,193
CHEMICALS - 0.2%
American Pacific Corporation(1) 201,100 1,504,228
CONSTRUCTION - 1.5%
EMCOR Group, Inc.(1) 219,300 10,824,648
COPPER - 2.0%
Mueller Industries, Inc.(1) 509,600 13,815,256
DIVERSIFIED MATERIALS & PROCESSING - 0.4%
Armor Holdings, Inc.(1) 212,200 2,843,480
METAL FABRICATING - 1.3%
Kaydon Corporation 159,800 3,323,840
Quanex Corporation 133,600 3,970,592
Roanoke Electric Steel Corporation 289,500 2,168,355
--------------
9,462,787
METALS & MINERALS MISCELLANEOUS - 0.5%
Minerals Technologies, Inc. 69,100 3,362,406
REAL ESTATE - 2.6%
Insignia Financial Group, Inc.(1) 217,100 2,411,981
Jones Lang LaSalle, Inc.(1) 349,100 5,515,780
LNR Property Corporation 118,500 4,431,900
Trammell Crow Company(1) 584,400 6,200,484
--------------
18,560,145
56
- ---------
FIFTY-SIX
-----
ARTVX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
MATERIALS & PROCESSING (CONTINUED)
STEEL - 1.2%
Schnitzer Steel Industries, Inc., Class A 193,500 $ 8,537,220
SYNTHETIC FIBERS - 0.5%
Wellman, Inc. 310,800 3,480,960
OTHER ENERGY - 16.3%
ENERGY MISCELLANEOUS - 0.8%
Veritas DGC, Inc.(1) 467,600 5,377,400
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 1.2%
Core Laboratories N.V.(1) 486,100 5,249,880
Willbros Group, Inc.(1) 321,700 3,342,463
--------------
8,592,343
OFFSHORE DRILLING - 0.9%
Atwood Oceanics, Inc.(1) 246,100 6,681,615
OIL: CRUDE PRODUCERS - 13.4%
Cabot Oil & Gas Corporation 418,950 11,567,210
Evergreen Resources, Inc.(1) 181,800 9,873,558
Forest Oil Corporation(1) 676,258 16,987,599
Nuevo Energy Company(1) 579,600 10,114,020
Plains Exploration and Production Company(1) 369,155 3,990,566
Prima Energy Corporation(1) 225,800 4,714,704
Spinnaker Exploration Company(1) 126,500 3,314,300
St. Mary Land & Exploration Company 382,600 10,444,980
Stone Energy Corporation(1) 342,700 14,365,984
Tom Brown, Inc.(1) 271,800 7,553,322
Ultra Petroleum Corporation(1) 100,800 1,301,328
--------------
94,227,571
PRODUCER DURABLES - 5.4%
AEROSPACE - 0.6%
Curtiss-Wright Corporation 21,600 1,365,120
United Industrial Corporation 187,000 3,048,100
--------------
4,413,220
ELECTRICAL EQUIPMENT & COMPONENTS - 1.9%
Genlyte Group, Inc.(1) 391,900 13,704,743
MACHINE TOOLS - 1.0%
Lincoln Electric Holdings, Inc. 352,300 7,190,443
MACHINERY: INDUSTRIAL/SPECIALTY - 1.2%
Thomas Industries, Inc. 172,700 4,671,535
Woodward Governor Company 79,800 3,431,400
--------------
8,102,935
POWER TRANSMISSION EQUIPMENT - 0.7%
Regal-Beloit Corporation 246,600 4,710,060
57
-----------
FIFTY-SEVEN
-----
ARTVX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
TECHNOLOGY - 2.0%
COMPUTER SERVICES SOFTWARE & SYSTEMS - 0.8%
Borland Software Corporation(1) 145,900 $ 1,425,443
Timberline Software Corporation 313,600 1,759,296
webMethods, Inc.(1) 273,600 2,224,368
--------------
5,409,107
COMMUNICATIONS TECHNOLOGY - 0.6%
CommScope, Inc.(1) 426,600 4,052,700
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 0.6%
Arrow Electronics, Inc.(1) 268,500 4,091,940
UTILITIES - 3.0%
UTILITIES: ELECTRICAL - 1.5%
DQE, Inc. 151,200 2,278,584
PNM Resources, Inc. 317,000 8,479,750
--------------
10,758,334
UTILITIES: GAS DISTRIBUTORS - 0.4%
NUI Corporation 203,100 3,152,112
UTILITIES: TELECOMMUNICATIONS - 1.1%
IDT Corporation, Class B(1) 342,300 6,024,480
IDT Corporation, Class C(1) 80,200 1,435,580
--------------
7,460,060
--------------
TOTAL COMMON STOCKS (Cost $544,794,238) 664,383,945
58
- -----------
FIFTY-EIGHT
-----
ARTVX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
PAR
AMOUNT VALUE
============ ============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 5.4%
Repurchase agreement with State Street Bank
and Trust Company, 0.75%, dated 6/30/03,
due 7/1/03, maturity value $37,693,785,
collateralized by $38,451,799 market
value Federal Home Loan Mortgage
Corporation Note, 1.40% due 5/4/04
(Cost $37,693,000) $ 37,693,000 $ 37,693,000
--------------
TOTAL INVESTMENTS - 99.9% (cost $582,487,238) 702,076,945
OTHER ASSETS LESS LIABILITIES - 0.1% 472,637
--------------
TOTAL NET ASSETS - 100.0%(3) $702,549,582
==============
(1) Non-income producing security.
(2) Affiliated company as defined by the Investment Company Act of 1940. See
note 7 to the financial statements.
(3) Percentages for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
59
----------
FIFTY-NINE
ARTISAN FUNDS, INC.
Statements of Assets & Liabilities - June 30, 2003
INTERNATIONAL
INTERNATIONAL SMALL CAP
===============================
ASSETS:
Investments in securities, unaffiliated, at value ... $7,823,895,956 $215,449,701
Investments in securities, affiliated, at value ..... 291,206,757 24,776,493
-------------------------------
TOTAL INVESTMENTS ................................... 8,115,102,713 240,226,194
Cash ............................................. 656 315
Receivable from investments sold..................... 48,267,676 2,307,826
Receivable from forward currency contracts........... 47,990,236 6,054,605
Receivable from fund shares sold..................... 29,495,098 1,750,822
Dividends and interest receivable.................... 17,755,987 84,741
-------------------------------
TOTAL ASSETS......................................... 8,258,612,366 250,424,503
LIABILITIES:
Payable for investments purchased.................... 28,016,855 5,148,751
Payable for forward currency contracts............... 48,101,119 6,047,526
Payable for fund shares redeemed..................... 21,395,644 407,169
Payable for operating expenses....................... 2,242,959 107,112
Payable for withholding taxes........................ 1,018,065 132,508
-------------------------------
TOTAL LIABILITIES.................................... 100,774,642 11,843,066
-------------------------------
TOTAL NET ASSETS..................................... $ 8,157,837,724 $238,581,437
===============================
NET ASSETS CONSIST OF:
Fund shares issued and outstanding................... $10,345,330,767 $207,491,391
Net unrealized appreciation (depreciation) on
investments and foreign currency related
transactions ...................................... (716,897,537) 27,693,014
Accumulated undistributed net investment
income (loss) ..................................... 90,594,085 162,036
Accumulated undistributed net realized gains
(losses) on investments and foreign currency
related transactions .............................. (1,561,189,591) 3,234,996
-------------------------------
$8,157,837,724 $238,581,437
===============================
SUPPLEMENTARY INFORMATION:
Net assets
Investor Shares................................. $5,182,832,740 $238,581,437
Institutional Shares............................ $2,975,004,984
Shares Outstanding
Investor Shares................................. 331,619,519 19,711,136
Institutional Shares............................ 189,425,338
Net asset value and offering price per share
Investor Shares................................. $15.63 $12.10
Institutional Shares............................ $15.71
Cost of securities of unaffiliated issuers held...... $8,421,385,574 $190,354,794
Cost of securities of affiliated issuers held........ $ 410,957,972 $ 22,054,211
The accompanying notes are an integral part of the financial statements.
60
- -----
SIXTY
INTERNATIONAL SMALL CAP
VALUE MID CAP MID CAP VALUE SMALL CAP VALUE
============================================================================
ASSETS:
Investments in securities, unaffiliated, at value ... $16,702,389 $3,082,764,692 $64,399,991 $117,564,302 $698,193,300
Investments in securities, affiliated, at value ..... - - - - 3,883,645
----------------------------------------------------------------------------
TOTAL INVESTMENTS ................................... 16,702,389 3,082,764,692 64,399,991 117,564,302 702,076,945
Cash ............................................. 669 3 481 999 991
Receivable from investments sold..................... - 11,531,565 - 1,379,495 935,208
Receivable from forward currency contracts........... 533,633 - - - -
Receivable from fund shares sold..................... 145,625 51,084,764 135,260 72,016 1,355,871
Dividends and interest receivable.................... 35,231 957,355 32,839 16,245 264,019
----------------------------------------------------------------------------
TOTAL ASSETS......................................... 17,417,547 3,146,338,379 64,568,571 119,033,057 704,633,034
LIABILITIES:
Payable for investments purchased.................... 510,407 26,191,042 - 1,702,240 1,737,514
Payable for forward currency contracts............... 531,698 - - - -
Payable for fund shares redeemed..................... 51,913 3,646,411 20,403 1,194,919 98,788
Payable for operating expenses....................... 30,931 899,847 49,628 99,136 247,150
Payable for withholding taxes........................ 3,142 - 477 - -
----------------------------------------------------------------------------
TOTAL LIABILITIES.................................... 1,128,091 30,737,300 70,508 2,996,295 2,083,452
----------------------------------------------------------------------------
TOTAL NET ASSETS..................................... $16,289,456 $3,115,601,079 $64,498,063 $116,036,762 $702,549,582
============================================================================
NET ASSETS CONSIST OF:
Fund shares issued and outstanding................... $13,780,423 $3,417,950,421 $57,900,394 $121,176,290 $603,853,593
Net unrealized appreciation (depreciation) on
investments and foreign currency related
transactions ...................................... 2,325,574 335,131,727 7,125,089 20,139,063 119,589,707
Accumulated undistributed net investment
income (loss) ..................................... 53,071 - - - -
Accumulated undistributed net realized gains
(losses) on investments and foreign currency
related transactions .............................. 130,388 (637,481,069) (527,420) (25,278,591) (20,893,718)
----------------------------------------------------------------------------
............................................. $16,289,456 $3,115,601,079 $64,498,063 $116,036,762 $702,549,582
============================================================================
SUPPLEMENTARY INFORMATION:
Net assets
Investor Shares................................. $16,289,456 $2,286,627,379 $64,498,063 $116,036,762 $702,549,582
Institutional Shares............................ $828,973,700
Shares Outstanding
Investor Shares................................. 1,251,972 104,849,058 5,539,191 9,750,506 53,407,980
Institutional Shares............................ 37,753,001
Net asset value and offering price per share
Investor Shares................................. $13.01 $21.81 $11.64 $11.90 $13.15
Institutional Shares............................ $21.96
Cost of securities of unaffiliated issuers held...... $14,377,152 $2,747,632,965 $57,274,948 $97,425,239 $578,899,178
Cost of securities of affiliated issuers held........ $ - $ - $ - $ - $ 3,588,060
The accompanying notes are an integral part of the financial statements.
61
---------
SIXTY-ONE
ARTISAN FUNDS, INC.
Statements of Operations - For the Year Ended June 30, 2003
INTERNATIONAL
INTERNATIONAL SMALL CAP
===============================
INVESTMENT INCOME:
Interest............................................. $2,825,610 $143,060
Dividends, from unaffiliated issuers ................ 176,343,076(1) 2,217,762(4)
Dividends, from affiliated issuers................... 2,344,814(2) 80,239
Other ............................................. 2,995,772 -
-------------------------------
TOTAL INVESTMENT INCOME.............................. 184,509,272 2,441,061
EXPENSES:
Advisory fees........................................ 66,306,063 1,489,029
Transfer agent fees
Investor Shares................................. 8,331,967 275,010
Institutional Shares............................ 32,233
Shareholder communications
Investor Shares................................. 1,177,617 39,746
Institutional Shares............................ 19,011
Custodian fees....................................... 3,945,008 142,237
Accounting fees...................................... 73,299 52,449
Professional fees.................................... 301,743 29,781
Registration fees
Investor Shares................................. 124,912 47,636
Institutional Shares............................ 127,627
Directors' fees...................................... 180,436 3,133
Organizational costs................................. - -
Other operating expenses............................. 163,719 26,919
-------------------------------
Total operating expenses before amounts
waived or paid by the Adviser ..................... 80,783,635 2,105,940
Less amounts waived or paid by the Adviser........... - -
-------------------------------
NET EXPENSES......................................... 80,783,635 2,105,940
-------------------------------
NET INVESTMENT INCOME (LOSS)......................... 103,725,637 335,121
NET REALIZED AND UNREALIZED GAINS (LOSSES)
ON INVESTMENTS:
Net realized gain (loss) on:
Investments..................................... (529,007,531)(3) 3,302,104
Foreign currency related transactions........... (10,809,131) (152,047)
-------------------------------
(539,816,662) 3,150,057
Net increase (decrease) in unrealized appreciation on:
Investments..................................... (423,541,570) 28,634,982
Foreign currency related transactions........... 52,282 (112,904)
-------------------------------
............................................. (423,489,288) 28,522,078
-------------------------------
NET GAIN (LOSS) ON INVESTMENTS....................... (963,305,950) 31,672,135
-------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................ $(859,580,313) $32,007,256
===============================
(1) Net of foreign taxes withheld of $22,229,774.
(2) Net of foreign taxes withheld of $14,358.
(3) Including $(7,613,533) from affiliated issuers.
(4) Net of foreign taxes withheld of $360,630.
(5) From commencement of operations (September 23, 2002) to June 30, 2003.
(6) Net of foreign taxes withheld of $23,791.
The accompanying notes are an integral part of the financial statements.
62
- ---------
SIXTY-TWO
INTERNATIONAL SMALL CAP
VALUE(5) MID CAP MID CAP VALUE SMALL CAP VALUE
============================================================================
INVESTMENT INCOME:
Interest............................................. $4,562 $1,630,118 $37,287 $33,988 $338,332
Dividends, from unaffiliated issuers ................ 169,431(6) 13,653,667 516,255 385,213 5,371,224
Dividends, from affiliated issuers................... - - - - -
Other ............................................. - - - - -
----------------------------------------------------------------------------
TOTAL INVESTMENT INCOME.............................. 173,993 15,283,785 553,542 419,201 5,709,556
EXPENSES:
Advisory fees........................................ 48,398 22,682,765 383,960 1,009,495 5,714,589
Transfer agent fees
Investor Shares................................. 51,951 3,493,286 144,557 191,523 891,648
Institutional Shares............................ 23,232
Shareholder communications
Investor Shares................................. 4,661 535,187 22,307 40,347 61,062
Institutional Shares............................ 5,954
Custodian fees....................................... 25,123 308,898 19,814 49,518 91,142
Accounting fees...................................... 38,600 61,059 40,717 40,539 44,472
Professional fees.................................... 20,911 116,996 27,020 29,834 52,514
Registration fees
Investor Shares................................. 45,137 89,446 39,025 30,980 48,401
Institutional Shares............................ 46,330
Directors' fees...................................... - 60,352 3,000 3,045 15,036
Organizational costs................................. - - - - 1,768
Other operating expenses............................. 8,267 68,466 4,510 11,285 14,184
----------------------------------------------------------------------------
Total operating expenses before amounts
waived or paid by the Adviser ..................... 243,048 27,491,971 684,910 1,406,566 6,934,816
Less amounts waived or paid by the Adviser........... (124,348) - - - -
----------------------------------------------------------------------------
NET EXPENSES......................................... 118,700 27,491,971 684,910 1,406,566 6,934,816
----------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)......................... 55,293 (12,208,186) (131,368) (987,365) (1,225,260)
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gain (loss) on:
Investments..................................... 130,388 (325,149,190) (110,623) (22,436,510) (20,174,753)
Foreign currency related transactions........... (2,222) - - - -
----------------------------------------------------------------------------
128,166 (325,149,190) (110,623) (22,436,510) (20,174,753)
Net increase (decrease) in unrealized appreciation on:
Investments..................................... 2,325,237 376,988,686 6,300,648 20,333,623 36,753,479
Foreign currency related transactions........... 337 - - - -
----------------------------------------------------------------------------
2,325,574 376,988,686 6,300,648 20,333,623 36,753,479
----------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS....................... 2,453,740 51,839,496 6,190,025 (2,102,887) 16,578,726
----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................ $2,509,033 $39,631,310 $6,058,657 $ (3,090,252) $15,353,466
============================================================================
The accompanying notes are an integral part of the financial statements.
63
-----------
SIXTY-THREE
ARTISAN FUNDS, INC.
Statements of Changes in Net Assets
INTERNATIONAL INTERNATIONAL SMALL CAP INTERNATIONAL VALUE
=============================== =============================== ===================
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
6/30/03 6/30/02 6/30/03 6/30/02(1) 6/30/03(2)
=======================================================================================
OPERATIONS:
Net investment income (loss)................. $103,725,637 $51,719,319 $335,121 $(4,449) $55,293
Net realized gain (loss) on:
Investments............................. (529,007,531) (393,817,449) 3,302,104 230,269 130,388
Foreign currency related transactions... (10,809,131) (2,431,313) (152,047) (16,760) (2,222)
Net increase (decrease) in unrealized
appreciation on:
Investments............................. (423,541,570) (9,921,060) 28,634,982 (814,257) 2,325,237
Foreign currency related transactions... 52,282 569,310 (112,904) (14,807) 337
---------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations ................. (859,580,313) (353,881,193) 32,007,256 (620,004) 2,509,033
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
Investor Shares......................... (31,901,533) (13,657,908) - - -
Institutional Shares.................... (18,341,682) (8,134,964)
Net realized gains on investment transactions:
Investor Shares......................... - - (236,073) - -
---------------------------------------------------------------------------------------
Institutional Shares.................... - -
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS..... (50,243,215) (21,792,872) (236,073) - -
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES ...... 1,716,020,036 2,333,625,659 132,312,967 75,117,291 13,780,423
---------------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS...... 806,196,508 1,957,951,594 164,084,150 74,497,287 16,289,456
---------------------------------------------------------------------------------------
Net assets, beginning of period.............. 7,351,641,216 5,393,689,622 74,497,287 - -
---------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD.................... $8,157,837,724 $7,351,641,216 $238,581,437 $74,497,287 $16,289,456
=======================================================================================
Accumulated undistributed net
investment income (loss) .................. $90,594,085 $47,858,931 $162,036 $(16,760) $53,071
=======================================================================================
(1) For the period from commencement of operations (December 21, 2001) through
June 30, 2002.
(2) For the period from commencement of operations (September 23, 2002) through
June 30, 2003.
The accompanying notes are an integral part of the financial statements.
64
- ----------
SIXTY-FOUR
MID CAP MID CAP VALUE
================================= =================================
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6/30/03 6/30/02 6/30/03 6/30/02
====================================================================
OPERATIONS:
Net investment income (loss)................. $(12,208,186) $(13,844,376) $(131,368) $(131,837)
Net realized gain (loss) on:
Investments............................. (325,149,190) (197,300,635) (110,623) (342,711)
Foreign currency related transactions... - - - -
Net increase (decrease) in unrealized
appreciation on:
Investments............................. 376,988,686 (147,245,296) 6,300,648 (17,524)
Foreign currency related transactions... - - - -
--------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS .......... 39,631,310 (358,390,307) 6,058,657 (492,072)
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
Investor Shares......................... - - - -
Institutional Shares.................... - -
Net realized gains on investment transactions:
Investor Shares......................... - - - (116,728)
Institutional Shares.................... - -
--------------------------------------------------------------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS..... - - - (116,728)
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES ...... 770,633,859 1,117,916,637 36,457,011 9,367,318
--------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS...... 810,265,169 759,526,330 42,515,668 8,758,518
--------------------------------------------------------------------
Net assets, beginning of period.............. 2,305,335,910 1,545,809,580 21,982,395 13,223,877
--------------------------------------------------------------------
NET ASSETS, END OF PERIOD.................... $3,115,601,079 $2,305,335,910 $64,498,063 $21,982,395
====================================================================
Accumulated undistributed net
investment income (loss) .................. $- $- $- $-
====================================================================
SMALL CAP SMALL CAP VALUE
================================= =================================
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
6/30/03 6/30/02 6/30/03 6/30/02
====================================================================
OPERATIONS:
Net investment income (loss)................. $(987,365) $(1,405,476) $(1,225,260) $(510,511)
Net realized gain (loss) on:
Investments............................. (22,436,510) 4,119,870 (20,174,753) 27,382,101
Foreign currency related transactions... - - - -
Net increase (decrease) in unrealized
appreciation on:
Investments............................. 20,333,623 (24,760,188) 36,753,479 24,836,522
Foreign currency related transactions... - - - -
--------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS .......... (3,090,252) (22,045,794) 15,353,466 51,708,112
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
Investor Shares......................... - - - (628,424)
Institutional Shares....................
Net realized gains on investment transactions:
Investor Shares......................... (629,095) (585,226) (22,600,376) (27,074,582)
Institutional Shares....................
--------------------------------------------------------------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS..... (629,095) (585,226) (22,600,376) (27,703,006)
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES ...... (12,182,933) 9,184,203 86,250,860 139,200,888
--------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS...... (15,902,280) (13,446,817) 79,003,950 163,205,994
--------------------------------------------------------------------
Net assets, beginning of period.............. 131,939,042 145,385,859 623,545,632 460,339,638
--------------------------------------------------------------------
NET ASSETS, END OF PERIOD.................... $116,036,762 $131,939,042 $702,549,582 $623,545,632
====================================================================
Accumulated undistributed net
investment income (loss) .................. $- $- $- $-
====================================================================
The accompanying notes are an integral part of the financial statements.
65
----------
SIXTY-FIVE
ARTISAN FUNDS, INC.
Financial Highlights - For a share outstanding throughout each period
NET TOTAL
REALIZED AND INCOME
NET ASSET NET UNREALIZED (LOSS) DIVIDENDS
YEAR OR VALUE INVESTMENT GAIN FROM FROM NET
PERIOD BEGINNING INCOME (LOSS) ON INVESTMENT INVESTMENT
ENDED OF PERIOD (LOSS)(1) INVESTMENTS OPERATIONS INCOME
==============================================================================
ARTISAN INTERNATIONAL FUND
------------------------------------------------------------------------------
Investor Shares 6/30/03 $18.15 $0.20 $(2.62) $(2.42) $(0.10)
------------------------------------------------------------------------------
6/30/02 19.53 0.15 (1.46) (1.31) (0.07)
------------------------------------------------------------------------------
6/30/01 30.16 0.10 (7.18) (7.08) -
------------------------------------------------------------------------------
6/30/00 18.67 (0.03) 12.08 12.05 (0.02)
------------------------------------------------------------------------------
6/30/99 16.25 0.08 2.62 2.70 (0.04)
------------------------------------------------------------------------------
Institutional Shares 6/30/03 $18.24 $0.25 $(2.65) $(2.40) $(0.13)
------------------------------------------------------------------------------
6/30/02 19.62 0.18 (1.46) (1.28) (0.10)
------------------------------------------------------------------------------
6/30/01 30.22 0.16 (7.21) (7.05) -
------------------------------------------------------------------------------
6/30/00 18.70 0.03 12.09 12.12 (0.06)
------------------------------------------------------------------------------
6/30/99 16.26 0.11 2.62 2.73 (0.05)
------------------------------------------------------------------------------
ARTISAN INTERNATIONAL SMALL CAP FUND
------------------------------------------------------------------------------
Investor Shares 6/30/03 $10.50 $0.03 $ 1.59 $ 1.62 $ -
------------------------------------------------------------------------------
6/30/02(2) 10.00 0.00 0.50(3) 0.50 -
------------------------------------------------------------------------------
ARTISAN INTERNATIONAL VALUE FUND
------------------------------------------------------------------------------
Investor Shares 6/30/03(6) $10.00 $0.09 $ 2.92 $ 3.01 $-
------------------------------------------------------------------------------
(1) Computed based on average shares outstanding.
(2) For the period from commencement of operations (December 21, 2001) through
June 30, 2002.
(3) 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.
(4) Not annualized.
(5) Annualized.
(6) For the period from commencement of operations (September 23, 2002) through
June 30, 2003.
(7) Annualized. The ratios of expenses to average net assets and net investment
loss to average net assets exclude expenses waived or paid by the adviser.
Absent expenses waived or paid by the adviser, the ratios of expenses to
average net assets and net investment loss to average net assets would have
been 5.02% and (1.43%), respectively for the period ended June 30, 2003.
The accompanying notes are an integral part of the financial statements.
66
- ---------
SIXTY-SIX
RATIO OF NET
INVESTMENT
DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INCOME
FROM NET VALUE END OF EXPENSES (LOSS) PORTFOLIO
REALIZED TOTAL END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
GAINS DISTRIBUTIONS PERIOD RETURN (MILLIONS) NET ASSETS NET ASSETS RATE
=====================================================================================================
ARTISAN INTERNATIONAL FUND
-----------------------------------------------------------------------------------------------------
Investor Shares $ - $(0.10) $15.63 (13.3)% $5,182.8 1.20% 1.35% 37.13%
-----------------------------------------------------------------------------------------------------
- (0.07) 18.15 (6.7) 5,289.6 1.21 0.82 50.67
-----------------------------------------------------------------------------------------------------
(3.55) (3.55) 19.53 (24.7) 3,907.1 1.22 0.45 72.01
-----------------------------------------------------------------------------------------------------
(0.54) (0.56) 30.16 65.6 3,734.8 1.27 (0.10) 99.02
-----------------------------------------------------------------------------------------------------
(0.24) (0.28) 18.67 17.4 943.9 1.38 0.59 79.41
-----------------------------------------------------------------------------------------------------
Institutional Shares $ - $(0.13) $15.71 (13.1)% $2,975.0 1.01% 1.68% 37.13%
-----------------------------------------------------------------------------------------------------
- (0.10) 18.24 (6.5) 2,062.0 1.01 1.01 50.67
-----------------------------------------------------------------------------------------------------
(3.55) (3.55) 19.62 (24.5) 1,486.6 1.03 0.70 72.01
-----------------------------------------------------------------------------------------------------
(0.54) (0.60) 30.22 66.0 1,136.2 1.08 0.09 99.02
-----------------------------------------------------------------------------------------------------
(0.24) (0.29) 18.70 17.6 179.6 1.17 0.68 79.41
-----------------------------------------------------------------------------------------------------
ARTISAN INTERNATIONAL SMALL CAP FUND
-----------------------------------------------------------------------------------------------------
Investor Shares $(0.02) $(0.02) $12.10 15.5% $ 238.6 1.77% 0.28% 62.79%
-----------------------------------------------------------------------------------------------------
- - 10.50 5.0(4) 74.5 2.39(5) (0.02)(5) 25.14(4)
-----------------------------------------------------------------------------------------------------
ARTISAN INTERNATIONAL VALUE FUND
-----------------------------------------------------------------------------------------------------
Investor Shares $ - $ - $13.01 30.1%(4) $ 16.3 2.45%(7) 1.14%(7) 17.42%(4)
-----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of the financial statements.
67
-----------
SIXTY-SEVEN
ARTISAN FUNDS, INC.
Financial Highlights (Continued) - For a share outstanding throughout each
period
NET TOTAL
REALIZED AND INCOME
NET ASSET NET UNREALIZED (LOSS) DIVIDENDS
YEAR OR VALUE INVESTMENT GAIN FROM FROM NET
PERIOD BEGINNING INCOME (LOSS) ON INVESTMENT INVESTMENT
ENDED OF PERIOD (LOSS)(1) INVESTMENTS OPERATIONS INCOME
==============================================================================
ARTISAN MID CAP FUND
------------------------------------------------------------------------------
Investor Shares 6/30/03 $22.13 $(0.11)(1) $(0.21)(2) $(0.32) $-
------------------------------------------------------------------------------
6/30/02 26.43 (0.19)(1) (4.11) (4.30) -
------------------------------------------------------------------------------
6/30/01 27.57 (0.13)(1) 0.02(2) (0.11) -
------------------------------------------------------------------------------
6/30/00 16.67 (0.18)(1) 11.91 11.73 -
------------------------------------------------------------------------------
6/30/99 13.69 (0.16)(1) 4.41 4.25 -
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Institutional Shares 6/30/03 $22.24 $(0.07)(1) $(0.21)(2) $(0.28) $-
------------------------------------------------------------------------------
6/30/02 26.48 (0.13)(1) (4.11) (4.24) -
------------------------------------------------------------------------------
6/30/01 27.57 (0.08)(1) 0.02(2) (0.06) -
------------------------------------------------------------------------------
ARTISAN MID CAP VALUE FUND
------------------------------------------------------------------------------
Investor Shares 6/30/03 $10.82 $(0.03)(1) $0.85 $0.82 $-
------------------------------------------------------------------------------
6/30/02 11.18 (0.09)(1) (0.19) (0.28) -
------------------------------------------------------------------------------
6/30/01(5) 10.00 (0.01)(1) 1.19 1.18 -
------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND
------------------------------------------------------------------------------
Investor Shares 6/30/03 $11.99 $(0.10)(1) $0.07(2) $(0.03) $-
------------------------------------------------------------------------------
6/30/02 13.99 (0.13)(1) (1.81) (1.94) -
------------------------------------------------------------------------------
6/30/01 14.69 (0.09)(1) 0.05(2) (0.04) -
------------------------------------------------------------------------------
6/30/00 11.09 (0.10)(1) 3.70 3.60 -
------------------------------------------------------------------------------
6/30/99 14.66 (0.08) (2.53) (2.61) -
------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
------------------------------------------------------------------------------
Investor Shares 6/30/03 $13.48 $(0.03)(1) $0.20 $0.17 $-
------------------------------------------------------------------------------
6/30/02 13.05 (0.01)(1) 1.16 1.15 (0.01)
------------------------------------------------------------------------------
6/30/01 10.63 0.05(1) 2.91 2.96 (0.05)
------------------------------------------------------------------------------
6/30/00 10.59 0.06(1) 0.36 0.42 (0.03)
------------------------------------------------------------------------------
6/30/99 11.37 (0.03) (0.21)(2) (0.24) -
------------------------------------------------------------------------------
(1) Computed based on average shares outstanding.
(2) 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.
(3) The ratios of expenses to average net assets and net investment loss to
average net assets exclude expenses paid by the adviser. Absent expenses
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%).
(4) Annualized. The ratios of expenses to average net assets and net investment
loss to average net assets exclude expenses paid by the adviser. Absent
expenses paid by the adviser, the ratios of expenses to average net assets
and net investment loss to average net assets would have been 2.53% and
(1.40%) for the year ended June 30, 2002 and 5.17% and (3.84%) for the year
ended June 30, 2001, respectively.
The accompanying notes are an integral part of the financial statements.
68
- -----------
SIXTY-EIGHT
RATIO OF NET
INVESTMENT
DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INCOME
FROM NET VALUE END OF EXPENSES (LOSS) PORTFOLIO
REALIZED TOTAL END OF TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
GAINS DISTRIBUTIONS PERIOD RETURN (MILLIONS) NET ASSETS NET ASSETS RATE
=====================================================================================================
ARTISAN MID CAP FUND
-----------------------------------------------------------------------------------------------------
Investor Shares $ - $ - $21.81 (1.4)% $2,286.6 1.20% (0.56)% 102.85%
-----------------------------------------------------------------------------------------------------
- - 22.13 (16.3) 1,855.5 1.22 (0.77) 121.14
-----------------------------------------------------------------------------------------------------
(1.03) (1.03) 26.43 (0.6) 1,333.6 1.31 (0.52) 153.95
-----------------------------------------------------------------------------------------------------
(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(3) (1.13)(3) 202.84
-----------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------
Institutional Shares $- $- $21.96 (1.3)% $829.0 1.00% (0.36)% 102.85%
-----------------------------------------------------------------------------------------------------
- - 22.24 (16.0) 449.8 1.02 (0.56) 121.14
-----------------------------------------------------------------------------------------------------
(1.03) (1.03) 26.48 (0.4) 212.2 1.08 (0.29) 153.95
-----------------------------------------------------------------------------------------------------
ARTISAN MID CAP VALUE FUND
-----------------------------------------------------------------------------------------------------
Investor Shares $- $- $11.64 7.6% $64.5 1.78% (0.34)% 45.55%
-----------------------------------------------------------------------------------------------------
(0.08) (0.08) 10.82 (2.4) 22.0 1.95(4) (0.82)(4) 167.70
-----------------------------------------------------------------------------------------------------
- - 11.18 11.8(6) 13.2 1.84(4) (0.52)(4) 40.72(6)
-----------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND
-----------------------------------------------------------------------------------------------------
Investor Shares $(0.06) $(0.06) $11.90 (0.1)% $116.0 1.39% (0.98)% 127.41%
-----------------------------------------------------------------------------------------------------
(0.06) (0.06) 11.99 (13.9) 131.9 1.31 (1.00) 139.72
-----------------------------------------------------------------------------------------------------
(0.66) (0.66) 13.99 0.1 145.4 1.34 (0.68) 147.13
-----------------------------------------------------------------------------------------------------
- - 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
-----------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
-----------------------------------------------------------------------------------------------------
Investor Shares $(0.50) $(0.50) $13.15 1.9% $702.5 1.21% (0.21)% 49.57%
-----------------------------------------------------------------------------------------------------
(0.71) (0.72) 13.48 9.7 623.5 1.20 (0.10) 33.59
-----------------------------------------------------------------------------------------------------
(0.49) (0.54) 13.05 28.8 460.3 1.20 0.45 40.77
-----------------------------------------------------------------------------------------------------
(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
-----------------------------------------------------------------------------------------------------
(5) For the period from commencement of operations (March 28, 2001) through
June 30, 2001.
(6) Not annualized.
The accompanying notes are an integral part of the financial statements.
69
----------
SIXTY-NINE
ARTISAN FUNDS, INC.
Notes to Financial Statements - June 30, 2003
(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 seven open-
end, diversified mutual funds (each a "Fund" and collectively the "Funds"):
FUND NAME INCEPTION DATE
---------------------------------------------------------------------------
Artisan International Fund
("International Fund" or "International") December 28, 1995
---------------------------------------------------------------------------
Artisan International Small Cap Fund
("International Small Cap Fund" or
"International Small Cap") December 21, 2001
---------------------------------------------------------------------------
Artisan International Value Fund
("International Value Fund" or
"International Value") September 23, 2002
---------------------------------------------------------------------------
Artisan Mid Cap Fund
("Mid Cap Fund" or "Mid Cap") June 27, 1997
---------------------------------------------------------------------------
Artisan Mid Cap Value Fund
("Mid Cap Value Fund" or "Mid Cap Value") March 28, 2001
---------------------------------------------------------------------------
Artisan Small Cap Fund
("Small Cap Fund" or "Small Cap") March 28, 1995
---------------------------------------------------------------------------
Artisan Small Cap Value Fund
("Small Cap Value Fund" or "Small Cap Value") September 29, 1997
---------------------------------------------------------------------------
Each Fund's investment objective is to seek long-term capital growth. Each
Fund offers shares of capital stock of the class designated Investor
Shares. The International Fund and Mid Cap Fund began offering a second
class of capital shares, Institutional Shares, effective July 1, 1997 and
July 1, 2000, respectively. 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 and
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.
Each class of the Funds has 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,
which are in accordance with accounting principles generally accepted in
the United States of America.
(a) Security valuation - Each equity security traded on a securities
exchange is valued at the last current sale price as of the time of
valuation on the exchange on which the security is principally traded
(the "principal exchange"), or lacking any current reported sale on
the principal exchange at the time of valuation, at the last current
sale price as of the time of valuation on a secondary exchange, or
lacking any current sale price on the principal or a secondary
exchange as of the time of valuation, at the most recent bid quotation
on the principal exchange, except that securities listed on the London
Stock Exchange shall be valued at the mean of the close of day bid and
ask, and each security traded in the Nasdaq Stock Market ("Nasdaq")
shall be valued at the Nasdaq Official Closing Price ("NOCP"), as
determined by Nasdaq, or lacking an NOCP, the last current reported
sale price as of the time of valuation on Nasdaq, or lacking any
current reported sale on Nasdaq at the time of valuation, at the most
recent bid quotation on Nasdaq. Securities for which prices are not
readily available, or for which
70
- -------
SEVENTY
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
management believes that the latest sales or bid price does not
reflect a fair value of the security, are valued by a valuation
committee at a fair value 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 the valuation date are valued at amortized cost,
which approximates market.
(b) Income taxes - No provision has been made for federal income taxes
since each Fund intends to i) comply with all provisions of the
Internal Revenue Code applicable to regulated investment companies and
ii) distribute to its shareholders substantially all of its taxable
income as well as net realized gains from the sale of investment
securities. The Funds may utilize earnings and profits distributed to
shareholders on redemption of Fund shares as part of the dividends
paid deduction.
(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 on the day 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, International Small Cap Fund and International
Value Fund may enter 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 or loss. The International Fund,
International Small Cap Fund and International Value Fund could be
exposed to loss if the counterparties fail to perform under these
contracts.
(e) Repurchase agreements - Each Fund may enter into repurchase agreements
with institutions that Artisan Partners Limited Partnership (the
"Adviser") has determined are creditworthy pursuant to criteria
adopted by the Funds' Board of Directors. Repurchase agreements are
recorded at cost and are collateralized in an amount greater than or
equal to the repurchase price plus accrued interest. To the extent
that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the
Fund would suffer a loss.
(f) Securities lending - During the year ended June 30, 2003 the
International Fund entered into various securities lending
transactions with borrowers approved by the Fund's Board of Directors.
Income of $2,995,772 from securities lending is included in Other
Income on the Statement of Operations. As of June 30, 2003 there were
no securities on loan. The International Fund's risks in entering into
securities lending arrangements are that the borrower may not provide
additional collateral when required or return the securities when due.
If the borrower defaults, the Fund may experience delays in selling
collateral or the collateral may not be sufficient to cover the value
of securities lent.
71
-----------
SEVENTY-ONE
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(g) Use of estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
(h) Other - Dividend income less foreign taxes withheld, if any, 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. Expenses attributable to Artisan
Funds are generally allocated to each Fund based on net assets.
Expenses attributable to a particular Fund are allocated directly to
that Fund.
The character of income and net realized gains and losses may differ
for financial statement and tax purposes and may result in
reclassification of permanent differences among certain capital
accounts.
The International Small Cap Fund and the International Value Fund
generally impose a 2% redemption fee on shares held 90 days or less.
These redemption fees are recorded as a reduction in the cost of
shares redeemed.
(3) TRANSACTIONS WITH AFFILIATES:
The Adviser, with which the officers and certain directors of the Artisan
Funds are affiliated, provides investment advisory and administrative
services to the Funds. In exchange for these services, each Fund (with the
exception of International Small Cap 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 International Small Cap Fund pays a monthly management fee to the
Adviser at an annual rate of 1.250% of average daily net assets.
Shares of Artisan Funds are offered for sale by Artisan Distributors LLC
("Distributors"). Distributors is wholly-owned by the Adviser. All
distribution expenses relating to the Funds are paid by the Adviser.
72
- -----------
SEVENTY-TWO
Each Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports. The
Adviser has voluntarily undertaken to reimburse International Value Fund
for any ordinary operating expenses in excess of 2.50% of average daily net
assets annually.
Each director who is not an interested person of Artisan Funds or the
Adviser receives an annual retainer of $49,000, plus a fee for each board
or committee meeting attended (other than a committee meeting held on the
same day as a board meeting) of $1,000 for an in-person meeting and $500
for a telephonic meeting as well as reimbursement of expenses related to
his duties as a director of Artisan Funds. In addition, each chairman of a
board committee who is a non-interested director receives a supplemental
annual retainer of $3,000. These fees are generally allocated to each Fund
in proportion to the Funds' net assets. Directors' fees for the
International Value Fund have been waived through June 30, 2003.
(4) ORGANIZATIONAL COSTS:
Organizational costs incurred prior to July 1, 1998 are amortized over
sixty months. These expenses were paid by the Adviser and have been
reimbursed by the Funds 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 (a)
$75 million or (b) the lesser of (i) 10% of its total assets (after giving
effect to the loan) or (ii) the maximum amount the Fund may borrow under
the Investment Company Act, the limitations included in the Fund's
prospectus, or any limit or restriction under any law or regulation to
which the Fund is subject or any agreement to which the Fund or Artisan
Funds is a party; provided that the aggregate borrowings by all Funds may
not exceed $100 million. Artisan Funds pays a commitment fee at the annual
rate 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. There were minimal borrowings under
the line of credit during the year ended June 30, 2003. At June 30, 2003
there were no borrowings outstanding 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,
2003 were as follows:
FUND SECURITY PURCHASES SECURITY SALES
------------------------------------------------------------------
INTERNATIONAL $4,594,416,019 $2,569,854,536
------------------------------------------------------------------
INTERNATIONAL SMALL CAP 214,290,990 71,014,718
------------------------------------------------------------------
INTERNATIONAL VALUE(1) 14,141,242 1,098,478
------------------------------------------------------------------
MID CAP 3,137,982,311 2,354,541,729
------------------------------------------------------------------
MID CAP VALUE 50,677,312 16,428,195
------------------------------------------------------------------
SMALL CAP 128,248,090 143,334,874
------------------------------------------------------------------
SMALL CAP VALUE 341,853,188 273,737,318
------------------------------------------------------------------
(1) For the period from inception (September 23, 2002) through
June 30, 2003.
73
-------------
SEVENTY-THREE
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(7) TRANSACTIONS IN SECURITIES OF AFFILIATES:
If one or more of the Funds owns, in the aggregate, 5% or more of the
outstanding voting securities of a portfolio company, that company is
deemed to be an affiliate of the Funds under the Investment Company Act of
1940. During the year ended June 30, 2003, the Funds purchased and sold
securities of affiliates in open market transactions and received dividends
from affiliates as summarized below:
JUNE 30, 2003
SHARE ----------------------
BALANCE PURCHASE SALES REALIZED DIVIDEND SHARE
FUND SECURITY 6/30/02 COST COST GAIN/(LOSS) INCOME BALANCE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL CanWest Global 2,611,998 $5,706,995 $- $- $- 4,004,998 $25,552,818
Communications Corp.(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Clariant AG(1) 4,694,084 78,974,390 13,320,470 (5,660,241) - 8,999,193 82,561,404
- ------------------------------------------------------------------------------------------------------------------------------------
Corus Entertainment, Inc. 1,894,350 13,221,002 - - - 2,929,750 49,162,318
Class B(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Grupo Modelo S.A. 13,456,600 49,828,788 3,848,660 (707,580) 1,721,057 33,674,300 76,697,291
de C.V., Series C
- ------------------------------------------------------------------------------------------------------------------------------------
Rhodia S.A. 5,376,760 25,904,630 2,639,708 (1,245,712) 623,757 8,837,821 57,232,926
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL Banco Latinoamericano de 49,400 7,816,939 - - - 1,458,614 11,625,154
SMALL CAP Exportaciones, S.A.,
E Shares(1)
- ------------------------------------------------------------------------------------------------------------------------------------
CanWest Global 91,600 1,218,648 - - - 364,800 2,327,509
Communications Corp.(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Clariant AG(1) - 3,181,892 - - - 265,600 2,436,697
- ------------------------------------------------------------------------------------------------------------------------------------
Corus Entertainment, Inc. 28,300 2,014,251 - - - 178,800 3,000,332
Class B(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Grupo Modelo S.A. 423,600 4,395,034 - - 80,239 2,365,100 5,386,801
de C.V., Series C
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP National Dentex 166,700 440,728 - - - 189,900 3,883,645
VALUE Corporation(1)
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Non-income producing security.
(8) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
NET UNREALIZED
GROSS GROSS APPRECIATION/
COST OF UNREALIZED UNREALIZED (DEPRECIATION) UNDISTRIBUTED UNDISTRIBUTED
FUND INVESTMENTS APPRECIATION DEPRECIATION ON INVESTMENTS ORDINARY INCOME LONG-TERM GAIN
-------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL $8,920,875,958 $489,124,416 $(1,294,897,661) $(805,773,245) $100,776,704 $ -
-------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP 212,552,652 30,490,445 (2,816,903) 27,673,542 3,315,469 354,871
-------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL VALUE 14,388,376 2,375,014 (61,001) 2,314,013 197,395 -
-------------------------------------------------------------------------------------------------------------------------------
MID CAP 2,790,092,705 355,724,857 (63,052,870) 292,671,987 - -
-------------------------------------------------------------------------------------------------------------------------------
MID CAP VALUE 57,396,366 7,594,227 (590,602) 7,003,625 - -
-------------------------------------------------------------------------------------------------------------------------------
SMALL CAP 102,059,772 18,949,126 (3,444,596) 15,504,530 - -
-------------------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE 583,494,944 131,566,030 (12,984,029) 118,582,001 - -
-------------------------------------------------------------------------------------------------------------------------------
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.
74
- ------------
SEVENTY-FOUR
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
The tax basis of dividends and long-term capital gain distributions paid
during the fiscal year ended June 30, 2003 and June 30, 2002, capital loss
carryovers as of June 30, 2003, and tax-basis post-October loss deferrals as
of June 30, 2003 (recognized for tax purposes on July 1, 2003) are as
follows:
FISCAL YEAR ENDED 6/30/03 FISCAL YEAR ENDED 6/30/02
--------------------------------------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM NET CAPITAL CAPITAL LOSS
INCOME CAPITAL GAIN INCOME CAPITAL GAIN LOSS CARRYOVER POST-OCTOBER
FUND DIVIDENDS DISTRIBUTIONS DIVIDENDS DISTRIBUTIONS CARRYOVERS(1) EXPIRATION LOSSES
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL $50,243,215 $ - $21,792,872 $ - $116,228,014 2009 $281,878,758
694,241,382 2010
384,841,928 2011
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP(2) 236,073 - - - - 122,291
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL VALUE(3) - - - - - 1,139
- ------------------------------------------------------------------------------------------------------------------------------------
MID CAP - - - - 178,010,588 2010 83,758,421
333,252,323 2011
- ------------------------------------------------------------------------------------------------------------------------------------
MID CAP VALUE - - 116,728 - 358,393 2010 -
47,609 2011
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP - 629,095 - 585,226 13,948,829 2011 6,695,229
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE 6,321,911 16,278,465 17,112,270 10,590,736 8,874,875 2011 11,011,136
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Capital gain distributions will resume in the future to the extent gains
are realized in excess of the available carryforwards.
(2) Commencement of operations - December 21, 2001.
(3) Commencement of operations - September 23, 2002.
OTHER TAX INFORMATION (UNAUDITED)
For the year ended June 30, 2003, of the ordinary income dividends paid by
the Small Cap Value Fund, 50% are eligible for the dividends received
deduction.
Each Fund hereby designates the following amounts as long-term capital gain
distributions for purposes of the dividends paid deduction. This data is
informational only. Every year in January, shareholders are sent a Form 1099-
DIV representing their portion of capital gain distributions on a calendar
year basis to be reported on their income tax returns.
Long-Term Capital Gains
-----------------------
International Small Cap $ 5,205
Small Cap Fund 629,095
Small Cap Value Fund 16,278,465
The amounts above include earnings and profits distributed to shareholders on
redemptions of Fund shares.
75
------------
SEVENTY-FIVE
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(9) FUND SHARE ACTIVITIES:
Capital share transactions for the Funds were as follows:
INTERNATIONAL
INTERNATIONAL SMALL CAP
============================== ===============
Investor Institutional Investor
Year ended June 30, 2003 Shares Shares Shares
======================================= ============================== ===============
Proceeds from shares issued............. $6,609,449,427 $1,265,372,555 $156,597,326
Net asset value of shares issued in
reinvestment of distributions ....... 29,416,168 16,663,234 233,838
Cost of shares redeemed.................(6,063,741,583) (141,139,765) (24,518,197)(1)
------------------------------ ---------------
Net increase (decrease) from fund
share activities................... $575,124,012 $1,140,896,024 $132,312,967
============================== ===============
Shares sold............................. 448,720,763 84,658,208 15,036,137
Shares issued in reinvestment
of distributions................... 1,986,215 1,121,348 24,615
Shares redeemed......................... (410,530,756) (9,434,864) (2,445,304)
------------------------------ ---------------
Net increase (decrease)
in capital shares .................... 40,176,222 76,344,692 12,615,448
============================== ===============
INTERNATIONAL
==============================
Investor Institutional
Year ended June 30, 2002 Shares Shares
======================================= ==============================
Proceeds from shares issued............. $5,291,916,630 $804,083,587
Net asset value of shares issued in
reinvestment of distributions ....... 12,195,555 7,337,783
Cost of shares redeemed.................(3,654,275,679) (127,632,217)
------------------------------
Net increase (decrease) from fund
share activities................... $1,649,836,506 $683,789,153
==============================
Shares sold............................. 291,977,419 44,007,369
Shares issued in reinvestment
of distributions................... 684,758 410,620
Shares redeemed......................... (201,323,845) (7,126,579)
------------------------------
Net increase (decrease)
in capital shares .................... 91,338,332 37,291,410
==============================
(1) Net of redemption fees of $76,057
(2) For the period from commencement of operations (September 23, 2002) to June
30, 2003.
(3) Net of redemption fees of $578.
(4) For the period from commencement of operations (December 21, 2001) to June
30, 2002.
(5) Net of redemption fees of $4,157.
76
- -----------
SEVENTY-SIX
INTERNATIONAL MID CAP SMALL CAP
VALUE(2) MID CAP VALUE SMALL CAP VALUE
=============== ========================== ============= ============= =============
Investor Investor Institutional Investor Investor Investor
Year ended June 30, 2002 Shares Shares Shares Shares Shares Shares
======================================= =============== ========================== ============= ============= =============
Proceeds from shares issued............. $14,046,764 $1,165,389,769 $364,499,717 $48,987,982 $53,637,048 $218,256,845
Net asset value of shares issued in
reinvestment of distributions ....... - - - - 615,881 21,684,627
Cost of shares redeemed................. (266,341)(3) (740,991,149) (18,264,478) (12,530,971) (66,435,862) (153,690,612)
--------------- -------------------------- ------------- ------------- -------------
Net increase (decrease) from fund
share activities................... $13,780,423 $424,398,620 $346,235,239 $36,457,011 $(12,182,933) $86,250,860
=============== ========================== ============= ============= =============
Shares sold............................. 1,275,274 58,902,392 18,444,267 4,746,201 5,277,657 18,453,943
Shares issued in reinvestment
of distributions................... - - - - 62,909 1,946,555
Shares redeemed......................... (23,302) (37,879,947) (921,013) (1,238,891) (6,597,238) (13,245,797)
--------------- -------------------------- ------------- ------------- -------------
Net increase (decrease)
in capital shares .................... 1,251,972 21,022,445 17,523,254 3,507,310 (1,256,672) 7,154,701
=============== ========================== ============= ============= =============
INTERNATIONAL MID CAP SMALL CAP
SMALL CAP(4) MID CAP VALUE SMALL CAP VALUE
=============== ========================== ============= ============= =============
Investor Investor Institutional Investor Investor Investor
Year ended June 30, 2002 Shares Shares Shares Shares Shares Shares
======================================== =============== ========================== ============= ============= =============
Proceeds from shares issued............. $76,912,849 $1,658,139,576 $320,452,227 $14,758,493 $55,591,745 $260,487,987
Net asset value of shares issued in
reinvestment of distributions ....... - - - 117,076 575,069 26,165,517
Cost of shares redeemed................. (1,795,558)(5) (838,081,569) (22,593,597) (5,508,251) (46,982,611) (147,452,616)
--------------- -------------------------- ------------- ------------- -------------
Net increase (decrease) from fund
share activities................... $75,117,291 $820,058,007 $297,858,630 $9,367,318 $9,184,203 $139,200,888
=============== ========================== ============= ============= =============
Shares sold............................. 7,265,365 68,336,403 13,136,926 1,365,659 4,208,106 20,102,864
Shares issued in reinvestment
of distributions................... - - - 12,117 46,227 2,226,852
Shares redeemed......................... (169,677) (34,975,059) (921,123) (528,280) (3,639,075) (11,349,245)
--------------- -------------------------- ------------- ------------- -------------
Net increase (decrease)
in capital shares .................... 7,095,688 33,361,344 12,215,803 849,496 615,258 10,980,471
=============== ========================== ============= ============= =============
77
-------------
SEVENTY-SEVEN
[PRICEWATERHOUSECOOPERS LOGO]
- --------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee WI 53202
Telephone (414) 212 1600
REPORT OF INDEPENDENT AUDITORS
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
International Small Cap Fund, Artisan International Value Fund, Artisan Mid Cap
Fund, Artisan Mid Cap Value Fund, Artisan Small Cap Fund and Artisan Small Cap
Value Fund (comprising Artisan Funds, Inc., hereafter referred to as the
"Funds") at June 30, 2003, the results of each of their operations, the changes
in each of their net assets and their financial highlights for each of the
periods indicated, in conformity with accounting principles generally accepted
in the United States of America. 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 of America, 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, 2003 by correspondence with the custodian and brokers, provide a reasonable
basis for our opinion.
/s/PricewaterhouseCoopers LLP
July 31, 2003
78
- -------------
SEVENTY-EIGHT
- ------------------------NOTES ON MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE----
The discussions of each Fund included in this Annual Report include statistical
information about the portfolios of each of the Artisan Funds. Except as
otherwise noted, that information is as of June 30, 2003; it varies with
changes in a Fund's portfolio investments. Artisan Funds may consider an issuer
to be from a particular country if (i) its principal securities trading market
is in that country; (ii) alone or on a consolidated basis it derives more of
its annual revenue from goods produced, sales made or services performed in
that country than any other country; or (iii) it is organized under the laws
of, or has a principal office in that country. By applying these tests, it is
possible that Artisan Funds could deem a particular issuer to be from more than
one country.
DEFINITIONS OF PORTFOLIO STATISTICS
MEDIAN MARKET CAP provides a measure of the market capitalization value of the
companies in a portfolio. Market capitalization is the aggregate value of all a
company's outstanding common stock. Equal numbers of companies in the portfolio
have market capitalizations higher and lower than the median. WEIGHTED AVERAGE
MARKET CAP is the average of the market capitalizations of the companies in the
portfolio weighted by the size of each company's position within the portfolio.
WEIGHTED AVERAGE GROWTH RATE is the average of the 3-5 year forecasted growth
rates of each company in the portfolio, weighted by the size of the company's
position within the portfolio. MEDIAN PRICE/BOOK VALUE measures the median
ratio of portfolio stock prices to each stock's book value of equity per share.
WEIGHTED HARMONIC AVERAGE P/E is the harmonic average, which measures the
price/earnings ratio of the Fund, excluding negative earners, weighted by the
size of the company's position within the portfolio. The earnings figures used
are estimates for the current calendar year. MEDIAN P/E measures the median
ratio of the portfolio stock prices to each stock's earnings. The earnings
figures used are estimates for the current calendar year.
DESCRIPTIONS OF INDICES
Each Fund's performance is compared in this report to changes in at least two
indices - a broad-based index of changes in prices of securities in the market
in which the Fund invests and a peer group index of other mutual funds that are
categorized by Lipper, Inc., an independent monitor of mutual fund performance,
in the same general category as the Fund. All of the indices are unmanaged and
their returns include reinvested dividends. Unlike the Funds' returns, the
returns of each index, except each Lipper index, do not include the payment of
sales commissions or other expenses that would be incurred in the purchase or
sale of the securities included in that index.
The indices to which the Funds are compared are:
ARTISAN INTERNATIONAL, ARTISAN INTERNATIONAL SMALL CAP AND ARTISAN
INTERNATIONAL VALUE FUNDS - MORGAN STANLEY CAPITAL INTERNATIONAL EAFE/R INDEX
(EAFE) is a market-weighted index of companies in developed markets, excluding
the U.S. and Canada. EAFE's average annual return since inception of the
International Fund is based upon a starting date of December 31, 1995.
ARTISAN INTERNATIONAL SMALL CAP FUND - MORGAN STANLEY CAPITAL INTERNATIONAL
EAFE/R SMALL CAP INDEX is a market-weighted index of small companies in
developed markets, excluding the U.S. and Canada.
ARTISAN INTERNATIONAL VALUE FUND - MORGAN STANLEY CAPITAL INTERNATIONAL EAFE/R
VALUE INDEX is a market-weighted index of companies in developed markets,
excluding the U.S. and Canada, with lower price-to-book ratios.
ARTISAN MID CAP FUND - RUSSELL MIDCAP/R INDEX is a market-weighted index of
about 800 medium-sized U.S. companies. The RUSSELL MIDCAP/R GROWTH INDEX is a
market-weighted index of those medium-sized companies included in the Russell
Midcap/R Index with higher price-to-book and higher forecasted growth values.
ARTISAN MID CAP VALUE FUND - RUSSELL MIDCAP/R INDEX is a market-weighted index
of about 800 medium-sized U.S. companies. The RUSSELL MIDCAP/R VALUE INDEX is a
market-weighted index of those medium-sized companies included in the Russell
Midcap/R Index with lower price-to-book ratios and lower forecasted growth
values.
ARTISAN SMALL CAP FUND - RUSSELL 2000/R INDEX is a market-weighted index of
about 2,000 small U.S. companies. RUSSELL 2000/R GROWTH INDEX is a market-
weighted index of those small companies included in the Russell 2000/R Index
with higher price-to-book ratios and higher forecasted growth values.
ARTISAN SMALL CAP VALUE FUND - RUSSELL 2000/R INDEX is a market-weighted index
of about 2,000 small U.S. companies. The RUSSELL 2000/R VALUE INDEX is a
market-weighted index of those small companies included in the Russell 2000/R
Index with lower price-to-book ratios and lower forecasted growth values.
Each LIPPER INDEX, except the Lipper International Small-Cap Funds Index,
reflects the net asset weighted returns of the 30 largest mutual funds tracked
by Lipper in the category reflected in the name of the index. The Lipper
International Small-Cap Funds Index reflects the net asset value weighted
return of the ten largest international small-cap funds tracked by Lipper.
Artisan International Fund, Artisan Mid Cap Fund and Artisan Small Cap Value
Fund are included in their respective Lipper indices.
TRADEMARKS
Trademarks and copyrights relating to the indices mentioned in this report are
owned by: Russell indices: The Frank Russell Company; MSCI indices: Morgan
Stanley & Co.; and Lipper indices: Reuters Funds Information Limited (a United
Kingdom corporation). Except as otherwise indicated, the trademarks, including
names, logos, slogans and service marks appearing in this report are the
property of Artisan Partners Limited Partnership and may not be copied,
reproduced, published or in any way used without written permission.
79
------------
SEVENTY-NINE
- ----DIRECTORS AND OFFICERS------------------------------------------------------
The board of directors has overall responsibility for the conduct of the affairs
of Artisan Funds. Each director serves an indefinite term of unlimited duration
until the next annual meeting of shareholders and until the election and
qualification of his or her successor. The board of directors may fill any
vacancy on the board provided that after such appointment at least two-thirds of
the directors have been elected by the shareholders. The shareholders may remove
a director by a vote of a majority of the outstanding shares of the Funds at any
meeting of shareholders called for the purpose of removing such director.
The board of directors elects the officers of Artisan Funds. Each officer serves
until the election and qualification of his or her successor, or until he or she
sooner dies, resigns, or is removed or disqualified. The board of directors may
remove any officer with or without cause at any time.
The names and ages of the directors and officers, the position each holds with
the Funds, the date each was first elected to office, their principal business
occupations and other directorships they have held during the last five years
are shown below.
DATE FIRST
POSITIONS ELECTED OR OTHER
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 8/01/03 WITH FUNDS TO OFFICE DURING PAST 5 YEARS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS WHO ARE NOT "INTERESTED PERSONS"
- ------------------------------------------------------------------------------------------------------------------------------------
David A. Erne - 60 Director 3/27/95 Partner of the law firm Trustee, Northwestern Mutual Life
Reinhart Boerner Van Insurance Company (life insurance,
Deuren S.C., Milwaukee, WI. disability insurance and annuity company).
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas R. Hefty - 56 Director 3/27/95 Retired; Adjunct Faculty, None.
Department of Business and
Economics, Ripon College;
Of Counsel to the law firm
Reinhart Boerner Van Deuren
S.C., Milwaukee, WI. Until
December 2002, Chairman of
the Board and Chief Executive
Officer of Cobalt Corporation
(provider of managed care and
specialty business services).
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey A. Joerres - 43 Director 8/9/01 Chairman of the Board Director, Johnson Controls, Inc.
(since May 2001), President (manufacturer of automotive systems and
and Chief Executive Officer building controls).
(since April 1999) of
Manpower, Inc. (non-
governmental employment
service organization);
formerly, Senior Vice
President, European
Operations and Global
Account Management and
Development of Manpower, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick S. Pittard - 57 Director 8/9/01 Retired. Until November Director, Jefferson Pilot Corporation
2001, Chairman of the Board, (individual and group life insurance and
President and Chief annuity company); Former Chairman of the
Executive Officer of Heidrick Board, The University of Georgia
& Struggles International, Foundation; Member, Board of Regents of
Inc. (executive search firm). the University System of Georgia.
- ------------------------------------------------------------------------------------------------------------------------------------
Howard B. Witt - 63 Director 3/27/95 Chairman of the Board, Director, Franklin Electric Co., Inc.
President and Chief Executive (manufacturer of electric motors).
Officer of Littelfuse, Inc.
(manufacturer of advanced
circuit protection devices).
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS WHO ARE "INTERESTED PERSONS"*
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew A. Ziegler - 45 Director, 1/5/95 Managing Director of Artisan None.
Chairman Partners; Chairman and
and Chief President of Artisan
Executive Distributors.
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Carlene Murphy Ziegler - 47 Director 3/27/95 Managing Director of Artisan None.
and Vice Partners and Portfolio
President Co-Manager of Artisan
Small Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
*Mr. Ziegler and Ms. Ziegler are married to each other. Mr. and Ms. Ziegler are
"interested persons" of Artisan Funds, as defined in the Investment Company Act
of 1940, because each is a Managing Director of Artisan Partners, the investment
adviser to Artisan Funds. As officers of Artisan Investment Corporation (an
entity incorporated for the sole purpose of acting as general partner to Artisan
Partners), Mr. and Ms. Ziegler manage Artisan Partners. Mr. Ziegler is also
President of Artisan Distributors, Artisan Funds' principal underwriter.
The business address of the directors and officers affiliated with Artisan
Partners is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202. The
addresses of the other directors are: Mr. Erne - 1000 N. Water Street,
Milwaukee, Wisconsin 53202; Mr. Hefty - W233 N2080 Ridgeview Parkway, Waukesha,
Wisconsin 53188; Mr. Joerres - 5301 North Ironwood, Milwaukee, Wisconsin 53217;
Mr. Pittard - c/o Artisan Funds, 1000 N. Water Street, Milwaukee, Wisconsin
53202; and Mr. Witt - 800 E. Northwest Highway, Des Plaines, Illinois 60016.
80
- ------
EIGHTY
- ------------------------------------------------------DIRECTORS AND OFFICERS----
DATE FIRST
POSITIONS ELECTED OR
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 8/01/03 WITH FUNDS TO OFFICE DURING PAST 5 YEARS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF ARTISAN FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
Michael C. Roos - 45 President 8/5/99 Managing Director of Artisan None.
Partners; Vice President of
Artisan Distributors.
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence A. Totsky - 44 Chief 1/22/98 Managing Director and Chief None.
Financial Financial Officer of Artisan
Officer and Partners; Vice President,
Treasurer Chief Financial Officer and
Treasurer of Artisan
Distributors.
- ------------------------------------------------------------------------------------------------------------------------------------
Janet D. Olsen - 47 General 1/18/01 Managing Director and General None.
Counsel and Counsel of Artisan Partners;
Secretary Vice President and Secretary
of Artisan Distributors;
prior to joining Artisan
Partners in November 2000,
Member of the law firm Bell,
Boyd & Lloyd LLC, Chicago, IL.
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Yockey - 47 Vice 4/23/96 Managing Director of Artisan None.
President Partners and Portfolio Manager
of Artisan International Fund and
Artisan International Small Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Scott C. Satterwhite - 46 Vice 7/31/97 Managing Director of Artisan Partners None.
President and Portfolio Co-Manager of Artisan
Mid Cap Value Fund and Artisan
Small Cap Value Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew C. Stephens - 39 Vice 7/31/97 Managing Director of Artisan Partners None.
President and Portfolio Manager of Artisan
Mid Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Marina T. Carlson - 39 Vice 8/5/99 Managing Director of Artisan None.
President Partners and Portfolio Co-Manager
of Artisan Small Cap Fund; prior to
joining Artisan Partners in 1999,
Manager of Strong Mid Cap Disciplined
Fund from its inception in
December 1998 through March 1999;
Portfolio Co-Manager of Strong
Opportunity Fund and Strong Common
Stock Fund, prior thereto.
- ------------------------------------------------------------------------------------------------------------------------------------
James C. Kieffer - 38 Vice 1/27/00 Managing Director of Artisan Partners None.
President and Portfolio Co-Manager of Artisan
Mid Cap Value Fund and Artisan
Small Cap Value Fund; from 1997
to 2000, Research Analyst for
Artisan Partners.
- ------------------------------------------------------------------------------------------------------------------------------------
N. David Samra - 39 Vice 6/5/02 Managing Director of Artisan Partners None.
President and Portfolio Manager of Artisan
International Value Fund; from August
1997 to May 2002, Portfolio Manager
and Analyst for Harris Associates L.P.
(investment management firm)
- ------------------------------------------------------------------------------------------------------------------------------------
Gregory K. Ramirez - 33 Assistant 1/22/98 Managing Director of Client Accounting None.
Secretary and and Administration of Artisan Partners
Assistant since January 2003, Director of Client
Treasurer Accounting and Administration from
January 2000 to December 2002
and Controller of Artisan Partners
prior thereto; Assistant Treasurer
of Artisan Distributors.
- ------------------------------------------------------------------------------------------------------------------------------------
Sarah A. Johnson - 31 Assistant 2/5/03 Counsel of Artisan Partners; prior None.
Secretary to joining Artisan Partners in July
2002, Associate of the law firm
Bell, Boyd & Lloyd LLC, Chicago, IL.
- ------------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information (SAI) contains further information about
the directors. Please call 800.344.1770 or visit our website at
WWW.ARTISANFUNDS.COM for a free copy of the SAI.
[ARTISAN LOGO]
ARTISAN FUNDS P.O. BOX 8412
BOSTON, MA 02266-8412
800.344.1770
WWW.ARTISANFUNDS.COM
8/21/03 - A3066
[ARTISAN LOGO]
-------------------
ANNUAL
REPORT
JUNE 30, 2003
-------------------
ARTISAN
INTERNATIONAL FUND
Institutional Shares
-------------------
- -----------------------------------------------------------TABLE OF CONTENTS----
TABLE OF CONTENTS
- -----------------------------------------
01 MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
- -----------------------------------------
- -----------------------------------------
05 SCHEDULE OF INVESTMENTS
- -----------------------------------------
- -----------------------------------------
09 STATEMENT OF
ASSETS & LIABILITIES
- -----------------------------------------
- -----------------------------------------
10 STATEMENT OF OPERATIONS
- -----------------------------------------
- -----------------------------------------
11 STATEMENTS OF
CHANGES IN NET ASSETS
- -----------------------------------------
- -----------------------------------------
12 FINANCIAL HIGHLIGHTS
- -----------------------------------------
- -----------------------------------------
13 NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------
- -----------------------------------------
18 REPORT OF
INDEPENDENT AUDITORS
- -----------------------------------------
- -----------------------------------------
19 NOTES ON
MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
- -----------------------------------------
- -----------------------------------------
20 DIRECTORS AND OFFICERS
- -----------------------------------------
- --------------------------------------------------------------------------------
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 complete information on 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 portfolio manager,
as of June 30, 2003. 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, member NASD.
ARTISAN
INTERNATIONAL FUND
INSTITUTIONAL SHARES
- ------------------------------------------------------------------HIGHLIGHTS----
o For the 12 months ended June 30, 2003, Artisan International Fund trailed
the MSCI EAFE/R Index.
o Our stocks in the financials and materials sectors were most costly to
performance.
o Our energy sector stocks and a favorable currency environment contributed
positively to returns.
- ---------------------------------------------------------INVESTMENT APPROACH----
We use a bottom-up investment process to construct a portfolio of international
growth companies of all market capitalizations. The investment team conducts its
own fundamental analysis with particular emphasis on:
1) Well-managed companies focused on increasing shareholder value;
2) Sustainable growth prospects;
3) Reasonable valuations;
4) Dominant or increasing market shares or direct exposure to an identified
theme.
- ----------------------------------------------------------PERFORMANCE REVIEW----
Artisan International Fund underperformed during the first nine months of the
fiscal year ended June 30, 2003, but strongly outperformed the MSCI EAFE/R Index
during the final three months.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (7/1/97 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN INTERNATIONAL FUND - INSTITUTIONAL SHARES ($14,892)
MSCI EAFE/R Index ($8,652)
Lipper International Funds Index ($9,460)
ARTISAN
INTERNATIONAL Lipper
FUND - MSCI International
INSTITUTIONAL EAFE/R Funds
SHARES Index Index
------ ------ ------
6/30/97 (Inception of Institutional Shares) 10,000 10,000 10,000
10,166 9,930 10,192
12/97 9,525 9,152 9,412
11,453 10,498 10,808
6/98 12,440 10,610 10,900
10,094 9,102 9,180
12/98 12,621 10,982 10,604
14,045 11,135 10,740
6/99 14,632 11,418 11,336
15,375 11,919 11,718
12/99 22,927 13,943 14,616
26,985 13,929 14,706
6/00 24,285 13,377 14,015
21,601 12,298 12,986
12/00 20,544 11,968 12,464
17,917 10,324 10,838
6/01 18,329 10,188 10,902
15,768 8,789 9,272
12/01 17,322 9,402 10,055
17,472 9,449 10,302
6/02 17,134 9,249 10,107
13,478 7,424 8,125
12/02 14,077 7,903 8,665
12,096 7,254 7,902
6/03 14,892 8,652 9,460
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan International Fund - Institutional Shares -13.09% 3.66% 6.86%
- --------------------------------------------------------------------------------
MSCI EAFE/R Index -6.46 -4.00 -2.38
- --------------------------------------------------------------------------------
Lipper International Funds Index -6.40 -2.79 -0.92
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE
DO NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON
DISTRIBUTIONS OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S
RETURN MAY VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY
DIFFERENT BY THE TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE
INFORMATION, CALL 800.399.1770. INVESTORS SHOULD MAINTAIN REALISTIC
EXPECTATIONS FOR FUTURE PERFORMANCE. INTERNATIONAL INVESTMENTS INVOLVE SPECIAL
RISKS, INCLUDING CURRENCY FLUCTUATION, LOWER LIQUIDITY, DIFFERENT ACCOUNTING
METHODS AND ECONOMIC AND POLITICAL SYSTEMS, AND HIGHER TRANSACTION COSTS. THESE
RISKS TYPICALLY ARE GREATER IN EMERGING MARKETS. THE FUND INVESTS IN GROWTH
STOCKS, WHICH MAY UNDERPERFORM OTHER ASSET TYPES DURING A GIVEN PERIOD. THESE
RISKS 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. See page 19 for a description of each index.
1
- --------------------------------------------------ARTISAN INTERNATIONAL FUND----
PERFORMANCE DISCUSSION
During the first three months of our fiscal year ended June 30, 2003,
international equity markets experienced an extremely rough time. After the lows
recorded in July 2002, the markets stabilized somewhat in August only to fall
again in September. Apparent signs of a global economic slowdown, and the
possibility of a military conflict in Iraq, added to the gloom of markets
already shaken by corporate governance issues and concerns about quality of
earnings. The next three months saw the markets rally during October and
November, only to fall back in December. As the markets shifted they also went
through rotations, with some previously underperforming sectors, such as
technology, rallying as the markets rebounded. Moving into 2003, the European
Central Bank cut interest rates for the second time in three months, but
European markets again performed poorly. In addition to all the concerns about
the Iraq conflict and the economic outlook, markets in the Netherlands, and in
Europe generally, were further depressed by the specter of financial fraud that
followed the announcement of major accounting irregularities by the Dutch
retailer Ahold (which we didn't own). As anticipated, the international equity
markets turned around as soon as military action in Iraq began. Typical for a
bounce back, we saw some of the strongest recoveries from sectors that had been
hit the hardest prior to the market's low on March 12.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02 Q3 02
- --------------------------------------------------------------------------------
Artisan International Fund -
Institutional Shares 23.12% -14.07% 4.44% -21.34%
- --------------------------------------------------------------------------------
MSCI EAFE/R Index 19.27 -8.21 6.45 -19.73
- --------------------------------------------------------------------------------
Returns are not annualized.
The fiscal year ended June 30, 2003 represented a highly volatile period for
equity investors. The only consolation is that it ended much better than it
started. The performance of the Fund was no different.
SECTOR REVIEW
The stocks we owned in the financials and materials sectors were the largest
negative contributors to performance during the period. More specifically,
German insurers, Allianz AG and Muenchener Rueckversicherungs-Gesellschaft AG
(Munich RE), and our chemical stocks were our biggest drags on performance.
Insurance companies in the U.S. and overseas were under stress during most of
the period. Many firms struggled to maintain their capital adequacy ratios as
their investment portfolios were plagued by falling market prices. During the
first three months of the fiscal year, the stocks of Munich RE and Allianz AG
were particularly affected and those stocks were down considerably. Allianz was
also affected by losses at its Dresdner Kleinwort Wasserstein investment banking
subsidiary due in part to slow capital market activities and higher debt
provisions. Following the rough beginning to the fiscal year, both Munich RE and
Allianz put in place plans to improve their structures and operations. For
example, each company reduced its shareholding in the other, conducted asset
write-downs, announced actions to bolster capital structure, and improved the
core insurance business by demonstrating greater underwriting discipline and
cost controls. Those factors and a stronger stock market late in the period,
among other things, caused those stock prices to recover somewhat and we still
held both stocks as of June 30, 2003.
[PHOTO]
MARK L. YOCKEY
Portfolio Manager
2
- --------------------------------------------------ARTISAN INTERNATIONAL FUND----
The returns of our specialty chemical companies were depressed by an overriding
macro factor - high oil and gas prices. Cost of goods sold for many chemical
firms is largely determined by the prices of both commodities. The most damaging
stocks were Clariant AG and Imperial Chemical Industries PLC (ICI), which in
our view, also suffered as management made mistakes in strategic positioning and
business execution. However, Clariant replaced its chief executive and we
believe that ICI took steps to improve its operations. On the other hand, our
energy holdings benefited from high oil and gas prices. EnCana Corporation and
Repsol YPF S.A. were the two largest contributors.
Looking beyond insurance and chemicals, Telefonica S.A., a Spanish
telecommunications company, was one of the larger positive contributors to Fund
performance. Among the catalysts for strong performance were the resumption of
dividend payments, an improved situation in Brazil, and strong cash flow
generation in the core Spanish wireline and wireless businesses. A number of
retailers such as Next PLC (British apparel), Wal-Mart de Mexico S.A. de C.V.,
and Tesco PLC (British supermarkets) also contributed strongly. Next was
supported by its stock buyback program and strong cash flow generation, while
Wal-Mart de Mexico and Tesco each reported strong sales growth.
COUNTRY & CURRENCY DISCUSSION
An important factor that positively influenced absolute Fund returns over the
course of the fiscal year was the weakening dollar. The trade-weighted dollar,
which measures the dollar against a basket of other currencies, depreciated
significantly during the fiscal year. This meant that when foreign holdings were
converted back to U.S. dollars, at the depreciated level, the same unit of
foreign currency could be redeemed for more dollars, resulting in a currency
gain. Were it not for this factor, returns would have been much lower.
We did not own many stocks in Japan because we thought that Japan's high
unemployment, deflationary pressures and historically reactionary policy
measures made the outlook too uncertain. That lack of exposure was a profitable
decision relative to the MSCI EAFE/R during the fiscal year because the Japanese
market performed poorly and did not get the currency boost of many other
overseas markets.
BIGGEST GAINERS %
---
Next PLC............................................ 30.2%
Repsol YPF, S.A. ................................... 28.7
Deutsche Boerse AG.................................. 28.5
EnCana Corporation.................................. 22.3
UBS AG.............................................. 18.9
BIGGEST LOSERS %
---
Clariant AG......................................... -52.6%
BAE Systems PLC..................................... -43.6
Muenchener Rueckversicherungs-Gesellschaft AG....... -42.6
Imperial Chemical Industries PLC.................... -41.4
Allianz AG.......................................... -28.4
For the year ended 6/30/03, these are the holdings that made the largest dollar
difference in the portfolio. While some holdings may have 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. The
percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
FUND CHANGES
We think chasing short-term market sentiment almost ensures short-term and long-
term underperformance. So, we made few major changes in the Fund, leaving the
geographic diversification and sector allocation of the Fund in many areas
largely unchanged. Eight of our Top 10 Holdings at the beginning of the fiscal
year remained at the end.
TOP 5 COUNTRY ALLOCATIONS
United Kingdom................ 22.0%
Switzerland................... 15.2
Germany....................... 12.7
Netherlands................... 9.4
France........................ 7.4
As a percentage of total net assets as of 6/30/03.
REGION ALLOCATION
6/03 6/02
------ ------
Europe........................ 79.1% 75.7%
Latin America................. 8.4 6.4
Asia/Pacific.................. 8.0 12.8
North America................. 3.3 0.6
As a percentage of total net assets as of 6/30/03 and 6/30/02, respectively.
3
- --------------------------------------------------ARTISAN INTERNATIONAL FUND----
TOP 10 HOLDINGS
COMPANY NAME COUNTRY %
- --------------------------------------------------------------------------------
Allianz AG Germany 3.7%
- --------------------------------------------------------------------------------
Compass Group PLC United Kingdom 3.4
- --------------------------------------------------------------------------------
Nestle S.A., Class B Switzerland 3.3
- --------------------------------------------------------------------------------
Diageo PLC United Kingdom 3.0
- --------------------------------------------------------------------------------
Honda Motor Co., Ltd. Japan 2.9
- --------------------------------------------------------------------------------
Tesco PLC United Kingdom 2.8
- --------------------------------------------------------------------------------
Lloyds TSB Group PLC United Kingdom 2.7
- --------------------------------------------------------------------------------
Fortis (NL) N.V. Netherlands 2.7
- --------------------------------------------------------------------------------
Muenchener Rueckversicherungs-Gesellschaft AG Germany 2.6
- --------------------------------------------------------------------------------
Marks & Spencer Group PLC United Kingdom 2.5
- --------------------------------------------------------------------------------
TOTAL 29.6%
As a percentage of total net assets as of 6/30/03.
On a sector basis, the consumer sectors remained our largest allocation. In
fact, at June 30, 2003, we had a slightly larger commitment to the consumer
discretionary group than we did at the beginning of the period. The increase was
due in part to bigger positions in a number of media stocks. We added to a
number of the retail stocks we own and added Kingfisher PLC, Europe's largest
home improvement retailer, late in the fiscal year. We sold Toyota Motor
Corporation and Italian caterer Autogrill S.p.A. The consumer staples sector as
a percentage of the Fund remained basically the same. However, we added to food
retailers Tesco PLC and Carrefour S.A. British American Tobacco PLC was sold.
Outside of the consumer sectors, we maintained a meaningful number of our
financial stocks. The modestly lower portfolio weighting was partly due to the
poor performance of our insurance stocks in addition to the sale and trimming of
some bank stocks. Some of the capital from the finance area was redeployed into
a number of energy stocks. As of June 30, 2002, we only had two small positions
in the sector. By the close of the fiscal year we had purchased EnCana
Corporation, which also contributed to a higher weighting in Canada, increased
our position in Royal Dutch Petroleum Company, NY Shares, and initiated small
positions in a few emerging markets oil stocks. In the healthcare sector, we
added pharmaceutical companies Roche Holding AG and Sanofi-Synthelabo S.A.
Scanning the Fund by region, European stocks continue to be our largest
weighting. We have not yet found many attractive ideas in Japan. Consequently,
the number of stocks we own in that country has continued to leave us
considerably underweight versus the MSCI EAFE/R and the sale of Toyota Motor
Corporation and Canon, Inc. contributed to an even lower weight.
As always, we appreciate your support.
FUND STATISTICS
Net Assets.............................. $8.2 Bil.
Number of Holdings............................. 88
Weighted Avg. Market Cap............... $24.9 Bil.
Weighted Avg. Growth Rate (3-5 yr).......... 11.1%
Weighted Harmonic Avg. P/E (2003E).......... 15.6X
All statistics are as of 6/30/03.
TOP 5 SECTORS
Financials........................... 25.1%
Consumer Staples...................... 23.1
Consumer Discretionary................ 20.0
Telecommunication Services............. 8.8
Healthcare............................. 6.7
As a percentage of total net assets as of 6/30/03.
4
ARTISAN
INTERNATIONAL FUND
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
========== ==========
COMMON AND PREFERRED STOCKS - 98.8%
AUSTRALIA - 1.1%
Commonwealth Bank of Australia 2,945,390 $58,440,513
National Australia Bank Ltd. 1,484,491 33,391,514
--------------
91,832,027
BELGIUM - 1.8%
Colruyt N.V. 11,576 801,581
Interbrew 6,596,708 146,825,194
--------------
147,626,775
BRAZIL - 1.1%
Banco Bradesco S.A. 3,767,729,000 14,098,514
Banco Itau Holding Financeira S.A. 178,301,400 11,879,693
Companhia de Bebidas das Americas - (ADR) 158,400 3,223,440
Petroleo Brasileiro S.A. - (ADR) 982,500 19,414,200
Telesp Celular Participacoes S.A.,
Preferred - (ADR)(1) 9,544,900 37,225,110
--------------
85,840,957
CANADA - 3.3%
CanWest Global Communications Corporation(1)(2) 4,004,998 25,552,818
Corus Entertainment, Inc., Class B(1)(2) 2,929,750 49,162,318
EnCana Corporation 3,712,600 141,575,822
Research In Motion Limited(1)(3) 728,771 15,748,741
Telus Corporation 2,313,400 40,799,110
--------------
272,838,809
CHINA - 0.4%
PetroChina Company Ltd. 94,868,500 28,588,957
DENMARK - 0.9%
A P Moller - Maersk A/S 1,566 8,483,995
Novo-Nordisk A/S, Class B 1,811,550 63,512,488
--------------
71,996,483
FRANCE - 7.4%
Axa 4,901,785 76,173,158
Carrefour S.A. 3,988,968 195,829,140
JC Decaux S.A.(1) 8,355,316 104,756,681
Orange S.A.(1) 951,733 8,462,272
Rhodia S.A.(2) 8,837,821 57,232,926
Sanofi-Synthelabo S.A. 1,694,711 99,416,433
Technip - Coflexip S.A. 138,149 12,108,632
Vivendi Universal S.A. 2,537,011 46,253,433
--------------
600,232,675
5
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
========== ==========
GERMANY - 12.7%
Allianz AG 3,600,002 $299,718,585
Deutsche Boerse AG 2,415,989 128,194,904
Deutsche Telekom AG(1) 5,718,400 87,416,188
Henkel KGaA 2,901,743 179,937,064
KDG Investors, L.P.(1)(4)(5) 400,000
Linde AG 3,492,083 129,500,649
Muenchener Rueckversicherungs-Gesellschaft AG 2,084,405 212,857,815
--------------
1,038,025,205
IRELAND - 0.0%(6)
Allied Irish Banks PLC 42,831 640,955
ITALY - 2.1%
Banca Nazionale del Lavoro S.p.A.(1) 14,142,007 23,749,598
Mediaset S.p.A. 1,391,245 11,794,063
Telecom Italia S.p.A. 25,341,043 139,038,546
--------------
174,582,207
JAPAN - 5.6%
Honda Motor Co., Ltd. 6,256,300 237,505,027
Japan Tobacco, Inc. 17,364 94,023,912
Promise Co., Ltd. 2,068,250 77,480,643
Yamanouchi Pharmaceutical Co., Ltd. 1,801,300 47,040,749
--------------
456,050,331
KOREA - 0.0%(6)
KT Corporation - (ADR) 45,700 900,747
LUXEMBOURG - 0.5%
RTL Group 849,486 40,648,255
MEXICO - 7.3%
Fomento Economico Mexicano S.A. de C.V. (ADR) 1,796,334 74,008,961
Grupo Modelo S.A. de C.V., Series C (ADR)(2) 33,674,300 76,697,291
Grupo Televisa S.A. (ADR) 3,592,600 123,944,700
Telefonos de Mexico S.A. de C.V. (ADR) 6,247,840 196,307,133
Wal-Mart de Mexico S.A. de C.V., Series V 40,927,400 120,673,065
--------------
591,631,150
NETHERLANDS - 9.4%
ABN Amro Holding N.V. 8,140,800 155,909,894
ASML Holding N.V.(1) 7,754,346 73,763,759
Fortis (NL) N.V. 12,541,576 216,389,272
Heineken N.V. 653,756 23,236,276
Royal Dutch Petroleum Company, NY Shares(3) 3,136,160 146,207,779
Unilever N.V. 1,356,550 72,900,582
Wolters Kluwer N.V. 6,251,112 75,498,606
--------------
763,906,168
POLAND - 0.3%
Bank Pekao S.A. 999,864 25,925,822
PORTUGAL - 0.7%
Portugal Telecom, SGPS, S.A. 7,892,332 56,647,701
6
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
========== ==========
RUSSIA - 0.5%
LUKOIL - (ADR) 561,600 $44,422,560
SINGAPORE - 0.9%
DBS Group Holdings Ltd. 12,301,807 71,962,864
SPAIN - 5.6%
Banco Bilbao Vizcaya Argentaria, S.A. 822,400 8,655,587
Industria de Diseno Textil, S.A. 5,380,748 135,543,633
Promotora de Informaciones, S.A. 8,287,886 75,407,164
Repsol YPF, S.A. 6,230,412 101,191,449
Telefonica, S.A.(1) 11,823,080 137,490,958
--------------
458,288,791
SWITZERLAND - 15.2%
CIBA Specialty Chemicals AG(1) 2,342,272 142,102,918
Compagnie Financiere Richemont AG 253,900 4,113,946
Clariant AG(1)(2) 8,999,193 82,561,404
Credit Suisse Group 5,125,600 135,193,578
Julius Baer Holding Ltd., Class B 260,306 63,940,213
Nestle S.A., Class B 1,312,811 271,478,747
Novartis AG 3,535,453 140,204,410
Roche Holding AG, Bearer 68,500 8,438,332
Roche Holding AG - Genusschein 1,407,200 110,620,746
Swiss Re 642,333 35,666,685
Serono S.A. 123,925 72,983,353
UBS AG 3,130,510 174,521,995
--------------
1,241,826,327
UNITED KINGDOM - 22.0%
BAE Systems PLC 49,938,951 117,625,385
BT Group PLC 1,453,500 4,895,076
Carlton Communications PLC 17,470,084 43,747,617
Compass Group PLC 51,429,309 277,762,149
Diageo PLC 22,924,551 245,161,290
Granada PLC 88,967,620 133,819,728
Imperial Chemical Industries PLC 54,671,863 110,925,694
Kingfisher PLC 15,357,614 70,378,836
Lloyds TSB Group PLC 31,519,006 224,150,737
Marks & Spencer Group PLC 38,724,724 202,105,657
Next PLC 7,492,682 127,128,532
mmO2 PLC(1) 7,498,600 7,033,846
Tesco PLC 62,293,968 225,752,400
--------------
1,790,486,947
--------------
TOTAL COMMON AND PREFERRED STOCKS (Cost $8,772,143,546) 8,054,902,713
7
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
PAR
AMOUNT VALUE
========== ==========
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 0.7%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%,
dated 6/30/03, due 7/1/03, maturity
value $60,201,254 collateralized by
$61,408,547 market value Federal
Home Loan Bank Note, 1.40% due 5/4/04.
(Cost $60,200,000) $60,200,000 $60,200,000
TOTAL INVESTMENTS - 99.5% (cost $8,832,343,546) 8,115,102,713
OTHER ASSETS LESS LIABILITIES - 0.5% 42,735,011
--------------
TOTAL NET ASSETS - 100.0%(7) $8,157,837,724
==============
(1) Non-income producing security.
(2) Affiliated company as defined by the Investment Company Act of 1940.
See Note 7 to the financial statements.
(3) Principally traded in the United States.
(4) Valued at a fair value in accordance with procedures established by the
Fund's Board of Directors.
(5) Private investment partnership which is restricted as to resale. Total
investment cost of $10 million, made through capital contributions on
3/6/00, 7/10/00 and 5/15/01. Value at June 30, 2003 represents less than
0.01% of total net assets.
(6) Represents less than 0.1% of total net assets.
(7) Percentages for the various classifications relate to total net assets.
(ADR) American Depository Receipt.
- --------------------------------------------------------------------------------
Portfolio Diversification - June 30, 2003
VALUE PERCENTAGE
=========== ==========
Consumer Discretionary $1,628,434,080 20.0%
Consumer Staples 1,887,638,026 23.1
Energy 493,509,399 6.1
Financials 2,048,942,540 25.1
Healthcare 542,216,511 6.7
Industrials 126,109,380 1.5
Information Technology 89,512,500 1.1
Materials 522,323,590 6.4
Telecommunication Services 716,216,687 8.8
Utilities - 0.0
---------------- --------
TOTAL COMMON AND PREFERRED STOCKS 8,054,902,713 98.8
Total short-term investments 60,200,000 0.7
---------------- --------
TOTAL INVESTMENTS 8,115,102,713 99.5
OTHER ASSETS LESS LIABILITIES 42,735,011 0.5
---------------- --------
TOTAL NET ASSETS $ 8,157,837,724 100.0%
================ ========
The accompanying notes are an integral part of the financial statements.
8
ARTISAN
INTERNATIONAL FUND
Statement of Assets & Liabilities - June 30, 2003
ASSETS:
Investments in securities, unaffiliated, at value .......... $7,823,895,956
Investments in securities, affiliated, at value ............ 291,206,757
---------------
TOTAL INVESTMENTS .......................................... 8,115,102,713
Cash........................................................ 656
Receivable from investments sold............................ 48,267,676
Receivable from forward currency contracts.................. 47,990,236
Receivable from fund shares sold............................ 29,495,098
Dividends and interest receivable........................... 17,755,987
---------------
TOTAL ASSETS................................................ 8,258,612,366
LIABILITIES:
Payable for investments purchased........................... 28,016,855
Payable for forward currency contracts...................... 48,101,119
Payable for fund shares redeemed............................ 21,395,644
Payable for operating expenses.............................. 2,242,959
Payable for withholding taxes............................... 1,018,065
---------------
TOTAL LIABILITIES........................................... 100,774,642
---------------
TOTAL NET ASSETS............................................ $8,157,837,724
===============
NET ASSETS CONSIST OF:
Fund shares issued and outstanding.......................... $10,345,330,767
Net unrealized appreciation (depreciation) on
investments and foreign currency related
transactions ............................................. (716,897,537)
Accumulated undistributed net investment income (loss)...... 90,594,085
Accumulated undistributed net realized gains
(losses) on investments and foreign
currency related transactions ............................ (1,561,189,591)
---------------
$8,157,837,724
===============
SUPPLEMENTARY INFORMATION:
Net assets
Investor Shares........................................ $5,182,832,740
Institutional Shares................................... $2,975,004,984
Shares Outstanding
Investor Shares........................................ 331,619,519
Institutional Shares................................... 189,425,338
Net asset value and offering price per share
Investor Shares........................................ $15.63
Institutional Shares................................... $15.71
Cost of securities of unaffiliated issuers held............. $8,421,385,574
Cost of securities of affiliated issuers held............... $410,957,972
The accompanying notes are an integral part of the financial statements.
9
ARTISAN
INTERNATIONAL FUND
Statement of Operations - For the Year Ended June 30, 2003
INVESTMENT INCOME:
Interest.................................................... $2,825,610
Dividends, from unaffiliated issuers ....................... 176,343,076(1)
Dividends, from affiliated issuers.......................... 2,344,814(2)
Other....................................................... 2,995,772
---------------
TOTAL INVESTMENT INCOME..................................... 184,509,272
EXPENSES:
Advisory fees............................................... 66,306,063
Transfer agent fees
Investor Shares........................................ 8,331,967
Institutional Shares................................... 32,233
Shareholder communications
Investor Shares........................................ 1,177,617
Institutional Shares................................... 19,011
Custodian fees.............................................. 3,945,008
Accounting fees............................................. 73,299
Professional fees........................................... 301,743
Registration fees
Investor Shares........................................ 124,912
Institutional Shares................................... 127,627
Directors' fees............................................. 180,436
Other operating expenses.................................... 163,719
---------------
TOTAL NET EXPENSES.......................................... 80,783,635
---------------
NET INVESTMENT INCOME (LOSS)................................ 103,725,637
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gain (loss) on:
Investments............................................ (529,007,531)(3)
Foreign currency related transactions.................. (10,809,131)
---------------
(539,816,662)
Net increase (decrease) in unrealized appreciation on:
Investments............................................ (423,541,570)
Foreign currency related transactions.................. 52,282
---------------
(423,489,288)
---------------
NET GAIN (LOSS) ON INVESTMENTS.............................. (963,305,950)
---------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $(859,580,313)
===============
(1) Net of foreign taxes withheld of $22,229,774.
(2) Net of foreign taxes withheld of $14,358.
(3) Including $(7,613,533) from affiliated issuers.
The accompanying notes are an integral part of the financial statements.
10
ARTISAN
INTERNATIONAL FUND
Statements of Changes in Net Assets
YEAR ENDED YEAR ENDED
6/30/03 6/30/02
======================================
OPERATIONS:
Net investment income (loss)............ $103,725,637 $51,719,319
Net realized gain (loss) on:
Investments........................ (529,007,531) (393,817,449)
Foreign currency related transactions (10,809,131) (2,431,313)
Net increase (decrease) in unrealized
appreciation on:
Investments........................ (423,541,570) (9,921,060)
Foreign currency
related transactions ............ 52,282 569,310
--------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS ..... (859,580,313) (353,881,193)
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
Investor Shares.................... (31,901,533) (13,657,908)
Institutional Shares............... (18,341,682) (8,134,964)
Net realized gains on
investment transactions:
Investor Shares.................... - -
Institutional Shares............... - -
--------------------------------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS (50,243,215) (21,792,872)
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES . 1,716,020,036 2,333,625,659
--------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS. 806,196,508 1,957,951,594
--------------------------------------
Net assets, beginning of period......... 7,351,641,216 5,393,689,622
--------------------------------------
NET ASSETS, END OF PERIOD............... $8,157,837,724 $7,351,641,216
======================================
Accumulated undistributed net
investment income (loss) ............. $90,594,085 $47,858,931
======================================
The accompanying notes are an integral part of the financial statements.
11
ARTISAN INTERNATIONAL FUND
INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
For a share outstanding Year Ended Year Ended Year Ended Year Ended Year Ended
throughout each period 06/30/03 06/30/02 06/30/01 06/30/00 06/30/99
- ------------------------------------------ ----------- ------------ ----------- ----------- -----------
Net asset value, beginning of period $18.24 $19.62 $30.22 $18.70 $16.26
Income (loss) from investment operations:
Net investment income (loss)(1) 0.25 0.18 0.16 0.03 0.11
Net realized and unrealized gains
(losses) on investments (2.65) (1.46) (7.21) 12.09 2.62
----------- ------------ ----------- ----------- -----------
Total income (loss) from
investment operations (2.40) (1.28) (7.05) 12.12 2.73
----------- ------------ ----------- ----------- -----------
Distributions paid to shareholders:
Net investment income (0.13) (0.10) - (0.06) (0.05)
Net realized gains on investment
transactions - - (3.55) (0.54) (0.24)
----------- ------------ ----------- ----------- -----------
Total distributions paid
to shareholders (0.13) (0.10) (3.55) (0.60) (0.29)
----------- ------------ ----------- ----------- -----------
Net asset value, end of period $15.71 $18.24 $19.62 $30.22 $18.70
=========== ============ =========== =========== ===========
Total return (13.1)% (6.5)% (24.5)% 66.0% 17.6%
Ratios/supplemental data:
Net assets, end of period (millions) $2,975.0 $2,062.0 $1,486.6 $1,136.2 $179.6
Ratio of expenses to average
net assets 1.01% 1.01% 1.03% 1.08% 1.17%
Ratio of net investment income (loss)
to average net assets 1.68% 1.01% 0.70% 0.09% 0.68%
Portfolio turnover rate 37.13% 50.67% 72.01% 99.02% 79.41%
(1) Computed based on average shares outstanding.
The accompanying notes are an integral part of the financial statements.
12
ARTISAN
INTERNATIONAL FUND
Notes to Financial Statements - June 30, 2003
(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 seven open-
end, diversified mutual funds. Artisan International Fund ("the Fund")
commenced operations on December 28, 1995. The Fund's investment goal is to
seek long-term capital growth.
The Fund offers shares of capital stock of two classes - Institutional
Shares and Investor Shares. Institutional Shares, which have been offered
since July 1, 1997, 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 and 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.
Each class of the Fund has 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,
which are in accordance with accounting principles generally accepted in
the United States of America.
(a) Security valuation - Each equity security traded on a securities
exchange is valued at the last current sale price as of the time of
valuation on the exchange on which the security is principally traded
(the "principal exchange"), or lacking any current reported sale on
the principal exchange at the time of valuation, at the last current
sale price as of the time of valuation on a secondary exchange, or
lacking any current sale price on the principal or a secondary
exchange as of the time of valuation, at the most recent bid quotation
on the principal exchange, except that securities listed on the London
Stock Exchange shall be valued at the mean of the close of day bid and
ask, and each security traded in the Nasdaq Stock Market ("Nasdaq")
shall be valued at the Nasdaq Official Closing Price ("NOCP"), as
determined by Nasdaq, or lacking an NOCP, the last current reported
sale price as of the time of valuation on Nasdaq, or lacking any
current reported sale on Nasdaq at the time of valuation, at the most
recent bid quotation on Nasdaq. Securities for which prices are not
readily available, or for which management believes that the latest
sales or bid price does not reflect a fair value of the security, are
valued by a valuation committee at a fair value 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 the valuation date are
valued at amortized cost, which approximates market.
13
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(b) Income taxes - No provision has been made for federal income taxes
since the Fund intends to i) comply with all provisions of the
Internal Revenue Code applicable to regulated investment companies and
ii) distribute to its shareholders substantially all of its taxable
income as well as net realized gains from the sale of investment
securities. The Fund may utilize earnings and profits distributed to
shareholders on redemption of Fund shares as part of the dividends
paid deduction.
(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 on the day 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 may enter 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 or loss. The Fund could be exposed to
loss if the counterparties fail to perform under these contracts.
(e) Repurchase agreements - The Fund may enter into repurchase agreements
with institutions that Artisan Partners Limited Partnership (the
"Adviser") has determined are creditworthy pursuant to criteria
adopted by the Funds' Board of Directors. Repurchase agreements are
recorded at cost and are collateralized in an amount greater than or
equal to the repurchase price plus accrued interest. To the extent
that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the
Fund would suffer a loss.
(f) Securities lending - During the year ended June 30, 2003 the Fund
entered into various securities lending transactions with borrowers
approved by the Fund's Board of Directors. Income of $2,995,772 from
securities lending is included in Other Income on the Statement of
Operations. As of June 30, 2003 there were no securities on loan. The
Fund's risks in entering into securities lending arrangements are that
the borrower may not provide additional collateral when required or
return the securities when due. If the borrower defaults, the Fund may
experience delays in selling collateral or the collateral may not be
sufficient to cover the value of securities lent.
(g) Use of estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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.
14
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(h) Other - Dividend income less foreign taxes withheld, if any, 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. Expenses attributable to Artisan Funds are
generally allocated to each Fund based on net assets. Expenses
attributable to a particular Fund are allocated directly to that Fund.
The character of income and net realized gains and losses may differ
for financial statement and tax purposes and may result in
reclassification of permanent differences among certain capital
accounts.
(3) TRANSACTIONS WITH AFFILIATES:
The Adviser, with which the officers and certain directors of the Artisan
Funds 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
Shares of the Fund are offered for sale by Artisan Distributors LLC
("Distributors"). Distributors is wholly-owned by the Adviser. All
distribution expenses relating to the Fund are paid by the Adviser. The
Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports.
Each director who is not an interested person of Artisan Funds or the
Adviser receives an annual retainer of $49,000, plus a fee for each board
or committee meeting attended (other than a committee meeting held on the
same day as a board meeting) of $1,000 for an in-person meeting and $500
for a telephonic meeting as well as reimbursement of expenses related to
his duties as a director of Artisan Funds. In addition, each chairman of a
board committee who is a non-interested director receives a supplemental
annual retainer of $3,000. These fees are generally allocated to each Fund
in proportion to the Fund's net assets.
(4) 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 (a)
$75 million or (b) the lesser of (i) 10% of its total assets (after giving
effect to the loan) or (ii) the maximum amount the Fund may borrow under
the Investment Company Act, the limitations included in the Fund's
prospectus, or any limit or restriction under any law or regulation to
which the Fund is subject or any agreement to which the Fund or Artisan
Funds is a party; provided that the aggregate borrowings by all Funds may
not exceed $100 million. Artisan Funds pays a commitment fee at the annual
rate 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. There were minimal borrowings under
the line of credit during the year ended June 30, 2003. At June 30, 2003
there were no borrowings outstanding under the line of credit.
15
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(5) 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,
2003 were $4,594,416,019 and $2,569,854,536, respectively.
(6) TRANSACTIONS IN SECURITIES OF AFFILIATES:
If one or more of the Artisan Funds owns, in the aggregate, 5% or more of
the outstanding voting securities of a portfolio company, that company is
deemed to be an affiliate of the Funds under the Investment Company Act of
1940. During the year ended June 30, 2003, the Fund purchased and sold
securities of affiliates in open market transactions and received dividends
from affiliates as summarized below:
JUNE 30, 2003
SHARE -----------------------
BALANCE PURCHASE SALES REALIZED DIVIDEND SHARE
SECURITY 6/30/02 COST COST GAIN/(LOSS) INCOME BALANCE VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
CanWest Global 2,611,998 $5,706,995 $ - $ - $ - 4,004,998 $25,552,818
Communications Corp.(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Clariant AG(1) 4,694,084 78,974,390 13,320,470 (5,660,241) - 8,999,193 82,561,404
- ----------------------------------------------------------------------------------------------------------------------------------
Corus Entertainment, Inc. 1,894,350 13,221,002 - - - 2,929,750 49,162,318
Class B(1)
- ----------------------------------------------------------------------------------------------------------------------------------
Grupo Modelo S.A. 13,456,600 49,828,788 3,848,660 (707,580) 1,721,057 33,674,300 76,697,291
de C.V., Series C
- ----------------------------------------------------------------------------------------------------------------------------------
Rhodia S.A. 5,376,760 25,904,630 2,639,708 (1,245,712) 623,757 8,837,821 57,232,926
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Non-income producing security.
(7) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
NET UNREALIZED
GROSS GROSS APPRECIATION/
COST OF UNREALIZED UNREALIZED (DEPRECIATION) UNDISTRIBUTED UNDISTRIBUTED
INVESTMENTS APPRECIATION DEPRECIATION ON INVESTMENTS ORDINARY INCOME LONG-TERM GAIN
---------------------------------------------------------------------------------------------------------------------------------
$8,920,875,958 $489,124,416 $(1,294,897,661) $(805,773,245) $100,776,704 $ -
---------------------------------------------------------------------------------------------------------------------------------
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 tax basis of dividends and long-term capital gain distributions paid
during the fiscal years ended June 30, 2003 and June 30, 2002, capital loss
carryovers as of June 30, 2003, and tax-basis post-October loss deferrals
as of June 30, 2003 (recognized for tax purposes on July 1, 2003) are as
follows:
FISCAL YEAR ENDED 6/30/03 FISCAL YEAR ENDED 6/30/02
----------------------------------------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM NET CAPITAL CAPITAL LOSS
INCOME CAPITAL GAIN INCOME CAPITAL GAIN LOSS CARRYOVER POST-OCTOBER
DIVIDENDS DISTRIBUTIONS DIVIDENDS DISTRIBUTIONS CARRYOVERS(1) EXPIRATION LOSSES
-------------------------------------------------------------------------------------------------------
$50,243,215 $- $21,792,872 $- $116,228,014 2009 $281,878,758
694,241,382 2010
384,841,928 2011
-------------------------------------------------------------------------------------------------------
(1) Capital gain distributions will resume in the future to the
extent gains are realized in excess of the available
carryforwards.
16
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(8) FUND SHARE ACTIVITIES:
Capital share transactions for the Fund were as follows:
Investor Institutional
Year ended June 30, 2003 Shares Share
======================================================================
Proceeds from shares issued.......... $ 6,609,449,427 $1,265,372,555
Net asset value of shares issued in
reinvestment of distributions .... 29,416,168 16,663,234
Cost of shares redeemed.............. (6,063,741,583) (141,139,765)
-------------------------------
Net increase (decrease) from fund
share activities................ $575,124,012 $1,140,896,024
===============================
Shares sold.......................... 448,720,763 84,658,208
Shares issued in reinvestment
of distributions................ 1,986,215 1,121,348
Shares redeemed...................... (410,530,756) (9,434,864)
-------------------------------
Net increase (decrease) in
capital shares .................... 40,176,222 76,344,692
===============================
Investor Institutional
Year ended June 30, 2002 Shares Share
======================================================================
Proceeds from shares issued..........$ 5,291,916,630 $ 804,083,587
Net asset value of shares issued in
reinvestment of distributions .... 12,195,555 7,337,783
Cost of shares redeemed.............. (3,654,275,679) (127,632,217)
-------------------------------
Net increase (decrease) from fund
share activities................ $1,649,836,506 $ 683,789,153
===============================
Shares sold.......................... 291,977,419 44,007,369
Shares issued in reinvestment
of distributions................ 684,758 410,620
Shares redeemed...................... (201,323,845) (7,126,579)
-------------------------------
Net increase (decrease) in
capital shares .................... 91,338,332 37,291,410
===============================
17
[PRICEWATERHOUSECOOPERS LOGO]
- --------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee WI 53202
Telephone (414) 212 1600
REPORT OF INDEPENDENT AUDITORS
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 constituting Artisan Funds, Inc., hereafter referred to as the
"Fund") at June 30, 2003, the results its operations, the changes in its net
assets and its financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. 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 of
America, 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, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/s/PricewaterhouseCoopers LLP
July 31, 2003
18
- ------------------------NOTES ON MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE----
The discussion of the Fund included in this Annual Report includes statistical
information about the portfolio. Except as otherwise noted, that information is
as of June 30, 2003; it varies with changes in a Fund's portfolio investments.
Artisan Funds may consider an issuer to be from a particular country if (i) its
principal securities trading market is in that country; (ii) alone or on a
consolidated basis it derives more of its annual revenue from goods produced,
sales made or services performed in that country than any other country; or
(iii) it is organized under the laws of, or has a principal office in that
country. By applying these tests, it is possible that Artisan Funds could deem
a particular issuer to be from more than one country.
DEFINITIONS OF PORTFOLIO STATISTICS
WEIGHTED AVERAGE MARKET CAP is the average of the market capitalizations of the
companies in the portfolio weighted by the size of each company's position
within the portfolio. Market capitalization is the aggregate value of all a
company's outstanding common stock. WEIGHTED AVERAGE GROWTH RATE is the average
of the 3-5 year forecasted growth rates of each company in the portfolio,
weighted by the size of the company's position within the portfolio. WEIGHTED
HARMONIC AVERAGE P/E is the harmonic average, which measures the price/earnings
ratio of the Fund, excluding negative earners, weighted by the size of the
company's position within the portfolio. The earnings figures used are
estimates for the current calendar year.
DESCRIPTIONS OF INDICES
The Fund's performance is compared in this report to changes in two indices - a
broad-based index of changes in prices of securities in the market in which the
Fund invests and a peer group index of other mutual funds that are categorized
by Lipper, Inc., an independent monitor of mutual fund performance, in the same
general category as the Fund. All of the indices are unmanaged and their
returns include reinvested dividends. Unlike the Fund's returns, the returns of
the Morgan Stanley index do not include the payment of sales commissions or
other expenses that would be incurred in the purchase or sale of the securities
included in that index.
The indices to which the Fund is compared are:
MORGAN STANLEY CAPITAL INTERNATIONAL EAFE/R INDEX (EAFE) is a market-weighted
index of companies in developed markets, excluding the U.S. and Canada. EAFE's
average annual return since inception of the International Fund is based upon a
starting date of December 31, 1995.
The LIPPER INTERNATIONAL FUNDS INDEX reflects the net asset weighted returns of
the 30 largest mutual funds tracked by Lipper in the category reflected in the
name of the index. The Fund is included in the Lipper International Funds
Index.
TRADEMARKS
Trademarks and copyrights relating to the indices mentioned in this report are
owned by: MSCI indices: Morgan Stanley & Co.; and Lipper indices: Reuters Funds
Information Limited (a United Kingdom Corporation). Except as otherwise
indicated, the trademarks, including names, logos, slogans and service marks
appearing in this report are the property of Artisan Partners Limited
Partnership and may not be copied, reproduced, published or in any way used
without written permission.
19
- ------------------------------------------------------DIRECTORS AND OFFICERS----
The board of directors has overall responsibility for the conduct of the affairs
of Artisan Funds. Each director serves an indefinite term of unlimited duration
until the next annual meeting of shareholders and until the election and
qualification of his or her successor. The board of directors may fill any
vacancy on the board provided that after such appointment at least two-thirds of
the directors have been elected by the shareholders. The shareholders may remove
a director by a vote of a majority of the outstanding shares of the Funds at any
meeting of shareholders called for the purpose of removing such director.
The board of directors elects the officers of Artisan Funds. Each officer serves
until the election and qualification of his or her successor, or until he or she
sooner dies, resigns, or is removed or disqualified. The board of directors may
remove any officer with or without cause at any time.
The names and ages of the directors and officers, the position each holds with
the Funds, the date each was first elected to office, their principal business
occupations and other directorships they have held during the last five years
are shown below.
DATE FIRST
POSITIONS ELECTED OR OTHER
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 8/01/03 WITH FUNDS TO OFFICE DURING PAST 5 YEARS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS WHO ARE NOT "INTERESTED PERSONS"
- ------------------------------------------------------------------------------------------------------------------------------------
David A. Erne - 60 Director 3/27/95 Partner of the law firm Trustee, Northwestern Mutual Life
Reinhart Boerner Van Insurance Company (life insurance,
Deuren S.C., Milwaukee, WI. disability insurance and annuity company).
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas R. Hefty - 56 Director 3/27/95 Retired; Adjunct Faculty, None.
Department of Business and
Economics, Ripon College;
Of Counsel to the law firm
Reinhart Boerner Van Deuren
S.C., Milwaukee, WI. Until
December 2002, Chairman of
the Board and Chief Executive
Officer of Cobalt Corporation
(provider of managed care and
specialty business services).
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey A. Joerres - 43 Director 8/9/01 Chairman of the Board Director, Johnson Controls, Inc.
(since May 2001), President (manufacturer of automotive systems and
and Chief Executive Officer building controls).
(since April 1999) of
Manpower, Inc. (non-
governmental employment
service organization);
formerly, Senior Vice
President, European
Operations and Global
Account Management and
Development of Manpower, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick S. Pittard - 57 Director 8/9/01 Retired. Until November Director, Jefferson Pilot Corporation
2001, Chairman of the Board, (individual and group life insurance and
President and Chief annuity company); Former Chairman of the
Executive Officer of Heidrick Board, The University of Georgia
& Struggles International, Foundation; Member, Board of Regents of
Inc. (executive search firm). the University System of Georgia.
- ------------------------------------------------------------------------------------------------------------------------------------
Howard B. Witt - 63 Director 3/27/95 Chairman of the Board, Director, Franklin Electric Co., Inc.
President and Chief Executive (manufacturer of electric motors).
Officer of Littelfuse, Inc.
(manufacturer of advanced
circuit protection devices).
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS WHO ARE "INTERESTED PERSONS"*
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew A. Ziegler - 45 Director, 1/5/95 Managing Director of Artisan None.
Chairman Partners; Chairman and
and Chief President of Artisan
Executive Distributors.
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Carlene Murphy Ziegler - 47 Director 3/27/95 Managing Director of Artisan None.
and Vice Partners and Portfolio
President Co-Manager of Artisan
Small Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
*Mr. Ziegler and Ms. Ziegler are married to each other. Mr. and Ms. Ziegler are
"interested persons" of Artisan Funds, as defined in the Investment Company Act
of 1940, because each is a Managing Director of Artisan Partners, the investment
adviser to Artisan Funds. As officers of Artisan Investment Corporation (an
entity incorporated for the sole purpose of acting as general partner to Artisan
Partners), Mr. and Ms. Ziegler manage Artisan Partners. Mr. Ziegler is also
President of Artisan Distributors, Artisan Funds' principal underwriter.
The business address of the directors and officers affiliated with Artisan
Partners is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202. The
addresses of the other directors are: Mr. Erne - 1000 N. Water Street,
Milwaukee, Wisconsin 53202; Mr. Hefty - W233 N2080 Ridgeview Parkway, Waukesha,
Wisconsin 53188; Mr. Joerres - 5301 North Ironwood, Milwaukee, Wisconsin 53217;
Mr. Pittard - c/o Artisan Funds, 1000 N. Water Street, Milwaukee, Wisconsin
53202; and Mr. Witt - 800 E. Northwest Highway, Des Plaines, Illinois 60016.
20
- ------------------------------------------------------DIRECTORS AND OFFICERS----
DATE FIRST
POSITIONS ELECTED OR
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 8/01/03 WITH FUNDS TO OFFICE DURING PAST 5 YEARS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF ARTISAN FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
Michael C. Roos - 45 President 8/5/99 Managing Director of Artisan None.
Partners; Vice President of
Artisan Distributors.
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence A. Totsky - 44 Chief 1/22/98 Managing Director and Chief None.
Financial Financial Officer of Artisan
Officer and Partners; Vice President,
Treasurer Chief Financial Officer and
Treasurer of Artisan
Distributors.
- ------------------------------------------------------------------------------------------------------------------------------------
Janet D. Olsen - 47 General 1/18/01 Managing Director and General None.
Counsel and Counsel of Artisan Partners;
Secretary Vice President and Secretary
of Artisan Distributors;
prior to joining Artisan
Partners in November 2000,
Member of the law firm Bell,
Boyd & Lloyd LLC, Chicago, IL.
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Yockey - 47 Vice 4/23/96 Managing Director of Artisan None.
President Partners and Portfolio Manager
of Artisan International Fund and
Artisan International Small Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Scott C. Satterwhite - 46 Vice 7/31/97 Managing Director of Artisan Partners None.
President and Portfolio Co-Manager of Artisan
Mid Cap Value Fund and Artisan
Small Cap Value Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew C. Stephens - 39 Vice 7/31/97 Managing Director of Artisan Partners None.
President and Portfolio Manager of Artisan
Mid Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Marina T. Carlson - 39 Vice 8/5/99 Managing Director of Artisan None.
President Partners and Portfolio Co-Manager
of Artisan Small Cap Fund; prior to
joining Artisan Partners in 1999,
Manager of Strong Mid Cap Disciplined
Fund from its inception in
December 1998 through March 1999;
Portfolio Co-Manager of Strong
Opportunity Fund and Strong Common
Stock Fund, prior thereto.
- ------------------------------------------------------------------------------------------------------------------------------------
James C. Kieffer - 38 Vice 1/27/00 Managing Director of Artisan Partners None.
President and Portfolio Co-Manager of Artisan
Mid Cap Value Fund and Artisan
Small Cap Value Fund; from 1997
to 2000, Research Analyst for
Artisan Partners.
- ------------------------------------------------------------------------------------------------------------------------------------
N. David Samra - 39 Vice 6/5/02 Managing Director of Artisan Partners None.
President and Portfolio Manager of Artisan
International Value Fund; from August
1997 to May 2002, Portfolio Manager
and Analyst for Harris Associates L.P.
(investment management firm)
- ------------------------------------------------------------------------------------------------------------------------------------
Gregory K. Ramirez - 33 Assistant 1/22/98 Managing Director of Client Accounting None.
Secretary and and Administration of Artisan Partners
Assistant since January 2003, Director of Client
Treasurer Accounting and Administration from
January 2000 to December 2002
and Controller of Artisan Partners
prior thereto; Assistant Treasurer
of Artisan Distributors.
- ------------------------------------------------------------------------------------------------------------------------------------
Sarah A. Johnson - 31 Assistant 2/5/03 Counsel of Artisan Partners; prior None.
Secretary to joining Artisan Partners in July
2002, Associate of the law firm
Bell, Boyd & Lloyd LLC, Chicago, IL.
- ------------------------------------------------------------------------------------------------------------------------------------
The Statement of Additional Information (SAI) contains further information about
the directors. Please call 800.344.1770 for a free copy of the SAI.
21
[ARTISAN LOGO]
--------------------
ANNUAL
REPORT
JUNE 30, 2003
--------------------
ARTISAN
MID CAP FUND
Institutional Shares
--------------------
- -----------------------------------------------------------TABLE OF CONTENTS----
TABLE OF CONTENTS
- ----------------------------------
01 MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
- ----------------------------------
- ----------------------------------
05 SCHEDULE OF INVESTMENTS
- ----------------------------------
- ----------------------------------
10 STATEMENT OF
ASSETS & LIABILITIES
- ----------------------------------
- ----------------------------------
11 STATEMENT OF OPERATIONS
- ----------------------------------
- ----------------------------------
12 STATEMENTS OF
CHANGES IN NET ASSETS
- ----------------------------------
- ----------------------------------
13 FINANCIAL HIGHLIGHTS
- ----------------------------------
- ----------------------------------
14 NOTES TO FINANCIAL STATEMENTS
- ----------------------------------
- ----------------------------------
19 REPORT OF
INDEPENDENT AUDITORS
- ----------------------------------
- ----------------------------------
20 NOTES ON
MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
- ----------------------------------
- ----------------------------------
21 DIRECTORS AND OFFICERS
- ----------------------------------
- --------------------------------------------------------------------------------
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 Mid Cap Fund, Institutional
Shares. This report is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective prospectus. For more complete
information on 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 portfolio managers,
as of June 30, 2003. 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, member NASD.
ARTISAN
MID CAP FUND
INSTITUTIONAL SHARES
- ------------------------------------------------------------------HIGHLIGHTS----
o For the 12 months ended June 30, 2003, Artisan Mid Cap Fund underperformed
both the Russell Midcap/R Index and the Russell Midcap/R Growth Index.
o The largest contributor to Fund performance was the healthcare sector.
o Our stock selections in technology and materials and processing were two
areas that hurt performance.
- ---------------------------------------------------------INVESTMENT APPROACH----
We use a bottom-up investment process to identify well-managed mid-sized
companies whose growth and profit potential are not yet fully recognized by
investors. Specifically, we spend most of our time answering three questions
about a company before we will invest in it:
1) Does the company exhibit franchise characteristics?
2) Is the company positioned for long-term growth and at an early stage in its
profit cycle?
3) Is the stock of the company trading at a reasonable discount to our estimate
of its private market value?
- ----------------------------------------------------------PERFORMANCE REVIEW----
During a volatile fiscal year ended June 30, 2003, the Artisan Mid Cap Fund
posted a slightly negative return.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (7/1/00 to 6/30/03)
[CHART APPEARS HERE]
ARTISAN MID CAP FUND - INSTITUTIONAL SHARES ($8,258)
Russell Midcap/R Growth Index ($5,416)
Russell Midcap/R Index ($9,406)
Lipper Mid-Cap Core Funds Index ($8,610)
ARTISAN Lipper
MID CAP Russell Mid-Cap
FUND - Midcap/R Russell Core
INSTITUTIONAL Growth Midcap/R Funds
SHARES Index Index Index
------ ------ ------ ------
7/1/00 (Inception of Institutional Shares) 10,000 10,000 10,000 10,000
11,114 10,252 10,681 10,378
12/00 10,011 7,869 10,298 9,602
8,871 5,895 9,217 8,502
6/01 9,962 6,849 10,096 9,571
7,732 4,945 8,293 7,737
12/01 9,736 6,283 9,719 9,132
9,537 6,172 10,131 9,469
6/02 8,364 5,045 9,164 8,464
6,856 4,179 7,548 7,079
12/02 7,397 4,561 8,146 7,545
7,164 4,561 7,953 7,258
6/03 8,258 5,416 9,406 8,610
AVERAGE ANNUAL TOTAL RETURNS (as of 6/30/03)
- --------------------------------------------------------------------------------
SINCE
FUND / INDEX 1-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Mid Cap Fund - Institutional Shares -1.26% -6.18%
- --------------------------------------------------------------------------------
Russell Midcap/R Growth Index 7.35 -18.49
- --------------------------------------------------------------------------------
Russell Midcap/R Index 2.63 -2.02
- --------------------------------------------------------------------------------
Lipper Mid-Cap Core Funds Index 1.72 -4.87
- --------------------------------------------------------------------------------
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE GRAPH AND TABLE ABOVE DO
NOT REFLECT THE DEDUCTION OF TAXES THAT A SHAREHOLDER WOULD PAY ON DISTRIBUTIONS
OR SALE OF FUND SHARES. IN TIMES OF MARKET VOLATILITY, THE FUND'S RETURN MAY
VARY GREATLY OVER SHORT PERIODS OF TIME AND MAY BE MATERIALLY DIFFERENT BY THE
TIME YOU RECEIVE THIS REPORT. FOR MORE CURRENT PERFORMANCE INFORMATION, CALL
800.399.1770. INVESTORS SHOULD MAINTAIN REALISTIC EXPECTATIONS FOR FUTURE
PERFORMANCE. THE FUND INVESTS IN STOCKS OF MEDIUM-SIZED COMPANIES, WHICH TEND TO
BE MORE VOLATILE THAN THOSE OF LARGE COMPANIES, AND HAVE UNDERPERFORMED THE
STOCKS OF SMALL AND LARGE COMPANIES DURING SOME PERIODS. GROWTH STOCKS MAY
UNDERPERFORM OTHER ASSET TYPES DURING A GIVEN PERIOD. THESE RISKS 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. See page 20 for a description of each index.
1
- --------------------------------------------------------ARTISAN MID CAP FUND----
PERFORMANCE REVIEW
The first three months of the year ended June 30, 2003, were a harsh
continuation of an already disappointing period for equity investors. In fact,
within mid-cap equities, the Russell Midcap/R Index was down 36 out of 64
trading days while the Russell Midcap/R Growth Index was down 32 of those days.
There was virtually no place to hide for equity investors during the quarter as
most markets returned negative results. The next quarter saw a bit of a
turnaround when stocks, led by technology, were up strongly during much of
October and November 2002. There was positive news during the rally. The United
Nations joined the U.S. in the search for weapons in Iraq, the Federal Reserve
cut interest rates, and the November mid-term elections provided some hope for
consistent and effective economic policy. However, stock prices retreated
somewhat in December and losses carried over into January and February before
showing some life at about the same time that fighting in Iraq began during
March. The final three months of the fiscal year were a bright contrast to the
first three. Almost all markets had positive returns. Mid-cap growth stocks
outperformed their value counterparts for the fourth consecutive quarter. A
number of factors contributed to market strength, including an end to the war in
Iraq, renewed consumer confidence, record low interest rates, and an increase in
buying of equities.
QUARTERLY TOTAL RETURNS
FUND/INDEX Q2 03 Q1 03 Q4 02 Q3 02
- --------------------------------------------------------------------------------
Artisan Mid Cap Fund - Institutional Shares 15.28% -3.15% 7.90% -18.03%
- --------------------------------------------------------------------------------
Russell Midcap/R Growth Index 18.76 -0.02 9.16 -17.18
- --------------------------------------------------------------------------------
Returns are not annualized.
SECTOR REVIEW
The 12 months ended June 30, 2003 were marked by extreme lows and extreme highs,
leaving the Fund with widely different quarter-by-quarter results. Our strongest
positive contribution for the fiscal year came from healthcare stocks. We have
mentioned in previous communications to shareholders that the pharmaceutical
industry is in a challenging environment as patents on many popular drugs
expire. However, that did not cause us to shy away from the sector. Instead, we
elected to focus on generic drug makers such as Barr Laboratories, Inc. and
Mylan Laboratories, Inc. Both performed very well during the period. Outside of
the pharmaceutical area, our position in biotech Amgen Inc., which we acquired
as a result of Amgen's acquisition of a prior holding, and medical supply
companies Guidant Corporation and Boston Scientific Corporation also contributed
strongly. Service provider Community Health Systems, Inc. detracted from
performance because of concern over near-term earnings growth after allegations
of fraud surfaced at a competitor.
Our energy stocks also yielded positive results. We held oil service providers
Nabors Industries, Ltd., Smith International, Inc., and Weatherford
International, Ltd. to varying degrees throughout the year and all three
contributed positively. Late in the period we sold natural gas producer Devon
Energy Corporation in favor of gas distributor The Williams Companies, Inc. Each
of those stocks also did well. We maintained our commitment to most energy
positions because we believed that the supply/demand dynamics for both oil and
gas were favorable.
The consumer discretionary sector experienced a rocky 12 months, but closed out
the fiscal year on a strong note. A number of factors held the sector back
early, including geopolitical tensions, weak consumer confidence, poor
employment figures, and uncertain economic activity. All showed signs of life
beginning late in March 2003. This led to the prospect of better earnings for
many of our cyclical companies and created support for improved performance.
Getty Images, Inc. was one stock
[PHOTO]
ANDREW C. STEPHENS
Lead Portfolio Manager
[PHOTO]
JAMES D. HAMEL
Associate Portfolio Manager
2
- --------------------------------------------------------ARTISAN MID CAP FUND----
that was very volatile, posting two very strong quarters and two weak quarters.
Fortunately, the good news ended up outweighing the bad and its stock ended up
being our strongest contributor in the sector. Other stocks that we held
throughout the period such as Lamar Advertising Company and toy maker Mattel,
Inc. were not as fortunate and we ended up lower than where we started the
period in each company. However, our decision to buy more stocks in the sector
turned out to be very timely as a number of them did well. Advertiser Omnicom
Group, Inc., retailer Williams-Sonoma, Inc., and e-commerce company
InterActiveCorp. (formerly USA Interactive), were a few of the success stories.
Some of the worst performing stocks in the Fund came from the materials and
processing sector. Packaging firm Pactiv Corporation was our largest holding on
June 30, 2002, and had the largest negative contribution in the sector.
Specialty chemicals company Rohm and Haas Company and steel company NuCor
Corporation were also poor performers. To a certain degree, those stocks
suffered due to the slow economic recovery and as a higher price for oil, which
is a large part of the input cost for many of these businesses, either directly
or indirectly clouded earnings expectations. Financial services, technology and
telecom related stocks also hurt our relative performance, particularly compared
to the growth index. In financials, the majority of the poor performance can be
attributed to insurance company Arthur J. Gallagher & Company and the few
banking stocks we held. Investment managers SEI Investments Company and T. Rowe
Price Group, Inc. helped to offset some of the slide when investor demand for
riskier assets such as equities returned during the market rally that started in
March 2003.
Within the technology and telecom related areas our stock selection was negative
compared to both indices. That was primarily due to our focus on higher quality
issues, which did not rise as rapidly during the last three months of the period
as some of the stocks we think carry more risk. This was most obvious in the
capacity-heavy telecommunications area, which was up well over 100% in the
Russell Midcap/R Growth Index. In addition, one of our largest holdings at the
beginning of the year, National Semiconductor Corporation (a manufacturer of
analog semiconductors) was hit hard in July 2002 partly on news that weak end-
user demand in PCs and handsets would cause manufacturers to pare back inventory
levels.
BIGGEST GAINERS %
---
Getty Images, Inc......................... 64.4%
Network Appliance, Inc.................... 59.3
Amgen, Inc. .............................. 48.0
Mylan Laboratories, Inc................... 46.5
EMC Corporation........................... 43.4
BIGGEST LOSERS %
---
Community Health Systems, Inc............. -26.5%
National Semiconductor Corporation........ -20.7
Rohm and Haas Company..................... -16.6
Comerica, Inc............................. -15.9
Pactiv Corporation........................ -14.1
For the year ended June 30, 2003, 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.
The percentage shown is the gain or loss on each individual holding during the
fiscal year ended June 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
FUND CHANGES
The most significant change in the Fund during the fiscal year was an increase
in the amount of capital we had in consumer discretionary stocks. Consumer
spending remained positive for virtually the whole period even as other economic
variables were mixed. That presented an excellent backdrop for us to add a
number of quality franchises with improving profit cycles to the Fund. Some of
our large purchases were Starwood Hotels & Resorts Worldwide, Inc., The Estee
Lauder Companies, Inc.,
SECTOR DIVERSIFICATION
6/03 6/02
------ ------
Auto & Transportation............... 4.4% 4.1%
Consumer Discretionary.............. 24.8 15.3
Consumer Staples.................... 1.4 1.4
Financial Services.................. 12.4 15.7
Healthcare.......................... 13.7 11.2
IntegratedOils...................... 0.0 0.0
Materials & Processing.............. 3.7 9.9
Other............................... 0.8 2.3
Other Energy........................ 6.5 6.5
Producer Durables................... 9.6 6.0
Technology.......................... 17.5 19.1
Utilities........................... 1.0 1.7
Other assets less liabilities....... 4.2 6.8
TOTAL............................... 100% 100%
As a percentage of total net assets as of 6/30/03 and 6/30/02, respectively.
3
- --------------------------------------------------------ARTISAN MID CAP FUND----
Williams-Sonoma, Inc., and Costco Wholesale Corporation. Our belief in cycles
also drove us to several firms in the sector that rely on business advertising
as part of their revenue streams. For example, we purchased Omnicom Group, Inc.,
InterActiveCorp. and The New York Times Company. That same premise of business
spending was also an important factor in the Fund's increased exposure to
producer durables as we added W.W. Grainger, Inc., KLA - Tencor Corporation, and
Molex, Inc.
Within healthcare, the key additions to the Fund were Mylan Laboratories, Inc.,
pharmacy benefit manager Caremark Rx, Inc., and Boston Scientific Corporation. A
merger of two of our biotech holdings (Biogen, Inc. and IDEC Pharmaceuticals
Corporation) was announced in June 2003. We did not believe that the merger
would be beneficial and we reduced our combined exposure at the end of the
period.
Some of the capital reallocated to consumer discretionary, producer durables and
healthcare stocks was from materials and processing and financial services
stocks. We significantly sold down Pactiv Corporation and completely liquidated
Rohm and Haas Company. In each instance, we believed the company's profit cycle
was slowing and stock price performance was weak. In the finance area, we sold
off almost all of our banking stocks for the same reason. However, some capital
was moved within the sector to data processors Fiserv, Inc. and Paychex, Inc.
Technology was a fairly active sector for the Fund. Only three stocks (Adobe
Systems, Inc., Ingram Micro, Inc. and Network Associates, Inc.) remained as
holdings throughout the year. In the software space, we sold long-time holding
Intuit, Inc. as we believed its profit cycle began to slow and Peoplesoft, Inc.
was sold after it announced a potential merger with rival J.D. Edwards &
Company. Seagate Technology, BEA Systems, Inc., and VERITAS Software Corporation
received part of the reallocation of capital. In the semi-conductor industry, we
sold National Semiconductor Corporation and Linear Technology Corporation, which
manufactures high performance linear integrated circuits, was added.
TOP 10 HOLDINGS
COMPANY NAME %
- ------------------------------------------------------------
Southwest Airlines Co. 2.3%
- ------------------------------------------------------------
Nabors Industries, Ltd. 2.0
- ------------------------------------------------------------
W.W. Grainger, Inc. 1.9
- ------------------------------------------------------------
Omnicom Group, Inc. 1.8
- ------------------------------------------------------------
Weatherford International, Ltd. 1.7
- ------------------------------------------------------------
Lamar Advertising Company 1.6
- ------------------------------------------------------------
Danaher Corporation 1.6
- ------------------------------------------------------------
SEI Investments Company 1.6
- ------------------------------------------------------------
Smith International, Inc. 1.6
- ------------------------------------------------------------
Mylan Laboratories, Inc. 1.6
- ------------------------------------------------------------
TOTAL 17.7%
As a percentage of total net assets as of 6/30/03.
The fiscal year ended with our GARDEN/SM holdings remaining the largest part of
the portfolio.
Thank you for the trust you have placed in us as we endeavor to be respectful of
your capital and work diligently to enhance its value.
FUND STATISTICS
Net Assets......................... $3.1 Bil.
Number of Holdings........................ 97
Median Market Cap.................. $5.0 Bil.
Weighted Avg. Market Cap........... $8.0 Bil.
Weighted Avg. Growth Rate (3-5 yr)..... 16.2%
Weighted Harmonic Avg. P/E (2003E)..... 24.1X
Fund statistics are as of 6/30/03.
4
ARTISAN
MID CAP FUND
Schedule of Investments - June 30, 2003
SHARES
HELD VALUE
========= =========
COMMON STOCKS - 95.8%
AUTO & TRANSPORTATION - 4.4%
AIR TRANSPORT - 3.4%
Expeditors International of Washington, Inc. 459,700 $15,924,008
FedEx Corporation 294,100 18,243,023
Southwest Airlines Co. 4,217,100 72,534,120
--------------
106,701,151
TRUCKERS - 1.0%
Swift Transportation Co., Inc.(1) 1,658,800 30,886,856
CONSUMER DISCRETIONARY - 24.8%
ADVERTISING AGENCIES - 3.4%
Lamar Advertising Company(1) 1,455,000 51,230,550
Omnicom Group, Inc. 772,800 55,409,760
--------------
106,640,310
CABLE TELEVISION SERVICES - 0.8%
EchoStar Communications Corporation(1) 772,800 26,754,336
COSMETICS - 1.3%
The Estee Lauder Companies, Inc. 1,225,800 41,101,074
CONSUMER ELECTRONICS - 1.1%
Electronic Arts, Inc.(1) 116,800 8,642,032
Yahoo!, Inc.(1) 760,200 24,904,152
--------------
33,546,184
ENTERTAINMENT - 0.5%
Pixar, Inc.(1) 239,800 14,589,432
HOTEL/MOTEL - 1.5%
Starwood Hotels & Resorts Worldwide, Inc. 1,620,000 46,315,800
JEWELRY WATCHES & GEMSTONES - 0.8%
Tiffany & Company 726,200 23,732,216
PUBLISHING: NEWSPAPERS - 1.1%
The New York Times Company 786,200 35,772,100
RADIO & TV BROADCASTING - 1.8%
Entercom Communications Corporation(1) 550,900 26,999,609
Univision Communications, Inc.(1) 1,007,800 30,637,120
--------------
57,636,729
5
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
========= =========
CONSUMER DISCRETIONARY (CONTINUED)
RESTAURANTS - 1.5%
Darden Restaurants, Inc. 786,100 $14,920,178
Wendy's International, Inc. 1,059,300 30,687,921
--------------
45,608,099
RETAIL - 6.4%
Abercrombie & Fitch Company Class A(1) 879,300 24,980,913
AnnTaylor Stores Corporation(1) 471,400 13,647,030
Costco Wholesale Corporation(1) 1,067,000 39,052,200
InterActiveCorp(1) 706,100 27,940,377
Kohl's Corporation(1) 548,200 28,166,516
Staples, Inc.(1) 1,147,500 21,056,625
Williams-Sonoma, Inc.(1) 1,359,000 39,682,800
Zale Corporation(1) 104,800 4,192,000
--------------
198,718,461
SERVICES: COMMERCIAL - 3.7%
Accenture, Ltd. Class A(1) 1,726,300 31,228,767
ARAMARK Corporation Class B(1) 624,500 14,001,290
Getty Images, Inc.(1) 613,900 25,354,070
Robert Half International, Inc.(1) 2,301,287 43,586,376
--------------
114,170,503
TOYS - 0.9%
Mattel, Inc. 1,524,600 28,845,432
CONSUMER STAPLES - 1.4%
FOODS - 1.4%
Dean Foods Company(1) 1,378,950 43,436,925
FINANCIAL SERVICES - 12.4%
BANKS: OUTSIDE NEW YORK CITY - 0.9%
Comerica, Inc. 626,200 29,118,300
FINANCIAL DATA PROCESSING SERVICES & SYSTEMS - 3.1%
Fiserv, Inc.(1) 1,152,500 41,040,525
Paychex, Inc. 1,289,900 37,806,969
SunGard Data Systems, Inc.(1) 707,800 18,339,098
--------------
97,186,592
FINANCIAL MISCELLANEOUS - 1.2%
MGIC Investment Corporation 772,800 36,043,392
INSURANCE: MULTI-LINE - 0.7%
Arthur J. Gallagher & Company 846,700 23,030,240
INSURANCE: PROPERTY-CASUALTY - 2.3%
Platinum Underwriters Holdings, Ltd. 923,800 25,071,932
XL Capital Limited 567,300 47,085,900
--------------
72,157,832
INVESTMENT MANAGEMENT COMPANIES - 2.7%
SEI Investments Company 1,545,700 49,462,400
T. Rowe Price Group, Inc. 892,800 33,703,200
--------------
83,165,600
6
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
========= =========
FINANCIAL SERVICES (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS (REIT) - 0.1%
American Financial Realty Trust 138,700 $2,068,017
SECURITIES BROKERAGE & SERVICES - 1.4%
LaBranche & Co., Inc. 1,093,000 22,614,170
The Charles Schwab Corporation 2,196,900 22,166,721
--------------
44,780,891
HEALTHCARE - 13.7%
BIOTECHNOLOGY RESEARCH & PRODUCTION - 3.6%
Amgen, Inc.(1) 501,540 33,322,317
Biogen, Inc.(1) 358,300 13,615,400
IDEC Pharmaceuticals Corporation(1) 379,400 12,899,600
Invitrogen Corporation(1) 747,400 28,677,738
Millennium Pharmaceuticals, Inc.(1) 1,431,100 22,511,203
--------------
111,026,258
DRUGS & PHARMACEUTICALS - 2.3%
Allergan, Inc. 306,500 23,631,150
Mylan Laboratories, Inc. 1,389,000 48,295,530
--------------
71,926,680
ELECTRONICS: MEDICAL SYSTEMS - 0.9%
Affymetrix, Inc.(1) 1,419,000 27,968,490
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES - 2.6%
Becton, Dickinson and Company 579,600 22,517,460
Boston Scientific Corporation(1) 699,500 42,739,450
Zimmer Holdings, Inc.(1) 337,000 15,181,850
--------------
80,438,760
MISCELLANEOUS HEALTH CARE - 1.0%
Alcon, Inc. 691,300 31,592,410
HEALTHCARE MANAGEMENT SERVICES - OTHER - 3.3%
Anthem, Inc.(1) 422,100 32,565,015
Caremark Rx, Inc.(1) 1,877,300 48,209,064
WebMD Corporation(1) 2,151,000 23,295,330
--------------
104,069,409
MATERIALS & PROCESSING - 3.7%
CONTAINERS & PACKAGING: PAPER & PLASTIC - 2.4%
Pactiv Corporation(1) 2,119,700 41,779,287
Smurfit-Stone Container Corporation(1) 2,664,800 34,722,344
--------------
76,501,631
ENGINEERING & CONTRACTING SERVICES - 0.5%
Fluor Corporation 456,800 15,366,752
PAINTS & COATINGS - 0.8%
RPM International, Inc. 1,781,200 24,491,500
OTHER - 0.8%
MULTI-SECTOR COMPANIES - 0.8%
Brunswick Corporation 970,000 24,269,400
7
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
========= =========
OTHER ENERGY - 6.5%
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 5.3%
Nabors Industries, Ltd.(1) 1,565,400 $61,911,570
Smith International, Inc.(1) 1,343,700 49,367,538
Weatherford International, Ltd.(1) 1,281,600 53,699,040
--------------
164,978,148
UTILITIES: GAS PIPELINES - 1.2%
The Williams Companies, Inc. 4,803,200 37,945,280
PRODUCER DURABLES - 9.6%
AEROSPACE - 0.6%
Alliant Techsystems, Inc.(1) 373,600 19,393,576
DIVERSIFIED PRODUCTION - 1.6%
Danaher Corporation 731,800 49,798,990
ELECTRICAL EQUIPMENT & COMPONENTS - 1.1%
Molex, Inc. 1,225,800 33,084,342
ELECTRONICS: INSTRUMENTS GAUGES & METERS - 1.5%
Mettler-Toledo International, Inc.(1) 319,800 11,720,670
Thermo Electron Corporation(1) 1,582,800 33,270,456
--------------
44,991,126
IDENTIFICATION CONTROL & FILTER DEVICES - 0.4%
Parker-Hannifin Corporation 316,200 13,277,238
MISCELLANEOUS EQUIPMENT - 1.9%
W.W. Grainger, Inc. 1,258,400 58,842,784
PRODUCTION TECHNOLOGY EQUIPMENT - 2.5%
KLA - Tencor Corporation(1) 852,700 39,642,023
Novellus Systems, Inc.(1) 1,048,900 38,411,767
--------------
78,053,790
TECHNOLOGY - 17.5%
COMMUNICATIONS TECHNOLOGY - 5.8%
Advanced Fibre Communications, Inc.(1) 1,406,600 22,885,382
Corning, Inc.(1) 5,023,200 37,121,448
Juniper Networks, Inc.(1) 2,214,200 27,389,654
Network Associates, Inc.(1) 3,004,600 38,098,328
Research In Motion Limited(1) 329,900 7,129,139
Symbol Technologies, Inc. 2,325,100 30,249,551
Tellabs, Inc.(1) 2,811,300 18,470,241
--------------
181,343,743
COMPUTER SERVICES SOFTWARE & SYSTEMS - 5.6%
Adobe Systems, Inc. 1,492,300 47,858,061
BEA Systems, Inc.(1) 3,524,000 38,270,640
Cognos, Inc.(1) 787,100 21,251,700
Seagate Technology(1) 2,098,500 37,038,525
VERITAS Software Corporation(1) 1,066,000 30,562,220
--------------
174,981,146
8
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
========= =========
TECHNOLOGY (CONTINUED)
COMPUTER TECHNOLOGY - 2.8%
EMC Corporation(1) 3,201,900 $33,523,893
Ingram Micro, Inc.(1) 1,531,200 16,843,200
Network Appliance, Inc.(1) 2,311,800 37,474,278
--------------
87,841,371
ELECTRONICS: TECHNOLOGY - 1.1%
Rockwell Automation, Inc. 1,392,400 33,194,816
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 2.2%
Linear Technology Corporation 1,264,800 40,739,208
Xilinx, Inc.(1) 1,033,700 26,162,947
--------------
66,902,155
UTILITIES - 1.0%
UTILITIES: GAS DISTRIBUTORS - 1.0%
Kinder Morgan, Inc. 594,500 32,489,425
--------------
TOTAL COMMON STOCKS (Cost $2,651,643,965) $2,986,775,692
PAR
AMOUNT
=========
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 3.1%
Repurchase agreement with State Street Bank
and Trust Company, 0.75%, dated 6/30/03,
due 7/1/03, maturity value $95,991,000,
collateralized by $97,914,689 market value
Federal Home Loan Bank Note, 1.40%,
due 5/4/04 (Cost $95,989,000) $95,989,000 95,989,000
--------------
TOTAL INVESTMENTS - 98.9% (Cost $2,747,632,965) 3,082,764,692
OTHER ASSETS LESS LIABILITIES - 1.1% 32,836,387
--------------
TOTAL NET ASSETS - 100.0%(2) $3,115,601,079
==============
(1) Non-income producing security.
(2) Percentages for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
9
ARTISAN
MID CAP FUND
Statement of Assets & Liabilities - June 30, 2003
ASSETS:
Investments in securities, at value .......................... $3,082,764,692
Cash.......................................................... 3
Receivable from investments sold.............................. 11,531,565
Receivable from fund shares sold.............................. 51,084,764
Dividends and interest receivable............................. 957,355
----------------
TOTAL ASSETS.................................................. 3,146,338,379
LIABILITIES:
Payable for investments purchased............................. 26,191,042
Payable for fund shares redeemed.............................. 3,646,411
Payable for operating expenses................................ 899,847
----------------
TOTAL LIABILITIES............................................. 30,737,300
----------------
TOTAL NET ASSETS.............................................. $3,115,601,079
=================
NET ASSETS CONSIST OF:
Fund shares issued and outstanding............................ $3,417,950,421
Net unrealized appreciation (depreciation) on investments
and foreign currency related transactions .................. 335,131,727
Accumulated undistributed net investment income (loss)........ -
Accumulated undistributed net realized gains (losses)
on investments and foreign currency related transactions ... (637,481,069)
----------------
$3,115,601,079
================
SUPPLEMENTARY INFORMATION:
Net assets
Investor Shares.......................................... $2,286,627,379
Institutional Shares..................................... $828,973,700
Shares Outstanding
Investor Shares.......................................... 104,849,058
Institutional Shares..................................... 37,753,001
Net asset value and offering price per share
Investor Shares.......................................... $21.81
Institutional Shares..................................... $21.96
Cost of securities held....................................... $2,747,632,965
The accompanying notes are an integral part of the financial statements.
10
ARTISAN
MID CAP FUND
Statement of Operations - For the Year Ended June 30, 2003
INVESTMENT INCOME:
Interest...................................................... $1,630,118
Dividends..................................................... 13,653,667
----------------
TOTAL INVESTMENT INCOME....................................... 15,283,785
EXPENSES:
Advisory fees................................................. 22,682,765
Transfer agent fees
Investor Shares.......................................... 3,493,286
Institutional Shares..................................... 23,232
Shareholder communications
Investor Shares.......................................... 535,187
Institutional Shares..................................... 5,954
Custodian fees................................................ 308,898
Accounting fees............................................... 61,059
Professional fees............................................. 116,996
Registration fees
Investor Shares.......................................... 89,446
Institutional Shares..................................... 46,330
Directors' fees............................................... 60,352
Other operating expenses...................................... 68,466
----------------
TOTAL EXPENSES................................................ 27,491,971
----------------
NET INVESTMENT INCOME (LOSS).................................. (12,208,186)
================
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gain (loss) on investments....................... (325,149,190)
Net increase (decrease) in unrealized appreciation
on investments ............................................. 376,988,686
----------------
NET GAIN (LOSS) ON INVESTMENTS................................ 51,839,496
----------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS ........................................... $39,631,310
================
The accompanying notes are an integral part of the financial statements.
11
ARTISAN
MID CAP FUND
Statements of Changes in Net Assets
Year Ended Year Ended
6/30/03 6/30/02
===================================
OPERATIONS:
Net investment income (loss)............... $(12,208,186) $(13,844,376)
Net realized gain (loss) on investments.... (325,149,190) (197,300,635)
Net increase (decrease) in unrealized
appreciation on investments ............. 376,988,686 (147,245,296)
-----------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................. 39,631,310 (358,390,307)
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
Investor Shares....................... - -
Institutional Shares.................. - -
Net realized gains on
investment transactions:
Investor Shares....................... - -
Institutional Shares.................. - -
-----------------------------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS... - -
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES .... 770,633,859 1,117,916,637
-----------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.... 810,265,169 759,526,330
-----------------------------------
Net assets, beginning of period............ 2,305,335,910 1,545,809,580
-----------------------------------
NET ASSETS, END OF PERIOD.................. $3,115,601,079 $2,305,335,910
===================================
Accumulated undistributed net
investment income (loss)................... $- $-
===================================
The accompanying notes are an integral part of the financial statements.
12
ARTISAN MID CAP FUND
FINANCIAL HIGHLIGHTS
Year Ended Year Ended Year Ended Year Ended Year Ended
06/30/03 06/30/02 06/30/01 06/30/00 06/30/99
For a share outstanding Institutional Institutional Institutional Investor Investor
throughout each period Shares Shares Shares Shares Shares
- ---------------------------------------- ----------- ----------- ----------- ------------ -----------
Net asset value, beginning of period $22.24 $26.48 $27.57 $16.67 $13.69
Income (loss) from investment operations:
Net investment income (loss) (1) (0.07) (0.13) (0.08) (0.18) (0.16)
Net realized and unrealized gains
(losses) on investments (0.21)(2) (4.11) 0.02(2) 11.91 4.41
----------- ----------- ----------- ------------ -----------
Total income (loss) from
investment operations (0.28) (4.24) (0.06) 11.73 4.25
----------- ----------- ----------- ------------ -----------
Distributions paid to shareholders:
Net investment income - - - - -
Net realized gains on investment
transactions - - (1.03) (0.83) (1.27)
----------- ----------- ----------- ------------ -----------
Total distributions paid
to shareholders - - (1.03) (0.83) (1.27)
----------- ----------- ----------- ------------ -----------
Net asset value, end of period $21.96 $22.24 $26.48 $27.57 $16.67
=========== =========== =========== ============ ===========
Total return (1.3%) (16.0%) (0.4%) 72.9% 35.8%
Ratios/supplemental data:
Net assets, end of period (millions) $829.0 $449.8 $212.2 $225.0 $43.3
Ratio of expenses to average
net assets 1.00% 1.02% 1.08% 1.40% 2.00%(3)
Ratio of net investment income
(loss) to average net assets (0.36%) (0.56%) (0.29%) (0.79%) (1.13%)(3)
Portfolio turnover rate 102.85% 121.14% 153.95% 245.69% 202.84%
(1) Computed based on average shares outstanding.
(2) 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.
(3) The ratios of expenses to average net assets and net investment loss to
average net assets exclude expenses paid by the Adviser. Absent expenses
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%),
respectively, for the year ended June 30, 1999.
The accompanying notes are an integral part of the financial statements.
13
ARTISAN
MID CAP FUND
Notes to Financial Statements - June 30, 2003
(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 seven open-
end, diversified mutual funds. Artisan Mid Cap Fund ("the Fund") commenced
operations on June 27, 1997. The Fund's investment goal is to seek long-
term capital growth.
The Fund offers shares of capital stock of two classes - Institutional
Shares and Investor Shares. Institutional Shares, which have been offered
since July 1, 2000, 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 and 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.
Each class of the Fund has 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,
which are in accordance with accounting principles generally accepted in
the United States of America.
(a) Security valuation - Each equity security traded on a securities
exchange is valued at the last current sale price as of the time of
valuation on the exchange on which the security is principally traded
(the "principal exchange"), or lacking any current reported sale on
the principal exchange at the time of valuation, at the last current
sale price as of the time of valuation on a secondary exchange, or
lacking any current sale price on the principal or a secondary
exchange as of the time of valuation, at the most recent bid quotation
on the principal exchange, except that securities listed on the London
Stock Exchange shall be valued at the mean of the close of day bid and
ask, and each security traded in the Nasdaq Stock Market ("Nasdaq")
shall be valued at the Nasdaq Official Closing Price ("NOCP"), as
determined by Nasdaq, or lacking an NOCP, the last current reported
sale price as of the time of valuation on Nasdaq, or lacking any
current reported sale on Nasdaq at the time of valuation, at the most
recent bid quotation on Nasdaq. Securities for which prices are not
readily available, or for which management believes that the latest
sales or bid price does not reflect a fair value of the security, are
valued by a valuation committee at a fair value 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 the valuation date are
valued at amortized cost, which approximates market.
14
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(b) Income taxes - No provision has been made for federal income taxes
since the Fund intends to i) comply with all provisions of the
Internal Revenue Code applicable to regulated investment companies and
ii) distribute to its shareholders substantially all of its taxable
income as well as net realized gains from the sale of investment
securities. The Fund may utilize earnings and profits distributed to
shareholders on redemption of Fund shares as part of the dividends
paid deduction.
(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 on the day 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.
(e) Repurchase agreements - The Fund may enter into repurchase agreements
with institutions that Artisan Partners Limited Partnership (the
"Adviser") has determined are creditworthy pursuant to criteria
adopted by the Funds' Board of Directors. Repurchase agreements are
recorded at cost and are collateralized in an amount greater than or
equal to the repurchase price plus accrued interest. To the extent
that the proceeds from any sale of such collateral upon a default in
the obligation to repurchase were less than the repurchase price, the
Fund would suffer a loss.
(f) Use of estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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 less foreign taxes withheld, if any, 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. Expenses attributable to Artisan Funds are
generally allocated to each Fund based on net assets. Expenses
attributable to a particular Fund are allocated directly to that Fund.
The character of income and net realized gains and losses may differ
for financial statement and tax purposes and may result in
reclassification of permanent differences among certain capital
accounts.
15
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(3) TRANSACTIONS WITH AFFILIATES:
The Adviser, with which the officers and certain directors of the Artisan
Funds 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
Shares of the Fund are offered for sale by Artisan Distributors LLC
("Distributors"). Distributors is wholly-owned by the Adviser. All
distribution expenses relating to the Fund are paid by the Adviser. The
Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports.
Each director who is not an interested person of Artisan Funds or the
Adviser receives an annual retainer of $49,000, plus a fee for each board
or committee meeting attended (other than a committee meeting held on the
same day as a board meeting) of $1,000 for an in-person meeting and $500
for a telephonic meeting as well as reimbursement of expenses related to
his duties as a director of Artisan Funds. In addition, each chairman of a
board committee who is a non-interested director receives a supplemental
annual retainer of $3,000. These fees are generally allocated to each Fund
in proportion to the Funds' net assets.
(4) 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 (a)
$75 million or (b) the lesser of (i) 10% of its total assets (after giving
effect to the loan) or (ii) the maximum amount the Fund may borrow under
the Investment Company Act, the limitations included in the Fund's
prospectus, or any limit or restriction under any law or regulation to
which the Fund is subject or any agreement to which the Fund or Artisan
Funds is a party; provided that the aggregate borrowings by all Funds may
not exceed $100 million. Artisan Funds pays a commitment fee at the annual
rate 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. There were minimal borrowings under
the line of credit during the year ended June 30, 2003. At June 30, 2003
there were no borrowings outstanding under the line of credit.
16
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(5) 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,
2003 were $3,137,982,311 and $2,354,541,729, respectively.
(6) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
NET UNREALIZED
GROSS GROSS APPRECIATION/
COST OF UNREALIZED UNREALIZED (DEPRECIATION) UNDISTRIBUTED UNDISTRIBUTED
INVESTMENTS APPRECIATION DEPRECIATION ON INVESTMENTS ORDINARY INCOME LONG-TERM GAIN
---------------------------------------------------------------------------------------------------------------------------------
$2,790,092,705 $355,724,857 $(63,052,870) $292,671,987 - -
---------------------------------------------------------------------------------------------------------------------------------
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 tax basis of dividends and long-term capital gain distributions paid
during the fiscal years ended June 30, 2003 and June 30, 2002, capital loss
carryovers as of June 30, 2003, and tax-basis post-October loss deferrals
as of June 30, 2003 (recognized for tax purposes on July 1, 2003) are as
follows:
FISCAL YEAR ENDED 6/30/03 FISCAL YEAR ENDED 6/30/02
-------------------------------------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM NET CAPITAL CAPITAL LOSS
INCOME CAPITAL GAIN INCOME CAPITAL GAIN LOSS CARRYOVER POST-OCTOBER
DIVIDENDS DISTRIBUTIONS DIVIDENDS DISTRIBUTIONS CARRYOVERS(1) EXPIRATION LOSSES
-------------------------------------------------------------------------------------------------------
- - - - $178,010,588 2010 $83,758,421
333,252,323 2011
-------------------------------------------------------------------------------------------------------
(1) Capital gain distributions will resume in the future to the
extent gains are realized in excess of the available
carryforwards.
17
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(7) FUND SHARE ACTIVITIES:
Capital share transactions for the Fund were as follows:
Investor Institutional
Year ended June 30, 2003 Shares Shares
================================================================================
Proceeds from shares issued.................... $1,165,389,769 $364,499,717
Net asset value of shares issued in
reinvestment of distributions .............. - -
Cost of shares redeemed........................ (740,991,149) (18,264,478)
------------------------------
Net increase (decrease) from fund
share activities.......................... $424,398,620 $346,235,239
==============================
Shares sold.................................... 58,902,392 18,444,267
Shares issued in reinvestment
of distributions.......................... - -
Shares redeemed................................ (37,879,947) (921,013)
------------------------------
Net increase (decrease) in capital shares...... 21,022,445 17,523,254
==============================
Investor Institutional
Year ended June 30, 2002 Shares Shares
================================================================================
Proceeds from shares issued................... $1,658,139,576 $320,452,227
Net asset value of shares issued in
reinvestment of distributions ............. - -
Cost of shares redeemed....................... (838,081,569) (22,593,597)
------------------------------
Net increase (decrease) from fund
share activities......................... $820,058,007 $297,858,630
==============================
Shares sold................................... 68,336,403 13,136,926
Shares issued in reinvestment
of distributions......................... - -
Shares redeemed............................... (34,975,059) (921,123)
------------------------------
Net increase (decrease) in capital shares..... 33,361,344 12,215,803
==============================
18
[PRICEWATERHOUSECOOPERS LOGO]
- --------------------------------------------------------------------------------
PRICEWATERHOUSECOOPERS LLP
100 East Wisconsin Avenue
Suite 1500
Milwaukee WI 53202
Telephone (414) 212 1600
REPORT OF INDEPENDENT AUDITORS
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 Mid Cap Fund (one of the
portfolios constituting Artisan Funds, Inc., hereafter referred to as the
"Fund") at June 30, 2003, the results of its operations, the changes in its net
assets and its financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. 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 of
America, 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, 2003 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/s/PricewaterhouseCoopers LLP
July 31, 2003
19
- ------------------------NOTES ON MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE----
The discussion of the Fund included in this Annual Report include statistical
information about the portfolio. Except as otherwise noted, that information is
as of June 30, 2003; it varies with changes in a Fund's portfolio investments.
Artisan Funds may consider an issuer to be from a particular country if (i) its
principal securities trading market is in that country; (ii) alone or on a
consolidated basis it derives more of its annual revenue from goods produced,
sales made or services performed in that country than any other country; or
(iii) it is organized under the laws of, or has a principal office in that
country. By applying these tests, it is possible that Artisan Funds could deem
a particular issuer to be from more than one country.
DEFINITIONS OF PORTFOLIO STATISTICS
MEDIAN MARKET CAP provides a measure of the market capitalization value of the
companies in a portfolio. Market capitalization is the aggregate value of all a
company's outstanding common stock. Equal numbers of companies in the portfolio
have market capitalizations higher and lower than the median. WEIGHTED AVERAGE
MARKET CAP is the average of the market capitalizations of the companies in the
portfolio weighted by the size of each company's position within the portfolio.
WEIGHTED AVERAGE GROWTH RATE is the average of the 3-5 year forecasted growth
rates of each company in the portfolio, weighted by the size of the company's
position within the portfolio. WEIGHTED HARMONIC AVERAGE P/E is the harmonic
average, which measures the price/earnings ratio of the Fund, excluding
negative earners, weighted by the size of the company's position within the
portfolio. The earnings figures used are estimates for the current calendar
year.
DESCRIPTIONS OF INDICES
The Fund's performance is compared in this report to changes in three indices -
a broad-based index of changes in prices of securities in the market in which
the Fund invests and a peer group index of other mutual funds that are
categorized by Lipper, Inc., an independent monitor of mutual fund performance,
in the same general category as the Fund. All of the indices are unmanaged and
their returns include reinvested dividends. Unlike the Fund's returns, the
returns of each index, except each Lipper index, do not include the payment of
sales commissions or other expenses that would be incurred in the purchase or
sale of the securities included in that index.
The indices to which the Fund is compared are:
RUSSELL MIDCAP/R INDEX is a market-weighted index of about 800 medium-sized
U.S. companies.
RUSSELL MIDCAP/R GROWTH INDEX is a market-weighted index of those medium-sized
companies included in the Russell Midcap/R Index with higher price-to-book and
higher forecasted growth values.
The LIPPER MID-CAP CORE FUNDS INDEX reflects the net asset weighted returns of
the 30 largest mutual funds tracked by Lipper in the category reflected in the
name of the index. The Fund is included in the Lipper Mid-Cap Core Funds Index.
TRADEMARKS
Trademarks and copyrights relating to the indices mentioned in this report are
owned by: Russell indices: The Frank Russell Company; and Lipper indices:
Reuters Funds Information Limited (a United Kingdom corporation). Except as
otherwise indicated, the trademarks, including names, logos, slogans and
service marks appearing in this report are the property of Artisan Partners
Limited Partnership and may not be copied, reproduced, published or in any way
used without written permission.
20
- ------------------------------------------------------DIRECTORS AND OFFICERS----
The board of directors has overall responsibility for the conduct of the affairs
of Artisan Funds. Each director serves an indefinite term of unlimited duration
until the next annual meeting of shareholders and until the election and
qualification of his or her successor. The board of directors may fill any
vacancy on the board provided that after such appointment at least two-thirds of
the directors have been elected by the shareholders. The shareholders may remove
a director by a vote of a majority of the outstanding shares of the Funds at any
meeting of shareholders called for the purpose of removing such director.
The board of directors elects the officers of Artisan Funds. Each officer serves
until the election and qualification of his or her successor, or until he or she
sooner dies, resigns, or is removed or disqualified. The board of directors may
remove any officer with or without cause at any time.
The names and ages of the directors and officers, the position each holds with
the Funds, the date each was first elected to office, their principal business
occupations and other directorships they have held during the last five years
are shown below.
DATE FIRST
POSITIONS ELECTED OR OTHER
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 8/01/03 WITH FUNDS TO OFFICE DURING PAST 5 YEARS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS WHO ARE NOT "INTERESTED PERSONS"
- ------------------------------------------------------------------------------------------------------------------------------------
David A. Erne - 60 Director 3/27/95 Partner of the law firm Trustee, Northwestern Mutual Life
Reinhart Boerner Van Insurance Company (life insurance,
Deuren S.C., Milwaukee, WI. disability insurance and annuity company).
- ------------------------------------------------------------------------------------------------------------------------------------
Thomas R. Hefty - 56 Director 3/27/95 Retired; Adjunct Faculty, None.
Department of Business and
Economics, Ripon College;
Of Counsel to the law firm
Reinhart Boerner Van Deuren
S.C., Milwaukee, WI. Until
December 2002, Chairman of
the Board and Chief Executive
Officer of Cobalt Corporation
(provider of managed care and
specialty business services).
- ------------------------------------------------------------------------------------------------------------------------------------
Jeffrey A. Joerres - 43 Director 8/9/01 Chairman of the Board Director, Johnson Controls, Inc.
(since May 2001), President (manufacturer of automotive systems and
and Chief Executive Officer building controls).
(since April 1999) of
Manpower, Inc. (non-
governmental employment
service organization);
formerly, Senior Vice
President, European
Operations and Global
Account Management and
Development of Manpower, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick S. Pittard - 57 Director 8/9/01 Retired. Until November Director, Jefferson Pilot Corporation
2001, Chairman of the Board, (individual and group life insurance and
President and Chief annuity company); Former Chairman of the
Executive Officer of Heidrick Board, The University of Georgia
& Struggles International, Foundation; Member, Board of Regents of
Inc. (executive search firm). the University System of Georgia.
- ------------------------------------------------------------------------------------------------------------------------------------
Howard B. Witt - 63 Director 3/27/95 Chairman of the Board, Director, Franklin Electric Co., Inc.
President and Chief Executive (manufacturer of electric motors).
Officer of Littelfuse, Inc.
(manufacturer of advanced
circuit protection devices).
- ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS WHO ARE "INTERESTED PERSONS"*
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew A. Ziegler - 45 Director, 1/5/95 Managing Director of Artisan None.
Chairman Partners; Chairman and
and Chief President of Artisan
Executive Distributors.
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Carlene Murphy Ziegler - 47 Director 3/27/95 Managing Director of Artisan None.
and Vice Partners and Portfolio
President Co-Manager of Artisan
Small Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
*Mr. Ziegler and Ms. Ziegler are married to each other. Mr. and Ms. Ziegler are
"interested persons" of Artisan Funds, as defined in the Investment Company Act
of 1940, because each is a Managing Director of Artisan Partners, the investment
adviser to Artisan Funds. As officers of Artisan Investment Corporation (an
entity incorporated for the sole purpose of acting as general partner to Artisan
Partners), Mr. and Ms. Ziegler manage Artisan Partners. Mr. Ziegler is also
President of Artisan Distributors, Artisan Funds' principal underwriter.
The business address of the directors and officers affiliated with Artisan
Partners is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202. The
addresses of the other directors are: Mr. Erne - 1000 N. Water Street,
Milwaukee, Wisconsin 53202; Mr. Hefty - W233 N2080 Ridgeview Parkway, Waukesha,
Wisconsin 53188; Mr. Joerres - 5301 North Ironwood, Milwaukee, Wisconsin 53217;
Mr. Pittard - c/o Artisan Funds, 1000 N. Water Street, Milwaukee, Wisconsin
53202; and Mr. Witt - 800 E. Northwest Highway, Des Plaines, Illinois 60016.
21
- ------------------------------------------------------DIRECTORS AND OFFICERS----
DATE FIRST
POSITIONS ELECTED OR
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 8/01/03 WITH FUNDS TO OFFICE DURING PAST 5 YEARS HELD
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF ARTISAN FUNDS
- ------------------------------------------------------------------------------------------------------------------------------------
Michael C. Roos - 45 President 8/5/99 Managing Director of Artisan None.
Partners; Vice President of
Artisan Distributors.
- ------------------------------------------------------------------------------------------------------------------------------------
Lawrence A. Totsky - 44 Chief 1/22/98 Managing Director and Chief None.
Financial Financial Officer of Artisan
Officer and Partners; Vice President,
Treasurer Chief Financial Officer and
Treasurer of Artisan
Distributors.
- ------------------------------------------------------------------------------------------------------------------------------------
Janet D. Olsen - 47 General 1/18/01 Managing Director and General None.
Counsel and Counsel of Artisan Partners;
Secretary Vice President and Secretary
of Artisan Distributors;
prior to joining Artisan
Partners in November 2000,
Member of the law firm Bell,
Boyd & Lloyd LLC, Chicago, IL.
- ------------------------------------------------------------------------------------------------------------------------------------
Mark L. Yockey - 47 Vice 4/23/96 Managing Director of Artisan None.
President Partners and Portfolio Manager
of Artisan International Fund and
Artisan International Small Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Scott C. Satterwhite - 46 Vice 7/31/97 Managing Director of Artisan Partners None.
President and Portfolio Co-Manager of Artisan
Mid Cap Value Fund and Artisan
Small Cap Value Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew C. Stephens - 39 Vice 7/31/97 Managing Director of Artisan Partners None.
President and Portfolio Manager of Artisan
Mid Cap Fund.
- ------------------------------------------------------------------------------------------------------------------------------------
Marina T. Carlson - 39 Vice 8/5/99 Managing Director of Artisan None.
President Partners and Portfolio Co-Manager
of Artisan Small Cap Fund; prior to
joining Artisan Partners in 1999,
Manager of Strong Mid Cap Disciplined
Fund from its inception in
December 1998 through March 1999;
Portfolio Co-Manager of Strong
Opportunity Fund and Strong Common
Stock Fund, prior thereto.
- ------------------------------------------------------------------------------------------------------------------------------------
James C. Kieffer - 38 Vice 1/27/00 Managing Director of Artisan Partners None.
President and Portfolio Co-Manager of Artisan
Mid Cap Value Fund and Artisan
Small Cap Value Fund; from 1997
to 2000, Research Analyst for
Artisan Partners.
- ------------------------------------------------------------------------------------------------------------------------------------
N. David Samra - 39 Vice 6/5/02 Managing Director of Artisan Partners None.
President and Portfolio Manager of Artisan
International Value Fund; from August
1997 to May 2002, Portfolio Manager
and Analyst for Harris Associates L.P.
(investment management firm)
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Gregory K. Ramirez - 33 Assistant 1/22/98 Managing Director of Client Accounting None.
Secretary and and Administration of Artisan Partners
Assistant since January 2003, Director of Client
Treasurer Accounting and Administration from
January 2000 to December 2002
and Controller of Artisan Partners
prior thereto; Assistant Treasurer
of Artisan Distributors.
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Sarah A. Johnson - 31 Assistant 2/5/03 Counsel of Artisan Partners; prior None.
Secretary to joining Artisan Partners in July
2002, Associate of the law firm
Bell, Boyd & Lloyd LLC, Chicago, IL.
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The Statement of Additional Information (SAI) contains further information about
the directors. Please call 800.399.1770 for a free copy of the SAI.
22
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. [Reserved]
ITEM 6. [Reserved]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. [Reserved]
ITEM 9. CONTROLS AND PROCEDURES.
(a) Based on an evaluation of the disclosure controls and procedures (as defined
in Rule 30a-3(b) under the Investment Company Act of 1940, the "Disclosure
Controls") as of a date within 90 days prior to the filing date (the "Filing
Date") of this Form N-CSR (the "Report"), the Disclosure Controls are
effectively designed to ensure that information required to be disclosed by the
registrant in the Report is recorded, processed, summarized and reported by the
Filing Date, including ensuring that information required to be disclosed in the
Report is accumulated and communicated to the registrant's management, including
the registrant's principal executive officer and principal financial officer, as
appropriate to allow timely decisions regarding required disclosure.
(b) There were no changes in the registrant's internal controls over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940)
that occurred during the registrant's second fiscal half-year that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a) Not applicable.
(b)(1) Certifications of Andrew A. Ziegler, Principal Executive Officer and
Lawrence A. Totsky, Principal Financial Officer pursuant to Rule 30a-2
under the Investment Company Act of 1940 (17 CFR 270.30a-2), attached
hereto as Exhibits (b)(1)(i) and (b)(1)(ii)
(2) Certification of Andrew A. Ziegler, Principal Executive Officer and
Lawrence A. Totsky, Principal Financial Officer pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, attached hereto as Exhibit (b)(2)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Artisan Funds, Inc.
By: /s/ Andrew A. Ziegler
-----------------------------------
Andrew A. Ziegler
Principal Executive Officer
Date: September 5, 2003
-----------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Andrew A. Ziegler
-----------------------------------
Andrew A. Ziegler
Principal Executive Officer
Date: September 5, 2003
-----------------------------------
By: Lawrence A. Totsky
-----------------------------------
Lawrence A. Totsky
Principal Financial Officer
Date: September 5, 2003
-----------------------------------