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)
875 East Wisconsin Avenue, Suite 800
Milwaukee, WI 53202
(Address of principal executive offices) (Zip Code)
Janet D. Olsen Cameron S. Avery
Artisan Funds, Inc. Bell, Boyd & Lloyd LLC
875 East Wisconsin Avenue, #800 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: 09/30/03
Date of reporting period: 09/30/03
ITEM 1. REPORTS TO SHAREHOLDERS.
[ARTISAN LOGO]
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ANNUAL
REPORT
SEPTEMBER 30, 2003
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ARTISAN INTERNATIONAL FUND
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ARTISAN INTERNATIONAL
SMALL CAP FUND
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ARTISAN INTERNATIONAL
VALUE FUND
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ARTISAN MID CAP FUND
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ARTISAN MID CAP
VALUE FUND
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ARTISAN SMALL CAP FUND
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ARTISAN SMALL CAP
VALUE FUND
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ARTISAN FUNDS, INC.
INVESTOR SHARES
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ARTISANFUNDS
P.O. BOX 8412
BOSTON, MA 02266-8412
This report and the financial statements contained herein are provided for the
general information of the shareholders of Artisan Funds. This report is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. For more 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 September 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----
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02 MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
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02 Artisan International Fund
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04 Artisan International Small Cap Fund
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06 Artisan International Value Fund
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08 Artisan Mid Cap Fund
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10 Artisan Mid Cap Value Fund
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12 Artisan Small Cap Fund
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14 Artisan Small Cap Value Fund
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16 SCHEDULES OF INVESTMENTS
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16 Artisan International Fund
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20 Artisan International Small Cap Fund
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24 Artisan International Value Fund
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27 Artisan Mid Cap Fund
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32 Artisan Mid Cap Value Fund
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35 Artisan Small Cap Fund
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40 Artisan Small Cap Value Fund
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46 STATEMENTS OF ASSETS & LIABILITIES
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48 STATEMENTS OF OPERATIONS
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50 STATEMENTS OF
CHANGES IN NET ASSETS
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54 FINANCIAL HIGHLIGHTS
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58 NOTES TO FINANCIAL STATEMENTS
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68 REPORT OF
INDEPENDENT AUDITORS
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69 NOTES ON
MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
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70 PROXY VOTING POLICIES
AND PROCEDURES
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70 DIRECTORS AND OFFICERS
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- ------------------------------------------------AVERAGE ANNUAL TOTAL RETURNS----
SINCE
1-YEAR 5-YEAR INCEPTION
----------- ----------- -----------
Artisan International Fund
(inception 12/28/95) 16.69% 9.09% 11.16%
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Artisan International Small Cap Fund
(inception 12/21/01) 52.75 NA 20.31
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Artisan International Value Fund
(inception 9/23/02) 44.35 NA 42.24
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Artisan Mid Cap Fund
(inception 6/27/97) 27.52 17.94 19.07
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Artisan Mid Cap Value Fund
(inception 3/28/01) 32.11 NA 8.69
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Artisan Small Cap Fund
(inception 3/28/95) 38.58 6.12 7.71
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Artisan Small Cap Value Fund
(inception 9/29/97) 26.70 14.10 9.83
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As of 9/30/03.
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.
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 Artisan International Fund changed its fiscal year end from June 30 to
September 30. This annual report discusses the results of the three-month
period July 1, 2003, through September 30, 2003.
o Most of our chemical industry stocks posted strong returns. Our consumer
discretionary sector stocks contributed to our relative underperformance.
- ----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----------------------------------------------------------
Despite a positive return for the period, Artisan International Fund lagged the
markets. The Fund gained 5.82% for the three-month fiscal period while its
benchmark, the MSCI EAFE/R Index, rose 8.13%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (12/28/95 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN INTERNATIONAL FUND ($22,732)
MSCI EAFE/R Index ($11,032)
Lipper International Funds Index ($13,342)
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
21,482 10,203 12,366
9/03 22,732 11,032 13,342
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
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3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR 5-YEAR INCEPTION
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Artisan International Fund 5.82% 16.69% 9.09% 11.16%
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MSCI EAFE/R Index 8.13 26.01 0.55 1.27
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Lipper International Funds Index 7.89 25.63 2.14 3.79
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*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. 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 69 for a
description of each index.
BIGGEST GAINERS
Clariant AG.................................. 43.3%
Imperial Chemicals Industries PLC............ 35.7
Credit Suisse Group.......................... 20.0
Tesco PLC.................................... 11.5
Nestle S.A, Class B.......................... 11.4
BIGGEST LOSERS
Industria de Diseno Textil, S.A.............. -14.6%
Fomento Economico Mexicano S.A. ............. -8.5
EnCana Corporation........................... -4.9
Deutsche Telekom AG.......................... -4.5
Muenchener Rueckversicherungs-
Gesellschaft AG............................ -3.2
For the period ended 9/30/03, 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
period ended September 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
02
---
TWO
- --------------------------------------------------ARTISAN INTERNATIONAL FUND----
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
For the three-month fiscal period, international equity markets continued their
post-Iraq turnaround that began in the second calendar quarter of 2003. It
appears that a global economic recovery has begun to unfold, but the pace of the
stock market rally has been unexpected. During the three-month period, the MSCI
EAFE/R Index advanced more than we have seen in a calendar third quarter for
more than a decade.
We lost some relative performance in the consumer staples sector due to our
overweight position, but offset most of the disadvantage with our stock picks.
UK food retailer Tesco PLC announced solid first half results, which confirmed
that it has strengthened its leading position in the UK retail food market.
Nestle S.A. was also a solid performer. It contributed to results after a
favorable financial report showed an increase in cash flows and operating
margins. The part of the report we were most pleased with was the company's
margin improvement, as it appears that cost cutting efforts have continued to
deliver results. One stock pick that contributed negatively was Spanish clothing
retailer Industria de Diseno Textil, S.A. It warned that gross margins for the
second half of 2003 would be below expectations.
Many of our specialty chemicals sector stocks, benefiting from the strength of
the cyclical recovery and improving raw material costs, posted attractive
returns. Imperial Chemical Industries PLC was one of the leading performers
after announcing profits that beat forecasts and additional job cuts aimed at
lowering costs.
In the financial sector we lost relative performance due to the uneven returns
of our stock picks. For example, Credit Suisse Group's stock rose by about 20%
as it recovered from last year's losses. The stock of Muenchener
Rueckversicherungs-Gesellschaft AG (Munich Re) suffered after its debt was
downgraded by Standard & Poor's following a second quarter loss. The loss was
due to an extraordinary tax charge triggered by a fiscal policy debate related
to the tax treatment of certain investment funds.
The information technology sector was the strongest performing group in the MSCI
EAFE/R Index. Our stock selections performed well, but we underperformed in the
area because we only owned a few select names. One of our stocks, semiconductor
company ASML Holding N.V., was up due to reductions in workforce, better margins
and a number of favorable reports about the outlook for semiconductor demand.
On a regional basis, what we gained through stock picking in Europe was more
than offset by the negative allocation effect from the Pacific Rim and Japan due
to our underweight position. We underestimated the momentum of the rally, as
markets such as Hong Kong, Taiwan and Japan were among the best performers
during the quarter.
PORTFOLIO CHANGES
On a regional and country level, we added primarily in Japan but also in Hong
Kong, South Korea and Taiwan, while we reduced our European exposure. Otherwise,
we remained focused on long-term trends and stayed with most of our thematic
holdings.
In the financial sector, we added Nikko Cordial Corporation, a holding company
for a major Japanese broker that also has a joint venture with Citigroup Inc. We
like the recent measures the company has taken to improve the stability of
earnings, such as cost cuts and revisions to its pay structure. We sold ABN Amro
Holdings, a Dutch bank that earns a portion of its revenue from the U.S.
mortgage market, when we concluded that its growth prospects had been dimmed by
falling refinancing demand in the U.S. At our lower expected growth rate, we
thought the company was fully valued.
In the media area, it appears that ad spending is beginning to show signs of
life again, and the stocks of advertising agencies and media companies reflected
the improved business outlook. We thought this had the potential to be a global
trend, so we added a number of Japanese media companies such as Nippon
Television Network Corporation, Tokyo Broadcasting System, Inc. and Fuji
Television Network, Inc. to our portfolio.
FUND STATISTICS
Net Assets................................... $8.9 Bil.
Number of Holdings........................... 103
Weighted Avg. Market Cap..................... $24.2 Bil.
Weighted Avg. Growth Rate (3-5 yr)........... 10.5%
Weighted Harmonic Avg. P/E (2003E)........... 17.5X
All statistics are as of 9/30/03.
TOP 10 HOLDINGS
Allianz AG (Germany)......................... 3.6%
Compass Group PLC (United Kingdom)........... 3.4
Nestle S.A., Class B (Switzerland)........... 3.3
Honda Motor Co., Ltd. (Japan)................ 2.8
Tesco PLC (United Kingdom)................... 2.8
Lloyds TSB Group PLC (United Kingdom)........ 2.6
Muenchener Rueckversicherungs-
Gesellschaft AG (Germany).................... 2.6
Fortis (NL) N.V. (Netherlands)............... 2.5
Marks & Spencer Group PLC (United Kingdom)... 2.5
Carrefour S.A. (France)...................... 2.3
TOTAL........................................ 28.4%
As a percentage of total net assets as of 9/30/03.
TOP 5 SECTORS
Consumer Discretionary....................... 24.9%
Financials................................... 24.2
Consumer Staples............................. 16.5
Telecommunications Services.................. 7.9
Materials.................................... 7.4
As a percentage of total net assets as of 9/30/03.
TOP 5 COUNTRY ALLOCATIONS
United Kingdom............................... 23.3%
Switzerland.................................. 15.7
Germany...................................... 13.4
Japan........................................ 9.8
France....................................... 6.0
As a percentage of total net assets as of 9/30/03.
REGION ALLOCATION
9/03 6/03
----- -----
Europe....................................... 74.6% 79.1%
Asia/Pacific................................. 13.8 8.0
Latin America................................ 6.8 8.4
North America................................ 2.9 3.3
As a percentage of total net assets as of 9/30/03 and 6/30/03, respectively.
800.344.1770 o WWW.ARTISANFUNDS.COM
03
-----
THREE
ARTISAN
INTERNATIONAL
SMALL CAP FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o Artisan International Small Cap Fund changed its fiscal year end from June
30 to September 30. This annual report discusses the results of the three-
month period July 1, 2003, through September 30, 2003.
o Artisan International Small Cap Fund closed to most new investors September
26, 2003. Shareholders of the Fund as of September 25, 2003, may continue to
buy shares and reinvest dividends and capital gains.
- ----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 gained 14.46% for the three-month fiscal
period and trailed the MSCI EAFE/R Small Cap Index that increased 16.46%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (12/21/01 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN INTERNATIONAL SMALL CAP FUND ($13,885)
MSCI EAFE/R Small Cap Index ($13,325)
MSCI EAFE/R Index ($10,194)
Lipper International Small-Cap Funds Index ($12,713)
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 10,245 10,219
3/02 10,490 10,806 10,298 10,645
6/02 10,500 11,254 10,079 10,925
9/02 9,090 9,449 8,090 9,131
12/02 9,945 9,420 8,612 9,407
3/03 9,564 9,149 7,905 8,999
6/03 12,130 11,441 9,428 11,137
9/03 13,885 13,325 10,194 12,713
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
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3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan International Small Cap Fund 14.46% 52.75% 20.31%
- --------------------------------------------------------------------------------
MSCI EAFE/R Small Cap Index 16.46 41.02 17.55
- --------------------------------------------------------------------------------
MSCI EAFE/R Index 8.13 26.01 1.09
- --------------------------------------------------------------------------------
Lipper International Small-Cap Funds Index 14.15 39.23 14.48
- --------------------------------------------------------------------------------
*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. 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 69 for a
description of each index.
BIGGEST GAINERS
Banco Latinoamericano de Exportaciones,
S.A. - E Shares............................ 50.6%
Hong Kong Exchanges & Clearing Ltd........... 43.2
Trinity Mirror PLC........................... 29.4
Vimpel-Communications - (ADR)................ 27.8
N.V. Holdingmaatschappij De Telegraaf........ 18.3
BIGGEST LOSERS
Stada Arzneimittel AG........................ -15.0%
LG Household & Health Care Ltd............... -14.6
Telekom Malaysia Berhad...................... -8.9
Telekom Austria AG........................... -6.3
Wimm-Bill-Dann Foods OJSC - (ADR)............ -5.3
For the period ended 9/30/03, 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
period ended September 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
04
- ----
FOUR
- ----------------------------------------ARTISAN INTERNATIONAL SMALL CAP FUND----
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
Following the turnaround in the second calendar quarter of 2003, international
equity markets continued their post-Iraq advance during the three-month fiscal
period. While we agree that the economic fundamentals have continued to improve,
the momentum and focus of the rally has been surprising.
The financial sector provided our strongest relative results for the fiscal
period. Latin American bank Banco Lationamericano de Exportaciones S.A., our
largest holding, was the strongest performing stock in the area. The appointment
of a new CEO, a strategic alliance with Bank of America and an improved
quarterly earnings report were a few of the driving factors behind the stock's
return. Hong Kong Exchanges & Clearing Ltd. was another company in the sector
that performed very well. The turnaround in equity markets and an increase in
trading volume were the primary drivers behind the strong result.
Our consumer discretionary holdings also contributed strongly to performance.
One of the best performing stocks was Trinity Mirror PLC, the UK's largest
newspaper publisher. It benefited from its new CEO's restructuring plans and
growing indications about a global recovery of advertising spending.
One negative performer was South Korean consumer products company LG Household &
Health Care Ltd. It reported disappointing earnings on lower margins due to
higher marketing expenses and increasing competition in cosmetics. In addition,
the South Korean economy, which slipped into its first recession in five years,
is weighing on demand. A typhoon and soft consumer spending were factors that we
believe delayed a potential recovery.
In the healthcare sector, generic drug maker Stada Arzneimittel AG hurt
performance after being one of our best performers in the second quarter of
2003. For the three-month period, the company's results offered mixed reviews as
earnings were in line with expectations, but margins in both the branded and
generic drug divisions fell.
On a regional basis, returns were fairly proportionate to our allocations. The
largest contribution was from Europe, but our emerging markets and Pacific Basin
exposure also added to returns. As we said earlier, the momentum of the market
rally has been surprising, and this was particularly true with respect to Asian
markets. Hong Kong, Taiwan and Japan were among the best performing markets and
the largest influences on relative performance were our lack of exposure to
Japan and a strong yen, which offset our gains from stock selection in the other
areas.
PORTFOLIO CHANGES
On a regional and country level, we added a number of stocks in Asia and the
Pacific Rim. Our weighting in Canada fell, mainly due to the sale of hotel chain
Four Seasons Hotels, Inc. Our allocations to Europe and Japan changed only
slightly. The largest commitments we have on a sector basis are consumer staples
and consumer discretionary, but we pared back both sectors causing our absolute
and relative weightings to fall compared to June 30, 2003.
Some specific transactions in the consumer sectors included the sales of U.K.
pub operator J.D Wetherspoon PLC and U.K. homebuilder Bovis Homes Group PLC. Two
purchases made during the quarter were Japanese home center chain Komeri
Company, Ltd. and leading Italian luxury goods company Bulgari S.p.A. Komeri's
margins are trending higher and the company boosted its product lineup for
professionals. Bulgari has a strong brand name, a history of product
innovations, and an improved cost structure driven by higher internal
efficiencies.
Outside of the consumer sector, two of the largest purchases were diversified
Swiss industrial company Sulzer AG and South Korean shipbuilder Samsung Heavy
Industries Company, Ltd. Sulzer, which has a solid balance sheet, has shown
improvements in margins and generates solid revenue growth. Samsung has a strong
cash position and it stands to benefit from a potential increase in global
shipbuilding demand and pricing.
FUND STATISTICS
Net Assets...................................$391.3 Mil.
Number of Holdings........................... 75
Median Market Cap............................ $1.3 Bil.
Weighted Avg. Market Cap..................... $2.0 Bil.
Weighted Avg. Growth Rate (3-5 yr)........... 19.0%
Weighted Harmonic Avg. P/E (2003E)........... 18.8X
All statistics are as of 9/30/03.
TOP 10 HOLDINGS
Banco Latinoamericano de Exportaciones, S.A. -
E Shares (Panama).......................... 4.5%
Vimpel-Communications - ADR (Russia)......... 3.0
Straumann Holding AG (Switzerland)........... 2.8
N.V. Holdingmaatschappij De Telegraaf
(Netherlands).............................. 2.5
Fraser & Neave Limited (Singapore)........... 2.4
Gruppo Editoriale L'Espresso S.p.A. (Italy).. 2.3
Rodriguez Group (France)..................... 2.2
Trinity Mirror PLC (United Kingdom).......... 2.1
Sogecable, S.A. (Spain)...................... 2.0
SIG Holding AG (Switzerland)................. 2.0
TOTAL........................................ 25.8%
As a percentage of total net assets as of 9/30/03.
TOP 5 SECTORS
Consumer Discretionary....................... 29.4%
Consumer Staples............................. 21.1
Financials................................... 13.0
Healthcare................................... 11.2
Industrials.................................. 8.2
As a percentage of total net assets as of 9/30/03.
TOP 5 COUNTRY ALLOCATIONS
Switzerland.................................. 13.8%
United Kingdom............................... 10.4
Netherlands.................................. 6.7
France....................................... 5.3
Italy........................................ 5.0
As a percentage of total net assets as of 9/30/03.
REGION ALLOCATION
9/03 6/03
----- -----
Europe....................................... 63.8% 64.5%
Asia/Pacific................................. 21.0 17.0
Latin America................................ 7.2 9.6
North America................................ 4.8 7.2
As a percentage of total net assets as of 9/30/03 and 6/30/03, respectively.
800.344.1770 o WWW.ARTISANFUNDS.COM
05
-----
FIVE
ARTISAN
INTERNATIONAL
VALUE FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o Artisan International Value Fund changed its fiscal year end from June 30 to
September 30. This annual report discusses the results of the three-month
period July 1, 2003, through September 30, 2003.
o Artisan International Value Fund marked its first calendar year of operation
having significantly outperformed its benchmark for the 12-month 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. We conduct our 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 gained 10.07% for the three-month fiscal period
ended September 30, 2003, and outperformed its benchmark, the MSCI EAFE/R Index,
which gained 8.13%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (9/23/02 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN INTERNATIONAL VALUE FUND ($14,320)
MCSI EAFE/R Value Index ($13,040)
MCSI EAFE/R Index ($12,639)
Lipper International Funds Index ($12,526)
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
7/03 13,280 12,318 11,972 11,935
8/03 13,710 12,685 12,261 12,279
9/03 14,320 13,040 12,639 12,526
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
- --------------------------------------------------------------------------------
3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan International Value Fund 10.07% 44.35% 42.24%
- --------------------------------------------------------------------------------
MSCI EAFE/R Value Index 9.58 30.85 29.75
- --------------------------------------------------------------------------------
MSCI EAFE/R Index 8.13 26.01 25.84
- --------------------------------------------------------------------------------
Lipper International Funds Index 7.89 25.63 24.73
- --------------------------------------------------------------------------------
*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 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 69 for a
description of each index.
BIGGEST GAINERS
NIPPONKOA Insurance Company, Ltd............. 45.5%
PubliGroupe S.A. ............................ 44.4
Carpetright PLC.............................. 33.7
Schindler Holding AG......................... 31.4
Meitec Corporation........................... 21.4
BIGGEST LOSERS
Brit Insurance Holdings PLC.................. -11.5%
Lotte Chilsung Beverage Co., Ltd. - Common... -6.7
Asia Satellite Telecommunications
Holdings, Ltd.............................. -5.0
Aventis S.A.................................. -3.9
Arch Capital Group, Ltd...................... -2.9
For the period ended 9/30/03, 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
period ended September 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
06
- ----
SIX
- --------------------------------------------ARTISAN INTERNATIONAL VALUE FUND----
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
The three-month fiscal period continued the positive trend set in the second
calendar quarter of 2003. Most major market indexes posted gains, though not at
the same dramatic pace of the second quarter. Investors in foreign markets
enjoyed the additional benefit of currency translation as many major currencies
continued their two-year climb against a US dollar that was under mounting
pressure from a record current account deficit, rising budget deficits, and low
interest rates.
The largest positive contribution to the Fund in the fiscal period came from
NIPPONKOA Insurance Company, Ltd. NIPPONKOA is one of Japan's largest property
and casualty insurers. The main issue affecting this company at the time of
investment was the low return earned on the company's investment portfolio. This
depressed the company's ROE and, in our view, was the reason the shares traded
at a large discount to book value. As a natural consequence of a rising Japanese
stock market, investor interest has returned to the property and casualty
insurance sector in anticipation of better operating returns and a growing book
value per share. NIPPONKOA rallied along with the sector.
The company that had the largest negative impact on the Fund was coincidentally
another property and casualty insurer. Brit Insurance Holdings PLC was purchased
for the Fund during the second quarter of 2003. The company's shares declined
during the quarter ended September 30, without, we believe, a fundamental
reason. We took the opportunity to increase our stake and were happy to see the
company's CEO do the same.
PORTFOLIO CHANGES
It may seem paradoxical, but in this environment of rising markets and
increasing investor optimism, our jobs as investors become more difficult.
That's not to say that we don't like to see rising stock prices. But remember,
we are looking to buy stocks at a significant discount to our estimate of long-
term intrinsic value. As investors become more optimistic, they feel more
confident placing higher valuations on stocks, which narrows this gap between
intrinsic value and stock prices. Of course, we benefit from this process as our
stocks rise in price, but suffer as it becomes more difficult to find new
significantly undervalued stocks - hence the paradox.
During the fiscal period, as is generally true, our investment activity was a
function of the movement in stock prices relative to our intrinsic value
estimates. Three stocks, Accenture Ltd., Tecan Group AG and Topdanmark A/S,
reached or exceeded our estimates of intrinsic value and were sold. And while
rising equity valuations have made it more difficult to find undervalued
securities that meet our criteria, we did find three attractive companies to add
to the portfolio: Arch Capital Group, Ltd., Lotte Chilsung Beverage Co., Ltd.
and Unilever PLC.
Arch Capital is a Bermuda-based insurance and reinsurance company. We believe
Arch Capital has an underutilized capital base and a talented management team in
place to profitably grow the business.
Lotte Chilsung Beverage Co., Ltd. is Korea's largest beverage company with a
nearly 45% market share of non-alcoholic beverages. In our opinion, the
company's attractions are many, including a strong competitive position, high
return on capital and a very cheap valuation. There are some risks, particularly
that the interests of the controlling shareholder may not necessarily be aligned
with ours as minority shareholders. However, we simply cannot find another
business of this quality trading at such an attractive price.
Unilever is an Anglo-Dutch food and consumer products company that owns many
familiar powerhouse brands including Lipton/R Tea, Knorr/R Soups, Hellmann's/R
Mayonnaise and Dove/R soap. We believe investors have overlooked stable, mature
companies such as Unilever in favor of more exciting, potentially fast-growing
stocks with exposure to an economic recovery.
We think it is worth noting that the three stocks we sold had an average P/E
that was roughly two times more than the three stocks we purchased. In short, we
sold stocks that appeared fully valued to us and replaced them with stocks that
we think are meaningfully undervalued.
FUND STATISTICS
Net Assets...................................$23.6 Mil.
Number of Holdings........................... 41
Median Market Cap............................ $1.4 Bil.
Weighted Avg. Market Cap..................... $7.1Bil.
Median P/B Value............................. 1.7X
Weighted Harmonic Avg. P/E (2003E)........... 16.3X
All statistics are as of 9/30/03.
TOP 10 HOLDINGS
Diageo PLC (United Kingdom).................. 4.2%
Meitec Corporation (Japan)................... 4.0
NIPPONKOA Insurance Company, Ltd. (Japan).... 3.4
Hunter Douglas N.V. (Netherlands)............ 3.2
Aventis S.A. (France)........................ 3.2
Euronext N.V. (Netherlands).................. 3.1
Tower, Ltd. (New Zealand).................... 3.1
Arch Capital Group, Ltd. (Bermuda)........... 3.0
Brit Insurance Holdings PLC (United Kingdom). 2.9
Pargesa Holding AG, Geneva (Switzerland)..... 2.9
TOTAL........................................ 33.0%
As a percentage of total net assets as of 9/30/03.
TOP 5 SECTORS
Financials................................... 25.1%
Consumer Discretionary....................... 18.9
Consumer Staples............................. 16.3
Industrials.................................. 12.1
Healthcare................................... 7.6
As a percentage of total net assets as of 9/30/03.
TOP 5 COUNTRY ALLOCATIONS
United Kingdom............................... 19.7%
Switzerland.................................. 14.9
Japan........................................ 11.1
Germany...................................... 7.4
Netherlands.................................. 7.2
As a percentage of total net assets as of 9/30/03.
REGION ALLOCATION
9/03 6/03
----- -----
Europe....................................... 65.4% 70.1%
Asia/Pacific................................. 22.1 19.4
North America................................ 4.3 3.6
Latin America................................ 2.3 2.0
As a percentage of total net assets as of 9/30/03 and 6/30/03, respectively.
800.344.1770 o WWW.ARTISANFUNDS.COM
07
-----
SEVEN
ARTISAN
MID CAP FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o Artisan Mid Cap Fund changed its fiscal year end from June 30 to September
30. This annual report discusses the results of the three-month period July
1, 2003 through September 30, 2003.
o Technology stocks contributed positively to relative performance. Our
consumer-related exposure hurt our relative results.
- ----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----------------------------------------------------------
For the three-month fiscal period ended September 30, 2003, Artisan Mid Cap Fund
gained 6.01%, while its benchmark, the Russell Midcap/R Index, increased 6.43%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (6/27/97 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN MID CAP FUND ($29,822)
Russell Midcap/R Growth Index ($12,860)
Russell Midcap/R Index ($15,639)
Lipper Mid-Cap Core Funds Index ($15,598)
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
28,132 12,000 14,694 14,734
9/03 29,822 12,860 15,639 15,598
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
- --------------------------------------------------------------------------------
3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Mid Cap Fund 6.01% 27.52% 17.94% 19.07%
- --------------------------------------------------------------------------------
Russell Midcap/R Growth Index 7.16 38.89 4.49 4.10
- --------------------------------------------------------------------------------
Russell Midcap/R Index 6.43 32.63 8.06 7.40
- --------------------------------------------------------------------------------
Lipper Mid-Cap Core Funds Index 5.86 28.76 9.49 7.36
- --------------------------------------------------------------------------------
*Not Annualized.
PERFORMANCE IS HISTORICAL AND 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
GROWTH 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 FALL OUT OF FAVOR WITH
INVESTORS AND 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 69 for a description of each index.
BIGGEST GAINERS
Research In Motion Limited................... 71.9%
Seagate Technology........................... 48.5%
Invitrogen Corporation....................... 43.8%
Network Appliance, Inc....................... 25.7%
Adobe Systems Incorporated................... 22.1%
BIGGEST LOSERS
Labranche & Co Inc........................... -28.0%
Lamar Advertising Company.................... -16.0%
InterActiveCorp.............................. -15.6%
Costco Wholesale Corporation................. -12.9%
Caremark Rx, Inc............................. -9.9%
For the period ended 9/30/03, 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
period ended September 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
08
- -----
EIGHT
- --------------------------------------------------------ARTISAN MID CAP FUND----
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
U.S. equity markets posted their second consecutive quarter of positive
performance during the three-month fiscal period. Within mid-caps, the smallest
and most speculative stocks led the way. In addition, technology stocks were
among the performance leaders for the Russell Midcap/R Index and Russell
Midcap/R Growth Index.
A variety of events drove optimism in the technology sector including a positive
outlook by Intel Corporation, an announcement by Microsoft Corporation that it
was looking to add jobs, increased industrial production within some tech
industries and strong consumer spending. On average the Fund had a slightly
larger commitment to technology stocks than the Russell Midcap/R Growth Index
and security selection was strong, which contributed positively to relative
performance.
Two of our best performing stocks were Network Appliance, Inc. and Adobe Systems
Incorporated. Network Appliance is a storage technology company that reported
strong earnings driven by better-than-expected sales of various products such as
its disaster recovery and data backup technology. Adobe is a publishing software
company that is known for its Acrobat/R, Illustrator/R and Photoshop/R products.
Its gains were driven by a strong earnings report due to the success of the
company's recently upgraded Acrobat/R, which contributed to strong business
growth.
Outside of technology, a number of individual success stories also contributed
to third quarter results. Two of the better performers were Invitrogen
Corporation and The Williams Companies, Inc. Invitrogen is a market leader in
molecular biology kits. Earlier this year, the company appointed a new President
and CEO, who joined the company from GE Medical Systems. As the former President
and CEO of GE Medical's Information Technologies business unit, he managed
numerous acquisitions and we think he brings significant operational experience
to Invitrogen.
In an otherwise soft quarter for energy related stocks, natural gas pipeline
leader, The Williams Companies, outperformed after reporting strong earnings.
The Williams Companies benefited from high natural gas prices and took steps to
exit certain business lines and focus on its core businesses.
The Fund's consumer-related exposure did the most damage to relative results in
the quarter. We were overweight advertising and media, which hurt our relative
performance, as did a few security-specific issues. In advertising and media,
several economic data points related to an advertising recovery showed signs of
life, but it appeared that weak employment data held back a rebound, causing
companies such as Lamar Advertising Company to underperform. Costco Wholesale
Corporation, the leading warehouse club brand in the U.S., fell after the
company lowered its outlook for its fiscal fourth quarter. It experienced
increased competition from Sam's Club (Wal-Mart Stores, Inc.' s warehouse store
chain) and rising labor costs.
PORTFOLIO CHANGES
The makeup of the portfolio is largely the same as it was on June 30, 2003. The
biggest change was the addition of a number of new gardenSM positions in the
technology sector, resulting in an increase in our overall weighting.
The companies owned in the energy sector remained the same because we continued
to think that the fundamentals were in place for oil and gas prices to be
sustained at higher levels. The reduced weight in the sector is the result of
trimming back a few of our holdings into strength. Within the consumer space, we
closed out the Fund's positions in Tiffany & Co., Darden Restaurants, Inc. and
Pixar. A number of data points in September related to employment, consumer
debt, and wage growth made us cautious about the valuation levels of many
consumer-related stocks. Our concern is that it will be hard to duplicate recent
stimuli such as low interest rates, which contributed to refinancing activity,
tax cuts and rebate checks. As a result, we felt it would be prudent to take
gains in some of those investments.
FUND STATISTICS
Net Assets................................... $3.5 Bil.
Number of Holdings........................... 100
Median Market Cap............................ $5.1 Bil.
Weighted Avg. Market Cap..................... $8.0 Bil.
Weighted Avg. Growth Rate (3-5 yr)........... 16.3%
Weighted Harmonic Avg. P/E (2003E)........... 25.8X
Fund statistics are as of 9/30/03.
TOP 10 HOLDINGS
Accenture Ltd - Class A...................... 2.0%
Southwest Airlines Co........................ 1.8
Caremark Rx, Inc............................. 1.6
Smith International, Inc..................... 1.6
Mylan Laboratories Inc....................... 1.6
Seagate Technology........................... 1.5
Boston Scientific Corporation................ 1.5
MGIC Investment Corporation.................. 1.5
Omnicom Group Inc............................ 1.5
Danaher Corporation.......................... 1.5
TOTAL........................................ 16.1%
As a percentage of total net assets as of 9/30/03.
SECTOR DIVERSIFICATION
9/03 6/03
----- -----
Auto & Transportation........................ 5.2% 4.4%
Consumer Discretionary....................... 24.1 24.8
Consumer Staples............................. 1.6 1.4
Financial Services........................... 12.4 12.4
Healthcare................................... 13.3 13.7
Integrated Oils.............................. 0.0 0.0
Materials & Processing....................... 3.0 3.7
Other........................................ 0.4 0.8
Other Energy................................. 4.8 6.5
Producer Durables............................ 7.8 9.6
Technology................................... 22.2 17.5
Utilities.................................... 0.7 1.0
Other assets less liabilities................ 4.5 4.2
TOTAL........................................ 100% 100%
As a percentage of total net assets as of 9/30/03 and 6/30/03, respectively.
800.344.1770 o WWW.ARTISANFUNDS.COM
09
----
NINE
ARTISAN
MID CAP VALUE
FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o Artisan Mid Cap Value Fund changed its fiscal year end from June 30 to
September 30. This annual report discusses the results of the three-month
period July 1, 2003, through September 30, 2003.
o Consumer staples and producer durables provided strong relative
contributions. Our energy stocks weakened relative performance.
- ----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 in transition, are experiencing declining earnings and/or
have earnings short falls.
PERFORMANCE REVIEW
For the three-month fiscal period ended September 30, 2003, Artisan Mid Cap
Value Fund was up 4.98%, while its benchmark, the Russell Midcap Value Index,
increased 5.94%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (3/28/01 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN MID CAP VALUE FUND ($12,327)
Russell Midcap/R Value Index ($11,657)
Russell Midcap/R Index ($10,967)
Lipper Mid-Cap Value Funds Index ($11,590)
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
9/03 12,327 11,657 10,967 11,590
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
- --------------------------------------------------------------------------------
3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Mid Cap Value Fund 4.98% 32.11% 8.69%
- --------------------------------------------------------------------------------
Russell Midcap/R Value Index 5.94 28.30 6.30
- --------------------------------------------------------------------------------
Russell Midcap/R Index 6.43 32.63 3.75
- --------------------------------------------------------------------------------
Lipper Mid-Cap Value Funds Index 6.17 29.17 6.06
- --------------------------------------------------------------------------------
*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. 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. See page 69 for a description of each index.
BIGGEST GAINERS
Tyson Foods Inc.............................. 29.9%
Swift Transportation Co. Inc................. 19.4
TCF Financial Corp. ......................... 19.1
Ingersoll-Rand Co............................ 18.9
Countrywide Financial Corporation............ 13.2
BIGGEST LOSERS
Loews Corp................................... -13.6%
Loews Corp. - Carolina Group................. -12.5
Deluxe Corp.................................. -6.6
Furniture Brands International, Inc.......... -6.4
The Student Loan Corporation................. -4.6
For the period ended 9/30/03, 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 period ended September 30, 2003, considering interim security purchases,
sales and dividends. Past performance of these specific holdings is historical
and does not guarantee future results.
10
---
TEN
- --------------------------------------------------ARTISAN MID CAP VALUE FUND----
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
During the three-month fiscal period, virtually every area of the market netted
solid gains. Speculative companies continued to generate strong returns as
investors favored stocks with little or no earnings power and/or high risk
levels. In the Russell Midcap/R Value Index, economically sensitive names were
among the leaders while energy and utilities proved to be laggards.
We were able to participate in the rally of economically sensitive areas of the
market as a number of our producer durables and consumer discretionary stocks
did well. Two solid contributors in the durables sector were Dover Corporation
and Ingersoll-Rand Company Limited. Both companies reported strong earnings
results, helping to push up stock prices. Some positive economic news and
anecdotal signs hinting at stronger business spending also helped sentiment.
In the consumer discretionary sector, jewelry retailer Zale Corporation and arts
and crafts retailer Michaels Stores, Inc. were solid performers, but strength in
those stocks was offset some by weakness at Furniture Brands International, Inc.
During July, Zale announced a Dutch auction tender offer to buy back up to 6.4
million outstanding shares at a premium to the existing stock price. Michaels
reported earnings that were ahead of consensus expectations. Its earnings
strength can be attributed to strong gross margin improvement and an increase in
same store sales. Furniture Brands disclosed that its sales estimates would be
weak for the year, which caused earnings expectations to be adjusted downward.
The financial sector was a positive absolute contributor, but a disappointment
at Loews Corporation hurt relative results. Countrywide Financial Corporation,
our largest holding as of September 30, 2003, posted solid gains. Countrywide is
primarily a mortgage banker and during the period refinancing demand slowed as
mortgage rates moved higher. However, Countrywide has a large servicing
portfolio that has the potential to provide earnings growth when rates rise.
TCF Financial Corporation was up meaningfully after reporting solid earnings and
announcing a stock repurchase program and a quarterly cash dividend. Loews fell
due to weak sales by its Carolina Group and increased losses at its CNA
insurance unit. Loews Corporation - Carolina Group, which we also hold, slumped
after a drop in sales of its largest brand of cigarettes, Newport, hurting
second quarter profits.
The one sector that posted a negative return in the Russell Midcap/R Value Index
was energy. Our investment discipline has led us to own more stocks in the
energy sector relative to the Index because of what we consider to be attractive
supply/demand economics for the group, the real cash earnings that many
companies are currently producing, and valuations we consider attractive. Gas
prices trended downward as the seasonal build of inventories exceeded
expectations and energy stocks tracked in a similar fashion. Our security
selection made up for some of the allocation disadvantage.
PORTFOLIO CHANGES
A number of new positions were added to the Fund during the period. The largest
of the additions were two consumer companies, Hormel Foods Corporation and Dial
Corporation. Hormel is a meat and food products company that became attractive
after its stock sold off in response to concerns about the negative effect of
"protein prices" on earnings. On a fundamental basis we are attracted to the
company's strong balance sheet and history of stock repurchases. Dial is best
known as a soap manufacturer, but the company offers a number of consumer
product lines. We are attracted to it based on its valuation, its accumulation
of cash, and our confidence in company management.
We sold Avalonbay Communities, Inc., Ingersoll-Rand Company Limited and Waters
Corporation. We began selling our position in Avalonbay during August after it
had reached our target range. Subsequent to our trimming, the company announced
a common stock offering of 2.75 million shares. We believe the offering
confirmed our estimate of the value of the business and we sold out completely.
We sold our positions in Ingersoll-Rand and Waters when they, too, moved into
our target ranges.
FUND STATISTICS
Net Assets................................... $77.4 Mil.
Number of Holdings........................... 47
Median Market Cap............................ $2.7 Bil.
Weighted Avg. Market Cap..................... $4.3 Bil.
Weighted Avg. Growth Rate (3-5 yr)........... 11.3%
Weighted Harmonic Avg. P/E (2003E)........... 12.5X
Fund statistics are as of 9/30/03.
TOP 10 HOLDINGS
Countrywide Financial Corporation............ 5.7%
Apache Corporation........................... 5.3
The Student Loan Corporation................. 4.2
Furniture Brands International, Inc.......... 3.6
White Mountains Insurance Group, Ltd......... 3.3
Polo Ralph Lauren Corporation................ 2.8
Zale Corporation............................. 2.6
XTO Energy, Inc.............................. 2.6
Nuveen Investments, Inc. - Class A........... 2.6
Republic Services, Inc. ..................... 2.6
TOTAL........................................ 35.3%
As a percentage of total net assets as of 9/30/03.
SECTOR DIVERSIFICATION
9/03 6/03
----- -----
Auto & Transportation........................ 3.7% 3.6%
Consumer Discretionary....................... 14.6 15.5
Consumer Staples............................. 10.2 5.6
Financial Services........................... 33.5 31.9
Healthcare................................... 0.7 1.0
Integrated Oils.............................. 0.0 0.0
Materials & Processing....................... 6.2 7.2
Other........................................ 1.5 1.6
Other Energy................................. 14.1 14.0
Producer Durables............................ 3.5 8.0
Technology................................... 1.5 2.6
Utilities.................................... 4.8 2.6
Other assets less liabilities................ 5.7 6.4
TOTAL........................................ 100% 100%
As a percentage of total net assets as of 9/30/03 and 6/30/03, respectively.
800.344.1770 o WWW.ARTISANFUNDS.COM
11
------
ELEVEN
ARTISAN
SMALL CAP FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o Artisan Small Cap Fund changed its fiscal year end from June 30 to September
30. This annual report discusses the results of the three-month period July
1, 2003 through September 30, 2003.
o Our financial sector holdings produced our strongest relative contribution.
The Fund's weakest performers came from the consumer discretionary sector.
- ----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----------------------------------------------------------
For the three-month fiscal period ended September 30, 2003, Artisan Small Cap
Fund underperformed its benchmark, the Russell 2000/R Growth Index, and its peer
group, as measured by the Lipper Small-Cap Core Funds Index.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (3/28/95 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN SMALL CAP FUND ($18,811)
Russell 2000/R Growth Index ($14,584)
Russell 2000/R Index ($21,064)
Lipper Small-Cap Core Funds Index ($23,257)
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
17,865 13,202 19,311 21,674
9/03 18,811 14,584 21,064 23,257
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
- --------------------------------------------------------------------------------
3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Small Cap Fund 5.29% 38.58% 6.12% 7.71%
- --------------------------------------------------------------------------------
Russell 2000/R Growth Index 10.47 41.72 2.75 4.53
- --------------------------------------------------------------------------------
Russell 2000/R Index 9.08 36.50 7.46 9.15
- --------------------------------------------------------------------------------
Lipper Small-Cap Core Funds Index 7.30 29.79 9.77 10.43
- --------------------------------------------------------------------------------
*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. 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 69 for a description of each index.
BIGGEST GAINERS
AirTran Holdings, Inc........................ 48.3%
Skyworks Solutions, Inc...................... 46.3
Plexus Corp.................................. 36.4
Axcelis Technologies, Inc.................... 32.9
American Medical Systems Holdings, Inc....... 27.1
BIGGEST LOSERS
Kroll Inc.................................... -28.7%
Boston Communications Group, Inc............. -28.1
FTI Consulting, Inc.......................... -27.5
CTI Molecular Imaging, Inc................... -12.9
Varco International, Inc..................... -10.7
For the period ended 9/30/03, 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
period ended September 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
12
- -------
TWELVE
- ------------------------------------------------------ARTISAN SMALL CAP FUND----
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
In what has historically been the toughest three-month period for stocks,
optimism continued to drive U.S. equity markets higher. Technology, healthcare,
and producer durables stocks were among the leading performers in the Russell
2000/R Growth Index.
The financial sector produced our strongest contributions relative to the
Russell 2000/R Growth Index. Two of the leading gainers were Selective Insurance
Group, Inc. and Jefferies Group, Inc. Selective is a property and casualty
insurer. It reported a large increase in earnings compared to the same period
last year, after showing improvement in its income relative to claims. Jefferies
is an institutional brokerage firm and investment bank focused on the middle
market. Trading volume was up substantially, leading to record-setting revenues
and net earnings during the second quarter.
Like the Index, the Fund had a number of technology related durables and
electronics stocks perform well. Axcelis Technologies, Inc. and Plexus Corp.
were both up over 30% and Semtech Corporation and Photronics, Inc. were both up
in excess of 20%. A number of news items such as a favorable outlook by Intel
Corporation, positive analyst comments, profit strength from a number of
industry leaders, and hints of an improvement in business spending were among
the catalysts behind the gains. Unfortunately, we underperformed on a relative
basis in tech-related issues partly due to being underweight in some of the best
performing industries. In addition, a few of our software stocks that were
gainers in the second quarter of 2003, backed off in the third quarter.
Healthcare was a similar story to technology. We had a number of winners
including VCA Antech, Inc. (animal healthcare), United Surgical Partners
International, Inc. (short stay surgical centers) and American Medical Systems
Holdings, Inc. (medical devices), but relative results were hampered by weakness
in CTI Molecular Imaging, Inc. CTI produces imaging equipment used in the
detection of cancer, heart disease and neurological disorders. It fell after
lowering its guidance citing increased competition, and we sold our position due
to a reduction in our estimate of company growth prospects.
The weakest performance in the Fund came from the consumer discretionary sector.
Two of our consulting firms, FTI Consulting, Inc. and Kroll, Inc., were the
primary drivers behind poor results. Shares tumbled after management at both
firms provided earnings outlooks that fell below expectations, attributing the
weakness to slowing demand for corporate restructuring and bankruptcy-related
work. FTI is particularly sensitive to a tail-off in that type of work and we
have sold our position. We added to our position in Kroll on weakness.
PORTFOLIO CHANGES
Given our caution about the rapid ascent of small-cap stocks during the last two
quarters, we made a number of adjustments in the portfolio due to stocks
reaching our target price. We also moved out of a number of companies where
future growth prospects softened causing us to pare back our estimate of
intrinsic value. Purchases made with the proceeds from the sales came from a
variety of sectors as we scoured the small-cap universe for what we consider to
be attractively priced growth.
Our new purchases included: Extreme Networks, Inc., network infrastructure
equipment; Magma Design Automation, Inc. and Micromuse, Inc., two software
companies; Lifepoint Hospitals, Inc., a rural hospital provider; and
Proassurance Corporation, a medical malpractice insurer. Consistent with our
process, we also started to work into a few smaller positions where we like the
businesses but are mindful to the current price.
Photronics, Affymetrix, Inc. and Manhattan Associates, Inc. were three
technology-related issues that we sold after they reached our target prices. The
same was true of Platinum Underwriters Holdings, Ltd., a property and casualty
insurer. We sold trucker USF Corporation, defense supplier DRS Technologies,
Inc., chemicals manufacturer Olin Corporation and offshore construction company
Global Industries, Ltd. on reduced growth prospects.
FUND STATISTICS
Net Assets................................... $127.9 Mil.
Number of Holdings........................... 81
Median Market Cap............................ $748.1 Mil.
Weighted Avg. Market Cap..................... $863.1 Mil.
Weighted Avg. Growth Rate (3-5 yr)........... 17.3%
Weighted Harmonic Avg. P/E (2003E)........... 20.8X
Median P/E (2003E)........................... 21.6X
Fund statistics are as of 9/30/03.
TOP 10 HOLDINGS
Waste Connections, Inc.......................... 2.0%
Charles River Laboratories International, Inc... 1.9
VCA Antech, Inc................................. 1.8
Technitrol, Inc................................. 1.7
Rare Hospitality International, Inc............. 1.7
Varco International, Inc........................ 1.7
Axcelis Technologies, Inc....................... 1.7
Commonwealth Telephone Enterprises, Inc......... 1.7
Respironics, Inc................................ 1.6
Avocent Corporation............................. 1.6
TOTAL........................................... 17.4%
As a percentage of total net assets as of 9/30/03.
SECTOR DIVERSIFICATION
9/03 6/03
----- -----
Auto & Transportation........................ 3.3% 4.2%
Consumer Discretionary....................... 18.1 21.4
Consumer Staples............................. 1.6 2.0
Financial Services........................... 11.8 9.8
Healthcare................................... 15.7 17.0
Integrated Oils.............................. 0.8 1.2
Materials & Processing....................... 4.8 4.8
Other Energy................................. 5.5 5.6
Producer Durables............................ 7.6 9.1
Technology................................... 22.0 18.9
Utilities.................................... 2.1 2.8
Other assets less liabilities................ 6.7 3.2
TOTAL........................................ 100% 100%
As a percentage of total net assets as of 9/30/03 and 6/30/03, respectively.
800.344.1770 o WWW.ARTISANFUNDS.COM
13
---------
THIRTEEN
ARTISAN
SMALL CAP VALUE
FUND
- ----HIGHLIGHTS------------------------------------------------------------------
o Artisan Small Cap Value Fund changed its fiscal year end from June 30 to
September 30. This annual report discusses the results of the three-month
period July 1, 2003, through September 30, 2003.
o A number of our transportation sector stocks contributed positively to
returns. Our energy holdings hurt relative performance the most.
- ----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----------------------------------------------------------
For the three-month fiscal period ended September 30, 2003, Artisan Small Cap
Value Fund rose 3.95%. The Fund's benchmark, the Russell 2000 Value Index,
gained 7.72%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (9/29/97 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN SMALL CAP VALUE FUND ($17,555)
Russell 2000/R Value Index ($14,661)
Russell 2000/R Index ($11,674)
Lipper Small-Cap Value Funds Index ($14,337)
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
16,887 13,610 10,703 13,135
9/03 17,555 14,661 11,674 14,337
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
- --------------------------------------------------------------------------------
3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Small Cap Value Fund 3.95% 26.70% 14.10% 9.83%
- --------------------------------------------------------------------------------
Russell 2000/R Value Index 7.72 31.66 10.84 6.58
- --------------------------------------------------------------------------------
Russell 2000/R Index 9.08 36.50 7.46 2.61
- --------------------------------------------------------------------------------
Lipper Small-Cap Value Funds Index 9.46 33.80 11.68 6.23
- --------------------------------------------------------------------------------
*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. 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 69 for a
description of each index.
BIGGEST GAINERS
Schnitzer Steel Industries, Inc. Class A..... 27.9%
Genlyte Group, Inc. ......................... 27.0
Scottish Re Group, Ltd. ..................... 16.2
Centex Construction Products, Inc............ 12.1
Zale Corporation............................. 11.7
BIGGEST LOSERS
Veritas DGC, Inc............................. -28.5%
Wellman, Inc................................. -26.9
Cimarex Energy Company....................... -15.8
Stone Energy Corporation..................... -12.3
EMCOR Group, Inc............................. -11.2
For the period ended 9/30/03, 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 period ended September 30, 2003, considering interim security purchases,
sales and dividends. Past performance of these specific holdings is historical
and does not guarantee future results.
14
- --------
FOURTEEN
- ------------------------------------------------ARTISAN SMALL CAP VALUE FUND----
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
The third quarter of the calendar year historically has been the worst quarter
of the year to own stocks, but the market shrugged off history and posted very
strong returns with small-caps outpacing larger stocks during the three-month
fiscal period. It was only in September that the U.S. market paused as some
economic data points, mainly weak employment figures, caused some hesitation
about rising valuations. Technology and healthcare were among the leading
performers in the Russell 2000/R Value Index and industrials were slightly
favored over consumer related stocks as business sentiment showed signs of life.
In the Fund, the transportation sector provided a number of winners. Our
truckers, Arkansas Best Corporation and USF Corporation, were each up strongly
when two competitors announced plans to merge. While the merger provides
synergies for the competitors, it also has the potential to develop a more
reasonable pricing environment and the desire for shippers to diversify, which
may benefit other truckers.
A number of our materials stocks were also up strongly. Although refinancing
trends slowed as rates rose, housing statistics remained at high levels, helping
construction related stocks. Centex Construction Products, Inc. has leveraged
the trend with its strong cash flow, low cost production and debt reduction.
Centex Corporation has also announced an agreement with Centex Construction to
spin off its ownership of the company. Slightly offsetting the strength was the
performance of mechanical and electrical systems company EMCOR Group, Inc. It
fell after its earnings report disappointed. The company cited losses from its
UK operation and slower commercial construction activity. Schnitzer Steel
Industries, Inc., was among our largest gainers for the second quarter in a row.
It is one of the largest scrap steel processors in the U.S. and has profited
from an increase in demand and pricing.
The two areas that hurt relative performance the most were our energy and
consumer discretionary holdings. The energy sector in general weakened as oil
and gas prices softened, causing the sector to post the only negative returns in
the Russell 2000/R Value Index. Top 10 Holding Stone Energy Corporation was the
largest single negative contributor. In addition to the macro headwinds, Stone
fell after it announced that July and August production was coming in below
expectations, which led to concerns about future earnings.
The consumer discretionary sector contributed positively to absolute results,
but our stocks were up, on average, less than the benchmark. One stock that
outpaced the sector average was jewelry retailer Zale Corporation. During July,
the company announced a Dutch auction tender offer to buy back up to 6.4 million
shares at a premium to the existing share price.
PORTFOLIO CHANGES
We did not make any dramatic changes to the Fund portfolio during the period.
The newest additions to our Top 10 Holdings as of September 30, 2003 were
Payless Shoesource, Inc. and Simpson Manufacturing Company, Inc. We added
Payless ShoeSource earlier in the year after it disappointed the market. Since
that point, we have been building our position in the company on further
weakness. It is a great example of how our process can sometimes cause us to buy
a name early, but also how our fundamental conviction in a company can pull it
into the top ten. Simpson Manufacturing moved into the top ten as the stock rose
due to its high margins and what we think is a strong brand name in a favorable
housing market.
The only sector weights that have changed much are consumer discretionary,
energy and utilities. The consumer discretionary sector weight fell mainly
because we trimmed back a number of our positions into the strength of the
sector. School Specialty, Inc., IHOP Corporation, and Zale Corporation were a
few examples. The opposite was true for our energy holdings as we added to top
holdings Forest Oil Corporation and Stone Energy Corporation. Part of the reason
our utilities weight rose was the purchase of El Paso Electric Company.
Utilities are sometimes looked at as an alternative to bonds because of their
dividend yield. We took the opportunity to enter El Paso as utilities lost favor
when interest rates rose during the third calendar quarter.
FUND STATISTICS
Net Assets................................... $775.2 Mil.
Number of Holdings.......................... 95
Median Market Cap............................ $714.2 Mil.
Weighted Avg. Market Cap..................... $843.2 Mil.
Median P/B Value............................. 1.6X
Median P/E Ratio (2003E)..................... 15.3X
Fund statistics are as of 9/30/03.
TOP 10 HOLDINGS
Kellwood Company............................. 3.5%
Zale Corporation ............................ 2.9
Forest Oil Corporation ...................... 2.9
Stewart Information Services Corporation..... 2.7
Centex Construction Products, Inc. .......... 2.6
Stone Energy Corporation..................... 2.6
ADVO, Inc. .................................. 2.1
LandAmerica Financial Group, Inc. ........... 2.1
Simpson Manufacturing Company, Inc. ......... 2.0
Payless ShoeSource, Inc...................... 2.0
TOTAL........................................ 25.4%
As a percentage of total net assets as of 9/30/03.
SECTOR DIVERSIFICATION
9/03 6/03
----- -----
Auto & Transportation........................ 8.2% 9.1%
Consumer Discretionary....................... 23.0 26.3
Consumer Staples............................. 0.9 0.5
Financial Services........................... 12.9 13.0
Healthcare................................... 1.3 1.7
Integrated Oils.............................. 1.0 1.0
Materials & Processing....................... 16.2 16.2
Other........................................ 0.0 0.0
Other Energy................................. 17.8 16.3
Producer Durables............................ 4.9 5.4
Technology................................... 1.5 2.0
Utilities.................................... 4.2 3.0
Other assets less liabilities................ 8.1 5.5
TOTAL........................................ 100% 100%
As a percentage of total net assets as of 9/30/03 and 6/30/03, respectively.
800.344.1770 o WWW.ARTISANFUNDS.COM
15
-------
FIFTEEN
-----
ARTIX
-----
ARTISAN
INTERNATIONAL FUND
(ARTIX)
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ ============
COMMON AND PREFERRED STOCKS - 98.1%
AUSTRALIA - 1.1%
AMP Limited 1,458,900 $6,609,494
Commonwealth Bank of Australia 2,945,390 55,499,755
National Australia Bank Ltd. 1,484,491 31,102,605
-------------
93,211,854
BELGIUM - 1.8%
Interbrew 6,331,108 157,720,367
BRAZIL - 1.1%
Banco Bradesco S.A. 3,767,729,000 14,805,701
Banco Itau Holding Financeira S.A. 178,301,400 12,672,712
Petroleo Brasileiro S.A. - (ADR) 1,236,000 28,341,480
Telesp Celular Participacoes S.A.,
Preferred - (ADR)(1) 9,544,900 44,479,234
-------------
100,299,127
CANADA - 2.9%
Bombardier, Inc., Class B 4,430,100 18,599,531
CanWest Global Communications Corporation(1)(2) 4,004,998 33,066,070
Corus Entertainment, Inc., Class B(1)(2) 2,929,750 50,980,470
EnCana Corporation 3,818,100 138,248,864
Telus Corporation 733,800 12,535,184
-------------
253,430,119
CHINA - 0.3%
China Petroleum & Chemical Corporation 111,114,000 30,847,464
DENMARK - 1.2%
A P Moller - Maersk A/S 6,466 44,132,710
Novo-Nordisk A/S, Class B 1,811,550 66,796,518
-------------
110,929,228
FRANCE - 6.0%
Carrefour S.A. 4,024,773 202,593,494
JC Decaux S.A.(1) 8,418,200 118,393,229
M6 - Metropole Television 1,227,600 33,328,300
Rhodia S.A. (2) 9,177,312 57,637,431
Sanofi-Synthelabo S.A. 2,056,611 125,090,122
-------------
537,042,576
GERMANY - 13.4%
Allianz AG 3,600,002 317,959,865
DaimlerChrysler AG 845,300 29,686,191
Deutsche Boerse AG 2,415,989 123,301,801
Deutsche Telekom AG(1) 9,898,090 143,473,646
Henkel KGaA 2,901,743 198,640,214
Infineon Technologies AG(1) 823,300 10,763,446
KDG Investors, L.P. (1)(3)(4) 10,000,000 -
Linde AG 3,427,883 141,233,787
Muenchener Rueckversicherungs-Gesellschaft AG 2,294,515 228,082,098
-------------
1,193,141,048
16
- -------
SIXTEEN
-----
ARTIX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
HONG KONG - 0.7%
Cheung Kong Holdings Limited 1,537,000 $ 12,156,042
CNOOC Limited 13,901,500 23,784,267
Hong Kong & China Gas Company Limited 4,596,800 6,173,069
HSBC Holdings PLC 849,600 11,464,180
Swire Pacific Limited, Class A 844,500 4,983,427
-------------
58,560,985
HUNGARY - 0.1%
Magyar Tavkozlesi Rt 1,379,050 5,085,715
Magyar Tavkozlesi Rt - (ADR) 83,600 1,562,484
-------------
6,648,199
ITALY - 0.8%
Mediolanum S.p.A. 1,576,500 10,139,894
Telecom Italia S.p.A. 33,179,210 56,482,851
-------------
66,622,745
JAPAN - 9.8%
Asahi Breweries, Ltd. 704,900 5,213,280
East Japan Railway Company 5,786 28,095,194
Fuji Fire & Marine Insurance Co., Ltd. 1,064,500 2,570,125
Fuji Television Network, Inc. 3,129 15,305,883
Honda Motor Co., Ltd. 6,256,300 251,004,452
Japan Airlines System Corporation 5,492,000 15,428,766
Japan Telecom Holdings Co., Ltd. 25,009 74,074,137
Japan Tobacco, Inc. 13,831 90,621,819
Nikko Cordial Corporation 33,210,200 177,057,477
Nippon Broadcasting System, Inc. 55,440 2,254,124
Nippon Television Network Corporation 8,870 1,300,864
Promise Co., Ltd. 2,068,250 90,961,047
Tokyo Broadcasting System, Inc. 1,311,500 18,151,353
Tokyu Corporation 3,506,400 14,476,902
Yamanouchi Pharmaceutical Co., Ltd. 2,122,400 58,672,459
Yamato Transport Co., Ltd. 1,991,700 26,635,848
-------------
871,823,730
KOREA - 0.2%
Korea Electric Power Corporation 1,145,390 21,560,400
LUXEMBOURG - 0.6%
RTL Group 849,486 49,738,496
MEXICO - 5.7%
Cemex S.A. de C.V. - (ADR) 810,400 20,219,480
Grupo Modelo S.A. de C.V., Series C 29,108,000 72,141,246
Grupo Televisa S.A. - (ADR) 3,818,600 139,722,574
Telefonos de Mexico S.A. de C.V. - (ADR) 5,264,840 160,840,862
Wal-Mart de Mexico S.A. de C.V., Series V 39,799,000 115,288,599
-------------
508,212,761
NETHERLANDS - 5.0%
ASML Holding N.V., NY Shares(1)(5) 971,600 12,757,108
ASML Holding N.V.(1) 8,675,346 113,720,742
Fortis (NL) N.V. 13,288,076 225,900,791
Wolters Kluwer N.V. 6,696,112 96,124,429
-------------
448,503,070
17
---------
SEVENTEEN
-----
ARTIX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
POLAND - 0.3%
Bank Pekao S.A. 999,864 $ 28,527,695
RUSSIA - 0.8%
LUKOIL - (ADR) 848,600 69,415,480
OAO Gazprom - (ADR) 93,300 2,304,510
-------------
71,719,990
SINGAPORE - 1.0%
DBS Group Holdings, Ltd. 12,301,807 91,770,022
SPAIN - 5.2%
Banco Bilbao Vizcaya Argentaria, S.A. 822,400 8,490,186
Industria de Diseno Textil, S.A. 4,792,499 102,749,617
Promotora de Informaciones, S.A. 8,526,054 90,702,491
Repsol YPF, S.A. 7,846,012 128,996,028
Telefonica, S.A. (1) 11,071,880 130,815,643
-------------
461,753,965
SWEDEN - 0.4%
Telefonaktiebolaget LM Ericsson - (ADR) 1,282,500 18,827,100
Telefonaktiebolaget LM Ericsson 11,026,000 16,080,354
-------------
34,907,454
SWITZERLAND - 15.7%
CIBA Specialty Chemicals AG(1) 2,353,292 159,673,662
Clariant AG (1) (2) 8,999,193 118,302,772
Credit Suisse Group 5,507,800 176,318,041
Julius Baer Holding Ltd., Class B 260,306 74,947,932
Nestle S.A., Class B 1,281,586 295,683,389
Novartis AG 3,877,207 150,117,652
Roche Holding AG - Genusschein 1,528,200 126,790,347
Swiss Re 642,333 40,833,262
Serono S.A. 131,478 86,071,368
UBS AG 3,057,735 171,676,135
-------------
400,414,560
TAIWAN - 0.7%
Chunghwa Telecom Co., Ltd. - (ADR) 4,392,600 61,540,326
UNITED KINGDOM - 23.3%
BAE Systems PLC 51,194,751 142,965,491
British Sky Broadcasting PLC 8,423,303 86,040,082
Carlton Communications PLC 17,470,084 46,899,048
Compass Group PLC 52,022,509 300,066,334
Diageo PLC 18,413,151 198,794,230
Granada PLC 88,967,620 138,273,860
Imperial Chemical Industries PLC(2) 59,764,246 164,661,279
Kesa Electricals PLC 10,897,500 40,349,773
Kingfisher PLC 26,669,020 115,702,853
Lloyds TSB Group PLC 34,015,435 233,943,261
Marks & Spencer Group PLC 44,321,724 225,441,868
Next PLC 6,007,882 112,249,447
Prudential PLC 935,700 6,388,674
Tesco PLC 62,293,968 249,551,131
Vodafone Group PLC 4,548,000 9,071,899
-------------
2,070,399,230
-------------
TOTAL COMMON AND PREFERRED STOCKS (Cost $9,036,701,564) 8,729,325,411
18
- --------
EIGHTEEN
-----
ARTIX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
PAR
AMOUNT VALUE
============ ============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 1.1%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%, dated
9/30/2003, due 10/1/2003, maturity value
$95,178,983 collateralized by $97,084,186
market value Federal National Mortgage
Association Note, 1.18% due 7/27/2004.
(Cost $95,177,000) $95,177,000 $95,177,000
-------------
TOTAL INVESTMENTS - 99.2% (cost $9,131,878,564) 8,824,502,411
OTHER ASSETS LESS LIABILITIES - 0.8% 74,890,655
-------------
TOTAL NET ASSETS - 100.0%(6) $8,899,393,066
==============
(1) Non-income producing securities.
(2) Affiliated company as defined by the Investment Company Act of 1940. See
Note 7 of the financial statements.
(3) Valued at a fair value in accordance with procedures established by the
Board of Directors of Artisan Funds.
(4) 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 September 30, 2003 represents 0.0%
of total net assets.
(5) Principally traded in the United States.
(6) Percentages for the various classifications relate to total net assets.
(ADR) American Depository Receipt.
Portfolio Diversification - September 30, 2003
VALUE PERCENTAGE
========== ==========
Consumer Discretionary $2,210,566,284 24.9%
Consumer Staples 1,470,959,170 16.5
Energy 419,633,582 4.7
Financials 2,153,178,794 24.2
Healthcare 613,538,466 6.9
Industrials 297,571,993 3.4
Information Technology 172,148,750 1.9
Materials 661,728,411 7.4
Telecommunication Services 699,961,982 7.9
Utilities 30,037,979 0.3
-------------- ----------
TOTAL COMMON AND PREFERRED STOCKS 8,729,325,411 98.1
Total short-term investments 95,177,000 1.1
-------------- ----------
TOTAL INVESTMENTS 8,824,502,411 99.2
OTHER ASSETS LESS LIABILITIES 74,890,655 0.8
-------------- ----------
TOTAL NET ASSETS $8,899,393,066 100.0%
============== ==========
The accompanying notes are an integral part of the financial statements.
19
--------
NINETEEN
-----
ARTJX
-----
ARTISAN INTERNATIONAL
SMALL CAP FUND (ARTJX)
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ ============
COMMON AND PREFERRED STOCKS - 96.8%
AUSTRALIA - 2.7%
John Fairfax Holdings Limited 3,176,800 $ 6,936,867
RG Capital Radio Limited 1,987,800 3,515,722
-------------
10,452,589
AUSTRIA - 1.9%
Telekom Austria AG(1) 697,176 7,392,378
BELGIUM - 3.5%
Agfa Gevaert N.V. 251,634 6,069,320
Colruyt N.V. 86,910 7,503,922
-------------
13,573,242
BRAZIL - 1.1%
Telesp Celular Participacoes S.A.,
Preferred - (ADR)(1) 961,400 4,480,124
CANADA - 4.8%
CanWest Global Communications Corporation(1)(2) 488,700 4,034,806
Corus Entertainment, Inc., Class B(1)(2) 311,000 5,411,699
Microcell Telecommunications, Inc.(1)(2) 309,200 3,665,525
Precision Drilling Corporation(1) 151,400 5,721,922
-------------
18,833,952
CHINA - 1.5%
Lianhua Supermarket Holdings Limited(1) 6,575,000 5,858,104
DENMARK - 0.3%
Radiometer A/S, B shares 18,907 1,145,106
FRANCE - 5.3%
Clarins S.A. 101,632 6,513,187
JC Decaux S.A.(1) 359,958 5,062,435
Rodriguez Group 129,922 8,439,718
Tonnellerie Francois Freres 38,260 757,869
-------------
20,773,209
GERMANY - 3.1%
AMB Generali Holding AG 31,200 1,854,066
Depfa Bank PLC 47,772 4,638,474
Stada Arzneimittel AG 101,646 5,448,143
Stada Arzneimittel AG - Rights(1) 101,646 227,401
-------------
12,168,084
GREECE - 2.8%
Chipita International S.A. 835,590 3,719,264
Coca-Cola Hellenic Bottling Company S.A. 385,310 7,300,140
-------------
11,019,404
20
- ------
TWENTY
-----
ARTJX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
HONG KONG - 1.5%
Hong Kong Exchanges & Clearing Limited 2,844,000 $6,040,984
ITALY - 5.0%
Bulgari S.p.A. 684,400 5,502,492
Davide Campari-Milano S.p.A. 124,450 5,031,816
Gruppo Editoriale L'Espresso S.p.A. 1,945,800 9,182,344
-------------
19,716,652
JAPAN - 4.7%
Don Quijote Company, Ltd. 34,600 1,767,033
Komeri Company, Ltd. 247,100 6,143,401
The Seiyu, Ltd.(1) 1,706,000 5,588,924
Yamaha Motor Company, Ltd. 460,500 4,914,370
-------------
18,413,728
KOREA - 2.8%
LG Household & Health Care Ltd. 316,120 6,981,218
Samsung Heavy Industries Company, Ltd. 989,000 3,809,303
-------------
10,790,521
MALAYSIA - 4.4%
AMMB Holdings Berhad 3,255,700 3,838,299
Berjaya Sports Toto Berhad 3,018,600 3,193,361
Genting Berhad 879,800 3,472,895
Malaysia International Shipping
Corporation Berhad - Foreign Shares 77,000 200,605
Malaysia International Shipping
Corporation Berhad - Local Shares 1,266,000 3,165,000
Telekom Malaysia Berhad 1,627,500 3,147,928
-------------
17,018,088
MEXICO - 1.6%
Grupo Modelo S.A. de C.V., Series C 2,580,700 6,396,005
NETHERLANDS - 6.7%
Euronext N.V. 261,900 6,381,017
Koninklijke Grolsch N.V. 200,290 5,134,313
Laurus N.V.(1) 2,773,266 4,847,113
N.V. Holdingmaatschappij De Telegraaf 501,059 9,925,174
-------------
26,287,617
PANAMA - 4.5%
Banco Latinoamericano de Exportaciones,
S.A., E Shares(1)(2)(3) 1,458,614 17,503,368
PORTUGAL - 1.3%
Brisa-Auto Estradas de Portugal, S.A. 583,921 3,408,727
Impresa - Sociedade Gestora de
Participacoes, S.A.(1) 489,950 1,569,946
-------------
4,978,673
RUSSIA - 4.2%
Vimpel-Communications - (ADR)(1) 194,900 11,861,614
Wimm-Bill-Dann Foods OJSC - (ADR)(1) 227,300 4,368,706
-------------
16,230,320
SINGAPORE - 2.5%
Fraser & Neave Limited 1,577,320 9,395,053
Singapore Post Limited 1,200,000 489,229
-------------
9,884,282
21
----------
TWENTY-ONE
-----
ARTJX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
SPAIN - 3.4%
Baron de Ley, S.A.(1) 100,134 $4,025,326
Recoletos Grupo de Comunicacion, S.A. 233,760 1,626,091
Sogecable, S.A.(1) 322,305 7,755,101
-------------
13,406,518
SWEDEN - 2.1%
Elekta AB, B shares(1) 380,400 6,087,814
JM AB 150,900 2,083,878
-------------
8,171,692
SWITZERLAND - 13.8%
Baloise Holding Limited 157,900 5,880,274
Bank Sarasin & Cie AG, B shares 2,810 3,787,688
Clariant AG(1)(2) 265,600 3,491,559
Nobel Biocare Holding AG 54,672 4,763,813
Schindler Holding AG, Participation
Certificates(1) 26,260 5,630,838
SIG Holding AG 58,700 7,738,900
Straumann Holding AG 103,215 10,792,294
Sulzer AG 35,184 6,704,634
Synthes-Stratec, Inc. 5,750 5,097,363
-------------
53,887,363
THAILAND - 0.9%
Land and Houses Public Company Limited -
Foreign Shares 2,850,000 975,393
Land and Houses Public Company Limited -
Local Shares 5,541,800 1,675,138
National Finance Public Company Limited 2,061,800 901,361
-------------
3,551,892
UNITED KINGDOM - 10.4%
Amersham PLC 509,900 4,390,473
Cambridge Antibody Technology Group PLC(1) 709,974 5,747,354
Capital Radio PLC 378,400 3,006,599
GWR Group PLC 1,056,987 3,755,539
Intertek Group PLC 786,100 6,703,346
Maiden Group PLC 628,578 2,847,228
SMG PLC 4,125,337 6,343,043
Trinity Mirror PLC 863,300 8,071,562
-------------
40,865,144
-------------
TOTAL COMMON AND PREFERRED STOCKS (Cost $313,993,315) 378,839,039
The accompanying notes are an integral part of the financial statements.
22
- ----------
TWENTY-TWO
-----
ARTJX
-----
PAR
AMOUNT VALUE
============ ============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 2.8%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%,
dated 9/30/2003, due 10/1/2003,
maturity value $10,869,226,
collateralized by $11,091,133 market
value Federal Home Loan Mortgage
Corporation Note, 1.25%, due 8/27/2004
(Cost $10,869,000) $10,869,000 $10,869,000
-------------
TOTAL INVESTMENTS - 99.6% (Cost $324,862,315) 389,708,039
OTHER ASSETS LESS LIABILITIES - 0.4% 1,616,504
-------------
TOTAL NET ASSETS - 100.0%(4) $391,324,543
=============
(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
Portfolio Diversification - September 30, 2003
VALUE PERCENTAGE
========== ==========
Consumer Discretionary $115,127,957 29.4%
Consumer Staples 82,663,091 21.1
Energy 5,721,922 1.5
Financials 50,825,531 13.0
Healthcare 43,699,761 11.2
Industrials 32,195,560 8.2
Information Technology 6,069,320 1.5
Materials 11,988,328 3.1
Telecommunication Services 30,547,569 7.8
Utilities - -
-------------- ----------
TOTAL COMMON AND PREFERRED STOCKS 378,839,039 96.8
Total short-term investments 10,869,000 2.8
-------------- ----------
TOTAL INVESTMENTS 389,708,039 99.6
OTHER ASSETS LESS LIABILITIES 1,616,504 0.4
-------------- ----------
TOTAL NET ASSETS $391,324,543 100.0%
============== ==========
The accompanying notes are an integral part of the financial statements.
23
- ------------
TWENTY-THREE
-----
ARTKX
-----
ARTISAN INTERNATIONAL
VALUE FUND (ARTKX)
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 94.1%
BERMUDA - 3.0%
Arch Capital Group, Ltd.(1)(2) 21,300 $703,113
CANADA - 1.3%
Toronto Stock Exchange 6,200 149,204
Toronto Stock Exchange, 144A 6,350 152,814
-------------
302,018
DENMARK - 3.7%
Jyske Bank A/S 10,325 443,891
Radiometer A/S, B Shares 7,060 427,590
-------------
871,481
FRANCE - 5.8%
Aventis S.A. 14,370 745,942
Vivendi Universal S.A. 35,260 624,491
-------------
1,370,433
GERMANY - 7.4%
Henkel KGaA 9,300 596,000
Pfeiffer Vacuum Technology AG 17,920 542,472
Schering AG 14,260 621,097
-------------
1,759,569
HONG KONG - 2.6%
Asia Satellite Telecommunications Holdings, Ltd. 405,500 620,471
ITALY - 4.6%
Caltagirone Editore S.p.A. 52,659 416,622
Cementir S.p.A. Cementerie del Tirreno 224,500 667,048
-------------
1,083,670
JAPAN - 11.1%
Ichiyoshi Securities Co., Ltd. 135,000 519,813
Meitec Corporation 25,400 934,704
NIPPONKOA Insurance Company, Ltd. 156,000 793,897
Tokyo Broadcasting System, Inc. 27,000 373,684
-------------
2,622,098
KOREA - 2.5%
Lotte Chilsung Beverage Co., Ltd. 1,040 493,709
Lotte Chilsung Beverage Co., Ltd. - Preferred 580 109,177
-------------
602,886
MEXICO - 2.3%
Grupo Aeroportuario del Sureste S.A.
de C.V. (ADR) 36,790 540,813
24
- -----------
TWENTY-FOUR
-----
ARTKX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
NETHERLANDS - 7.2%
Euronext N.V. 30,484 $742,722
Hunter Douglas N.V. 21,805 760,945
Koninklijke Numico N.V. 10,000 202,978
-------------
1,706,645
NEW ZEALAND - 5.9%
Telecom Corporation of New Zealand, Ltd. 217,996 669,966
Tower, Ltd. 908,824 725,336
-------------
1,395,302
NORWAY - 2.1%
Statoil ASA 54,195 485,873
SWITZERLAND - 14.9%
Givaudan S.A. 1,571 665,395
Gurit-Heberlein AG 684 424,973
Pargesa Holding AG 297 685,229
PubliGroupe S.A. 2,027 499,148
Schindler Holding AG 2,659 620,527
Tamedia AG 10,265 622,215
-------------
3,517,487
UNITED KINGDOM - 19.7%
Brit Insurance Holdings PLC 614,000 688,920
Cable & Wireless PLC (ADR) 79,380 448,497
Carpetright PLC 48,360 632,641
Diageo PLC 91,090 983,437
Lloyds TSB Group PLC 46,800 321,870
Rotork PLC 38,900 230,842
Signet Group PLC 307,250 538,816
Somerfield PLC 66,200 135,901
Unilever PLC (ADR) 19,300 668,552
-------------
4,649,476
-------------
TOTAL COMMON STOCKS (Cost $18,531,677) 22,231,335
PAR
AMOUNT
============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 6.2%
Repurchase agreement with State Street
Bank & Trust Company, 0.75%, dated 9/30/03,
due 10/1/03, maturity value $1,460,030,
collateralized by $1,492,844 market value
Federal Home Loan Mortgage Corporation,
1.25%, due 8/27/04 (Cost $1,460,000) $1,460,000 1,460,000
-------------
TOTAL INVESTMENTS - 100.3% (Cost $19,991,677) 23,691,335
OTHER ASSETS LESS LIABILITIES - (0.3%) (77,389)
-------------
TOTAL NET ASSETS - 100.0%(3) $23,613,946
=============
(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.
25
-----------
TWENTY-FIVE
-----
ARTKX
-----
ARTISAN INTERNATIONAL
VALUE FUND (ARTKX)
Portfolio Diversification - September 30, 2003
VALUE PERCENTAGE
========== ==========
Consumer Discretionary $ 4,468,564 18.9%
Consumer Staples 3,855,149 16.3
Energy 485,873 2.1
Financials 5,926,808 25.1
Healthcare 1,794,628 7.6
Industrials 2,869,358 12.1
Information Technology - -
Materials 1,092,021 4.6
Telecommunication Services 1,738,934 7.4
Utilities - -
----------- --------
TOTAL COMMON AND PREFERRED STOCKS 22,231,335 94.1
Total short-term investments 1,460,000 6.2
----------- --------
TOTAL INVESTMENTS 23,691,335 100.3
OTHER ASSETS LESS LIABILITIES (77,389) (0.3)
----------- --------
TOTAL NET ASSETS $23,613,946 100.0%
=========== ========
The accompanying notes are an integral part of the financial statements.
26
- ----------
TWENTY-SIX
-----
ARTMX
-----
ARTISAN
MID CAP FUND
(ARTMX)
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 95.5%
AUTO & TRANSPORTATION - 5.2%
AIR TRANSPORT - 4.0%
Expeditors International of Washington, Inc. 839,000 $28,869,990
FedEx Corporation 790,800 50,951,244
Southwest Airlines Co. 3,479,800 61,592,460
-------------
141,413,694
TRUCKERS - 1.2%
Swift Transportation Co., Inc.(1) 1,763,500 40,013,815
CONSUMER DISCRETIONARY - 24.1%
ADVERTISING AGENCIES - 2.8%
Lamar Advertising Company(1) 1,614,000 47,354,760
Omnicom Group Inc. 713,200 51,243,420
-------------
98,598,180
CABLE TELEVISION SERVICES - 1.0%
EchoStar Communications Corporation(1) 930,900 35,625,543
COSMETICS - 1.4%
The Estee Lauder Companies, Inc. 1,469,800 50,120,180
CONSUMER ELECTRONICS - 1.3%
VeriSign, Inc.(1) 1,357,900 18,290,913
Yahoo!, Inc.(1) 807,400 28,565,812
-------------
46,856,725
HOTEL/MOTEL - 1.1%
Starwood Hotels & Resorts Worldwide, Inc. 1,147,500 39,933,000
PUBLISHING: NEWSPAPERS - 1.1%
The New York Times Company 887,500 38,570,750
RADIO & TV BROADCASTING - 1.6%
Entercom Communications Corporation(1) 552,000 24,740,640
Univision Communications, Inc.(1) 981,900 31,352,067
-------------
56,092,707
RESTAURANTS - 1.7%
Starbucks Corporation(1) 964,500 27,777,600
Wendy's International, Inc. 943,200 30,465,360
-------------
58,242,960
27
------------
TWENTY-SEVEN
-----
ARTMX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
CONSUMER DISCRETIONARY (CONTINUED)
RETAIL - 5.9%
Abercrombie & Fitch Company - Class A(1) 884,200 $24,501,182
CarMax, Inc. (1) 855,000 27,924,300
Costco Wholesale Corporation(1) 1,414,100 43,950,228
Dollar Tree Stores, Inc.(1) 705,900 23,647,650
Kohl's Corporation(1) 570,700 30,532,450
Staples, Inc.(1) 1,814,600 43,096,750
Williams-Sonoma, Inc.(1) 517,200 13,954,056
-------------
207,606,616
SERVICES: COMMERCIAL - 4.9%
Accenture Ltd - Class A(1) 3,087,600 68,976,984
BearingPoint, Inc.(1) 1,616,900 12,902,862
Getty Images, Inc.(1) 537,200 18,887,952
InterActiveCorp(1) 978,900 32,352,645
Robert Half International, Inc.(1) 1,920,387 37,447,547
-------------
170,567,990
TOYS - 1.3%
Mattel, Inc. 2,327,900 44,136,984
CONSUMER STAPLES - 1.6%
DRUG & GROCERY STORE CHAINS - 0.6%
Whole Foods Market, Inc.(1) 425,700 23,490,126
FOODS - 1.0%
Dean Foods Company(1) 1,096,950 34,038,358
FINANCIAL SERVICES - 12.4%
BANKS: OUTSIDE NEW YORK CITY - 0.6%
CapitalSource, Inc.(1) 514,600 9,005,500
Comerica, Inc. 263,600 12,283,760
-------------
21,289,260
DIVERSIFIED FINANCIAL SERVICES - 1.1%
CIT Group, Inc. 1,361,600 39,159,616
FINANCIAL DATA PROCESSING SERVICES & SYSTEMS - 2.2%
Fiserv, Inc.(1) 1,097,700 39,769,671
Paychex, Inc. 1,082,900 36,742,797
-------------
76,512,468
FINANCIAL MISCELLANEOUS - 1.5%
MGIC Investment Corporation 993,100 51,710,717
INSURANCE: PROPERTY-CASUALTY - 2.0%
Platinum Underwriters Holdings, Ltd. 927,800 26,071,180
XL Capital Limited 585,400 45,333,376
-------------
71,404,556
INVESTMENT MANAGEMENT COMPANIES - 2.4%
SEI Investments Company 1,367,900 44,456,750
T. Rowe Price Group, Inc. 1,021,300 42,138,838
-------------
86,595,588
SAVINGS & LOANS - 0.8%
Golden West Financial Corporation 303,000 27,121,530
28
- ------------
TWENTY-EIGHT
-----
ARTMX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
FINANCIAL SERVICES (CONTINUED)
SECURITIES BROKERAGE & SERVICES - 1.8%
Ameritrade Holding Corporation(1) 1,931,500 $21,729,375
LaBranche & Co., Inc. 872,400 12,737,040
The Charles Schwab Corporation 2,331,100 27,763,401
-------------
62,229,816
HEALTHCARE - 13.3%
BIOTECHNOLOGY RESEARCH & PRODUCTION - 2.4%
Invitrogen Corporation(1) 848,500 49,204,515
Millennium Pharmaceuticals, Inc.(1) 2,177,000 33,504,030
-------------
82,708,545
DRUGS & PHARMACEUTICALS - 5.3%
Allergan, Inc. 321,400 25,303,822
AmerisourceBergen Corporation 203,700 11,009,985
Andrx Corporation(1) 1,488,800 27,557,688
Biovail Corporation(1) 604,200 22,446,030
Gilead Sciences, Inc.(1) 473,500 26,482,855
IVAX Corporation(1) 1,018,900 19,970,440
Mylan Laboratories Inc. 1,410,400 54,511,960
-------------
187,282,780
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES - 3.0%
Becton, Dickinson and Company 607,800 21,953,736
Boston Scientific Corporation(1) 835,200 53,285,760
Zimmer Holdings, Inc.(1) 535,200 29,489,520
-------------
104,729,016
MISCELLANEOUS HEALTH CARE - 0.3%
Alcon, Inc. 177,600 9,972,240
HEALTHCARE MANAGEMENT SERVICES - OTHER - 2.3%
Anthem, Inc.(1) 364,200 25,978,386
Caremark Rx, Inc.(1) 2,458,300 55,557,580
-------------
81,535,966
MATERIALS & PROCESSING - 3.0%
CONTAINERS & PACKAGING: PAPER & PLASTIC - 2.2%
Pactiv Corporation(1) 1,825,800 37,027,224
Smurfit-Stone Container Corporation(1) 2,701,300 40,465,474
-------------
77,492,698
ENGINEERING & CONTRACTING SERVICES - 0.8%
Fluor Corporation 741,200 27,668,996
OTHER - 0.4%
MULTI-SECTOR COMPANIES - 0.4%
Brunswick Corporation 513,900 13,196,952
OTHER ENERGY - 4.8%
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 3.5%
Nabors Industries, Ltd.(1) 880,300 32,799,978
Smith International, Inc.(1) 1,529,400 55,027,812
Weatherford International, Ltd.(1) 927,300 35,033,394
-------------
122,861,184
UTILITIES: GAS PIPELINES - 1.3%
The Williams Companies, Inc. 4,755,900 44,800,578
29
-----------
TWENTY-NINE
-----
ARTMX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
PRODUCER DURABLES - 7.8%
AEROSPACE - 0.4%
Alliant Techsystems, Inc.(1) 293,900 $ 14,121,895
DIVERSIFIED PRODUCTION - 1.4%
Danaher Corporation 693,200 51,199,752
ELECTRICAL EQUIPMENT & COMPONENTS - 1.4%
Molex, Inc. 1,754,800 50,169,732
ELECTRONICS: INSTRUMENTS GAUGES & METERS - 0.9%
Thermo Electron Corporation(1) 1,497,400 32,493,580
MISCELLANEOUS EQUIPMENT - 1.3%
W.W. Grainger, Inc. 950,800 45,210,540
OFFICE FURNITURE & BUSINESS EQUIPMENT - 0.6%
Diebold, Inc. 394,600 19,986,490
PRODUCTION TECHNOLOGY EQUIPMENT - 1.8%
KLA - Tencor Corporation(1) 533,000 27,396,200
Novellus Systems, Inc.(1) 1,031,700 34,819,875
-------------
62,216,075
TECHNOLOGY - 22.2%
COMMUNICATIONS TECHNOLOGY - 7.3%
Avaya, Inc.(1) 3,002,200 32,723,980
Avocent Corporation(1) 423,100 12,815,699
Corning, Inc.(1) 4,400,800 41,455,536
Juniper Networks, Inc.(1) 2,227,800 33,238,776
Network Associates, Inc.(1) 2,682,200 36,907,072
Nortel Networks Corporation(1) 8,184,000 33,554,400
Research In Motion Limited(1) 835,900 31,931,380
Symbol Technologies, Inc. 2,906,000 34,726,700
-------------
257,353,543
COMPUTER SERVICES SOFTWARE & SYSTEMS - 7.0%
Adobe Systems Incorporated 1,120,400 43,986,904
Amdocs, Ltd.(1) 1,333,400 25,067,920
BEA Systems, Inc.(1) 3,451,000 41,584,550
Cognos, Inc.(1) 1,210,200 37,540,404
Seagate Technology 1,979,800 53,850,560
VERITAS Software Corporation(1) 1,353,900 42,512,460
-------------
244,542,798
COMPUTER TECHNOLOGY - 1.7%
Apple Computer, Inc.(1) 1,336,800 27,578,184
Network Appliance, Inc.(1) 1,645,900 33,790,327
-------------
61,368,511
ELECTRONICS - 0.5%
Vishay Intertechnology, Inc.(1) 957,800 16,780,656
ELECTRONICS: TECHNOLOGY - 1.3%
Rockwell Automation, Inc. 1,739,400 45,659,250
30
- ------
THIRTY
-----
ARTMX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
TECHNOLOGY (CONTINUED)
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 4.4%
Agere Systems, Inc. - Class A(1) 5,581,400 $17,134,898
Agere Systems, Inc. - Class B(1) 4,757,300 13,748,597
Linear Technology Corporation 1,310,600 46,932,586
PMC-Sierra, Inc.(1) 2,023,700 26,694,627
Xilinx, Inc.(1) 1,718,700 49,000,137
-------------
153,510,845
UTILITIES - 0.7%
UTILITIES: TELECOMMUNICATIONS - 0.7%
Sprint Corporation(1) 4,414,300 25,293,939
-------------
TOTAL COMMON STOCKS (Cost $2,928,147,650) $3,353,487,740
PAR
AMOUNT
============ ============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 4.7%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%,
dated 9/30/03, due 10/1/03,
maturity value $165,996,458,
collateralized by $67,318,589
market value Federal National
Mortgage Association Note, 1.18%,
due 7/27/04, and $102,000,916 market
value Federal Home Loan Mortgage
Corporation Note, 1.20%, due 8/6/2004
(Cost $165,993,000) $165,993,000 165,993,000
-------------
TOTAL INVESTMENTS - 100.2% (Cost $3,094,140,650) 3,519,480,740
OTHER ASSETS LESS LIABILITIES - (0.2%) (6,722,137)
-------------
TOTAL NET ASSETS - 100.0%(2) $3,512,758,603
==============
(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.
31
----------
THIRTY-ONE
-----
ARTQX
-----
ARTISAN
MID CAP VALUE FUND
(ARTQX)
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 94.3%
AUTO & TRANSPORTATION - 3.7%
TRANSPORTATION MISCELLANEOUS - 1.7%
Tidewater, Inc. 46,900 $ 1,327,270
TRUCKERS - 2.0%
Swift Transportation Co., Inc.(1) 69,400 1,574,686
CONSUMER DISCRETIONARY - 14.6%
HOUSEHOLD FURNISHINGS - 3.6%
Furniture Brands International, Inc.(1) 116,800 2,814,880
RETAIL - 3.8%
Michaels Stores, Inc. 22,300 908,948
Zale Corporation(1) 46,000 2,042,860
-------------
2,951,808
SERVICES: COMMERCIAL - 2.6%
Republic Services, Inc. 88,200 1,996,848
TEXTILES: APPAREL MANUFACTURERS - 4.6%
Liz Claiborne, Inc. 39,500 1,344,975
Polo Ralph Lauren Corporation 81,900 2,196,558
-------------
3,541,533
CONSUMER STAPLES - 10.2%
DRUG & GROCERY STORE CHAINS - 2.0%
Safeway, Inc.(1) 68,000 1,559,920
FOODS - 4.5%
Hormel Foods Corporation 68,500 1,574,130
Tyson Foods, Inc. - Class A 134,400 1,899,072
-------------
3,473,202
SOAPS & HOUSEHOLD CHEMICALS - 2.2%
Dial Corporation 79,200 1,705,968
TOBACCO - 1.5%
Loews Corporation - Carolina Group 49,900 1,147,700
FINANCIAL SERVICES - 33.5%
BANKS: OUTSIDE NEW YORK CITY - 2.1%
TCF Financial Corporation 34,500 1,654,275
FINANCIAL DATA PROCESSING SERVICES & SYSTEMS - 1.9%
Deluxe Corporation 35,700 1,432,998
32
- ----------
THIRTY-TWO
-----
ARTQX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
FINANCIAL SERVICES (CONTINUED)
FINANCE: SMALL LOAN - 4.2%
The Student Loan Corporation 27,200 $3,245,776
INSURANCE: MULTI-LINE - 5.4%
Alleghany Corporation(1) 8,600 1,679,150
Loews Corporation 29,700 1,198,989
Old Republic International Corporation 39,100 1,293,819
-------------
4,171,958
INSURANCE: PROPERTY-CASUALTY - 7.4%
Arch Capital Group, Ltd.(1) 40,400 1,333,604
Everest Re Group, Ltd. 8,800 661,408
PartnerRe, Ltd 23,100 1,170,477
White Mountains Insurance Group, Ltd. 6,500 2,580,695
-------------
5,746,184
SAVINGS & LOANS - 4.2%
Golden West Financial Corporation 18,400 1,646,984
Washington Federal, Inc. 64,500 1,626,045
-------------
3,273,029
SECURITIES BROKERAGE & SERVICES - 8.3%
Countrywide Financial Corporation 56,000 4,383,680
Nuveen Investments, Inc. - Class A 73,300 2,015,750
-------------
6,399,430
HEALTHCARE - 0.7%
DRUGS & PHARMACEUTICALS - 0.7%
Mylan Laboratories, Inc. 14,400 556,560
MATERIALS & PROCESSING - 6.2%
PAPER - 3.4%
Domtar, Inc. 113,300 1,273,491
MeadWestvaco Corporation 54,319 1,385,135
-------------
2,658,626
REAL ESTATE - 1.0%
Catellus Development Corporation(1) 31,900 779,955
STEEL - 1.8%
Harsco Corporation 35,600 1,369,532
OTHER - 1.5%
MULTI-SECTOR COMPANIES - 1.5%
Wesco Financial Corporation 3,410 1,159,298
OTHER ENERGY - 14.1%
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 0.8%
Weatherford International, Ltd.(1) 16,600 627,148
OFFSHORE DRILLING - 1.3%
Diamond Offshore Drilling, Inc. 52,600 1,004,660
OIL: CRUDE PRODUCERS - 12.0%
Apache Corporation 59,373 4,116,924
EOG Resources, Inc. 38,500 1,606,990
Newfield Exploration Company(1) 38,700 1,492,659
XTO Energy, Inc. 96,466 2,024,821
-------------
9,241,394
33
------------
THIRTY-THREE
-----
ARTQX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
PRODUCER DURABLES - 3.5%
DIVERSIFIED PRODUCTION - 3.1%
Dover Corporation 33,200 $1,174,284
Pentair, Inc. 30,700 1,224,009
-------------
2,398,293
HOMEBUILDING - 0.4%
Centex Corporation 4,100 319,308
TECHNOLOGY - 1.5%
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 1.5%
Arrow Electronics, Inc. (1) 61,500 1,130,985
UTILITIES - 4.8%
UTILITIES: MISCELLANEOUS - 1.3%
Vectren Corporation 41,900 989,678
UTILITIES: ELECTRICAL - 1.5%
Cinergy Corporation 31,400 1,152,380
UTILITIES: GAS DISTRIBUTORS - 1.0%
Sempra Energy 27,100 795,656
UTILITIES: TELECOMMUNICATIONS - 1.0%
Telephone and Data Systems, Inc. 13,700 774,598
-------------
TOTAL COMMON STOCKS (Cost $63,542,489) 72,975,536
PAR
AMOUNT
============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 10.3%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%,
dated 9/30/03, due 10/1/03, maturity
value $7,956,166, collateralized by
$8,115,463 market value Federal Home
Loan Mortgage Corporation Note, 1.25%,
due 8/27/04 (Cost $7,956,000) $7,956,000 7,956,000
-------------
TOTAL INVESTMENTS - 104.6% (Cost $71,498,489) 80,931,536
OTHER ASSETS LESS LIABILITIES - (4.6)% (3,531,417)
-------------
TOTAL NET ASSETS - 100.0%(2) $77,400,119
=============
(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.
34
- -----------
THIRTY-FOUR
-----
ARTSX
-----
ARTISAN
SMALL CAP FUND
(ARTSX)
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 93.3%
AUTO & TRANSPORTATION - 3.3%
AIR TRANSPORT - 0.5%
AirTran Holdings, Inc.(1) 42,400 $710,200
RAILROADS - 1.2%
Genesee & Wyoming, Inc., Class A(1) 62,800 1,488,988
TRUCKERS - 1.6%
Pacer International, Inc.(1) 100,700 2,006,951
CONSUMER DISCRETIONARY - 18.1%
CASINOS & GAMBLING - 1.1%
Boyd Gaming Corporation 17,800 271,628
Shuffle Master, Inc.(1) 43,300 1,176,894
-------------
1,448,522
CONSUMER PRODUCTS - 0.5%
RC2 Corporation(1) 33,800 649,298
EDUCATION SERVICES - 0.7%
Bright Horizons Family Solutions, Inc.(1) 23,500 938,825
ENTERTAINMENT - 1.4%
Alliance Gaming Corporation(1) 87,100 1,766,388
RADIO & TV BROADCASTING - 3.0%
LIN TV Corporation, Class A(1) 89,800 1,909,148
Regent Communications, Inc.(1) 321,100 1,958,710
-------------
3,867,858
RESTAURANTS - 1.8%
RARE Hospitality International, Inc.(1) 89,050 2,218,236
RETAIL - 3.9%
Christopher & Banks Corporation 44,250 1,055,805
Linens 'n Things, Inc.(1) 67,200 1,598,016
Men's Wearhouse, Inc.(1) 43,600 1,118,340
Stage Stores, Inc.(1) 46,400 1,182,272
-------------
4,954,433
SERVICES: COMMERCIAL - 5.7%
The Advisory Board Company(1) 35,100 1,595,295
Harris Interactive, Inc.(1) 154,400 1,086,976
Kroll Inc.(1) 109,800 2,042,280
Waste Connections, Inc.(1) 71,800 2,519,462
-------------
7,244,013
35
-----------
THIRTY-FIVE
-----
ARTSX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
CONSUMER STAPLES - 1.6%
FOODS - 1.6%
American Italian Pasta Company, Class A(1) 52,800 $2,042,832
FINANCIAL SERVICES - 11.8%
BANKS: OUTSIDE NEW YORK CITY - 4.6%
Community First Bankshares, Inc. 69,300 1,831,599
Greater Bay Bancorp 75,700 1,574,560
PrivateBancorp, Inc. 31,000 1,026,410
Texas Capital Bancshares, Inc.(1) 119,400 1,459,068
-------------
5,891,637
FINANCIAL INFORMATION SERVICES - 0.9%
FactSet Research Systems, Inc. 25,400 1,126,490
INSURANCE: PROPERTY-CASUALTY - 3.7%
IPC Holdings, Ltd. 35,400 1,239,000
ProAssurance Corporation(1) 58,100 1,500,723
Selective Insurance Group, Inc. 65,100 1,937,376
-------------
4,677,099
REAL ESTATE INVESTMENT TRUSTS (REIT) - 1.4%
Innkeepers USA Trust 158,700 1,380,690
La Quinta Corporation(1) 59,200 368,816
-------------
1,749,506
SECURITIES BROKERAGE & SERVICES - 1.2%
Jefferies Group, Inc. 55,700 1,601,375
HEALTHCARE - 15.7%
BIOTECHNOLOGY RESEARCH & PRODUCTION - 1.9%
Charles River Laboratories
International, Inc.(1) 81,000 2,485,890
DRUGS & PHARMACEUTICALS - 2.6%
Priority Healthcare Corporation, Class B(1) 90,400 1,856,816
Taro Pharmaceutical Industries, Ltd.(1) 26,100 1,470,996
-------------
3,327,812
ELECTRONICS: MEDICAL SYSTEMS - 0.7%
Zoll Medical Corporation(1) 29,100 932,655
HEALTH CARE FACILITIES - 2.8%
LifePoint Hospitals, Inc.(1) 63,200 1,519,960
United Surgical Partners International, Inc.(1) 71,800 2,031,940
-------------
3,551,900
HEALTH CARE MANAGEMENT SERVICES - 1.4%
Mid Atlantic Medical Services, Inc.(1) 33,600 1,728,048
HEALTH CARE SERVICES - 0.5%
Inveresk Research Group, Inc.(1) 35,200 698,720
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES - 4.0%
American Medical Systems Holdings, Inc.(1) 93,300 2,024,610
Respironics, Inc.(1) 50,000 2,089,000
Techne Corporation(1) 33,100 1,052,249
-------------
5,165,859
36
- ----------
THIRTY-SIX
-----
ARTSX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
HEALTHCARE (CONTINUED)
MEDICAL SERVICES - 1.8%
VCA Antech, Inc.(1) 95,500 $2,249,025
INTEGRATED OILS - 0.8%
OIL: INTEGRATED DOMESTIC - 0.8%
Cimarex Energy Company(1) 54,100 1,060,360
MATERIALS & PROCESSING - 4.8%
BUILDING MATERIALS - 1.3%
Hughes Supply, Inc. 50,600 1,641,970
BUILDING: ROOFING & WALLBOARD - 1.2%
ElkCorp 65,100 1,533,756
CONTAINERS & PACKAGING: METAL & GLASS - 0.8%
Anchor Glass Container Corporation(1) 61,000 994,300
PLASTICS - 1.5%
Spartech Corporation 92,200 1,963,860
OTHER ENERGY - 5.5%
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 4.3%
Pride International, Inc.(1) 98,300 1,666,185
Varco International, Inc.(1) 128,100 2,166,171
W-H Energy Services, Inc.(1) 91,300 1,625,140
-------------
5,457,496
OIL: CRUDE PRODUCERS - 1.2%
Unit Corporation(1) 81,800 1,541,112
PRODUCER DURABLES - 7.6%
AEROSPACE - 0.7%
MTC Technologies, Inc.(1) 39,200 909,440
ELECTRICAL EQUIPMENT & COMPONENTS - 1.7%
Technitrol, Inc.(1) 121,100 2,229,451
IDENTIFICATION CONTROL & FILTER DEVICES - 1.4%
ESCO Technologies, Inc.(1) 39,700 1,797,219
MACHINERY: INDUSTRIAL/SPECIALTY - 1.4%
Actuant Corporation, Class A(1) 31,900 1,791,185
PRODUCTION TECHNOLOGY EQUIPMENT - 1.7%
Axcelis Technologies, Inc.(1) 262,100 2,164,946
TELECOMMUNICATIONS EQUIPMENT - 0.7%
Tollgrade Communications, Inc.(1) 53,700 862,959
37
------------
THIRTY-SEVEN
-----
ARTSX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
TECHNOLOGY - 22.0%
COMMUNICATIONS TECHNOLOGY - 4.0%
Avocent Corporation(1) 67,600 $ 2,047,604
Extreme Networks, Inc.(1) 163,300 1,030,423
Tekelec(1) 72,800 1,136,408
Verisity, Ltd.(1) 72,500 906,250
-------------
5,120,685
COMPUTER SERVICES SOFTWARE & SYSTEMS - 8.3%
Anteon International Corporation(1) 56,800 1,738,080
Borland Software Corporation(1) 151,300 1,393,473
Hyperion Solutions Corporation(1) 46,200 1,333,794
Macrovision Corporation(1) 61,600 1,137,752
Magma Design Automation, Inc.(1) 46,800 918,216
Micromuse, Inc.(1) 110,300 902,254
Progress Software Corporation(1) 72,800 1,565,200
SERENA Software, Inc.(1) 89,000 1,655,400
-------------
10,644,169
ELECTRICAL & ELECTRONICS - 1.1%
Plexus Corp.(1) 87,100 1,353,534
ELECTRONICS - 2.2%
Aeroflex, Inc.(1) 172,600 1,527,510
Semtech Corporation(1) 68,800 1,270,048
-------------
2,797,558
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 4.9%
DSP Group, Inc.(1) 78,500 1,955,435
Lattice Semiconductor Corporation(1) 187,000 1,329,570
ParthusCeva, Inc.(1) 108,100 928,579
Planar Systems, Inc.(1) 83,600 1,793,220
Skyworks Solutions, Inc.(1) 23,600 214,760
-------------
6,221,564
ELECTRONICS: TECHNOLOGY - 1.5%
Coherent, Inc.(1) 80,300 1,977,789
UTILITIES - 2.1%
UTILITIES: TELECOMMUNICATIONS - 2.1%
Boston Communications Group, Inc.(1) 57,000 568,347
Commonwealth Telephone Enterprises, Inc.(1) 52,600 2,110,838
-------------
2,679,185
-------------
TOTAL COMMON STOCKS (Cost $97,661,645) 119,265,098
38
- ------------
THIRTY-EIGHT
-----
ARTSX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
PAR
AMOUNT VALUE
============ ============
SHORT TERM INVESTMENTS
(CASH EQUIVALENTS) - 2.3%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%,
dated 9/30/2003, due 10/1/2003,
maturity value $2,930,061, collateralized
by $2,993,609 market value Federal
National Mortgage Association Note,
1.18%, due 7/27/2004 (Cost $2,930,000) $2,930,000 $2,930,000
-------------
TOTAL INVESTMENTS - 95.6% (Cost $100,591,645) 122,195,098
OTHER ASSETS LESS LIABILITIES - 4.4% 5,678,428
-------------
TOTAL NET ASSETS - 100.0%(2) $127,873,526
=============
(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.
39
------------
THIRTY-NINE
-----
ARTVX
-----
ARTISAN
SMALL CAP VALUE FUND
(ARTVX)
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ ============
COMMON STOCKS - 91.9%
AUTO & TRANSPORTATION - 8.2%
AUTO PARTS: AFTER MARKET - 1.3%
Superior Industries International, Inc. 258,200 $10,470,010
AUTO PARTS: ORIGINAL EQUIPMENT - 1.7%
BorgWarner, Inc. 193,400 13,122,190
RECREATIONAL VEHICLES & BOATS - 0.6%
Polaris Industries, Inc. 66,500 4,930,975
SHIPPING - 1.6%
Kirby Corporation(1) 421,500 12,097,050
TRUCKERS - 3.0%
Arkansas Best Corporation 328,100 9,022,750
USF Corporation 444,200 13,978,974
-------------
23,001,724
CONSUMER DISCRETIONARY - 23.0%
ADVERTISING AGENCIES - 2.1%
ADVO, Inc.(1) 395,200 16,452,176
COMMERCIAL INFORMATION SERVICES - 1.4%
ProQuest Company(1) 406,400 10,688,320
CONSUMER ELECTRONICS - 0.5%
Register.com, Inc.(1) 249,448 1,125,010
THQ, Inc.(1) 184,200 3,024,564
-------------
4,149,574
HOUSEHOLD FURNISHINGS - 1.7%
Ethan Allen Interiors, Inc. 364,400 13,118,400
PUBLISHING: MISCELLANEOUS - 0.3%
Courier Corporation 51,763 2,635,254
RADIO & TV BROADCASTING - 0.6%
World Wrestling Entertainment, Inc. 435,700 4,365,714
RESTAURANTS - 2.6%
IHOP Corporation 422,600 13,882,410
Papa John's International, Inc.(1) 243,400 6,038,754
-------------
19,921,164
40
- ------
FORTY
-----
ARTVX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
CONSUMER DISCRETIONARY (CONTINUED)
RETAIL - 6.8%
Neiman Marcus Group, Inc., Class A(1) 65,200 $2,718,840
OfficeMax, Inc.(1) 215,500 2,019,235
Payless ShoeSource, Inc.(1) 1,184,900 15,332,606
School Specialty, Inc.(1) 354,500 10,000,445
Zale Corporation(1) 508,900 22,600,249
-------------
52,671,375
SERVICES: COMMERCIAL - 2.9%
BearingPoint, Inc.(1) 1,026,400 8,190,672
Cross Country Healthcare, Inc.(1) 264,000 3,719,760
Medical Staffing Network Holdings, Inc.(1) 516,600 3,905,496
Roto-Rooter, Inc. 152,600 5,424,930
Watson Wyatt & Company Holdings(1) 61,700 1,388,867
-------------
22,629,725
TEXTILES APPAREL MANUFACTURERS - 3.5%
Kellwood Company 809,150 27,066,068
WHOLESALERS - 0.6%
United Stationers, Inc.(1) 120,800 4,551,744
CONSUMER STAPLES - 0.9%
FOODS - 0.9%
Ralcorp Holdings, Inc.(1) 134,900 3,736,730
Sensient Technologies Corporation 173,100 3,635,100
-------------
7,371,830
FINANCIAL SERVICES - 12.9%
FINANCIAL DATA PROCESSING SERVICES & SYSTEMS - 0.8%
CCC Information Services Group, Inc.(1) 278,800 4,672,688
John H. Harland Company 58,600 1,551,142
-------------
6,223,830
FINANCIAL MISCELLANEOUS - 4.7%
LandAmerica Financial Group, Inc. 348,400 15,970,656
Stewart Information Services Corporation(1) 737,600 20,829,824
-------------
36,800,480
INSURANCE: LIFE - 1.4%
Scottish Re Group, Ltd. 448,800 10,838,520
INSURANCE: MULTI-LINE - 1.7%
Hilb, Rogal & Hamilton Company 200,200 6,214,208
PICO Holdings, Inc.(1) 550,800 7,198,956
-------------
13,413,164
INSURANCE: PROPERTY-CASUALTY - 3.1%
Arch Capital Group, Ltd.(1) 236,500 7,806,865
IPC Holdings, Ltd. 256,400 8,974,000
White Mountains Insurance Group, Ltd. 18,000 7,146,540
-------------
23,927,405
41
----------
FORTY-ONE
-----
ARTVX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
FINANCIAL SERVICES (CONTINUED)
INVESTMENT MANAGEMENT COMPANIES - 0.8%
Capital Southwest Corporation 116,000 $6,534,280
REAL ESTATE INVESTMENT TRUSTS (REIT) - 0.4%
Chateau Communities, Inc. 58,400 1,737,984
Cousins Properties, Inc. 60,700 1,684,425
-------------
3,422,409
HEALTHCARE - 1.3%
HEALTH CARE FACILITIES - 0.1%
LifePoint Hospitals, Inc.(1) 39,500 949,975
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES - 0.5%
National Dentex Corporation(1)(2) 189,900 4,096,143
MEDICAL SERVICES - 0.7%
America Service Group, Inc.(1) 269,700 5,663,700
INTEGRATED OILS - 1.0%
OIL: INTEGRATED DOMESTIC - 1.0%
Cimarex Energy Company(1) 388,200 7,608,720
MATERIALS & PROCESSING - 16.2%
AGRICULTURE FISHING & RANCHING - 0.4%
Delta & Pine Land Company 126,500 2,910,765
BUILDING: CEMENT - 2.6%
Centex Construction Products, Inc. 454,500 20,302,515
BUILDING MATERIALS - 2.8%
Butler Manufacturing Company 179,500 2,726,605
LSI Industries, Inc. 230,450 3,247,041
Simpson Manufacturing Company, Inc.(1) 382,000 15,619,980
-------------
21,593,626
CHEMICALS - 1.0%
Albermarle Corporation 81,200 2,228,940
American Pacific Corporation(1) 201,100 1,705,328
Great Lakes Chemical Corporation 188,300 3,786,713
-------------
7,720,981
CONSTRUCTION - 1.7%
EMCOR Group, Inc.(1) 304,600 12,960,730
COPPER - 1.7%
Mueller Industries, Inc.(1) 509,600 12,969,320
DIVERSIFIED MATERIALS & PROCESSING - 0.4%
Armor Holdings, Inc.(1) 169,800 2,844,150
METAL FABRICATING - 1.7%
Kaydon Corporation 109,900 2,609,026
Quanex Corporation 231,700 7,785,120
Roanoke Electric Steel Corporation 289,500 2,868,945
-------------
13,263,091
42
- ----------
FORTY-TWO
-----
ARTVX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ ============
MATERIALS & PROCESSING (CONTINUED)
METALS & MINERALS MISCELLANEOUS - 0.4%
Minerals Technologies, Inc. 53,900 $2,743,510
REAL ESTATE - 2.5%
Jones Lang LaSalle, Inc.(1) 425,300 7,868,050
LNR Property Corporation 96,100 3,935,295
Trammell Crow Company(1) 584,400 7,275,780
-------------
19,079,125
STEEL - 0.5%
Schnitzer Steel Industries, Inc., Class A 124,600 3,741,738
SYNTHETIC FIBERS - 0.5%
Wellman, Inc. 537,200 4,034,372
OTHER ENERGY - 17.8%
ENERGY: MISCELLANEOUS - 0.6%
Veritas DGC, Inc.(1) 547,600 4,369,848
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 0.9%
Core Laboratories N.V.(1) 486,100 6,829,705
OFFSHORE DRILLING - 0.8%
Atwood Oceanics, Inc.(1) 246,100 5,903,939
OIL: CRUDE PRODUCERS - 15.5%
Cabot Oil & Gas Corporation 418,950 10,892,700
Evergreen Resources, Inc.(1) 416,600 11,248,200
Forest Oil Corporation(1) 939,458 22,500,019
Nuevo Energy Company(1) 628,000 11,410,760
Plains Exploration and Production Company(1) 619,955 7,730,839
Prima Energy Corporation(1) 297,000 7,499,250
Range Resources Corporation(1) 407,700 2,788,668
Spinnaker Exploration Company(1) 339,400 8,145,600
St. Mary Land & Exploration Company 382,600 9,687,432
Stone Energy Corporation(1) 566,800 19,996,704
Tom Brown, Inc.(1) 314,900 8,092,930
-------------
119,993,102
PRODUCER DURABLES - 4.9%
AEROSPACE - 0.4%
United Industrial Corporation 187,000 2,973,300
ELECTRICAL EQUIPMENT & COMPONENTS - 1.8%
Genlyte Group, Inc. (1) 311,900 13,885,788
MACHINE TOOLS - 1.0%
Lincoln Electric Holdings, Inc. 352,300 7,824,583
43
-----------
FORTY-THREE
-----
ARTVX
-----
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ ============
PRODUCER DURABLES (CONTINUED)
MACHINERY: INDUSTRIAL/SPECIALTY - 1.1%
Thomas Industries, Inc. 172,700 $4,925,404
Woodward Governor Company 79,800 3,488,058
-------------
8,413,462
POWER TRANSMISSION EQUIPMENT - 0.6%
Regal-Beloit Corporation 246,600 5,030,640
TECHNOLOGY - 1.5%
COMPUTER SERVICES SOFTWARE & SYSTEMS - 0.4%
webMethods, Inc.(1) 375,800 2,998,884
COMMUNICATIONS TECHNOLOGY - 0.7%
CommScope, Inc.(1) 426,600 5,144,796
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 0.4%
Arrow Electronics, Inc.(1) 182,900 3,363,531
UTILITIES - 4.2%
UTILITIES: ELECTRICAL - 2.5%
Duquesne Light Holdings, Inc. 263,700 4,071,528
El Paso Electric Company(1) 343,800 3,970,890
PNM Resources, Inc. 416,900 11,689,876
-------------
19,732,294
UTILITIES: GAS DISTRIBUTORS - 0.7%
NUI Corporation 343,400 5,133,830
UTILITIES: TELECOMMUNICATIONS - 1.0%
IDT Corporation, Class B(1) 342,300 6,181,938
IDT Corporation, Class C(1) 106,600 1,884,688
-------------
8,066,626
-------------
TOTAL COMMON STOCKS (Cost $582,889,817) 712,550,170
44
- ----------
FORTY-FOUR
-----
ARTVX
-----
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
PAR
AMOUNT VALUE
============ ============
SHORT TERM INVESTMENTS
(CASH EQUIVALENTS) - 8.2%
Repurchase agreement with State Street
Bank and Trust Company, 0.75%,
dated 9/30/2003, due 10/1/2003,
maturity value $63,246,318,
collateralized by $13,513,242 market
value Federal Home Loan Mortgage
Corporation Note, 1.20% due 8/6/2004
and $51,002,178 market value Federal
Home Loan Mortgage Corporation Note,
1.25% due 8/27/04 (Cost $63,245,000) $63,245,000 $ 63,245,000
-------------
TOTAL INVESTMENTS - 100.1% (cost $646,134,817) 775,795,170
OTHER ASSETS LESS LIABILITIES - (0.1%) (639,599)
-------------
TOTAL NET ASSETS - 100.0%(3) $775,155,571
=============
(1) Non-income producing securities.
(2) Affiliated company as defined by the Investment Company Act of 1940. See
note 7 to the financial statements.
(3) Percentage for the various classifications relate to total net assets.
The accompanying notes are an integral part of the financial statements.
45
----------
FORTY-FIVE
ARTISAN FUNDS, INC.
Statements of Assets & Liabilities - September 30, 2003
INTERNATIONAL
INTERNATIONAL SMALL CAP
=============================
ASSETS:
Investments in securities, unaffiliated, at value...... $8,304,677,389 $344,732,082
Investments in securities, affiliated, at value ....... 424,648,022 34,106,957
Short-term investments (repurchase agreements),
at value ............................................ 95,177,000 10,869,000
-----------------------------
TOTAL INVESTMENTS...................................... 8,824,502,411 389,708,039
Cash ................................................. 752 900
Receivable from investments sold....................... 28,915,270 1,389,868
Receivable from forward currency contracts............. 40,653,395 1,595,477
Receivable from fund shares sold....................... 65,248,493 1,007,256
Dividends and interest receivable...................... 35,408,146 501,312
-----------------------------
TOTAL ASSETS........................................... 8,994,728,467 394,202,852
LIABILITIES:
Payable for investments purchased...................... 19,006,026 908,120
Payable for forward currency contracts................. 40,719,491 1,597,895
Payable for fund shares redeemed....................... 29,984,752 116,137
Payable for operating expenses......................... 2,745,810 157,568
Payable for withholding taxes.......................... 2,879,322 98,589
-----------------------------
TOTAL LIABILITIES...................................... 95,335,401 2,878,309
-----------------------------
TOTAL NET ASSETS ...................................... $8,899,393,066 $391,324,543
=============================
NET ASSETS CONSIST OF:
Fund shares issued and outstanding..................... $10,590,297,266 $318,044,962
Net unrealized appreciation (depreciation) on
investments and foreign currency
related transactions ................................ (306,485,129) 64,802,610
Accumulated undistributed net
investment income (loss) ............................ 101,915,854 291,438
Accumulated undistributed net realized gains
(losses) on investments and foreign currency
related transactions ................................ (1,486,334,925) 8,185,533
-----------------------------
$8,899,393,066 $391,324,543
=============================
SUPPLEMENTARY INFORMATION:
Net assets
Investor Shares................................... $5,544,691,408 $391,324,543
Institutional Shares.............................. $3,354,701,658
Shares outstanding
Investor Shares................................... 335,180,557 28,264,684
Institutional Shares.............................. 201,686,520
Net asset value, offering price and redemption
price per share
Investor Shares................................... $16.54 $13.84
Institutional Shares.............................. $16.63
Cost of securities of unaffiliated issuers held........ $8,595,953,547 $302,360,283
Cost of securities of affiliated issuers held.......... $535,925,017 $22,502,032
46
- ---------
FORTY-SIX
INTERNATIONAL MID CAP SMALL CAP
VALUE MID CAP VALUE SMALL CAP VALUE
============================================================================
ASSETS:
Investments in securities, unaffiliated, at value...... $ 22,231,335 $ 3,353,487,740 $72,975,536 $119,265,098 $708,454,027
Investments in securities, affiliated, at value ....... - - - - 4,096,143
Short-term investments (repurchase agreements), at value 1,460,000 165,993,000 7,956,000 2,930,000 63,245,000
----------------------------------------------------------------------------
TOTAL INVESTMENTS...................................... 23,691,335 3,519,480,740 80,931,536 122,195,098 775,795,170
Cash ................................................. 316 364 390 215 581
Receivable from investments sold....................... - 56,209,421 - 3,223,525 1,085,131
Receivable from forward currency contracts............. 126,314 - - - -
Receivable from fund shares sold....................... 92,650 18,772,262 362,276 4,121,447 3,919,629
Dividends and interest receivable...................... 61,485 943,330 28,479 16,481 268,228
----------------------------------------------------------------------------
TOTAL ASSETS........................................... 23,972,100 3,595,406,117 81,322,681 129,556,766 781,068,739
LIABILITIES:
Payable for investments purchased...................... 165,855 76,914,380 3,866,620 1,509,732 5,141,048
Payable for forward currency contracts................. 126,368 - - - -
Payable for fund shares redeemed....................... - 4,661,657 102 51,885 491,236
Payable for operating expenses......................... 61,417 1,071,477 55,270 121,623 280,884
Payable for withholding taxes.......................... 4,514 - 570 - -
----------------------------------------------------------------------------
TOTAL LIABILITIES...................................... 358,154 82,647,514 3,922,562 1,683,240 5,913,168
----------------------------------------------------------------------------
TOTAL NET ASSETS ...................................... $ 23,613,946 $ 3,512,758,603 $77,400,119 $127,873,526 $775,155,571
============================================================================
NET ASSETS CONSIST OF:
Fund shares issued and outstanding..................... $ 19,216,265 $ 3,619,824,485 $67,425,266 $126,574,916 $648,167,745
Net unrealized appreciation (depreciation)
on investments and foreign currency
related transactions ................................ 3,701,510 425,340,090 9,433,205 21,603,453 129,660,353
Accumulated undistributed net
investment income (loss) ............................ 70,865 - - - -
Accumulated undistributed net realized
gains (losses) on investments and foreign
currency related transactions ....................... 625,306 (532,405,972) 541,648 (20,304,843) (2,672,527)
----------------------------------------------------------------------------
.................................................. $23,613,946 $3,512,758,603 $77,400,119 $127,873,526 $775,155,571
============================================================================
SUPPLEMENTARY INFORMATION:
Net assets
Investor Shares................................... $ 23,613,946 $2,583,182,013 $77,400,119 $127,873,526 $775,155,571
Institutional Shares.............................. $929,576,590
Shares outstanding
Investor Shares................................... 1,648,627 111,765,388 6,333,628 10,204,527 56,687,399
Institutional Shares.............................. 39,925,471
Net asset value, offering price and
redemption price per share
Investor Shares................................... $14.32 $23.11 $12.22 $12.53 $13.67
Institutional Shares.............................. $23.28
Cost of securities of unaffiliated issuers held........ $19,991,677 $3,094,140,650 $71,498,489 $100,591,645 $642,546,757
Cost of securities of affiliated issuers held.......... $- $- $- $- $3,588,060
The accompanying notes are an integral part of the financial statements.
47
-----------
FORTY-SEVEN
ARTISAN FUNDS, INC.
Statements of Operations
INTERNATIONAL INTERNATIONAL SMALL CAP INTERNATIONAL VALUE
======================== ======================== ========================
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
9/30/03(4) 6/30/03 9/30/03(4) 6/30/03 9/30/03(4) 6/30/03(5)
=============================================================================
INVESTMENT INCOME:
Interest...................... $304,072 $2,825,610 $27,958 $143,060 $2,635 $4,562
Dividends, from unaffiliated
issuers(1) ................. 33,361,570 176,343,076 1,324,009 2,217,762 118,457 169,431
Dividends, from affiliated
issuers(1) ................. 3,627,004 2,344,814 - 80,239 - -
Other ...................... 412,122 2,995,772 - - - -
-----------------------------------------------------------------------------
TOTAL INVESTMENT INCOME....... 37,704,768 184,509,272 1,351,967 2,441,061 121,092 173,993
EXPENSES:
Advisory fees................. 20,395,030 66,306,063 972,488 1,489,029 49,178 48,398
Transfer agent fees
Investor Shares.......... 2,693,210 8,331,967 145,453 275,010 26,705 51,951
Institutional Shares..... 8,409 32,233
Shareholder communications
Investor Shares.......... 506,499 1,177,617 24,857 39,746 4,104 4,661
Institutional Shares..... 4,797 19,011
Custodian fees................ 1,208,462 3,945,008 91,709 142,237 6,621 25,123
Accounting fees............... 19,918 73,299 13,940 52,449 13,197 38,600
Professional fees............. 93,801 301,743 27,557 29,781 26,810 20,911
Registration fees
Investor Shares.......... 29,428 124,912 32,678 47,636 7,528 45,137
Institutional Shares..... 31,250 127,627
Directors' fees............... 43,746 180,436 1,279 3,133 750 -
Organizational costs.......... - - - - - -
Other operating expenses...... 51,890 163,719 3,402 26,919 3,221 8,267
-----------------------------------------------------------------------------
Total operating expenses
before amounts waived
or paid by the Adviser ..... 25,086,440 80,783,635 1,313,363 2,105,940 138,114 243,048
Less amounts waived or
paid by the Adviser ........ (21,084) - (8,129) - (39,758) (124,348)
-----------------------------------------------------------------------------
NET EXPENSES.................. 25,065,356 80,783,635 1,305,234 2,105,940 98,356 118,700
-----------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS).. 12,639,412 103,725,637 46,733 335,121 22,736 55,293
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS:
Net realized gain (loss) on:
Investments.............. 74,854,666 (529,007,531) 5,281,076 3,302,104 497,624 130,388
(2) (3)
Foreign currency
related transactions .. (1,317,643) (10,809,131) (202,732) (152,047) (4,859) (2,222)
-----------------------------------------------------------------------------
73,537,023 (539,816,662) 5,078,344 3,150,057 492,765 128,166
Net increase (decrease)
in unrealized appreciation/
depreciation on:
Investments.............. 409,874,381 (423,541,570) 37,030,177 28,634,982 1,374,411 2,325,237
Foreign currency
related transactions .. 538,027 52,282 79,419 (112,904) 1,525 337
-----------------------------------------------------------------------------
410,412,408 (423,489,288) 37,109,596 28,522,078 1,375,936 2,325,574
-----------------------------------------------------------------------------
NET GAIN (LOSS) ON
INVESTMENTS AND
FOREIGN CURRENCY
RELATED TRANSACTIONS ....... 483,949,431 (963,305,950) 42,187,940 31,672,135 1,868,701 2,453,740
-----------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS ........... $496,588,843$(859,580,313)$42,234,673 $32,007,256 $1,891,437 $2,509,033
=============================================================================
(1) Net of foreign taxes withheld of:
Unaffiliated issuers Affiliated issuers
--------------------------------------------------------------------------
International 9/30/03 $ 3,660,412 $393,960
6/30/03 22,229,774 14,358
International Small Cap 9/30/03 263,662 -
6/30/03 360,630 -
International Value 9/30/03 18,376 -
6/30/03 23,791 -
(2) Including $(1,994,615) from affiliated issuers.
(3) Including $(7,613,533) from affiliated issuers.
(4) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
(5) From commencement of operations (September 23, 2002) to June 30, 2003.
48
- -----------
FORTY-EIGHT
MID CAP MID CAP VALUE SMALL CAP SMALL CAP VALUE
======================= ======================= ====================== ======================
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
9/30/03(4) 6/30/03 9/30/03(4) 6/30/03 9/30/03(4) 6/30/03 9/30/03(4) 6/30/03
=====================================================================================================
INVESTMENT INCOME:
Interest...................... $315,857 $1,630,118 $10,830 $37,287 $9,188 $33,988 $1,399,853 $338,332
Dividends, from
unaffiliated issuers(1) .... 2,975,086 13,653,667 214,293 516,255 78,581 385,213 102,376 5,371,224
Dividends, from
affiliated issuers(1) ...... - - - - - - - -
Other ...................... - - 7,032 - - - 9,039 -
-----------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME....... 3,290,943 15,283,785 232,155 553,542 87,769 419,201 1,511,268 5,709,556
EXPENSES:
Advisory fees................. 8,025,858 22,682,765 181,557 383,960 312,469 1,009,495 1,880,540 5,714,589
Transfer agent fees
Investor Shares.......... 1,184,401 3,493,286 53,008 144,557 63,528 191,523 282,606 891,648
Institutional Shares..... 5,986 23,232
Shareholder communications
Investor Shares.......... 239,560 535,187 12,082 22,307 17,975 40,347 27,715 61,062
Institutional Shares..... 1,739 5,954
Custodian fees................ 102,873 308,898 6,529 19,814 13,088 49,518 25,059 91,142
Accounting fees............... 17,082 61,059 10,528 40,717 12,319 40,539 11,480 44,472
Professional fees............. 43,312 116,996 22,867 27,020 25,353 29,834 27,583 52,514
Registration fees
Investor Shares.......... 38,952 89,446 8,631 39,025 8,833 30,980 18,009 48,401
Institutional Shares..... 13,218 46,330
Directors' fees............... 16,707 60,352 750 3,000 750 3,045 3,767 15,036
Organizational costs.......... - - - - - - - 1,768
Other operating expenses...... 24,596 68,466 252 4,510 1,881 11,285 4,928 14,184
-----------------------------------------------------------------------------------------------------
Total operating expenses
before amounts waived
or paid by the Adviser ..... 9,714,284 27,491,971 296,204 684,910 456,196 1,406,566 2,281,687 6,934,816
Less amounts waived or
paid by the Adviser ........ (14,194) - (7,129) - (7,243) - (7,683) -
-----------------------------------------------------------------------------------------------------
NET EXPENSES.................. 9,700,090 27,491,971 289,075 684,910 448,953 1,406,566 2,274,004 6,934,816
-----------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS).. (6,409,147) (12,208,186) (56,920) (131,368) (361,184) (987,365) (762,736) (1,225,260)
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS:
Net realized gain (loss) on:
Investments.............. 105,075,097 (325,149,190) 1,143,665 (110,623) 4,973,748 (22,436,510) 18,221,191 (20,174,753)
Foreign currency
related transactions .. - - - - - - - -
-----------------------------------------------------------------------------------------------------
105,075,097 (325,149,190) 1,143,665 (110,623) 4,973,748 (22,436,510) 18,221,191 (20,174,753)
Net increase (decrease)
in unrealized appreciation/
depreciation on:
Investments.............. 90,208,363 376,988,686 2,308,116 6,300,648 1,464,390 20,333,623 10,070,646 36,753,479
Foreign currency
related ............... - - - - - - - -
-----------------------------------------------------------------------------------------------------
90,208,363 376,988,686 2,308,116 6,300,648 1,464,390 20,333,623 10,070,646 36,753,479
-----------------------------------------------------------------------------------------------------
NET GAIN (LOSS) ON
INVESTMENTS AND
FOREIGN CURRENCY
RELATED TRANSACTIONS ....... 195,283,460 51,839,496 3,451,781 6,190,025 6,438,138 (2,102,887) 28,291,837 16,578,726
-----------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS ...........$188,874,313 $39,631,310 $3,394,861 $6,058,657 $6,076,954 $(3,090,252)$27,529,101 $15,353,466
======================================================================================================
The accompanying notes are an integral part of the financial statements.
49
----------
FORTY-NINE
ARTISAN FUNDS, INC.
Statements of Changes in Net Assets
INTERNATIONAL
=============================================
PERIOD ENDED YEAR ENDED YEAR ENDED
9/30/03(1) 6/30/03 6/30/02
=============================================
OPERATIONS:
Net investment income (loss)........................... $12,639,412 $103,725,637 $51,719,319
Net realized gain (loss) on:
Investments....................................... 74,854,666 (529,007,531) (393,817,449)
Foreign currency related transactions............. (1,317,643) (10,809,131) (2,431,313)
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments....................................... 409,874,381 (423,541,570) (9,921,060)
Foreign currency related transactions............. 538,027 52,282 569,310
---------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................... 496,588,843 (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 ................ 244,966,499 1,716,020,036 2,333,625,659
---------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................ 741,555,342 806,196,508 1,957,951,594
---------------------------------------------
Net assets, beginning of period........................ 8,157,837,724 7,351,641,216 5,393,689,622
---------------------------------------------
NET ASSETS, END OF PERIOD.............................. $8,899,393,066 $8,157,837,724 $7,351,641,216
=============================================
Accumulated undistributed net
investment income (loss) ............................ $101,915,854 $90,594,085 $47,858,931
=============================================
(1) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
(2) For the period from commencement of operations (December 21, 2001) through
June 30, 2002.
(3) For the period from commencement of operations (September 23, 2002) through
June 30, 2003.
50
- -----
FIFTY
INTERNATIONAL SMALL CAP INTERNATIONAL VALUE
=========================================== ============================
PERIOD ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED PERIOD ENDED
9/30/03(1) 6/30/03 6/30/2002(2) 9/30/03(1) 6/30/2003(3)
=========================================== ============================
OPERATIONS:
Net investment income (loss)........................... $46,733 $335,121 $(4,449) $22,736 $55,293
Net realized gain (loss) on:
Investments....................................... 5,281,076 3,302,104 230,269 497,624 130,388
Foreign currency related transactions............. (202,732) (152,047) (16,760) (4,859) (2,222)
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments....................................... 37,030,177 28,634,982 (814,257) 1,374,411 2,325,237
Foreign currency related transactions............. 79,419 (112,904) (14,807) 1,525 337
------------------------------------------- -----------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................... 42,234,673 32,007,256 (620,004) 1,891,437 2,509,033
DISTRIBUTIONS PAID TO SHAREHOLDERS:
Net investment income:
Investor Shares................................... - - - - -
Institutional Shares..............................
Net realized gains on investment transactions:
Investor Shares................................... - (236,073) - - -
Institutional Shares..............................
------------------------------------------- -----------------------------
TOTAL DISTRIBUTIONS PAID TO SHAREHOLDERS............... - (236,073) - - -
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND SHARE ACTIVITIES ................ 110,508,433 132,312,967 75,117,291 5,433,053 13,780,423
------------------------------------------- -----------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................ 152,743,106 164,084,150 74,497,287 7,324,490 16,289,456
------------------------------------------- -----------------------------
Net assets, beginning of period........................ 238,581,437 74,497,287 - 16,289,456 -
------------------------------------------- -----------------------------
NET ASSETS, END OF PERIOD.............................. $391,324,543 $238,581,437 $74,497,287 $23,613,946 $16,289,456
=========================================== ============================
Accumulated undistributed
net investment income (loss) ........................ $291,438 $162,036 $(16,760) $70,865 $53,071
=========================================== ============================
The accompanying notes are an integral part of the financial statements.
51
---------
FIFTY-ONE
ARTISAN FUNDS, INC.
Statements of Changes in Net Assets (Continued)
Mid Cap Mid Cap Value
========================================== ==========================================
Period Ended Year Ended Year Ended Period Ended Year Ended Year Ended
9/30/03(1) 6/30/03 6/30/02 9/30/03(1) 6/30/03 6/30/02
========================================== ==========================================
OPERATIONS:
Net investment income (loss)............ $(6,409,147) $(12,208,186) $(13,844,376) $(56,920) $(131,368) $(131,837)
Net realized gain (loss) on:
Investments........................ 105,075,097 (325,149,190) (197,300,635) 1,143,665 (110,623) (342,711)
Foreign currency
related transactions ............ - - - - - -
Net increase (decrease) in
unrealized appreciation/
depreciation on:
Investments........................ 90,208,363 376,988,686 (147,245,296) 2,308,116 6,300,648 (17,524)
Foreign currency
related transactions ............ - - - - - -
------------------------------------------ ------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS ..... 188,874,313 39,631,310 (358,390,307) 3,394,861 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 - - - - -
FUND SHARE ACTIVITIES:
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM FUND
SHARE ACTIVITIES ..................... 208,283,211 770,633,859 1,117,916,637 9,507,195 36,457,011 9,367,318
------------------------------------------ ------------------------------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS ........................ 397,157,524 810,265,169 759,526,330 12,902,056 42,515,668 8,758,518
------------------------------------------ ------------------------------------------
Net assets, beginning of period......... 3,115,601,079 2,305,335,910 1,545,809,580 64,498,063 21,982,395 13,223,877
------------------------------------------ ------------------------------------------
NET ASSETS, END OF PERIOD............... $3,512,758,603 $3,115,601,079 $2,305,335,910 $77,400,119 $64,498,063 $21,982,395
========================================== ==========================================
Accumulated undistributed net
investment income (loss) ............. $ - $ - $ - $ - $ - $ -
========================================== ==========================================
(1) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
52
- ---------
FIFTY-TWO
SMALL CAP SMALL CAP VALUE
========================================== ==========================================
PERIOD ENDED YEAR ENDED YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
9/30/03(1) 6/30/03 6/30/02 9/30/03(1) 6/30/03 6/30/02
========================================== ==========================================
OPERATIONS:
Net investment income (loss)............ $(361,184) $(987,365) $(1,405,476) $(762,736) $(1,225,260) $(510,511)
Net realized gain (loss) on:
Investments........................ 4,973,748 (22,436,510) 4,119,870 18,221,191 (20,174,753) 27,382,101
Foreign currency
related transactions ............ - - - - - -
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments........................ 1,464,390 20,333,623 (24,760,188) 10,070,646 36,753,479 24,836,522
Foreign currency
related transactions ............ - - - - - -
------------------------------------------ ------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS ..... 6,076,954 (3,090,252) (22,045,794) 27,529,101 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 ..................... 5,759,810 (12,182,933) 9,184,203 45,076,888 86,250,860 139,200,888
------------------------------------------ ------------------------------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS ........................ 11,836,764 (15,902,280) (13,446,817) 72,605,989 79,003,950 163,205,994
------------------------------------------ ------------------------------------------
Net assets, beginning of period......... 116,036,762 131,939,042 145,385,859 702,549,582 623,545,632 460,339,638
------------------------------------------ ------------------------------------------
NET ASSETS, END OF PERIOD............... $127,873,526 $116,036,762 $131,939,042 $775,155,571 $702,549,582 $623,545,632
========================================== ==========================================
Accumulated undistributed net
investment income (loss) ............. $ - $ - $ - $ - $ - $ -
========================================== ==========================================
The accompanying notes are an integral part of the financial statements.
53
-----------
FIFTY-THREE
ARTISAN FUNDS, INC.
Financial Highlights - For a share outstanding throughout each period
NET ASSET NET NET REALIZED TOTAL INCOME DIVIDENDS
YEAR OR VALUE INVESTMENT AND UNREALIZED (LOSS) FROM FROM NET
PERIOD BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT
ENDED OF PERIOD (LOSS)(1) INVESTMENTS OPERATIONS INCOME
==============================================================================
ARTISAN INTERNATIONAL FUND
------------------------------------------------------------------------------
Investor Shares 9/30/03(4) $15.63 $ 0.02 $0.89 $0.91 $ -
------------------------------------------------------------------------------
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 9/30/03(4) $15.71 $ 0.03 $0.89 $0.92 $ -
------------------------------------------------------------------------------
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 9/30/03(4) $12.10 $ - $1.74 $1.74 $ -
------------------------------------------------------------------------------
6/30/03 10.50 0.03 1.59 1.62 -
------------------------------------------------------------------------------
6/30/02(6) 10.00 - 0.50 (7) 0.50 -
------------------------------------------------------------------------------
ARTISAN INTERNATIONAL VALUE FUND
------------------------------------------------------------------------------
Investor Shares 9/30/03(4) $13.01 $ 0.02 $1.29 $1.31 $ -
------------------------------------------------------------------------------
6/30/03(8) 10.00 0.09 2.92 3.01 -
------------------------------------------------------------------------------
(1) Computed based on average shares outstanding.
(2) Periods less than 12 months (where applicable) are not annualized.
(3) Periods less than 12 months (where applicable) are annualized.
(4) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
(5) The ratios of expenses to average net assets and net investment income
(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 income (loss) to average
net assets would have been as follows (periods less than 12 months, where
applicable, are annualized):
RATIO OF
NET
INVESTMENT
RATIO OF INCOME
YEAR OR EXPENSES (LOSS) TO
PERIOD TO AVERAGE AVERAGE
FUND ENDED NET ASSETS NET ASSETS
International Investor Shares 9/30/03 1.23% 0.49%
International Institutional Shares 9/30/03 1.00 0.73
International Small Cap Investor Shares 9/30/03 1.69 0.05
International Value Investor Shares 9/30/03 2.80 (0.34)
6/30/03 5.02 (1.43)
54
- ----------
FIFTY-FOUR
RATIO OF NET
DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INVESTMENT
FROM NET VALUE END OF EXPENSES INCOME (LOSS) PORTFOLIO
REALIZED TOTAL END TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
GAINS DISTRIBUTIONS OF PERIOD RETURN(2) (MILLIONS) NET ASSETS(3) NET ASSETS(3) RATE(2)
==============================================================================================================
ARTISAN INTERNATIONAL FUND
--------------------------------------------------------------------------------------------------------------
Investor Shares $ - $ - $16.54 5.8% $5,544.7 1.23%(5) 0.49%(5) 15.23%
--------------------------------------------------------------------------------------------------------------
- (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 $ - $ - $16.63 5.9% $3,354.7 1.00%(5) 0.73%(5) 15.23%
--------------------------------------------------------------------------------------------------------------
- (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 $ - $ - $13.84 14.5% $391.3 1.68%(5) 0.06%(5) 13.28%
--------------------------------------------------------------------------------------------------------------
(0.02) (0.02) 12.10 15.5 238.6 1.77 0.28 62.79
--------------------------------------------------------------------------------------------------------------
- - 10.50 5.0 74.5 2.39 (0.02) 25.14
--------------------------------------------------------------------------------------------------------------
ARTISAN INTERNATIONAL VALUE FUND
--------------------------------------------------------------------------------------------------------------
Investor Shares $ - $ - $14.32 10.1% $23.6 2.00%(5) 0.46%(5) 9.30%
--------------------------------------------------------------------------------------------------------------
- - 13.01 30.1 16.3 2.45(5) 1.14(5) 17.42
--------------------------------------------------------------------------------------------------------------
(6) For the period from commencement of operations (December 21, 2001) through
June 30, 2002.
(7) 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.
(8) 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.
55
----------
FIFTY-FIVE
ARTISAN FUNDS, INC.
Financial Highlights (Continued) - For a share outstanding throughout each
period
NET ASSET NET NET REALIZED TOTAL INCOME DIVIDENDS
YEAR OR VALUE INVESTMENT AND UNREALIZED (LOSS) FROM FROM NET
PERIOD BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT
ENDED OF PERIOD (LOSS) INVESTMENTS OPERATIONS INCOME
==============================================================================
ARTISAN MID CAP FUND
------------------------------------------------------------------------------
Investor Shares 9/30/03(3) $21.81 $(0.05)(4) $1.35 $1.30 $ -
------------------------------------------------------------------------------
6/30/03 22.13 (0.11)(4) (0.21)(5) (0.32) -
------------------------------------------------------------------------------
6/30/02 26.43 (0.19)(4) (4.11) (4.30) -
------------------------------------------------------------------------------
6/30/01 27.57 (0.13)(4) 0.02(5) (0.11) -
------------------------------------------------------------------------------
6/30/00 16.67 (0.18)(4) 11.91 11.73 -
------------------------------------------------------------------------------
6/30/99 13.69 (0.16)(4) 4.41 4.25 -
------------------------------------------------------------------------------
Institutional Shares 9/30/03(3) $21.96 $(0.03)(4) $1.35 $1.32 $ -
------------------------------------------------------------------------------
6/30/03 22.24 (0.07)(4) (0.21)(5) (0.28) -
------------------------------------------------------------------------------
6/30/02 26.48 (0.13)(4) (4.11) (4.24) -
------------------------------------------------------------------------------
6/30/01 27.57 (0.08)(4) 0.02(5) (0.06) -
------------------------------------------------------------------------------
ARTISAN MID CAP VALUE FUND
------------------------------------------------------------------------------
Investor Shares 9/30/03(3) $11.64 $(0.01)(4) $0.59 $0.58 $ -
------------------------------------------------------------------------------
6/30/03 10.82 (0.03)(4) 0.85 0.82 -
------------------------------------------------------------------------------
6/30/02 11.18 (0.09)(4) (0.19) (0.28) -
------------------------------------------------------------------------------
6/30/01(6) 10.00 (0.01)(4) 1.19 1.18 -
------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND
------------------------------------------------------------------------------
Investor Shares 9/30/03(3) $11.90 $(0.04)(4) $0.67 $0.63 $ -
------------------------------------------------------------------------------
6/30/03 11.99 (0.10)(4) 0.07(5) (0.03) -
------------------------------------------------------------------------------
6/30/02 13.99 (0.13)(4) (1.81) (1.94) -
------------------------------------------------------------------------------
6/30/01 14.69 (0.09)(4) 0.05(5) (0.04) -
------------------------------------------------------------------------------
6/30/00 11.09 (0.10)(4) 3.70 3.60 -
------------------------------------------------------------------------------
6/30/99 14.66 (0.08) (2.53) (2.61) -
------------------------------------------------------------------------------
ARTISAN SMALL CAP VALUE FUND
------------------------------------------------------------------------------
Investor Shares 9/30/03(3) $13.15 $(0.01)(4) $0.53 $0.52 $ -
------------------------------------------------------------------------------
6/30/03 13.48 (0.03)(4) 0.20 0.17 -
------------------------------------------------------------------------------
6/30/02 13.05 (0.01)(4) 1.16 1.15 (0.01)
------------------------------------------------------------------------------
6/30/01 10.63 0.05(4) 2.91 2.96 (0.05)
------------------------------------------------------------------------------
6/30/00 10.59 0.06(4) 0.36 0.42 (0.03)
------------------------------------------------------------------------------
6/30/99 11.37 (0.03) (0.21)(5) (0.24) -
------------------------------------------------------------------------------
(1) Periods less than 12 months (where applicable) are not annualized.
(2) Periods less than 12 months (where applicable) are annualized.
(3) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
(4) Computed based on average shares outstanding.
(5) 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.
(6) For the period from commencement of operations (March 28, 2001) through
June 30, 2001.
(7) The ratios of expenses to average net assets and net investment income
(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 income (loss) to average
net assets would have been as follows (periods less than 12 months, where
applicable, are annualized):
56
- ---------
FIFTY-SIX
RATIO OF NET
DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INVESTMENT
FROM NET VALUE END OF EXPENSES INCOME (LOSS) PORTFOLIO
REALIZED TOTAL END TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
GAINS DISTRIBUTIONS OF PERIOD RETURN(1) (MILLIONS) NET ASSETS(2) NET ASSETS(2) RATE(1)
==============================================================================================================
ARTISAN MID CAP FUND
--------------------------------------------------------------------------------------------------------------
Investor Shares $ - $ - $23.11 6.0% $2,583.2 1.20%(7) (0.81)%(7) 26.52%
--------------------------------------------------------------------------------------------------------------
- - 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(7) (1.13)(7) 202.84
--------------------------------------------------------------------------------------------------------------
Institutional Shares $ - $ - $23.28 6.1% $ 929.6 0.98%(7) (0.59)%(7) 26.52%
--------------------------------------------------------------------------------------------------------------
- - 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 $ - $ - $12.22 5.0% $ 77.4 1.59%(7) (0.31)%(7) 11.90%
--------------------------------------------------------------------------------------------------------------
- - 11.64 7.6 64.5 1.78 (0.34) 45.55
--------------------------------------------------------------------------------------------------------------
(0.08) (0.08) 10.82 (2.4) 22.0 1.95(7) (0.82)(7) 167.70
--------------------------------------------------------------------------------------------------------------
- - 11.18 11.8 13.2 1.84(7) (0.52)(7) 40.72
--------------------------------------------------------------------------------------------------------------
ARTISAN SMALL CAP FUND
--------------------------------------------------------------------------------------------------------------
Investor Shares $ - $ - $12.53 5.3% $ 127.9 1.44%(7) (1.16)%(7) 30.18%
--------------------------------------------------------------------------------------------------------------
(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 $ - $ - $13.67 4.0% $ 775.2 1.20%(7) (0.40)%(7) 12.20%
--------------------------------------------------------------------------------------------------------------
(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
--------------------------------------------------------------------------------------------------------------
RATIO OF
NET
INVESTMENT
RATIO OF INCOME
YEAR OR EXPENSES (LOSS) TO
PERIOD TO AVERAGE AVERAGE
FUND ENDED NET ASSETS NET ASSETS
Mid Cap Investor Shares 9/30/03 1.20% (0.81)%
6/30/99 2.12 (1.25)
Mid Cap Institutional Shares 9/30/03 0.98 (0.59)
Mid Cap Value Investor Shares 9/30/03 1.63 (0.35)
6/30/02 2.53 (1.40)
6/30/01 5.17 (3.84)
Small Cap Investor Shares 9/30/03 1.46 (1.18)
Small Cap Value Investor Shares 9/30/03 1.20 (0.41)
The accompanying notes are an integral part of the financial statements.
57
-----------
FIFTY-SEVEN
ARTISAN FUNDS, INC.
Notes to Financial Statements - September 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
58
- -----------
FIFTY-EIGHT
- -----------------------------------------------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 subchapter
M 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 a 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 a 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 period ended September 30, 2003 and
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 $185,160 and $2,995,772, respectively,
from securities lending is included in Other Income on the Statements
of Operations. As of September 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.
59
----------
FIFTY-NINE
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(g) Directed Brokerage - Each of the Artisan Funds may direct portfolio
trades, subject to obtaining the best price and execution, to various
brokers who have agreed to rebate a portion of the commissions
generated. Such rebates are made directly to the applicable Fund as
cash payments and are included in Other Income on the Statements of
Operations for International, Mid Cap Value and Small Cap Value in the
amounts of $226,962, $7,032 and $9,039, respectively.
(h) 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.
(i) 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.
60
- -----
SIXTY
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 waive or reimburse International
Value Fund for any ordinary operating expenses in excess of 2.00% of
average daily net assets annually. For the period ended September 30, 2003
and June 30, 2003 these waivers and reimbursements totaled $39,758 and
$124,348, respectively.
During the period ended September 30, 2003, the Adviser agreed to reimburse
expenses related to the change in fiscal year from June 30 to September 30.
These reimbursements are reflected in the Statements of Operations. The
total amounts due to/(from) the Funds from/(to) the Adviser for
International, International Small Cap, International Value, Mid Cap, Mid
Cap Value, Small Cap and Small Cap Value as of September 30, 2003 were
$21,084, $8,129, ($9,420), $14,194, $7,129, $7,243 and $7,683,
respectively.
Each director who is not an interested person of Artisan Funds or the
Adviser received 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 received a supplemental
annual retainer of $3,000. These fees were generally allocated to each Fund
in proportion to the Funds' net assets.
(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 no borrowings under the
line of credit during the period ended September 30, 2003, and minimal
borrowings under the line of credit during the year ended June 30, 2003.
(6) INVESTMENT TRANSACTIONS:
The cost of securities purchased and the proceeds from the sale of
securities (excluding short-term securities) for the period ended September
30, 2003 were as follows:
FUND SECURITY PURCHASES SECURITY SALES
-----------------------------------------------------------------------
INTERNATIONAL $1,477,211,542 $1,285,740,178
-----------------------------------------------------------------------
INTERNATIONAL SMALL CAP 142,188,183 39,682,396
-----------------------------------------------------------------------
INTERNATIONAL VALUE 6,566,523 1,705,622
-----------------------------------------------------------------------
MID CAP 1,022,761,654 851,333,067
-----------------------------------------------------------------------
MID CAP VALUE 17,055,189 7,945,258
-----------------------------------------------------------------------
SMALL CAP 36,120,111 35,589,452
-----------------------------------------------------------------------
SMALL CAP VALUE 105,123,489 85,200,676
-----------------------------------------------------------------------
61
---------
SIXTY-ONE
- ----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 period ended September 30, 2003, the Funds held securities
of affiliates or purchased and sold securities of affiliates in open market
transactions and received dividends from affiliates as summarized below:
SEPTEMBER 30, 2003
SHARE ------------------------
BALANCE PURCHASE SALES REALIZED DIVIDEND SHARE
FUND SECURITY 6/30/03 COST COST GAIN/(LOSS) INCOME BALANCE VALUE
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL CanWest Global 4,004,998 $- $- $- $- 4,004,998 $33,066,070
Communications Corp.(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Clariant AG(1) 8,999,193 - - - - 8,999,193 118,302,772
- ------------------------------------------------------------------------------------------------------------------------------------
Corus Entertainment, Inc., 2,929,750 - - - - 2,929,750 50,980,470
Class B(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Grupo Modelo S.A. 33,674,300 - 12,498,629 (1,994,615) - 29,108,000 72,141,246
de C.V., Series C(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Imperial Chemical 54,671,863 12,332,375 - - 2,583,116 59,764,246 164,661,279
Industries PLC(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Rhodia S.A. 8,837,821 2,297,909 - - 1,043,888 9,177,312 57,637,431
- ------------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL Banco Latinoamericano 1,458,614 - - - - 1,458,614 17,503,368
SMALL CAP de Exportaciones,
S.A., E Shares(1)
- ------------------------------------------------------------------------------------------------------------------------------------
CanWest Global 364,800 930,088 - - - 488,700 4,034,806
Communications Corp.(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Clariant AG(1) 265,600 - - - - 265,600 3,491,559
- ------------------------------------------------------------------------------------------------------------------------------------
Corus Entertainment, Inc., 178,800 2,125,107 - - - 311,000 5,411,699
Class B(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Grupo Modelo S.A. 2,365,100 548,007 - - - 2,580,700 6,396,005
de C.V., Series C(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Microcell - 2,824,828 - - - 309,200 3,665,525
Telecommunications,
Inc.(1)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
SMALL CAP National Dentex 189,900 - - - - 189,900 4,096,143
VALUE Corporation(1)
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Non-income producing security.
(2) Issuer was no longer an affiliate as of September 30, 2003.
(3) Issuer was not an affiliate as of June 30, 2003.
(8) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
GROSS GROSS NET APPRECIATION/
COST OF UNREALIZED UNREALIZED (DEPRECIATION) UNDISTRIBUTED UNDISTRIBUTED
FUND INVESTMENTS APPRECIATION DEPRECIATION ON INVESTMENTS ORDINARY INCOME LONG-TERM GAIN
- ----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL $9,220,603,060 $597,246,384 $(993,347,033) $(396,100,649) $101,850,701 $ -
- ----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP 325,015,671 67,476,896 (2,784,528) 64,692,368 7,887,377 743,211
- ----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL VALUE 20,123,751 3,706,228 (138,644) 3,567,584 828,246 -
- ----------------------------------------------------------------------------------------------------------------------------------
MID CAP 3,126,873,269 457,171,903 (64,564,432) 392,607,471 - -
- ----------------------------------------------------------------------------------------------------------------------------------
MID CAP VALUE 71,624,493 9,832,944 (525,901) 9,307,043 430,440 237,214
- ----------------------------------------------------------------------------------------------------------------------------------
SMALL CAP 103,345,905 20,922,885 (2,073,692) 18,849,193 - -
- ----------------------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE 647,142,524 143,806,644 (15,153,998) 128,652,646 - -
- ----------------------------------------------------------------------------------------------------------------------------------
62
- ---------
SIXTY-TWO
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
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.
There were no dividends or long-term capital gain distributions paid during
the period ended September 30, 2003. The tax basis of (i) dividends and
long-term capital gain distributions paid during the year ended June 30,
2003, and (ii) dividends and long-term capital gain distributions paid
during the year ended June 30, 2002; capital loss carryovers as of
September 30, 2003; and capital loss carryovers utilized during the period
ended September 30, 2003 are as follows:
PERIOD ENDED
YEAR ENDED 6/30/03 YEAR ENDED 6/30/02 AS OF 9/30/03 9/30/03
----------------------------------------------------------------------------------------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM NET CAPITAL CAPITAL LOSS CAPITAL LOSS
INCOME CAPITAL GAIN INCOME CAPITAL GAIN LOSS CARRYOVER CARRYOVER
FUND DIVIDENDS DISTRIBUTIONS DIVIDENDS DISTRIBUTIONS CARRYOVERS(1) EXPIRATION UTILIZED
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL $50,243,215 $- $21,792,872 $- $116,228,014 2008 -
694,241,382 2009
384,841,928 2010
202,299,105 2011
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL SMALL CAP(2) 263,073 - - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL VALUE(3) - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
MID CAP - - - - 166,421,032 2009 11,589,556
333,252,323 2010
- -----------------------------------------------------------------------------------------------------------------------------------
MID CAP VALUE - - 116,728 - - 406,002
- -----------------------------------------------------------------------------------------------------------------------------------
SMALL CAP - 629,095 - 585,226 13,948,829 2010 -
3,601,756 2011
- -----------------------------------------------------------------------------------------------------------------------------------
SMALL CAP VALUE 6,321,911 16,278,465 17,112,270 10,590,736 1,664,820 2010 7,210,055
- -----------------------------------------------------------------------------------------------------------------------------------
(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)
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 Fund $ 3,534
Mid Cap Value Fund 6,281
The amounts above include earnings and profits distributed to shareholders on
redemptions of Fund shares.
63
-----------
SIXTY-THREE
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(9) FUND SHARE ACTIVITIES:
Capital share transactions for the Funds were as follows:
INTERNATIONAL
INTERNATIONAL SMALL CAP
============================= =============
Investor Institutional Investor
Period ended September 30, 2003 Shares Shares Shares
======================================= ============================= =============
Proceeds from shares issued............. $1,653,682,408 $222,370,761 $118,234,351
Net asset value of shares issued in
reinvestment of distributions ....... - - -
Cost of shares redeemed.................(1,607,024,622) (24,062,048) (7,725,918)(1)
----------------------------- --------------
Net increase (decrease) from fund
share transactions ................... $46,657,786 $198,308,713 $110,508,433
============================= =============
Shares sold............................. 102,140,758 13,738,314 9,146,005
Shares issued in reinvestment
of distributions ..................... - - -
Shares redeemed......................... (98,579,720) (1,477,132) (592,457)
----------------------------- --------------
Net increase (decrease)
in capital shares .................... 3,561,038 12,261,182 8,553,548
============================= =============
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)(3)
----------------------------- --------------
Net increase (decrease) from fund
share transactions ................... $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
============================= =============
(1) Net of redemption fees of $48,643.
(2) Net of redemption fees of $509.
(3) Net of redemption fees of $76,057.
(4) For the period from commencement of operations (September 23, 2002) to June
30, 2003.
(5) Net of redemption fees of $578.
64
- -----------
SIXTY-FOUR
INTERNATIONAL VALUE MID CAP MID CAP VALUE SMALL CAP SMALL CAP VALUE
=============== ============================ =============== ============ ============
Investor Investor Institutional Investor Investor Investor
Period ended September 30, 2003 Shares Shares Shares Shares Shares Shares
======================================= =============== ============================ =============== ============ ============
Proceeds from shares issued............. $5,774,285 $320,410,216 $56,462,660 $15,855,003 $10,625,353 $74,751,717
Net asset value of shares issued in
reinvestment of distributions ....... - - - - - -
Cost of shares redeemed................. (341,232)(2) (161,733,175) (6,856,490) (6,347,808) (4,865,543) (29,674,829)
--------------- ----------------------------- -------------- ------------ ------------
Net increase (decrease) from fund
share transactions ................... $5,433,053 $158,677,041 $49,606,170 $9,507,195 $5,759,810 $45,076,888
=============== ============================ =============== ============ ============
Shares sold............................. 421,672 13,957,902 2,468,566 1,323,657 839,721 5,442,976
Shares issued in reinvestment
of distributions ..................... - - - - - -
Shares redeemed......................... (25,017) (7,041,572) (296,096) (529,220) (385,700) (2,163,557)
--------------- ----------------------------- -------------- ------------ ------------
Net increase (decrease)
in capital shares .................... 396,655 6,916,330 2,172,470 794,437 454,021 3,279,419
=============== ============================ =============== ============ ============
INTERNATIONAL VALUE(4) MID CAP MID CAP VALUE SMALL CAP SMALL CAP VALUE
=============== ============================ =============== ============ ============
Investor Investor Institutional Investor Investor Investor
Year ended June 30, 2003 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)(5) (740,991,149) (18,264,478) (12,530,971) (66,435,862) (153,690,612)
--------------- ----------------------------- -------------- ------------ ------------
Net increase (decrease) from fund
share transactions ................... $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
=============== ============================ =============== ============ ============
65
----------
SIXTY-FIVE
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(9) FUND SHARE ACTIVITIES (CONTINUED):
Capital share transactions for the Funds were as follows:
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 transactions ................... $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) For the period from commencement of operations (December 21, 2001) to June
30, 2002.
(2) Net of redemption fees of $4,157.
10. CHANGE IN INDEPENDENT AUDITORS
The Board of Directors and the audit committee of the Board of Directors
recommended and approved Ernst & Young LLP as the Funds' independent
auditors on August 26, 2003. PricewaterhouseCoopers LLP previously served
as the Funds' independent auditors. There were no disagreements with the
previous independent auditors and an unqualified opinion was issued on the
June 30, 2003 financial statements of Artisan Funds.
11. LITIGATION
Artisan Funds and the Adviser are defendants in a lawsuit that seeks
certification of a plaintiff class consisting of all persons in the United
States who held shares in International Fund for a period of more than 14
days during the five years prior to the filing of the lawsuit. The suit
seeks compensatory and punitive damages, as well as interest, costs and
attorney's fees. The lawsuit alleges, in summary, that Artisan Funds and
the Adviser exposed long-term International Fund shareholders to trading by
market timers by allegedly (a) failing to properly evaluate daily whether a
significant event affecting the value of International Fund's securities
had occurred after foreign markets had closed but before the calculation of
the Fund's net asset value ("NAV"); (b) failing to implement the Fund's
portfolio valuation and share pricing policies and procedures; (c) allowing
portfolio valuation and share policies and procedures that benefited market
timers at the expense of long-term shareholders; and (d) failing to know
and implement applicable rules and regulations concerning the calculation
of NAV. Artisan Funds and the Adviser intend to defend the lawsuit
vigorously. Artisan Funds does not believe that the pending action will
have a material affect on the financial statements of any Fund.
66
- ----------
SIXTY-SIX
INTERNATIONAL
SMALL CAP (1) MID CAP MID CAP VALUE SMALL CAP 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)(2) (838,081,569) (22,593,597) (5,508,251) (46,982,611) (147,452,616)
--------------- ----------------------------- -------------- ------------ ------------
Net increase (decrease) from fund
share transactions ................... $75,117,291$ 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
=============== ============================ =============== ============ ============
67
-----------
SIXTY-SEVEN
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of Artisan Funds, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Artisan Funds, Inc., comprising the 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 (the "Funds") as of September 30, 2003,
and the related statements of operations, statements of changes in net assets
and financial highlights for the three-month period then ended. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits. The financial
statements and financial highlights of the Funds for the periods prior to
September 30, 2003, were audited by other auditors whose report dated July 31,
2003, expressed an unqualified opinion on those financial statements and
financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States.Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 2003, by correspondence
with the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Artisan Funds, Inc. as of September 30, 2003, and the results of their
operations, changes in net assets and financial highlights for the three-month
period then ended, in conformity with accounting principles generally accepted
in the United States.
/s/ Ernst & Young LLP
Milwaukee, Wisconsin
October 31, 2003
68
- -----------
SIXTY-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 September 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 and products of portfolio
companies mentioned in this report are owned by their respective owners. 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.
69
----------
SIXTY-NINE
- ----PROXY VOTING POLICIES AND PROCEDURES----------------------------------------
You may obtain a description of the Artisan Funds' proxy voting policies and
procedures, without charge, upon request by calling 800.344.1770. That
information also is available on the Securities and Exchange Commission's
website at http://www.sec.gov.
- ----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
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 11/01/03 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 (individual life
Deuren s.c., Milwaukee, WI insurance, 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 and (manufacturer of automotive systems 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 Distinguished Executive in Director, Jefferson Pilot Corporation
Residence (teaching position), (individual and group life insurance and
University of Georgia. Until annuity company); Former Chairman of the
November 2001, Chairman of the Board, The University of Georgia
Board, President and Chief Foundation; Member, Board of Regents of
Executive Officer of Heidrick & the University System of Georgia
Struggles International, Inc.
(executive search firm)
- ------------------------------------------------------------------------------------------------------------------------------------
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 - 46 Director, 1/5/95 Managing Director of Artisan None
Chairman Partners; Chairman and President
and Chief of Artisan Distributors
Executive
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Carlene Murphy Director 3/27/95 Managing Director of Artisan None
Ziegler - 47 and Vice Partners and Portfolio
President Co-Manager of Artisan Small
Cap Fund
- ------------------------------------------------------------------------------------------------------------------------------------
70
----------
SEVENTY
DIRECTORS AND OFFICERS----------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DATE FIRST
POSITIONS ELECTED OR
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 11/01/03 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 None
President Partners and Portfolio Co-Manager
of Artisan Mid Cap Value Fund
and Artisan Small Cap Value Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew C. Stephens - 40 Vice 7/31/97 Managing Director of Artisan None
President Partners and Portfolio Manager
of Artisan Mid Cap Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Marina T. Carlson - 39 Vice
President 8/5/99 Managing Director of Artisan None
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 None
President Partners 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 Managing Director of Artisan None
President 6/5/02 Partners 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 None
Secretary Accounting and Administration
and of Artisan Partners since
Assistant January 2003, Director of
Treasurer Client 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 Associate Counsel of Artisan None
Secretary Partners; prior to joining
Artisan Partners in July 2002,
Associate of the law firm
Bell, Boyd & Lloyd LLC,
Chicago, IL
- ------------------------------------------------------------------------------------------------------------------------------------
*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 875 E. Wisconsin Avenue, Suite 800, 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, 875 E. Wisconsin Avenue, Suite 800, Milwaukee,
Wisconsin 53202; and Mr. Witt - 800 E. Northwest Highway, Des Plaines, Illinois
60016.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
71
-----------
SEVENTY-ONE
[ARTISAN LOGO] ARTISAN FUNDS
P.O. BOX 8412
BOSTON, MA 02266-8412
800.344.1770
WWW.ARTISANFUNDS.COM
11/28/03 - A3154
--------------------
[ARTISAN LOGO]
--------------------
ANNUAL
REPORT
SEPTEMBER 30, 2003
--------------------
--------------------
ARTISAN
INTERNATIONAL FUND
--------------------
ARTISAN MID CAP FUND
--------------------
Institutional Shares
--------------------
--------------------
ARTISAN FUNDS, INC.
INSTITUTIONAL SHARES
- ---------------------------------------------------------------TABLE OF CONTENTS
TABLE OF CONTENTS
- ----------------------------------------
02 MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
- ----------------------------------------
02 Artisan International Fund
- ----------------------------------------
04 Artisan Mid Cap Fund
- ----------------------------------------
- ----------------------------------------
06 SCHEDULES OF INVESTMENTS
- ----------------------------------------
06 Artisan International Fund
- ----------------------------------------
11 Artisan Mid Cap Fund
- ----------------------------------------
- ----------------------------------------
16 STATEMENTS OF ASSETS & LIABILITIES
- ----------------------------------------
- ----------------------------------------
17 STATEMENTS OF OPERATIONS
- ----------------------------------------
- ----------------------------------------
18 STATEMENTS OF
CHANGES IN NET ASSETS
- ----------------------------------------
- ----------------------------------------
20 FINANCIAL HIGHLIGHTS
- ----------------------------------------
- ----------------------------------------
22 NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------
- ----------------------------------------
29 REPORT OF
INDEPENDENT AUDITORS
- ----------------------------------------
- ----------------------------------------
30 NOTES ON
MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE
- ----------------------------------------
- ----------------------------------------
31 PROXY VOTING POLICES
AND PROCEDURES
- ----------------------------------------
- ----------------------------------------
31 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 and
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 Funds, 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(s), as of September 30, 2003. That information and those views may
change and the Funds disclaim 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 Artisan International Fund changed its fiscal year end from June 30 to
September 30. This annual report discusses the results of the three-month
period July 1, 2003, through September 30, 2003.
o Most of our chemical industry stocks posted strong returns. Our consumer
discretionary sector stocks contributed to our relative underperformance.
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--------------------------------------------------------------
Despite a positive return for the period, Artisan International Fund lagged the
markets. The Fund gained 5.86% for the three-month fiscal period while its
benchmark, the MSCI EAFE/R Index, rose 8.13%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (7/1/97 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN INTERNATIONAL FUND - INSTITUTIONAL SHARES ($15,764)
MSCI EAFE/R Index ($9,355)
Lipper International Funds Index ($10,207)
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
14,892 8,652 9,460
9/03 15,764 9,355 10,207
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
- --------------------------------------------------------------------------------
3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR 5-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan International Fund -
Institutional Shares 5.86% 16.96% 9.33% 7.55%
- --------------------------------------------------------------------------------
MSCI EAFE/R Index 8.13 26.01 0.55 -1.06
- --------------------------------------------------------------------------------
Lipper International Funds Index 7.89 25.63 2.14 0.33
- --------------------------------------------------------------------------------
*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, 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 30 for a description of each index.
BIGGEST GAINERS
Clariant AG.................................. 43.3%
Imperial Chemicals Industries PLC............ 35.7
Credit Suisse Group.......................... 20.0
Tesco PLC.................................... 11.5
Nestle S.A, Class B.......................... 11.4
BIGGEST LOSERS
Industria de Diseno Textil, S.A.............. -14.6%
Fomento Economico Mexicano S.A. ............. -8.5
EnCana Corporation........................... -4.9
Deutsche Telekom AG.......................... -4.5
Muenchener Rueckversicherungs-
Gesellschaft AG............................ -3.2
For the period ended 9/30/03, 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
period ended September 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
02
---
TWO
- ------------------------------------------------------ARTISAN INTERNATIONAL FUND
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
For the three-month fiscal period, international equity markets continued their
post-Iraq turnaround that began in the second calendar quarter of 2003. It
appears that a global economic recovery has begun to unfold, but the pace of the
stock market rally has been unexpected. During the three-month period, the MSCI
EAFE/R Index advanced more than we have seen in a calendar third quarter for
more than a decade.
We lost some relative performance in the consumer staples sector due to our
overweight position, but offset most of the disadvantage with our stock picks.
UK food retailer Tesco PLC announced solid first half results, which confirmed
that it has strengthened its leading position in the UK retail food market.
Nestle S.A. was also a solid performer. It contributed to results after a
favorable financial report showed an increase in cash flows and operating
margins. The part of the report we were most pleased with was the company's
margin improvement, as it appears that cost cutting efforts have continued to
deliver results. One stock pick that contributed negatively was Spanish clothing
retailer Industria de Diseno Textil, S.A. It warned that gross margins for the
second half of 2003 would be below expectations.
Many of our specialty chemicals sector stocks, benefiting from the strength of
the cyclical recovery and improving raw material costs, posted attractive
returns. Imperial Chemical Industries PLC was one of the leading performers
after announcing profits that beat forecasts and additional job cuts aimed at
lowering costs.
In the financial sector we lost relative performance due to the uneven returns
of our stock picks. For example, Credit Suisse Group's stock rose by about 20%
as it recovered from last year's losses. The stock of Muenchener
Rueckversicherungs-Gesellschaft AG (Munich Re) suffered after its debt was
downgraded by Standard & Poor's following a second quarter loss. The loss was
due to an extraordinary tax charge triggered by a fiscal policy debate related
to the tax treatment of certain investment funds.
The information technology sector was the strongest performing group in the MSCI
EAFE/R Index. Our stock selections performed well, but we underperformed in the
area because we only owned a few select names. One of our stocks, semiconductor
company ASML Holding N.V., was up due to reductions in workforce, better margins
and a number of favorable reports about the outlook for semiconductor demand.
On a regional basis, what we gained through stock picking in Europe was more
than offset by the negative allocation effect from the Pacific Rim and Japan due
to our underweight position. We underestimated the momentum of the rally, as
markets such as Hong Kong, Taiwan and Japan were among the best performers
during the quarter.
PORTFOLIO CHANGES
On a regional and country level, we added primarily in Japan but also in Hong
Kong, South Korea and Taiwan, while we reduced our European exposure. Otherwise,
we remained focused on long-term trends and stayed with most of our thematic
holdings.
In the financial sector, we added Nikko Cordial Corporation, a holding company
for a major Japanese broker that also has a joint venture with Citigroup Inc. We
like the recent measures the company has taken to improve the stability of
earnings, such as cost cuts and revisions to its pay structure. We sold ABN Amro
Holdings, a Dutch bank that earns a portion of its revenue from the U.S.
mortgage market, when we concluded that its growth prospects had been dimmed by
falling refinancing demand in the U.S. At our lower expected growth rate, we
thought the company was fully valued.
In the media area, it appears that ad spending is beginning to show signs of
life again, and the stocks of advertising agencies and media companies reflected
the improved business outlook. We thought this had the potential to be a global
trend, so we added a number of Japanese media companies such as Nippon
Television Network Corporation, Tokyo Broadcasting System, Inc. and Fuji
Television Network, Inc. to our portfolio.
FUND STATISTICS
Net Assets................................... $8.9 Bil.
Number of Holdings........................... 103
Weighted Avg. Market Cap.....................$24.2 Bil.
Weighted Avg. Growth Rate (3-5 yr)........... 10.5%
Weighted Harmonic Avg. P/E (2003E)........... 17.5X
All statistics are as of 9/30/03.
TOP 10 HOLDINGS
Allianz AG (Germany)......................... 3.6%
Compass Group PLC (United Kingdom)........... 3.4
Nestle S.A., Class B (Switzerland)........... 3.3
Honda Motor Co., Ltd. (Japan)................ 2.8
Tesco PLC (United Kingdom)................... 2.8
Lloyds TSB Group PLC (United Kingdom)........ 2.6
Muenchener Rueckversicherungs-
Gesellschaft AG (Germany).................. 2.6
Fortis (NL) N.V. (Netherlands)............... 2.5
Marks & Spencer Group PLC (United Kingdom)... 2.5
Carrefour S.A. (France)...................... 2.3
TOTAL........................................ 28.4%
As a percentage of total net assets as of 9/30/03.
TOP 5 SECTORS
Consumer Discretionary....................... 24.9%
Financials................................... 24.2
Consumer Staples............................. 16.5
Telecommunications Services.................. 7.9
Materials.................................... 7.4
As a percentage of total net assets as of 9/30/03.
TOP 5 COUNTRY ALLOCATIONS
United Kingdom............................... 23.3%
Switzerland.................................. 15.7
Germany...................................... 13.4
Japan........................................ 9.8
France....................................... 6.0
As a percentage of total net assets as of 9/30/03.
REGION ALLOCATION
9/03 6/03
------ ------
Europe....................................... 74.6% 79.1%
Asia/Pacific................................. 13.8 8.0
Latin America................................ 6.8 8.4
North America................................ 2.9 3.3
As a percentage of total net assets as of 9/30/03 and 6/30/03, respectively.
03
-----
THREE
ARTISAN
MID CAP FUND
INSTITUTIONAL SHARES
HIGHLIGHTS----------------------------------------------------------------------
o Artisan Mid Cap Fund changed its fiscal year end from June 30 to September
30. This annual report discusses the results of the three-month period July
1, 2003 through September 30, 2003.
o Technology stocks contributed positively to relative performance. Our
consumer-related exposure hurt our relative results.
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--------------------------------------------------------------
For the three-month fiscal period ended September 30, 2003, Artisan Mid Cap Fund
gained 6.06%, while its benchmark, the Russell Midcap/R Index, increased 6.43%.
GROWTH OF AN ASSUMED $10,000 INVESTMENT (7/1/00 to 9/30/03)
[CHART APPEARS HERE]
ARTISAN MID CAP FUND - INSTITUTIONAL SHARES ($8,759)
Russell Midcap/R Growth Index ($5,804)
Russell Midcap/R Index ($10,011)
Lipper Mid-Cap Core Funds Index ($9,114)
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
8,258 5,416 9,406 8,610
9/03 8,759 5,804 10,011 9,114
AVERAGE ANNUAL TOTAL RETURNS (as of 9/30/03)
- --------------------------------------------------------------------------------
3-MONTH SINCE
FUND / INDEX FISCAL PERIOD* 1-YEAR INCEPTION
- --------------------------------------------------------------------------------
Artisan Mid Cap Fund -
Institutional Shares 6.06% 27.76% -3.99%
- --------------------------------------------------------------------------------
Russell Midcap/R Growth Index 7.16 38.89 -15.41
- --------------------------------------------------------------------------------
Russell Midcap/R Index 6.43 32.63 0.03
- --------------------------------------------------------------------------------
Lipper Mid-Cap Core Funds Index 5.86 28.76 -2.81
- --------------------------------------------------------------------------------
*Not Annualized.
PERFORMANCE IS HISTORICAL AND 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 GROWTH 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 FALL OUT OF FAVOR WITH INVESTORS AND 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 30 for a
description of each index.
BIGGEST GAINERS
Research In Motion Limited............. 71.9%
Seagate Technology..................... 48.5%
Invitrogen Corporation................. 43.8%
Network Appliance, Inc................. 25.7%
Adobe Systems Incorporated............. 22.1%
BIGGEST LOSERS
Labranche & Co Inc.................... -28.0%
Lamar Advertising Company............. -16.0%
InterActiveCorp....................... -15.6%
Costco Wholesale Corporation.......... -12.9%
Caremark Rx, Inc....................... -9.9%
For the period ended 9/30/03, 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
period ended September 30, 2003, considering interim security purchases, sales
and dividends. Past performance of these specific holdings is historical and
does not guarantee future results.
04
- ----
FOUR
- --------------------------------------------------------ARTISAN MID CAP FUND----
INVESTING ENVIRONMENT AND PERFORMANCE REVIEW
U.S. equity markets posted their second consecutive quarter of positive
performance during the three-month fiscal period. Within mid-caps, the smallest
and most speculative stocks led the way. In addition, technology stocks were
among the performance leaders for the Russell Midcap/R Index and Russell
Midcap/R Growth Index.
A variety of events drove optimism in the technology sector including a positive
outlook by Intel Corporation, an announcement by Microsoft Corporation that it
was looking to add jobs, increased industrial production within some tech
industries and strong consumer spending. On average the Fund had a slightly
larger commitment to technology stocks than the Russell Midcap/R Growth Index
and security selection was strong, which contributed positively to relative
performance.
Two of our best performing stocks were Network Appliance, Inc. and Adobe Systems
Incorporated. Network Appliance is a storage technology company that reported
strong earnings driven by better-than-expected sales of various products such as
its disaster recovery and data backup technology. Adobe is a publishing software
company that is known for its Acrobat/R, Illustrator/R and Photoshop/R products.
Its gains were driven by a strong earnings report due to the success of the
company's recently upgraded Acrobat/R, which contributed to strong business
growth.
Outside of technology, a number of individual success stories also contributed
to third quarter results. Two of the better performers were Invitrogen
Corporation and The Williams Companies, Inc. Invitrogen is a market leader in
molecular biology kits. Earlier this year, the company appointed a new President
and CEO, who joined the company from GE Medical Systems. As the former President
and CEO of GE Medical's Information Technologies business unit, he managed
numerous acquisitions and we think he brings significant operational experience
to Invitrogen.
In an otherwise soft quarter for energy related stocks, natural gas pipeline
leader, The Williams Companies, outperformed after reporting strong earnings.
The Williams Companies benefited from high natural gas prices and took steps to
exit certain business lines and focus on its core businesses.
The Fund's consumer-related exposure did the most damage to relative results in
the quarter. We were overweight advertising and media, which hurt our relative
performance, as did a few security-specific issues. In advertising and media,
several economic data points related to an advertising recovery showed signs of
life, but it appeared that weak employment data held back a rebound, causing
companies such as Lamar Advertising Company to underperform. Costco Wholesale
Corporation, the leading warehouse club brand in the U.S., fell after the
company lowered its outlook for its fiscal fourth quarter. It experienced
increased competition from Sam's Club (Wal-Mart Stores, Inc.'s warehouse store
chain) and rising labor costs.
PORTFOLIO CHANGES
The makeup of the portfolio is largely the same as it was on June 30, 2003. The
biggest change was the addition of a number of new gardenSM positions in the
technology sector, resulting in an increase in our overall weighting.
The companies owned in the energy sector remained the same because we continued
to think that the fundamentals were in place for oil and gas prices to be
sustained at higher levels. The reduced weight in the sector is the result of
trimming back a few of our holdings into strength. Within the consumer space, we
closed out the Fund's positions in Tiffany & Co., Darden Restaurants, Inc. and
Pixar. A number of data points in September related to employment, consumer
debt, and wage growth made us cautious about the valuation levels of many
consumer-related stocks. Our concern is that it will be hard to duplicate recent
stimuli such as low interest rates, which contributed to refinancing activity,
tax cuts and rebate checks. As a result, we felt it would be prudent to take
gains in some of those investments.
FUND STATISTICS
Net Assets................................... $3.5 Bil.
Number of Holdings........................... 100
Median Market Cap............................ $5.1 Bil.
Weighted Avg. Market Cap..................... $8.0 Bil.
Weighted Avg. Growth Rate (3-5 yr)........... 16.3%
Weighted Harmonic Avg. P/E (2003E)........... 25.8X
Fund statistics are as of 9/30/03.
TOP 10 HOLDINGS
Accenture Ltd - Class A...................... 2.0%
Southwest Airlines Co........................ 1.8
Caremark Rx, Inc............................. 1.6
Smith International, Inc..................... 1.6
Mylan Laboratories Inc....................... 1.6
Seagate Technology........................... 1.5
Boston Scientific Corporation................ 1.5
MGIC Investment Corporation.................. 1.5
Omnicom Group Inc............................ 1.5
Danaher Corporation.......................... 1.5
TOTAL........................................ 16.1%
As a percentage of total net assets as of 9/30/03.
SECTOR DIVERSIFICATION
9/03 6/03
------ ------
Auto & Transportation........................ 5.2% 4.4%
Consumer Discretionary....................... 24.1 24.8
Consumer Staples............................. 1.6 1.4
Financial Services........................... 12.4 12.4
Healthcare................................... 13.3 13.7
Integrated Oils.............................. 0.0 0.0
Materials & Processing....................... 3.0 3.7
Other........................................ 0.4 0.8
Other Energy................................. 4.8 6.5
Producer Durables............................ 7.8 9.6
Technology................................... 22.2 17.5
Utilities.................................... 0.7 1.0
Other assets less liabilities................ 4.5 4.2
TOTAL........................................ 100% 100%
As a percentage of total net assets as of 9/30/03
and 6/30/03, respectively.
05
----
FIVE
ARTISAN
INTERNATIONAL FUND
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ =============
COMMON AND PREFERRED STOCKS - 98.1%
AUSTRALIA - 1.1%
AMP Limited 1,458,900 $ 6,609,494
Commonwealth Bank of Australia 2,945,390 55,499,755
National Australia Bank Ltd. 1,484,491 31,102,605
-------------
93,211,854
BELGIUM - 1.8%
Interbrew 6,331,108 157,720,367
BRAZIL - 1.1%
Banco Bradesco S.A. 3,767,729,000 14,805,701
Banco Itau Holding Financeira S.A. 178,301,400 12,672,712
Petroleo Brasileiro S.A. - (ADR) 1,236,000 28,341,480
Telesp Celular Participacoes S.A.,
Preferred - (ADR)(1) 9,544,900 44,479,234
-------------
100,299,127
CANADA - 2.9%
Bombardier, Inc., Class B 4,430,100 18,599,531
CanWest Global Communications Corporation(1)(2) 4,004,998 33,066,070
Corus Entertainment, Inc., Class B(1)(2) 2,929,750 50,980,470
EnCana Corporation 3,818,100 138,248,864
Telus Corporation 733,800 12,535,184
-------------
253,430,119
CHINA - 0.3%
China Petroleum & Chemical Corporation 111,114,000 30,847,464
DENMARK - 1.2%
A P Moller - Maersk A/S 6,466 44,132,710
Novo-Nordisk A/S, Class B 1,811,550 66,796,518
-------------
110,929,228
FRANCE - 6.0%
Carrefour S.A. 4,024,773 202,593,494
JC Decaux S.A.(1) 8,418,200 118,393,229
M6 - Metropole Television 1,227,600 33,328,300
Rhodia S.A. (2) 9,177,312 57,637,431
Sanofi-Synthelabo S.A. 2,056,611 125,090,122
-------------
537,042,576
GERMANY - 13.4%
Allianz AG 3,600,002 317,959,865
DaimlerChrysler AG 845,300 29,686,191
Deutsche Boerse AG 2,415,989 123,301,801
Deutsche Telekom AG(1) 9,898,090 143,473,646
Henkel KGaA 2,901,743 198,640,214
Infineon Technologies AG(1) 823,300 10,763,446
KDG Investors, L.P. (1)(3)(4) 10,000,000 -
Linde AG 3,427,883 141,233,787
Muenchener Rueckversicherungs-Gesellschaft AG 2,294,515 228,082,098
-------------
1,193,141,048
06
---
SIX
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ =============
HONG KONG - 0.7%
Cheung Kong Holdings Limited 1,537,000 $12,156,042
CNOOC Limited 13,901,500 23,784,267
Hong Kong & China Gas Company Limited 4,596,800 6,173,069
HSBC Holdings PLC 849,600 11,464,180
Swire Pacific Limited, Class A 844,500 4,983,427
-------------
58,560,985
HUNGARY - 0.1%
Magyar Tavkozlesi Rt 1,379,050 5,085,715
Magyar Tavkozlesi Rt - (ADR) 83,600 1,562,484
-------------
6,648,199
ITALY - 0.8%
Mediolanum S.p.A. 1,576,500 10,139,894
Telecom Italia S.p.A. 33,179,210 56,482,851
-------------
66,622,745
JAPAN - 9.8%
Asahi Breweries, Ltd. 704,900 5,213,280
East Japan Railway Company 5,786 28,095,194
Fuji Fire & Marine Insurance Co., Ltd. 1,064,500 2,570,125
Fuji Television Network, Inc. 3,129 15,305,883
Honda Motor Co., Ltd. 6,256,300 251,004,452
Japan Airlines System Corporation 5,492,000 15,428,766
Japan Telecom Holdings Co., Ltd. 25,009 74,074,137
Japan Tobacco, Inc. 13,831 90,621,819
Nikko Cordial Corporation 33,210,200 177,057,477
Nippon Broadcasting System, Inc. 55,440 2,254,124
Nippon Television Network Corporation 8,870 1,300,864
Promise Co., Ltd. 2,068,250 90,961,047
Tokyo Broadcasting System, Inc. 1,311,500 18,151,353
Tokyu Corporation 3,506,400 14,476,902
Yamanouchi Pharmaceutical Co., Ltd. 2,122,400 58,672,459
Yamato Transport Co., Ltd. 1,991,700 26,635,848
-------------
871,823,730
KOREA - 0.2%
Korea Electric Power Corporation 1,145,390 21,560,400
LUXEMBOURG - 0.6%
RTL Group 849,486 49,738,496
MEXICO - 5.7%
Cemex S.A. de C.V. - (ADR) 810,400 20,219,480
Grupo Modelo S.A. de C.V., Series C 29,108,000 72,141,246
Grupo Televisa S.A. - (ADR) 3,818,600 139,722,574
Telefonos de Mexico S.A. de C.V. - (ADR) 5,264,840 160,840,862
Wal-Mart de Mexico S.A. de C.V., Series V 39,799,000 115,288,599
-------------
508,212,761
NETHERLANDS - 5.0%
ASML Holding N.V., NY Shares(1)(5) 971,600 12,757,108
ASML Holding N.V.(1) 8,675,346 113,720,742
Fortis (NL) N.V. 13,288,076 225,900,791
Wolters Kluwer N.V. 6,696,112 96,124,429
-------------
448,503,070
07
-----
SEVEN
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ =============
POLAND - 0.3%
Bank Pekao S.A. 999,864 $28,527,695
RUSSIA - 0.8%
LUKOIL - (ADR) 848,600 69,415,480
OAO Gazprom - (ADR) 93,300 2,304,510
-------------
71,719,990
SINGAPORE - 1.0%
DBS Group Holdings, Ltd. 12,301,807 91,770,022
SPAIN - 5.2%
Banco Bilbao Vizcaya Argentaria, S.A. 822,400 8,490,186
Industria de Diseno Textil, S.A. 4,792,499 102,749,617
Promotora de Informaciones, S.A. 8,526,054 90,702,491
Repsol YPF, S.A. 7,846,012 128,996,028
Telefonica, S.A. (1) 11,071,880 130,815,643
-------------
461,753,965
SWEDEN - 0.4%
Telefonaktiebolaget LM Ericsson - (ADR) 1,282,500 18,827,100
Telefonaktiebolaget LM Ericsson 11,026,000 16,080,354
-------------
34,907,454
SWITZERLAND - 15.7%
CIBA Specialty Chemicals AG(1) 2,353,292 159,673,662
Clariant AG (1) (2) 8,999,193 118,302,772
Credit Suisse Group 5,507,800 176,318,041
Julius Baer Holding Ltd., Class B 260,306 74,947,932
Nestle S.A., Class B 1,281,586 295,683,389
Novartis AG 3,877,207 150,117,652
Roche Holding AG - Genusschein 1,528,200 126,790,347
Swiss Re 642,333 40,833,262
Serono S.A. 131,478 86,071,368
UBS AG 3,057,735 171,676,135
-------------
1,400,414,560
TAIWAN - 0.7%
Chunghwa Telecom Co., Ltd. - (ADR) 4,392,600 61,540,326
UNITED KINGDOM - 23.3%
BAE Systems PLC 51,194,751 142,965,491
British Sky Broadcasting PLC 8,423,303 86,040,082
Carlton Communications PLC 17,470,084 46,899,048
Compass Group PLC 52,022,509 300,066,334
Diageo PLC 18,413,151 198,794,230
Granada PLC 88,967,620 138,273,860
Imperial Chemical Industries PLC(2) 59,764,246 164,661,279
Kesa Electricals PLC 10,897,500 40,349,773
Kingfisher PLC 26,669,020 115,702,853
Lloyds TSB Group PLC 34,015,435 233,943,261
Marks & Spencer Group PLC 44,321,724 225,441,868
Next PLC 6,007,882 112,249,447
Prudential PLC 935,700 6,388,674
Tesco PLC 62,293,968 249,551,131
Vodafone Group PLC 4,548,000 9,071,899
-------------
2,070,399,230
-------------
TOTAL COMMON AND PREFERRED STOCKS (Cost $9,036,701,564) 8,729,325,411
08
- -----
EIGHT
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
PAR
AMOUNT VALUE
============ =============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 1.1%
Repurchase agreement with State Street Bank
and Trust Company, 0.75%, dated 9/30/2003,
due 10/1/2003, maturity value $95,178,983
collateralized by $97,084,186 market value
Federal National Mortgage Association Note,
1.18% due 7/27/2004. (Cost $95,177,000) $95,177,000 $95,177,000
-------------
TOTAL INVESTMENTS - 99.2% (cost $9,131,878,564) 8,824,502,411
OTHER ASSETS LESS LIABILITIES - 0.8% 74,890,655
-------------
TOTAL NET ASSETS - 100.0%(6) $8,899,393,066
==============
(1) Non-income producing securities.
(2) Affiliated company as defined by the Investment Company Act of 1940. See
Note 7 of the financial statements.
(3) Valued at a fair value in accordance with procedures established by the
Board of Directors of Artisan Funds.
(4) 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 September 30, 2003 represents 0.0%
of total net assets.
(5) Principally traded in the United States.
(6) 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.
09
----
NINE
ARTISAN
INTERNATIONAL FUND
Portfolio Diversification - September 30, 2003
VALUE PERCENTAGE
============ =============
Consumer Discretionary $2,210,566,284 24.9%
Consumer Staples 1,470,959,170 16.5
Energy 419,633,582 4.7
Financials 2,153,178,794 24.2
Healthcare 613,538,466 6.9
Industrials 297,571,993 3.4
Information Technology 172,148,750 1.9
Materials 661,728,411 7.4
Telecommunication Services 699,961,982 7.9
Utilities 30,037,979 0.3
-------------- --------
TOTAL COMMON AND PREFERRED STOCKS 8,729,325,411 98.1
Total short-term investments 95,177,000 1.1
-------------- --------
TOTAL INVESTMENTS 8,824,502,411 99.2
OTHER ASSETS LESS LIABILITIES 74,890,655 0.8
-------------- --------
TOTAL NET ASSETS $8,899,393,066 100.0%
============== ========
The accompanying notes are an integral part of the financial statements.
10
---
TEN
ARTISAN
MID CAP FUND
Schedule of Investments - September 30, 2003
SHARES
HELD VALUE
============ =============
COMMON STOCKS - 95.5%
AUTO & TRANSPORTATION - 5.2%
AIR TRANSPORT - 4.0%
Expeditors International of Washington, Inc. 839,000 $28,869,990
FedEx Corporation 790,800 50,951,244
Southwest Airlines Co. 3,479,800 61,592,460
-------------
141,413,694
TRUCKERS - 1.2%
Swift Transportation Co., Inc.(1) 1,763,500 40,013,815
CONSUMER DISCRETIONARY - 24.1%
ADVERTISING AGENCIES - 2.8%
Lamar Advertising Company(1) 1,614,000 47,354,760
Omnicom Group Inc. 713,200 51,243,420
-------------
98,598,180
CABLE TELEVISION SERVICES - 1.0%
EchoStar Communications Corporation(1) 930,900 35,625,543
COSMETICS - 1.4%
The Estee Lauder Companies, Inc. 1,469,800 50,120,180
CONSUMER ELECTRONICS - 1.3%
VeriSign, Inc.(1) 1,357,900 18,290,913
Yahoo!, Inc.(1) 807,400 28,565,812
-------------
46,856,725
HOTEL/MOTEL - 1.1%
Starwood Hotels & Resorts Worldwide, Inc. 1,147,500 39,933,000
PUBLISHING: NEWSPAPERS - 1.1%
The New York Times Company 887,500 38,570,750
RADIO & TV BROADCASTING - 1.6%
Entercom Communications Corporation(1) 552,000 24,740,640
Univision Communications, Inc.(1) 981,900 31,352,067
-------------
56,092,707
RESTAURANTS - 1.7%
Starbucks Corporation(1) 964,500 27,777,600
Wendy's International, Inc. 943,200 30,465,360
-------------
58,242,960
11
------
ELEVEN
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ =============
CONSUMER DISCRETIONARY (CONTINUED)
RETAIL - 5.9%
Abercrombie & Fitch Company - Class A(1) 884,200 $24,501,182
CarMax, Inc. (1) 855,000 27,924,300
Costco Wholesale Corporation(1) 1,414,100 43,950,228
Dollar Tree Stores, Inc.(1) 705,900 23,647,650
Kohl's Corporation(1) 570,700 30,532,450
Staples, Inc.(1) 1,814,600 43,096,750
Williams-Sonoma, Inc.(1) 517,200 13,954,056
-------------
207,606,616
SERVICES: COMMERCIAL - 4.9%
Accenture Ltd - Class A(1) 3,087,600 68,976,984
BearingPoint, Inc.(1) 1,616,900 12,902,862
Getty Images, Inc.(1) 537,200 18,887,952
InterActiveCorp(1) 978,900 32,352,645
Robert Half International, Inc.(1) 1,920,387 37,447,547
-------------
170,567,990
TOYS - 1.3%
Mattel, Inc. 2,327,900 44,136,984
CONSUMER STAPLES - 1.6%
DRUG & GROCERY STORE CHAINS - 0.6%
Whole Foods Market, Inc.(1) 425,700 23,490,126
FOODS - 1.0%
Dean Foods Company(1) 1,096,950 34,038,358
FINANCIAL SERVICES - 12.4%
BANKS: OUTSIDE NEW YORK CITY - 0.6%
CapitalSource, Inc.(1) 514,600 9,005,500
Comerica, Inc. 263,600 12,283,760
-------------
21,289,260
DIVERSIFIED FINANCIAL SERVICES - 1.1%
CIT Group, Inc. 1,361,600 39,159,616
FINANCIAL DATA PROCESSING SERVICES & SYSTEMS - 2.2%
Fiserv, Inc.(1) 1,097,700 39,769,671
Paychex, Inc. 1,082,900 36,742,797
-------------
76,512,468
FINANCIAL MISCELLANEOUS - 1.5%
MGIC Investment Corporation 993,100 51,710,717
INSURANCE: PROPERTY-CASUALTY - 2.0%
Platinum Underwriters Holdings, Ltd. 927,800 26,071,180
XL Capital Limited 585,400 45,333,376
-------------
71,404,556
INVESTMENT MANAGEMENT COMPANIES - 2.4%
SEI Investments Company 1,367,900 44,456,750
T. Rowe Price Group, Inc. 1,021,300 42,138,838
-------------
86,595,588
SAVINGS & LOANS - 0.8%
Golden West Financial Corporation 303,000 27,121,530
12
- ------
TWELVE
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ =============
FINANCIAL SERVICES (CONTINUED)
SECURITIES BROKERAGE & SERVICES - 1.8%
Ameritrade Holding Corporation(1) 1,931,500 $21,729,375
LaBranche & Co., Inc. 872,400 12,737,040
The Charles Schwab Corporation 2,331,100 27,763,401
-------------
62,229,816
HEALTHCARE - 13.3%
BIOTECHNOLOGY RESEARCH & PRODUCTION - 2.4%
Invitrogen Corporation(1) 848,500 49,204,515
Millennium Pharmaceuticals, Inc.(1) 2,177,000 33,504,030
-------------
82,708,545
DRUGS & PHARMACEUTICALS - 5.3%
Allergan, Inc. 321,400 25,303,822
AmerisourceBergen Corporation 203,700 11,009,985
Andrx Corporation(1) 1,488,800 27,557,688
Biovail Corporation(1) 604,200 22,446,030
Gilead Sciences, Inc.(1) 473,500 26,482,855
IVAX Corporation(1) 1,018,900 19,970,440
Mylan Laboratories Inc. 1,410,400 54,511,960
-------------
187,282,780
MEDICAL & DENTAL INSTRUMENTS & SUPPLIES - 3.0%
Becton, Dickinson and Company 607,800 21,953,736
Boston Scientific Corporation(1) 835,200 53,285,760
Zimmer Holdings, Inc.(1) 535,200 29,489,520
-------------
104,729,016
MISCELLANEOUS HEALTH CARE - 0.3%
Alcon, Inc. 177,600 9,972,240
HEALTHCARE MANAGEMENT SERVICES - OTHER - 2.3%
Anthem, Inc.(1) 364,200 25,978,386
Caremark Rx, Inc.(1) 2,458,300 55,557,580
-------------
81,535,966
MATERIALS & PROCESSING - 3.0%
CONTAINERS & PACKAGING: PAPER & PLASTIC - 2.2%
Pactiv Corporation(1) 1,825,800 37,027,224
Smurfit-Stone Container Corporation(1) 2,701,300 40,465,474
-------------
77,492,698
ENGINEERING & CONTRACTING SERVICES - 0.8%
Fluor Corporation 741,200 27,668,996
OTHER - 0.4%
MULTI-SECTOR COMPANIES - 0.4%
Brunswick Corporation 513,900 13,196,952
OTHER ENERGY - 4.8%
MACHINERY: OIL WELL EQUIPMENT & SERVICES - 3.5%
Nabors Industries, Ltd.(1) 880,300 32,799,978
Smith International, Inc.(1) 1,529,400 55,027,812
Weatherford International, Ltd.(1) 927,300 35,033,394
-------------
122,861,184
UTILITIES: GAS PIPELINES - 1.3%
The Williams Companies, Inc. 4,755,900 44,800,578
13
--------
THIRTEEN
- ----SCHEDULE OF INVESTMENTS-----------------------------------------------------
SHARES
HELD VALUE
============ =============
PRODUCER DURABLES - 7.8%
AEROSPACE - 0.4%
Alliant Techsystems, Inc.(1) 293,900 $14,121,895
DIVERSIFIED PRODUCTION - 1.4%
Danaher Corporation 693,200 51,199,752
ELECTRICAL EQUIPMENT & COMPONENTS - 1.4%
Molex, Inc. 1,754,800 50,169,732
ELECTRONICS: INSTRUMENTS GAUGES & METERS - 0.9%
Thermo Electron Corporation(1) 1,497,400 32,493,580
MISCELLANEOUS EQUIPMENT - 1.3%
W.W. Grainger, Inc. 950,800 45,210,540
OFFICE FURNITURE & BUSINESS EQUIPMENT - 0.6%
Diebold, Inc. 394,600 19,986,490
PRODUCTION TECHNOLOGY EQUIPMENT - 1.8%
KLA - Tencor Corporation(1) 533,000 27,396,200
Novellus Systems, Inc.(1) 1,031,700 34,819,875
-------------
62,216,075
TECHNOLOGY - 22.2%
COMMUNICATIONS TECHNOLOGY - 7.3%
Avaya, Inc.(1) 3,002,200 32,723,980
Avocent Corporation(1) 423,100 12,815,699
Corning, Inc.(1) 4,400,800 41,455,536
Juniper Networks, Inc.(1) 2,227,800 33,238,776
Network Associates, Inc.(1) 2,682,200 36,907,072
Nortel Networks Corporation(1) 8,184,000 33,554,400
Research In Motion Limited(1) 835,900 31,931,380
Symbol Technologies, Inc. 2,906,000 34,726,700
-------------
257,353,543
COMPUTER SERVICES SOFTWARE & SYSTEMS - 7.0%
Adobe Systems Incorporated 1,120,400 43,986,904
Amdocs, Ltd.(1) 1,333,400 25,067,920
BEA Systems, Inc.(1) 3,451,000 41,584,550
Cognos, Inc.(1) 1,210,200 37,540,404
Seagate Technology 1,979,800 53,850,560
VERITAS Software Corporation(1) 1,353,900 42,512,460
-------------
244,542,798
COMPUTER TECHNOLOGY - 1.7%
Apple Computer, Inc.(1) 1,336,800 27,578,184
Network Appliance, Inc.(1) 1,645,900 33,790,327
-------------
61,368,511
ELECTRONICS - 0.5%
Vishay Intertechnology, Inc.(1) 957,800 16,780,656
ELECTRONICS: TECHNOLOGY - 1.3%
Rockwell Automation, Inc. 1,739,400 45,659,250
14
- --------
FOURTEEN
- -----------------------------------------------------SCHEDULE OF INVESTMENTS----
SHARES
HELD VALUE
============ =============
TECHNOLOGY (CONTINUED)
ELECTRONICS: SEMI-CONDUCTORS/COMPONENTS - 4.4%
Agere Systems, Inc. - Class A(1) 5,581,400 $17,134,898
Agere Systems, Inc. - Class B(1) 4,757,300 13,748,597
Linear Technology Corporation 1,310,600 46,932,586
PMC-Sierra, Inc.(1) 2,023,700 26,694,627
Xilinx, Inc.(1) 1,718,700 49,000,137
-------------
153,510,845
UTILITIES - 0.7%
UTILITIES: TELECOMMUNICATIONS - 0.7%
Sprint Corporation(1) 4,414,300 25,293,939
--------------
TOTAL COMMON STOCKS (Cost $2,928,147,650) $3,353,487,740
PAR
AMOUNT
============
SHORT-TERM INVESTMENTS
(CASH EQUIVALENTS) - 4.7%
Repurchase agreement with State Street Bank
and Trust Company, 0.75%, dated 9/30/03,
due 10/1/03, maturity value $165,996,458,
collateralized by $67,318,589 market value
Federal National Mortgage Association Note,
1.18%, due 7/27/04, and $102,000,916 market
value Federal Home Loan Mortgage Corporation
Note, 1.20%, due 8/6/2004
(Cost $165,993,000) $165,993,000 165,993,000
--------------
TOTAL INVESTMENTS - 100.2% (Cost $3,094,140,650) 3,519,480,740
OTHER ASSETS LESS LIABILITIES - (0.2%) (6,722,137)
--------------
TOTAL NET ASSETS - 100.0%(2) $3,512,758,603
==============
(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.
15
-------
FIFTEEN
ARTISAN FUNDS, INC.
Statements of Assets & Liabilities - September 30, 2003
ARTISAN ARTISAN
INTERNATIONAL FUND MID CAP FUND
================== ================
ASSETS:
Investments in securities,
unaffiliated, at value .................... $ 8,304,677,389 $3,353,487,740
Investments in securities,
affiliated, at value ..................... 424,648,022 -
Short-term investments
(repurchase agreements), at value ......... 95,177,000 165,993,000
--------------------------------
TOTAL INVESTMENTS............................ 8,824,502,411 3,519,480,740
Cash ....................................... 752 364
Receivable from investments sold............. 28,915,270 56,209,421
Receivable from forward currency contracts... 40,653,395 -
Receivable from fund shares sold............. 65,248,493 18,772,262
Dividends and interest receivable............ 35,408,146 943,330
--------------------------------
TOTAL ASSETS................................. 8,994,728,467 3,595,406,117
LIABILITIES:
Payable for investments purchased............ 19,006,026 76,914,380
Payable for forward currency contracts....... 40,719,491 -
Payable for fund shares redeemed............. 29,984,752 4,661,657
Payable for operating expenses............... 2,745,810 1,071,477
Payable for withholding taxes................ 2,879,322 -
--------------------------------
TOTAL LIABILITIES............................ 95,335,401 82,647,514
--------------------------------
TOTAL NET ASSETS ............................ $8,899,393,066 $3,512,758,603
================================
NET ASSETS CONSIST OF:
Fund shares issued and outstanding........... $10,590,297,266 $ 3,619,824,485
Net unrealized appreciation (depreciation)
on investments and foreign currency
related transactions ...................... (306,485,129) 425,340,090
Accumulated undistributed net investment
income (loss) ............................. 101,915,854 -
Accumulated undistributed net realized
gains (losses) on investments and foreign
currency related transactions ............. (1,486,334,925) (532,405,972)
--------------------------------
$8,899,393,066 $3,512,758,603
================================
SUPPLEMENTARY INFORMATION:
Net assets
Investor Shares......................... $5,544,691,408 $2,583,182,013
Institutional Shares.................... $3,354,701,658 $929,576,590
Shares outstanding
Investor Shares......................... 335,180,557 111,765,388
Institutional Shares.................... 201,686,520 39,925,471
Net asset value, offering price and
redemption price per share
Investor Shares......................... $16.54 $23.11
Institutional Shares.................... $16.63 $23.28
Cost of securities of
unaffiliated issuers held ................. $8,595,953,547 $3,094,140,650
Cost of securities of affiliated
issuers held $535,925,017 $-
The accompanying notes are an integral part of the financial statements.
16
- -------
SIXTEEN
ARTISAN FUNDS, INC.
Statements of Operations
ARTISAN ARTISAN
INTERNATIONAL FUND MID CAP FUND
================================= =================================
PERIOD ENDED YEAR ENDED PERIOD ENDED YEAR ENDED
9/30/03(4) 6/30/03 9/30/03(4) 6/30/03
=========================================================================
INVESTMENT INCOME:
Interest.............................................. $ 304,072 $ 2,825,610 $ 315,857 $ 1,630,118
Dividends, from unaffiliated issuers(1)............... 33,361,570 176,343,076 2,975,086 13,653,667
Dividends, from affiliated issuers(1)................. 3,627,004 2,344,814 - -
Other................................................. 412,122 2,995,772 - -
--------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 37,704,768 184,509,272 3,290,943 15,283,785
EXPENSES:
Advisory fees......................................... 20,395,030 66,306,063 8,025,858 22,682,765
Transfer agent fees
Investor Shares.................................. 2,693,210 8,331,967 1,184,401 3,493,286
Institutional Shares............................. 8,409 32,233 5,986 23,232
Shareholder communications
Investor Shares.................................. 506,499 1,177,617 239,560 535,187
Institutional Shares............................. 4,797 19,011 1,739 5,954
Custodian fees........................................ 1,208,462 3,945,008 102,873 308,898
Accounting fees....................................... 19,918 73,299 17,082 61,059
Professional fees..................................... 93,801 301,743 43,312 116,996
Registration fees
Investor Shares.................................. 29,428 124,912 38,952 89,446
Institutional Shares............................. 31,250 127,627 13,218 46,330
Directors' fees....................................... 43,746 180,436 16,707 60,352
Other operating expenses.............................. 51,890 163,719 24,596 68,466
--------------------------------------------------------------------------
Total operating expenses before amounts waived
or paid by the Adviser.............................. 25,086,440 80,783,635 9,714,284 27,491,971
Less amounts waived or paid by the Adviser............ (21,084) - (14,194) -
--------------------------------------------------------------------------
NET EXPENSES.......................................... 25,065,356 80,783,635 9,700,090 27,491,971
--------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS).......................... 12,639,412 103,725,637 (6,409,147) (12,208,186)
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON INVESTMENTS:
Net realized gain (loss) on:
Investments...................................... 74,854,666(2) (529,007,531)(3) 105,075,097 (325,149,190)
Foreign currency related transactions............ (1,317,643) (10,809,131) - -
--------------------------------------------------------------------------
73,537,023 (539,816,662) 105,075,097 (325,149,190)
Net increase (decrease) in unrealized
appreciation/depreciation on:
Investments...................................... 409,874,381 (423,541,570) 90,208,363 376,988,686
Foreign currency related transactions............ 538,027 52,282 - -
--------------------------------------------------------------------------
410,412,408 (423,489,288) 90,208,363 376,988,686
--------------------------------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS................................ 483,949,431 (963,305,950) 195,283,460 51,839,496
--------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS..................................... $496,588,843 $(859,580,313) $188,874,313 $ 39,631,310
==========================================================================
(1) Net of foreign taxes withheld of:
Unaffiliated issuers Affiliated issuers
- --------------------------------------------------------------------------------
Artisan International Fund 9/30/03 $ 3,660,412 $393,960
6/30/03 22,229,774 14,358
(2) Including $(1,994,615) from affiliated issuers.
(3) Including $(7,613,533) from affiliated issuers.
(4) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
The accompanying notes are an integral part of the financial statements.
17
---------
SEVENTEEN
ARTISAN FUNDS, INC.
Statements of Changes in Net Assets
ARTISAN INTERNATIONAL FUND
=========================================================
PERIOD ENDED YEAR ENDED YEAR ENDED
9/30/03(1) 6/30/03 6/30/02
=========================================================
OPERATIONS:
Net investment income (loss).......................................... $ 12,639,412 $ 103,725,637 $ 51,719,319
Net realized gain (loss) on:
Investments...................................................... 74,854,666 (529,007,531) (393,817,449)
Foreign currency related transactions............................ (1,317,643) (10,809,131) (2,431,313)
Net increase (decrease) in unrealized appreciation/depreciation on:
Investments...................................................... 409,874,381 (423,541,570) (9,921,060)
Foreign currency related transactions............................ 538,027 52,282 569,310
--------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 496,588,843 (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 ............................... 244,966,499 1,716,020,036 2,333,625,659
--------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... 741,555,342 806,196,508 1,957,951,594
--------------------------------------------------------------
Net assets, beginning of period....................................... 8,157,837,724 7,351,641,216 5,393,689,622
--------------------------------------------------------------
NET ASSETS, END OF PERIOD............................................. $8,899,393,066 $8,157,837,724 $7,351,641,216
==============================================================
Accumulated undistributed net investment income (loss)................ $ 101,915,854 $ 90,594,085 $ 47,858,931
==============================================================
(1) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
The accompanying notes are an integral part of the financial statements.
18
- --------
EIGHTEEN
ARTISAN FUNDS, INC.
Statements of Changes in Net Assets
ARTISAN MID CAP FUND
=========================================================
PERIOD ENDED YEAR ENDED YEAR ENDED
9/30/03(1) 6/30/03 6/30/02
=========================================================
OPERATIONS:
Net investment income (loss).......................................... $ (6,409,147) $ (12,208,186) $ (13,844,376)
Net realized gain (loss) on:
Investments...................................................... 105,075,097 (325,149,190) (197,300,635)
Foreign currency related transactions............................ - - -
Net increase (decrease) in unrealized appreciation/depreciation on:
Investments...................................................... 90,208,363 376,988,686 (147,245,296)
Foreign currency related transactions............................ - - -
--------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 188,874,313 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 ............................... 208,283,211 770,633,859 1,117,916,637
--------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS............................... 397,157,524 810,265,169 759,526,330
--------------------------------------------------------------
Net assets, beginning of period....................................... 3,115,601,079 2,305,335,910 1,545,809,580
--------------------------------------------------------------
NET ASSETS, END OF PERIOD............................................. $3,512,758,603 $3,115,601,079 $2,305,335,910
==============================================================
Accumulated undistributed net investment income (loss)................ $ - $ - $ -
==============================================================
(1) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
The accompanying notes are an integral part of the financial statements.
19
--------
NINETEEN
ARTISAN FUNDS, INC.
Financial Highlights - For a share outstanding throughout each period
NET ASSET NET NET REALIZED TOTAL INCOME DIVIDENDS
YEAR OR VALUE INVESTMENT AND UNREALIZED (LOSS) FROM FROM NET
PERIOD BEGINNING INCOME GAIN (LOSS) ON INVESTMENT INVESTMENT
ENDED OF PERIOD (LOSS)(1) INVESTMENTS OPERATIONS INCOME
================================================================================
ARTISAN INTERNATIONAL FUND
--------------------------------------------------------------------------------
Institutional Shares 9/30/03(4) $15.71 $ 0.03 $0.89 $0.92 $ -
--------------------------------------------------------------------------------
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 MID CAP FUND
--------------------------------------------------------------------------------
Institutional Shares 9/30/03(4) $21.96 $(0.03) $1.35 $1.32 $ -
--------------------------------------------------------------------------------
6/30/03 22.24 (0.07) (0.21)(6) (0.28) -
--------------------------------------------------------------------------------
6/30/02 26.48 (0.13) (4.11) (4.24) -
--------------------------------------------------------------------------------
6/30/01 27.57 (0.08) 0.02(6) (0.06) -
(1) Computed based on average shares outstanding.
(2) Periods less than 12 months (where applicable) are not annualized.
(3) Periods less than 12 months (where applicable) are annualized.
(4) For the period from July 1, 2003 to September 30, 2003. Artisan Funds
changed its fiscal year-end from June 30 to September 30 effective
September 30, 2003.
(5) The ratios of expenses to average net assets and net investment income
(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 income (loss) to average
net assets would have been as follows (periods less than 12 months, where
applicable, are annualized):
RATIO OF RATIO OF NET
EXPENSES TO INVESTMENT INCOME
PERIOD AVERAGE NET (LOSS) TO AVERAGE
FUND ENDED ASSETS NET ASSETS
Artisan International Fund
Institutional Shares 9/30/03 1.00 0.73
Artisan Mid Cap Fund
Institutional Shares 9/30/03 0.98 (0.59)
(6) 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.
20
- ------
TWENTY
RATIO OF NET
DISTRIBUTIONS NET ASSET NET ASSETS RATIO OF INVESTMENT
FROM NET VALUE END OF EXPENSES INCOME (LOSS) PORTFOLIO
REALIZED TOTAL END TOTAL PERIOD TO AVERAGE TO AVERAGE TURNOVER
GAINS DISTRIBUTIONS OF PERIOD RETURN(2) (MILLIONS) NET ASSETS(3) NET ASSETS(3) RATE(2)
==============================================================================================================
ARTISAN INTERNATIONAL FUND
--------------------------------------------------------------------------------------------------------------
Institutional Shares $ - $ - $16.63 5.9% $3,354.7 1.00%(5) 0.73%(5) 15.23%
--------------------------------------------------------------------------------------------------------------
- (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 MID CAP FUND
--------------------------------------------------------------------------------------------------------------
Institutional Shares $ - $ - $23.28 6.1% $ 929.6 0.98%(5) (0.59)%(5) 26.52%
--------------------------------------------------------------------------------------------------------------
- - 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
The accompanying notes are an integral part of the financial statements.
21
----------
TWENTY-ONE
ARTISAN FUNDS, INC.
INSTITUTIONAL SHARES
Notes to Financial Statements - September 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 and Artisan Mid
Cap Fund, two series of Artisan Funds, (each a "Fund" and collectively the
"Funds") commenced operations on December 28, 1995 and June 27, 1997,
respectively. Each Fund's investment objective is to seek long-term capital
growth.
The Funds offer shares of capital stock of two classes - Institutional
Shares and Investor Shares. The Artisan International Fund and the Artisan
Mid Cap Fund began offering 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 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.
22
- ----------
TWENTY-TWO
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(b) Income taxes - No provision has been made for federal income taxes
since each Fund intends to i) comply with all provisions of subchapter
M 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 a 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 a 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.
Artisan International 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. Artisan International
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 period ended September 30, 2003 and
year ended June 30, 2003, Artisan International Fund entered into
various securities lending transactions with borrowers approved by the
Fund's Board of Directors. Income of $185,160 and $2,995,772,
respectively, from securities lending is included in Other Income on
the Statements of Operations. As of September 30, 2003 there were no
securities on loan. Artisan 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.
(g) Directed Brokerage - Each of the Funds may direct portfolio trades,
subject to obtaining the best price and execution, to various brokers
who have agreed to rebate a portion of the commissions generated. Such
rebates are made directly to the applicable Fund as cash payments and
are included in Other Income on the Statements of Operations for
Artisan International Fund in the amount of $226,962.
23
------------
TWENTY-THREE
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(h) 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.
(i) 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.
(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 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 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.
Each Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports.
During the period ended September 30, 2003, the Adviser agreed to reimburse
expenses related to the change in fiscal year from June 30 to September 30.
These reimbursements are reflected in the Statements of Operations. The
total amounts due to the Funds from the Adviser for Artisan International
Fund and Artisan Mid Cap Fund as of September 30, 2003 were $21,084 and
$14,194, respectively.
Each director who is not an interested person of Artisan Funds or the
Adviser received 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 received a supplemental
annual retainer of $3,000. These fees were generally allocated to each Fund
in proportion to the Funds' net assets.
24
- -----------
TWENTY-FOUR
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(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 no borrowings under the
line of credit during the period ended September 30, 2003.
(5) INVESTMENT TRANSACTIONS:
The cost of securities purchased and the proceeds from the sale of
securities (excluding short-term securities) for the period ended September
30, 2003 were as follows:
FUND SECURITY PURCHASES SECURITY SALES
---------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND $1,477,211,542 $1,285,740,178
---------------------------------------------------------------------------
ARTISAN MID CAP FUND 1,022,761,654 851,333,067
---------------------------------------------------------------------------
(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 period ended September 30, 2003, Artisan International
Fund held securities of affiliates or purchased and sold securities of
affiliates in open market transactions and received dividends from
affiliates as summarized below:
SEPTEMBER 30, 2003
SHARE ------------------------
BALANCE PURCHASE SALES REALIZED DIVIDEND SHARE
SECURITY 6/30/03 COST COST GAIN/(LOSS) INCOME BALANCE VALUE
- -----------------------------------------------------------------------------------------------------------------------------------
CanWest Global Communications
Corp.(1) 4,004,998 $ - $ - $ - $ - 4,004,998 $33,066,070
- -----------------------------------------------------------------------------------------------------------------------------------
Clariant AG(1) 8,999,193 - - - - 8,999,193 118,302,772
- -----------------------------------------------------------------------------------------------------------------------------------
Corus Entertainment, Inc.,
Class B(1) 2,929,750 - - - - 2,929,750 50,980,470
- -----------------------------------------------------------------------------------------------------------------------------------
Grupo Modelo S.A. de C.V.,
Series C(2) 33,674,300 - 12,498,629 (1,994,615) - 29,108,000 72,141,246
- -----------------------------------------------------------------------------------------------------------------------------------
Imperial Chemical
Industries PLC(3) 54,671,863 12,332,375 - - 2,583,116 59,764,246 164,661,279
- -----------------------------------------------------------------------------------------------------------------------------------
Rhodia S.A. 8,837,821 2,297,909 - - 1,043,888 9,177,312 57,637,431
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Non-income producing security.
(2) Issuer was no longer an affiliate as of September 30, 2003
(3) Issuer was not an affiliate as of June 30, 2003.
25
-----------
TWENTY-FIVE
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(7) INFORMATION FOR FEDERAL INCOME TAX PURPOSES:
GROSS GROSS NET APPRECIATION/
COST OF UNREALIZED UNREALIZED (DEPRECIATION) UNDISTRIBUTED UNDISTRIBUTED
FUND INVESTMENTS APPRECIATION DEPRECIATION ON INVESTMENTS ORDINARY INCOME LONG-TERM GAIN
- ------------------------------------------------------------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND $9,220,603,060 $597,246,384 $(993,347,033) $(396,100,649) $101,850,701 $ -
- -----------------------------------------------------------------------------------------------------------------------------------
ARTISAN MID CAP FUND 3,126,873,269 457,171,903 (64,564,432) 392,607,471 - -
- -----------------------------------------------------------------------------------------------------------------------------------
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.
There were no dividends or long-term capital gain distributions paid during
the period ended September 30, 2003. The tax basis of (i) dividends and long-
term capital gain distributions paid during the year ended June 30, 2003, and
(ii) dividends and long-term capital gain distributions paid during the year
ended June 30, 2002; capital loss carryovers as of September 30, 2003; and
capital loss carryovers utilized during the period ended September 30, 2003
are as follows:
PERIOD ENDED
YEAR ENDED 6/30/03 YEAR ENDED 6/30/02 AS OF 9/30/03 9/30/03
-------------------------------------------------------------------------------------------------------
ORDINARY LONG-TERM ORDINARY LONG-TERM NET CAPITAL CAPITAL LOSS CAPITAL LOSS
INCOME CAPITAL GAIN INCOME CAPITAL GAIN LOSS CARRYOVER CARRYOVER
FUND DIVIDENDS DISTRIBUTIONS DIVIDENDS DISTRIBUTIONS CARRYOVERS(1) EXPIRATION UTILIZED
- ------------------------------------------------------------------------------------------------------------------------------------
ARTISAN INTERNATIONAL FUND $50,243,215 $ - $21,792,872 $ - $116,228,014 2008 -
694,241,382 2009
384,841,928 2010
202,299,105 2011
- ------------------------------------------------------------------------------------------------------------------------------------
ARTISAN MID CAP FUND - - - - 166,421,032 2009 11,589,556
333,252,323 2010
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Capital gain distributions will resume in the future to the extent gains
are realized in excess of the available carryforwards.
26
- ----------
TWENTY-SIX
- -----------------------------------------------NOTES TO FINANCIAL STATEMENTS----
(8) FUND SHARE ACTIVITIES:
Capital share transactions for the Funds were as follows:
ARTISAN INTERNATIONAL FUND ARTISAN MID CAP FUND
=================================== ===================================
Investor Institutional Investor Institutional
Period ended September 30, 2003 Shares Shares Shares Shares
============================================================================================ ===================================
Proceeds from shares issued....................... $ 1,653,682,408 $ 222,370,761 $ 320,410,216 $ 56,462,660
Net asset value of shares issued in
reinvestment of distributions ................. - - - -
Cost of shares redeemed........................... (1,607,024,622) (24,062,048) (161,733,175) (6,856,490)
-------------------------------------- --------------------------------------
Net increase (decrease) from fund
share transactions........................... $ 46,657,786 $ 198,308,713 $ 158,677,041 $ 49,606,170
====================================== ======================================
Shares sold....................................... 102,140,758 13,738,314 13,957,902 2,468,566
Shares issued in reinvestment
of distributions............................. - - - -
Shares redeemed................................... (98,579,720) (1,477,132) (7,041,572) (296,096)
-------------------------------------- --------------------------------------
Net increase (decrease) in capital shares......... 3,561,038 12,261,182 6,916,330 2,172,470
====================================== ======================================
ARTISAN INTERNATIONAL FUND ARTISAN MID CAP FUND
=================================== ===================================
Investor Institutional Investor Institutional
Year ended June 30, 2003 Shares Shares Shares Shares
============================================================================================ ===================================
Proceeds from shares issued....................... $ 6,609,449,427 $1,265,372,555 $1,165,389,769 $364,499,717
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) (740,991,149) (18,264,478)
-------------------------------------- --------------------------------------
Net increase (decrease) from fund
share transactions........................... $ 575,124,012 $1,140,896,024 $ 424,398,620 $346,235,239
====================================== ======================================
Shares sold....................................... 448,720,763 84,658,208 58,902,392 18,444,267
Shares issued in reinvestment
of distributions............................. 1,986,215 1,121,348 - -
Shares redeemed................................... (410,530,756) (9,434,864) (37,879,947) (921,013)
-------------------------------------- --------------------------------------
Net increase (decrease) in capital shares......... 40,176,222 76,344,692 21,022,445 17,523,254
====================================== ======================================
27
------------
TWENTY-SEVEN
- ----NOTES TO FINANCIAL STATEMENTS-----------------------------------------------
(8) FUND SHARE ACTIVITIES (CONTINUED):
Capital share transactions for the Funds were as follows:
ARTISAN INTERNATIONAL FUND ARTISAN MID CAP FUND
=================================== ===================================
Investor Institutional Investor Institutional
Year ended June 30, 2002 Shares Shares Shares Shares
============================================================================================ ===================================
Proceeds from shares issued....................... $5,291,916,630 $ 804,083,587 $1,658,139,576 $320,452,227
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) (838,081,569) (22,593,597)
-------------------------------------- --------------------------------------
Net increase (decrease) from fund
share transactions........................... $1,649,836,506 $ 683,789,153 $ 820,058,007 $297,858,630
====================================== ======================================
Shares sold....................................... 291,977,419 44,007,369 68,336,403 13,136,926
Shares issued in reinvestment
of distributions............................. 684,758 410,620 - -
Shares redeemed................................... (201,323,845) (7,126,579) (34,975,059) (921,123)
-------------------------------------- --------------------------------------
Net increase (decrease) in capital shares......... 91,338,332 37,291,410 33,361,344 12,215,803
====================================== ======================================
9. CHANGE IN INDEPENDENT AUDITORS
The Board of Directors and the audit committee of the Board of Directors
recommended and approved Ernst & Young LLP as the Funds' independent
auditors on August 26, 2003. PricewaterhouseCoopers LLP previously served
as the Funds' independent auditors. There were no disagreements with the
previous independent auditors and an unqualified opinion was issued on the
June 30, 2003 financial statements of Artisan Funds.
10. LITIGATION
Artisan Funds and the Adviser are defendants in a lawsuit that seeks
certification of a plaintiff class consisting of all persons in the United
States who held shares in Artisan International Fund for a period of more
than 14 days during the five years prior to the filing of the lawsuit. The
suit seeks compensatory and punitive damages, as well as interest, costs
and attorney's fees. The lawsuit alleges, in summary, that Artisan Funds
and the Adviser exposed long-term Artisan International Fund shareholders
to trading by market timers by allegedly (a) failing to properly evaluate
daily whether a significant event affecting the value of Artisan
International Fund's securities had occurred after foreign markets had
closed but before the calculation of the Fund's net asset value ("NAV");
(b) failing to implement the Fund's portfolio valuation and share pricing
policies and procedures; (c) allowing portfolio valuation and share
policies and procedures that benefited market timers at the expense of
long-term shareholders; and (d) failing to know and implement applicable
rules and regulations concerning the calculation of NAV. Artisan Funds and
the Adviser intend to defend the lawsuit vigorously. Artisan Funds does not
believe that the pending action will have a material affect on the
financial statements of any Fund.
28
- ------------
TWENTY-EIGHT
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors and Shareholders of Artisan Funds, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Artisan International Fund and Artisan Mid Cap
Fund (two series of Artisan Funds, Inc., hereafter referred to as "the Funds")
as of September 30, 2003, and the related statements of operations, statements
of changes in net assets and financial highlights for the three-month period
then ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial statements and financial highlights of the Funds for the
periods prior to September 30, 2003, were audited by other auditors whose report
dated July 31, 2003, expressed an unqualified opinion on those financial
statements and financial highlights.
We conducted our audits in accordance with auditing standards generally accepted
in the United States.Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of securities owned as of September 30, 2003, by correspondence
with the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation.We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Artisan Funds, Inc. as of September 30, 2003, and the results of their
operations, changes in net assets and financial highlights for the three-month
period then ended, in conformity with accounting principles generally accepted
in the United States.
/s/Ernst & Young LLP
Milwaukee, Wisconsin
October 31, 2003
29
-----------
TWENTY-NINE
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 September 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 FUND - 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 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.
Each LIPPER 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. Artisan International Fund and Artisan Mid Cap Fund are included in
their respective Lipper indices.
TRADEMARKS
Trademarks and copyrights relating to the indices and products of portfolio
companies mentioned in this report are owned by their respective owners. 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.
30
- ------
THIRTY
- --------------------------------------------PROXY VOTING POLICIES AND PROCEDURES
You may obtain a description of Artisan Funds' proxy voting policies and
procedures, without charge, upon request by calling 800.399.1770. That
information also is available on the Securities and Exchange Commission's
website at http://www.sec.gov.
- ----------------------------------------------------------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
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 11/01/03 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 (individual life
Deuren s.c., Milwaukee, WI insurance, 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 and (manufacturer of automotive systems 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 Distinguished Executive in Director, Jefferson Pilot Corporation
Residence (teaching position), (individual and group life insurance and
University of Georgia. Until annuity company); Former Chairman of the
November 2001, Chairman of the Board, The University of Georgia
Board, President and Chief Foundation; Member, Board of Regents of
Executive Officer of Heidrick & the University System of Georgia
Struggles International, Inc.
(executive search firm)
- ------------------------------------------------------------------------------------------------------------------------------------
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 - 46 Director, 1/5/95 Managing Director of Artisan None
Chairman Partners; Chairman and President
and Chief of Artisan Distributors
Executive
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
Carlene Murphy Director 3/27/95 Managing Director of Artisan None
Ziegler - 47 and Vice Partners and Portfolio
President Co-Manager of Artisan Small
Cap Fund
- ------------------------------------------------------------------------------------------------------------------------------------
31
----------
THIRTY-ONE
DIRECTORS AND OFFICERS----------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
DATE FIRST
POSITIONS ELECTED OR
NAME AND AGE HELD APPOINTED PRINCIPAL OCCUPATIONS DIRECTORSHIPS
AT 11/01/03 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 None
President Partners and Portfolio Co-Manager
of Artisan Mid Cap Value Fund
and Artisan Small Cap Value Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Andrew C. Stephens - 40 Vice 7/31/97 Managing Director of Artisan None
President Partners and Portfolio Manager
of Artisan Mid Cap Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Marina T. Carlson - 39 Vice
President 8/5/99 Managing Director of Artisan None
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 None
President Partners 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 Managing Director of Artisan None
President 6/5/02 Partners 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 None
Secretary Accounting and Administration
and of Artisan Partners since
Assistant January 2003, Director of
Treasurer Client 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 Associate Counsel of Artisan None
Secretary Partners; prior to joining
Artisan Partners in July 2002,
Associate of the law firm
Bell, Boyd & Lloyd LLC,
Chicago, IL
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*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 875 E. Wisconsin Avenue, Suite 800, 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, 875 E. Wisconsin Avenue, Suite 800, Milwaukee,
Wisconsin 53202; and Mr. Witt - 800 E. Northwest Highway, Des Plaines, Illinois
60016.
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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.
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32
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THIRTY-TWO
ITEM 2. CODE OF ETHICS.
(a) Registrant has adopted a code of ethics that applies to its principal
executive officer, principal financial officer and principal accounting
officer (the "Code").
(b) No disclosures are required by this item 2(b).
(c) During the period covered by the report, registrant did not make any
amendments to the provisions of the Code.
(d) During the period covered by the report, registrant did not grant any
waivers, including implicit waivers, from the provisions of the Code.
(e) Not applicable.
(f) A copy of the Code is filed as Exhibit (a)(1) to this Form N-CSR.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Registrant's board of directors has determined that Thomas R. Hefty, member and
chairman of the registrant's audit committee, qualifies as an "audit committee
financial expert," as such term is defined in Instruction 2(b) to Item 3 of Form
N-CSR. Mr. Hefty is "independent" as such term is defined in paragraph (a)(2) of
Item 3 of Form N-CSR.
Under applicable securities laws, a person who is determined to be an audit
committee financial expert will not be deemed an "expert" for any purpose,
including without limitation for the purposes of Section 11 of the Securities
Act of 1933, as a result of being designated or identified as an audit committee
financial expert. The designation or identification of a person as an audit
committee financial expert does not impose on such person any duties,
obligations, or liabilities that are greater than the duties, obligations, and
liabilities imposed on such person as a member of the audit committee and board
of directors in the absence of such designation or identification.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5.
Not applicable.
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(c) 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 most recent fiscal year that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 10. EXHIBITS.
(a)(1) Code of Ethics for Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer (as referenced in Item 2
above), attached hereto as Exhibit (a)(1)
(2) Certifications of Andrew A. Ziegler, Principal Executive Officer and
Lawrence A. Totsky, Principal Financial Officer pursuant to Rule
30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)),
attached hereto as Exhibits (a)(2)(i) and (a)(2)(ii)
(b) 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)
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:December 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:December 5, 2003
-----------------------------------
By: Lawrence A. Totsky
-----------------------------------
Lawrence A. Totsky
Principal Financial Officer
Date:December 5, 2003
-----------------------------------