<PAGE>
As filed with the Securities and Exchange Commission on November 27, 1995
1933 Act Reg. No. 33-88316
1940 Act File No. 811-8932
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
__________________________________
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 3 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 5 [X]
_________________________________
Artisan Funds, Inc.
(Registrant)
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
Telephone Number: (414) 390-6100
Andrew A. Ziegler Janet D. Olsen
Artisan Funds, Inc. Bell, Boyd & Lloyd
1000 North Water Street, #1770 Three First National Plaza, #3300
Milwaukee, Wisconsin 53202 Chicago, Illinois 60602
(Agents for Service)
____________________________
Amending Parts A, B, and C and filing Exhibits.
It is proposed that this filing will become effective:
____ immediately upon filing pursuant to rule 485(b)
____ on __________ pursuant to rule 485(b)
____ 60 days after filing pursuant to rule 485(a)(1)
____ on _________________ pursuant to rule 485(a)(1)
____ 75 days after filing pursuant to rule 485(a)(2)
_X__ on December 27, 1995 pursuant to rule 485(a)(2)/*/
Registrant has previously elected to register an indefinite number of its shares
of common stock of the series Artisan Small Cap Fund and Artisan International
Fund pursuant to Rule 24f-2. Registrant filed its Rule 24f-2 Notice for the
fiscal year ended June 30, 1995 on November 14, 1995.
Page 1 of ___ pages (including exhibits).
The index of exhibits is on sequential page ___.
- --------------------
/*/ Pursuant to a request for acceleration.
<PAGE>
Artisan Funds, Inc.
Cross-reference sheet pursuant to rule 495(a) of Regulation C
Item Location or caption*
- ---- ------------------------------------------
Part A
------
1(a)-(b) Front cover
2(a) Expenses and Performance - Expenses
(b)-(c) Contents; The Fund at a Glance
3(a) Not applicable
(b) Not applicable
(c)-(d) Expenses and Performance - Performance
4(a)(i) Organization
(ii) The Fund at a Glance; The Fund's Investment Philosophy;
Securities, Investment Practices, and Risks
(b) Securities, Investment Practices and Risks
(c) The Fund at a Glance - Who May Want to Invest;
The Fund's Investment Philosophy; Securities, Investment
Practices and Risks
5(a) Organization
(b) Organization; Management; The Fund in Detail -
Expenses; Expenses and Performance - Expenses; How to
Contact Us
(c) Organization; Management
(d) Not applicable
(e) How to Buy Shares; How to Sell Shares; How to Contact Us
(f) Expenses and Performance - Expenses; The Fund in
Detail - Expenses
(g) Not applicable
5A Not applicable
6(a) Organization; How to Buy Shares; How to Sell Shares
(b)-(d) Not applicable
(e) Doing Business with the Fund; How to Buy Shares;
How to Sell Shares; Shareholder and Account Policies -
Statements and Reports; How to Contact Us
(f)-(g) Dividends, Capital Gains, and Taxes
i
<PAGE>
7 Doing Business with the Fund; How to Buy Shares;
Shareholder and Account Policies - Purchases
(a) Not applicable
(b) How to Buy Shares; Shareholder and Account Policies -
Share Price
(c) Not applicable
(d) How to Buy Shares
(e)-(f) Not applicable
8(a) Doing Business with the Fund; How to Sell
Shares; Shareholder and Account Policies - Redemptions
(b) Shareholder and Account Policies - Purchases
(c)-(d) Shareholder and Account Policies - Redemptions
9 Not applicable
ii
<PAGE>
Item Location or caption*
--------- ------------------------------------------
Part B (Statement of Additional Information)
--------------------------------------------
10 Front cover
11 Front cover
12 Part A - Organization
13(a)-(c) Investment Objectives and Policies; Investment
Techniques and Risks; Investment Restrictions
(d) Investment Techniques and Risks
14(a)-(b) Directors and Officers
(c) Not applicable
15(a)-(b) Not applicable
(c) Directors and Officers
16(a)(i) Investment Adviser
(ii) Directors and Officers
(iii) Investment Adviser
(b) Investment Adviser
(c)-(g) Not applicable
(h) Custodian; Independent Accountants
(i) Not applicable
17(a) Portfolio Transactions
(b) Not applicable
(c)-(d) Portfolio Transactions
(e) Not applicable
18(a) The Fund
(b) Not applicable
19(a)-(c) Purchasing and Redeeming Shares
20 Additional Tax Information
21 Not applicable
22(a) Not applicable
(b) Performance Information
23 Financial Statements
iii
<PAGE>
THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION RELATING TO
ARTISAN SMALL CAP FUND, A SERIES OF ARTISAN FUNDS, INC.,
IS NOT AFFECTED BY THE FILING OF THIS POST-EFFECTIVE AMENDMENT NO. 3.
iv
<PAGE>
ARTISAN
INTERNATIONAL
FUND
No Load Fund
Please read this prospectus before
investing and keep it on file for ARTISAN INTERNATIONAL FUND invests
future reference. It contains for maximum long-term capital growth.
important information, including how The Fund seeks to achieve its
the Fund invests and the services objective by investing primarily in
available to shareholders. the stocks of foreign companies.
A Statement of Additional Information
dated the date of this prospectus
has been filed with the Securities
and Exchange Commission and is
incorporated herein by reference (is
legally considered a part of this
prospectus). The Statement of
Additional Information is available
free upon request by calling
1-800-344-1770.
LIKE ALL MUTUAL FUNDS, THESE PROSPECTUS
SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND DECEMBER 28, 1995
EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION ARTISAN FUNDS, INC.
PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY 1000 NORTH WATER STREET, SUITE 1770
REPRESENTATION TO THE CONTRARY IS A MILWAUKEE, WISCONSIN 53202
CRIMINAL OFFENSE.
<PAGE>
CONTENTS
THE FUND AT A GLANCE 3 GOAL, STRATEGY, MANAGEMENT, WHO MAY WANT TO
INVEST AND RISKS AND RETURNS
EXPENSES AND PERFORMANCE 5 EXPENSES AND PERFORMANCE
YOUR ACCOUNT 6 WAYS TO SET UP YOUR ACCOUNT
7 DOING BUSINESS WITH THE FUND
7 HOW TO BUY SHARES AND MINIMUM INVESTMENTS
9 HOW TO SELL SHARES
SHAREHOLDER AND ACCOUNT 11 STATEMENTS AND REPORTS, SHARE PRICE AND
POLICIES PURCHASES
12 REDEMPTIONS, ACCOUNT REGISTRATION AND
TELEPHONE TRANSACTIONS
DIVIDENDS, CAPITAL GAINS, 14 DISTRIBUTION OPTIONS AND TAXES
AND TAXES
15 FOREIGN INCOME TAXES AND UNDERSTANDING
DISTRIBUTIONS
THE FUND IN DETAIL 16 ORGANIZATION AND MANAGEMENT
17 EXPENSES AND THE FUND'S INVESTMENT PHILOSOPHY
18 SECURITIES, INVESTMENT PRACTICES AND RISKS
19 EQUITY SECURITIES AND FOREIGN SECURITIES
20 DEBT SECURITIES; CONVERTIBLE SECURITIES AND
MANAGING INVESTMENT EXPOSURE
22 ILLIQUID AND RESTRICTED SECURITIES AND
DIVERSIFICATION; LENDING PORTFOLIO
SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY
SECURITIES; BORROWING; OTHER INVESTMENT
COMPANIES
23 PORTFOLIO TURNOVER
2 Prospectus
<PAGE>
THE FUND AT A GLANCE
GOAL
ARTISAN INTERNATIONAL FUND (THE "FUND"), ONE OF THE SERIES OF FUNDS OF ARTISAN
FUNDS, INVESTS FOR MAXIMUM LONG-TERM CAPITAL GROWTH.
STRATEGY
The Fund generally invests in the stocks of foreign companies and uses its own
detailed research process to identify investment opportunities. The Fund's
research method is both "top-down" and "bottom-up." That means that country
selection and stock selection are equally important parts of the investment
process.
Country selection involves identifying the regions and countries of the world
which are enjoying improving or rapid economic growth. The Fund avoids
countries that, while showing favorable economic growth, appear to have
overvalued markets. Economic growth is determined principally from the
standpoint of gross domestic product growth, corporate profitability, current
account and currency issues, interest rates, and social changes.
Having identified favorable areas of the world for growth, the Fund seeks out
the stocks of companies best positioned to capitalize on that growth. In this
process, the Fund emphasizes well-managed companies with dominant or increasing
market share in strong industries. It focuses on companies with above-average
financial characteristics and accelerating earnings per share. The Fund also
analyzes relative valuations using a variety of criteria such as price-to-
earnings ratios and avoids stocks that are trading at unsustainable or unusually
high valuations.
MANAGEMENT: Artisan Partners Limited Partnership ("Artisan Partners"), located
in Milwaukee, Wisconsin, selects investments for the Fund. Mark Yockey, vice
president of Artisan Funds, is the portfolio manager and is primarily
responsible for the day-to-day management of the Fund. He makes all investment
decisions with the assistance of a team of Artisan Partners investment research
and trading professionals.
Immediately prior to joining Artisan Partners, Mr. Yockey was the portfolio
manager of the United International Growth Fund from January 1990 through
December 1995, and throughout that time period had full discretionary authority
over the selection of investments for that fund. Average annual returns for
that fund, through September 30, 1995 were:
UNITED INTERNATIONAL
GROWTH FUND(a)
One Year 6.66%
Three Years 19.67%
Five Years 15.82%
(a) Assuming reinvestment of dividends
Of course, historical performance may not be indicative of future performance
even though Mr. Yockey intends to utilize a similar approach to achieve capital
growth in the Fund.
The above-stated average annual returns for United International Growth Fund
have been adjusted to take into account certain expenses of that fund. The
expenses of the Fund may differ from the expenses of United International Growth
Fund. This means that varying management, accounting, transfer agent, custodian
and other fees as well as different asset size will affect results.
WHO MAY WANT TO INVEST
Artisan International Fund is designed for investors who want maximum long-term
capital growth rather than income and who have the long-term investment outlook
needed for investing in the stocks of foreign companies.
RISKS AND RETURNS
Historically, stocks have shown greater growth than other types of securities.
In the short term, however, stock prices may fluctuate widely in response to
company, market or economic news. Investing in foreign securities involves
certain risks not typically associated with investing in U.S. securities,
including fluctuation of exchange rates of foreign currencies, differences in
accounting and financial reporting standards, differences in settlement and
trading
3 Prospectus
<PAGE>
practices, less liquidity in some markets, and generally higher transaction
costs. The Fund does not pursue income and is not by itself a balanced
investment plan.
The Fund seeks to limit risk by selecting companies with experienced management,
positive cash flows and sustainable growth prospects and diversifying its
holdings, to avoid concentration in any one country, industry or stock.
The value of the Fund's investments and the return it generates vary from day to
day. Performance depends on Artisan Partners' skill in selecting individual
stocks, as well as general market and economic conditions in the countries in
which the Fund is invested. When you sell your shares, they may be worth more
or less than you paid for them.
See "Securities, Investment Practices and Risks" on page 18 for the types of
investments the Fund may make, and "Your Account" on page 7 for how to buy and
redeem shares.
4 Prospectus
<PAGE>
EXPENSES AND PERFORMANCE
EXPENSES
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell shares
of the Fund.
TRANSACTION EXPENSES
Maximum sales charge on purchases
and reinvested dividends................... NONE
Deferred sales charge on redemptions....... NONE
Redemption fee............................. NONE
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS). The
Fund pays its own operating expenses, including a management fee to Artisan
Partners. The Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports. The
Fund's expenses are factored into its share price or dividends, are subtracted
from the share price daily, and are not charged directly to shareholder
accounts.
The Fund expects to incur the following expenses:
Management fee............................. 1.00%
12b-1 fee.................................. None
Other expenses (a)......................... 1.10%
Total operating expenses................... 2.10%
_______
(a) A shareholder requesting payment of redemption proceeds by wire must pay
the cost of the wire (currently $5.00).
Artisan Partners has undertaken to reimburse the Fund for any ordinary operating
expenses in excess of 2.50% of average net assets annually. The purpose of the
expense table is to help an investor understand the costs and expenses
associated with investing in the Fund. The estimate of "Other expenses" is
based on the estimated expenses the Fund expects to incur during its initial
full fiscal year.
EXAMPLE: Let's say, hypothetically, that the Fund's annual return is 5% and
that its operating expenses are exactly as shown in the column to the left. For
every $1,000 you invested, here's how much you would have paid in total expenses
if you closed your account after the number of years indicated:
After 1 year....................... $22.05
After 3 years...................... $64.77
This example illustrates the effect of expenses, but is not meant to suggest
actual or expected costs or returns, all of which may be more or less than those
shown in the example. Because the Fund is new, the above amounts are estimates.
UNDERSTANDING EXPENSES
Operating a mutual fund requires paying for portfolio management, shareholder
statements, tax reporting, and other services. These costs are paid from the
Fund's assets; any quoted share price or return is after expenses.
PERFORMANCE
Mutual fund performance is commonly measured as TOTAL RETURN. Total return is
the change in value of an investment over a given period, assuming reinvestment
of any dividends and capital gains. Total return reflects the Fund's
performance over a stated period of time. An AVERAGE ANNUAL TOTAL RETURN is a
hypothetical rate of return that, if achieved annually, would have produced the
same total return if performance had been constant over the entire period.
Average annual total return smoothes out variations in performance; it is not
the same as actual year-by-year results.
Total return and average annual total return are based on past results and are
not a prediction of future performance. They do not include the effect of
income taxes paid by shareholders. The Fund may sometimes show its performance
compared to certain performance rankings, averages or stock indexes (described
more fully in the Statement of Additional Information).
5 Prospectus
<PAGE>
WAYS TO SET UP YOUR ACCOUNT
INDIVIDUAL OR JOINT OWNERSHIP
For your general investment needs
Individual accounts are owned by one person. Joint accounts can have two or
more owners.
- --------------------------------------------------------------------------------
RETIREMENT
To defer taxes on your retirement savings
Retirement plans allow individuals to defer taxes on investment income and
capital gains. Contributions to these accounts may be tax deductible.
RETIREMENT ACCOUNTS REQUIRE SPECIAL APPLICATIONS.
. INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age and under
70 1/2 with earned income to invest up to $2,000 per tax year. If your
spouse has (or elects to be treated as having) earned income of less than
$250 per year, you can invest up to a total of $2,250 in a "spousal IRA,"
split between you and your spouse so that neither of you has invested more
than $2,000.
. ROLLOVER IRAS retain special tax advantages for certain distributions from
employer-sponsored retirement plans.
. SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) allow small business owners or
those with self-employment income to make tax-deductible contributions of up
to $22,500 per year for themselves and any eligible employees.
. OTHER RETIREMENT PLANS - The funds may be used as investments in other kinds
of retirement plans, including Keogh or corporate profit sharing and money
purchase plans, 403(b) plans and 401(k) plans. All of these accounts need to
be established by the trustee of the plan. The Fund does not offer
prototypes of these plans.
An IRA disclosure statement is delivered in advance of opening any IRA account
and contains information unique to retirement accounts. It also contains a
summary of the custodian fees which may be incurred for set-up and maintenance
of an IRA account.
- --------------------------------------------------------------------------------
GIFT OR TRANSFER TO A MINOR (UGMA, UTMA)
To invest for a minor's education or other future needs
These custodial accounts provide a way to give money to a minor. The account
application should include the child's social security number.
- --------------------------------------------------------------------------------
TRUST OR ESTABLISHED EMPLOYEE BENEFIT OR PROFIT-SHARING PLAN
For money being invested by a trust, employee benefit plan, or profit-sharing
plan
The trust or plan must be established before an account can be opened. The date
of the trust or plan should be included on the new account application.
- --------------------------------------------------------------------------------
BUSINESS OR ORGANIZATION
For investment needs of corporations, associations, partnerships, institutions,
or other groups
You will need to send a certified corporate resolution (indicating which
officers are authorized to act) with your application.
6 Prospectus
<PAGE>
YOUR ACCOUNT - CONTINUED
YOUR ACCOUNT
DOING BUSINESS WITH THE FUND
The Fund provides shareholders with service 7 days a week, 24 hours a day.
To reach the Fund, call 1-800-344-1770.
HOW TO BUY SHARES
YOU CAN OPEN A NEW ACCOUNT BY
. mailing in an application with a check for $1,000 or more.
. exchanging $1,000 or more from your existing account with Artisan Small Cap
Fund, another series of Artisan Funds. For more details, see "Telephone
Exchange Plan" on page 13.
AFTER YOUR ACCOUNT IS OPEN, YOU MAY ADD TO IT BY:
. mailing a check or money order along with the form at the bottom of your
account statement, or a letter;
. moving money from your bank account by telephone provided you have elected
this privilege on your new account application;
. moving an investment from Artisan Small Cap Fund to the Fund by telephone
provided you have elected this privilege;
. wiring money from your bank; or
. making automatic investments.
The Fund is a NO-LOAD FUND, which means you pay no sales commissions of any
kind. The price you pay for shares is the net asset value per share next
calculated after your investment is received and accepted. An order is
considered received when the application (for a new account) or information
identifying the account and the money are received. See "Shareholder and
Account Policies" for information about share price. The Fund does not issue
share certificates.
MINIMUM INVESTMENTS
TO OPEN AN ACCOUNT $1,000
TO ADD TO AN ACCOUNT $ 50
MINIMUM BALANCE $ 500
The initial minimum investment will be waived if you participate in the
Automatic Investment Plan. Because it is very expensive for the Fund to
maintain small accounts (and that cost is borne by all shareholders), the Fund
reserves the right to close your account if the value is less than $500 (or
$1,000 if you discontinued the Automatic Investment Plan before your account
reached $1,000). Before closing a small account, the Fund will notify you and
allow you at least 30 days to bring the value of the account up to the minimum.
7 Prospectus
<PAGE>
HOW TO BUY SHARES
MAIL
- --------------------------------------------------------------------------------
TO OPEN AN ACCOUNT:
. Complete and sign the new account application. Make your check or money order
payable to "Artisan Funds" or "Artisan International Fund."
Mail to the address on the new account application OR FOR OVERNIGHT DELIVERY:
Artisan Funds
c/o Boston Financial Data Services
2 Heritage Drive
Quincy, MA 02171
TO ADD TO AN ACCOUNT:
. Make your check or money order payable to "Artisan Funds" or "Artisan
International Fund." Put your account number on your check.
Mail check and form at the bottom of your account statement (or a letter) to
the address on your account statement or for OVERNIGHT DELIVERY:
Artisan Funds
c/o Boston Financial Data Services
2 Heritage Drive
Quincy, MA 02171
- --------------------------------------------------------------------------------
PHONE 1-800-344-1770
- --------------------------------------------------------------------------------
TO OPEN AN ACCOUNT:
. You may establish the telephone transaction option when you open an account
by electing the option on your new account application.
. You may not open a new account by phone. However, if you elected the
telephone transaction option when you opened your account with Artisan Small
Cap Fund, you may exchange an investment of at least $1,000 from that fund
into the Fund.
TO ADD TO AN ACCOUNT:
. If you did not elect the telephone transaction option on your new account
application for the Fund or for Artisan Small Cap Fund, complete the
shareholder options form to make investments by phone from $50 to $25,000
into your account, and to participate in the telephone exchange plan.
- --------------------------------------------------------------------------------
WIRE
- --------------------------------------------------------------------------------
TO OPEN AN ACCOUNT:
. Call 1-800-344-1770 for instructions on opening an account by wire.
TO ADD TO AN ACCOUNT:
. Call 1-800-344-1770 for instructions on adding to an account by wire.
- --------------------------------------------------------------------------------
AUTOMATIC INVESTMENT PLAN
- --------------------------------------------------------------------------------
TO OPEN AN ACCOUNT:
. If you sign up for the Automatic Investment Plan when you open your account,
the minimum initial investment will be waived.
. Complete and sign the Automatic Investment Plan section of the new account
application.
TO ADD TO AN ACCOUNT:
. Sign up for the Automatic Investment Plan on the shareholder options form or
call 1-800-344-1770 for instructions on how to add to your existing account.
- --------------------------------------------------------------------------------
8 Prospectus
<PAGE>
YOUR ACCOUNT - CONTINUED
HOW TO SELL SHARES
You can arrange to take money out of your account at any time by selling
(redeeming) some or all of your shares. Your shares will be sold at the next
net asset value per share (share price) calculated after your order is received
and accepted. See "Shareholder and Account Policies" for more information about
share price.
To sell shares in a regular (non-IRA) account, you may use any of the methods
described here. To sell shares in an IRA account, your request must be made in
writing. If you need an IRA distribution form, call us at 1-800-344-1770.
SELLING SHARES IN WRITING
Write a "letter of instruction" with:
. each owner's name and address,
. the fund's name,
. your account number,
. the dollar amount or number of shares to be redeemed, and
. the signature of each owner as it appears on the account.
Mail your letter to:
Artisan Funds
c/o Boston Financial Data Services
P.O. Box 8412
Boston, MA 02266-8412
If you are using overnight mail:
Artisan Funds
c/o Boston Financial Data Services
2 Heritage Drive
Quincy, MA 02171
CERTAIN REDEMPTION REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE, designed to
protect you and the Fund from fraud. Your request must be made in writing and
include a signature guarantee if any of the following situations applies:
. you wish to redeem more than $25,000 worth of shares;
. if you add/change your name or add/remove an owner on your account;
. if you add/change the beneficiary on your account;
. the check is being mailed to an address different than one on your account
(record address);
. the check is being made payable to someone other than the account owner;
. when you add the telephone redemption option to your existing account;
. if you transfer the ownership of your account; or
. if you have changed the address on the account by phone within the last 60
days.
You should be able to obtain a signature guarantee from a bank, broker, dealer,
credit union (if authorized under state law), securities exchange or
association, clearing agency, or savings association. A NOTARY PUBLIC CANNOT
PROVIDE A SIGNATURE GUARANTEE.
9 Prospectus
<PAGE>
HOW TO SELL SHARES SPECIAL REQUIREMENTS
NOTE: Some redemptions require signature guarantees. See page 12.
- -------------------------------------------------------------------------------
MAIL
- -------------------------------------------------------------------------------
Individual, Joint . The letter of instruction must be signed by
Owners, Sole all persons required to sign for transactions,
Proprietorships, (usually, all owners of the account) exactly as
UGMA, UTMA their names appear on the account.
Trust . The letter of instruction must include the
signatures of all trustees.
All Others . Call 1-800-344-1770 for instructions.
- -------------------------------------------------------------------------------
PHONE 1-800-344-1770
- -------------------------------------------------------------------------------
All accounts except IRAs . You automatically have the telephone redemption
option (which allows you to redeem at least
$500 and up to $25,000 worth of shares per day
by phone) unless you declined it on your new
account application. If you declined the
telephone redemption option, call
1-800-344-1770 for instructions on how to add
it.
. All trades must be placed between 8:00 a.m. and
4:00 p.m. est.
- -------------------------------------------------------------------------------
WIRE
- -------------------------------------------------------------------------------
All account types . We will transmit payment by wire for a fee
except IRAs (currently $5.00) to a pre-authorized bank
account. Usually, the funds will arrive at your
bank the next business day.
- -------------------------------------------------------------------------------
SYSTEMATIC WITHDRAWALS
- -------------------------------------------------------------------------------
All account types . Sign up for systematic withdrawals
except IRAs (distributions from your account at regular
intervals in specified dollar amounts of at
least $50) by calling 1-800-344-1770 for
instructions on how to add this option.
. You must have $5,000 in your account before you
are eligible to sign up for this option. If the
amount in your account is not sufficient to
meet a withdrawal, the remaining amount in the
account will be redeemed.
10 Prospectus
<PAGE>
SHAREHOLDER AND ACCOUNT POLICIES
STATEMENTS AND REPORTS
Statements and reports that the Fund sends to you include:
. Confirmation statements (after every transaction in your account or change in
your account registration);
. Account statements (quarterly);
. Annual and semi-annual reports with financial statements; and
. Year-end tax statements.
We recommend that you keep each quarterly account statement and, especially,
each calendar year-end statement with your other important financial papers
since you may need to refer to them at a later date for tax purposes.
If you need copies of current or preceding year statements call 1-800-344-1770.
Copies of statements for earlier years are available and are subject to a $10
processing fee.
SHARE PRICE
THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange ("NYSE") is
open. THE OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price
to sell one share) are the same, and represent the Fund's net asset value per
share calculated at the next Closing Time after receipt of your purchase or
redemption order. Closing Time is the time of the close of regular session
trading on the NYSE, which is usually 3:00 p.m., Central time but is sometimes
earlier.
THE FUND'S NET ASSET VALUE PER SHARE is the value of a single share, and is
computed by adding up the value of the Fund's investments, cash, and other
assets, subtracting its liabilities, and then dividing the result by the number
of shares outstanding.
Fund securities and assets are valued primarily on the basis of market
quotations from the primary market in which they are traded or, if quotations
are not readily available, by a method that the board of directors believes
accurately reflects a fair value. Values of foreign securities are translated
from the local currency into U.S. dollars using current exchange rates.
Trading in securities on European and Far Eastern securities exchanges and over-
the-counter markets is normally completed at various times before the close of
business on each day on which the NYSE is open. Trading of these securities may
not take place on every NYSE business day. In addition, trading may take place
in various foreign markets on Saturdays or on other days when the NYSE is not
open and on which the Fund's net asset value is not calculated. Therefore, such
calculation does not take place contemporaneously with the determination of the
prices of many of the portfolio securities used in such calculation and the
value of the Fund's portfolio may be significantly affected on days when shares
of the Fund may not be purchased or redeemed.
PURCHASES
. All of your purchases must be made in U.S. dollars and checks must be drawn
on U.S. banks.
. The Fund does not accept cash, credit cards or third-party checks.
. If your check or telephone purchase order does not clear, your purchase will
be cancelled and you will be liable for any losses or fees the Fund or its
transfer agent incurs.
. Your ability to make automatic investments and telephone purchases may
11 Prospectus
<PAGE>
be immediately terminated if any item is unpaid by your financial
institution.
. THE FUND RESERVES THE RIGHT TO reject any purchase order. For example, a
purchase order may be refused if, in Artisan Partners' opinion, it is so
large that it would disrupt management of the Fund.
CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with the
Fund may enter confirmed purchase orders or redemption requests on behalf of
customers on an expedited basis, including orders by phone, with payment to
follow no later than the time when the Fund is priced on the following business
day. If payment is not received by that time, the financial institution could
be held liable for resulting fees or losses. These institutions may impose
charges for their services, and those charges could constitute a significant
portion of a smaller account.
REDEMPTIONS
. Normally, redemption proceeds will be mailed within seven business days after
receipt of the request for redemption.
. The Fund may hold payment on redemptions until it is reasonably satisfied
that it has received payment for a recent purchase made by check or by an
automatic investment or telephone purchase, which can take up to fifteen
days.
. If you make a telephone redemption, the Fund will send payment for your
redemption one of three ways: (i) by mail; (ii) by Electronic Funds Transfer
(EFT) to a pre-authorized bank account; or (iii) to your bank account by wire
transfer. The cost of the wire (currently $5.00) will be deducted from the
payment. Your bank also may impose a fee for the incoming wire. Payment by
EFT will arrive usually at your bank two banking days after your call.
Payment by wire is credited usually to your bank account on the next business
day after your call.
. Redemptions may be suspended or payment dates postponed on days when the NYSE
is closed (other than weekends or holidays), when trading on the NYSE is
restricted, or as permitted by the SEC.
If the Fund sends you a check (paying for a redemption, systematic withdrawal
payment, or a dividend or capital gain distribution you elected to receive in
cash) and the check is returned "undeliverable" or remains uncashed for six
months, the check will be cancelled and the proceeds will be reinvested in the
Fund at the net asset value per share on the date of cancellation. In addition,
after that six-month period, your systematic withdrawal payments will be
cancelled and future withdrawals will occur only when requested, or your cash
election will automatically be changed and future dividends and distributions
will be reinvested in your account.
ACCOUNT REGISTRATION
ADDRESS CHANGES for your account may be made by writing us a letter or by
phoning us at 1-800-344-1770. The Fund will send a written confirmation of the
change to both your old and new addresses. No telephone redemptions may be made
for 60 days after a change of address by phone. During those 60 days, a
signature guarantee will be required for any written redemption request unless
your change of address was made in writing with a signature guarantee.
TELEPHONE TRANSACTIONS
GENERAL
YOU MAY INITIATE MANY TRANSACTIONS, INCLUDING EXCHANGES, PURCHASES AND
REDEMPTIONS, BY TELEPHONE. The Fund will not be responsible for any losses
resulting from unauthorized transactions if it follows reasonable procedures
designed to verify the identity of the caller. Those procedures may include
recording the call, requesting additional information, and sending written
confirmation of telephone transactions. If the Fund fails to follow such
reasonable
12 Prospectus
<PAGE>
procedures, the Fund may be responsible for resulting losses.
You should verify the accuracy of telephone transactions immediately upon
receipt of your confirmation statement. If you are unable to reach the Fund by
phone (for example, during periods of unusual market activity), consider placing
your order by mail.
TELEPHONE EXCHANGE PLAN
The telephone exchange plan permits you to transfer investments between your
Artisan Small Cap Fund account and your Artisan International Fund account
between the hours of 7:00 a.m. and 3:00 p.m., Central time on days the NYSE is
open for trading. Artisan Small Cap Fund is another series of Artisan Funds.
Each exchange between accounts must be at least $1,000. The price of shares
exchanged between Artisan Small Cap Fund and the Fund is determined at the end
of that day's trading session.
Telephone exchange plan restrictions:
. To exchange between funds, you must have an account with Artisan Small Cap
Fund and Artisan International Fund. Your accounts must be registered in the
same name, address, and taxpayer identification number.
. To OPEN a Fund account by telephone by exchanging an investment from
Artisan Small Cap Fund, you must have previously elected the telephone
transaction option for that fund.
. If the Artisan Small Cap Fund is still open to new investors (its
prospectus discloses that it will be closed to new investors when it reaches
$300 million in total assets) you may open an account in that fund by
transferring an investment from your Artisan International Fund. After the
Artisan Small Cap Fund closes, you will not be able to open an account with
that fund unless you meet the post-closing requirements identified in the
Artisan Small Cap Fund prospectus.
. Before exchanging into Artisan Small Cap Fund, you should carefully read
its prospectus which may be obtained by calling 1-800-344-1770.
. The exchange of shares may have tax consequences to you.
. If your account is subject to backup withholding, you may not use the
telephone exchange plan.
. Because excessive trading can hurt performance and shareholders, Artisan
Funds reserves the right to temporarily or permanently terminate the
telephone exchange plan of any investor who makes excessive use of the plan.
Artisan Funds may limit the number of transfers per calendar year.
. Artisan Funds reserves the right to terminate or modify the telephone
exchange plan at any time, but will try to give you prior notice whenever it
is able to do so.
13 Prospectus
<PAGE>
DIVIDENDS, CAPITAL GAINS, AND TAXES
The Fund intends to distribute substantially all of its net income and capital
gains to shareholders at least annually.
DISTRIBUTION OPTIONS
When you open an account, specify on your new account application how you want
to receive your distributions. If you later want to change your distribution
option, you may do so either by a written request or by calling us at 1-800-344-
1770. The Fund offers three options:
. REINVESTMENT OPTION. Your dividends and capital gain distributions will be
automatically reinvested in additional shares of the Fund. If you do not
indicate a choice on your new account application, your distributions will be
reinvested automatically.
. INCOME-ONLY OPTION. Your capital gain distributions will be automatically
reinvested, but you will be sent a check for each dividend.
. CASH OPTION. You will be sent a check for all distributions.
FOR IRA ACCOUNTS, all distributions are automatically reinvested because payment
of distributions in cash would be a taxable distribution from your IRA, and
might be subject to income tax and penalties if you are under 59 1/2 years old.
After you are 59 1/2, you may request payment of distributions in cash which
might be subject to income tax.
When you reinvest, the reinvestment price is the Fund's net asset value per
share at the close of business on the reinvestment date. The mailing of
distribution checks will usually begin on the payment date, which is usually one
week after the ex-dividend date.
TAXES
As with any investment, you should consider how the return on your investment in
the Fund will be taxed. If your account is a tax-deferred account (for example,
an IRA or an employee benefit plan account), the following tax discussion does
not apply. If your account is not a tax-deferred account, however, you should
be aware of the following tax rules:
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and
also may be subject to state or local taxes. If you live outside the United
States, your distributions also could be taxed by the country in which you
reside.
Your distributions are taxable when they are paid, whether you take them in cash
or reinvest them in additional shares. However, distributions declared in
October, November or December and paid in January are taxable as if they were
received by you on December 31.
For federal tax purposes, the Fund's income and short-term capital gain
distributions are taxed as dividends; long-term capital gain distributions are
taxed as long-term capital gains. Every January, the Fund will send you and the
IRS a statement, called a Form 1099, showing the amount of each taxable
distribution you received in the previous calendar year.
TAXES ON TRANSACTIONS. When you redeem shares you will recognize a capital gain
or loss if there is a difference between the cost of your shares and the price
you receive when you sell them.
Whenever you sell shares of the Fund, you will receive a confirmation statement
showing how many shares you sold and at what price. You also will receive a
year-end statement every January reporting, among other things, your average
cost basis in the shares you sold. This will allow you or your tax preparer to
determine whether a redemption resulted in a capital gain or loss and the tax
consequences of that gain or loss. However, be sure to keep your regular
account statements; the information they
14 Prospectus
<PAGE>
contain will be essential in verifying the amount of your capital gains or
losses.
FOREIGN INCOME TAXES
Investment income received by the Fund from sources within foreign countries may
be subject to foreign income taxes withheld at the source. If the Fund pays
non-refundable taxes to foreign governments during the year, the taxes will
reduce the Fund's dividend but will be included in your taxable income. You may
be able to claim an offsetting credit or deduction on your tax return for your
share of foreign taxes paid by the Fund. You will receive this information as
part of your Form 1099.
WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that your
Social Security or taxpayer identification number is correct and that you are
not subject to backup withholding for failing to report income to the IRS. If
you fail to comply with applicable IRS regulations including the certification
procedures described above, the IRS can require the Fund to withhold 31% of your
taxable distributions and redemptions.
- --------------------------------------------------------------------------------
UNDERSTANDING DISTRIBUTIONS
- --------------------------------------------------------------------------------
As a shareholder, you are entitled to your share of the Fund's net income and
any gains realized on its investments. The Fund's income from dividends and
interest, and any net realized short-term gain, are paid to you as DIVIDENDS.
The Fund realizes long-term capital gains whenever it sells securities held for
more than one year for a higher price than it paid for them. Net realized long-
term gains are paid to you as CAPITAL GAIN DISTRIBUTIONS.
- --------------------------------------------------------------------------------
15 Prospectus
<PAGE>
THE FUND IN DETAIL
ORGANIZATION
Artisan International Fund is a series of Artisan Funds, Inc., an open-end,
management investment company which was incorporated under Wisconsin law in
1995.
Each share of the Fund has one vote. All shares participate equally in
dividends and other distributions declared by the board of directors, and all
shares of the Fund have equal rights in the event of liquidation of the Fund.
Shares of the Fund have no preemptive, conversion, or subscription rights.
ARTISAN FUNDS IS GOVERNED BY A BOARD OF DIRECTORS which is responsible for
protecting the interests of the shareholders of the Fund. The directors are
experienced executives and professionals who meet at regular intervals to
oversee the activities of the Fund, review contractual arrangements with
companies that provide services to the Fund, and review performance. A majority
of directors are not otherwise affiliated with the Fund or Artisan Partners.
The Wisconsin Business Corporation Law permits registered investment companies
to operate without an annual meeting of shareholders under specified
circumstances if an annual meeting is not required by the Investment Company Act
of 1940 (the federal securities law that governs the regulation of investment
companies). The Fund has adopted the appropriate provisions in its bylaws and
does not expect to hold an annual meeting in any year in which the election of
directors is not required to be acted on by shareholders. The Fund believes that
not holding shareholder meetings except as otherwise required reduces the Fund's
expenses and enhances shareholder return.
THE FUND MAY HOLD SPECIAL MEETINGS OF SHAREHOLDERS. These meetings may be
called to elect or remove directors, change fundamental policies, approve a
management contract, or for other purposes. The Fund will mail proxy materials
in advance, including a voting card and information about the proposals to be
voted on. You are entitled to one vote for each share of the Fund that you own.
Shareholders not attending these meetings are encouraged to vote by proxy.
MANAGEMENT
The Fund is managed by Artisan Partners Limited Partnership, 1000 North Water
Street, Suite 1770, Milwaukee, Wisconsin 53202, which selects the Fund's
investments and handles its business affairs, under the direction of the board
of directors. Artisan Partners is a limited partnership managed by its general
partner, Artisan Investment Corporation, controlled by Andrew A. Ziegler and
Carlene Murphy Ziegler.
Andrew A. Ziegler is a director and chief executive officer of Artisan Funds.
Immediately prior to founding Artisan Partners, Mr. Ziegler was president and
chief operating officer of Strong/Corneliuson Capital Management, and president
of the Strong Funds; prior thereto, Mr. Ziegler was Executive Vice President and
General Counsel of Strong. From 1986 to 1990, Mr. Ziegler was an attorney with
the law firm of Godfrey & Kahn, S.C., Milwaukee, WI. Mr. Ziegler holds a B.S.
from the University of Wisconsin - Madison and a J.D. from the University of
Wisconsin Law School.
Carlene Murphy Ziegler is a director and president of Artisan Funds and the
portfolio manager of Artisan Small Cap Fund, another series of Artisan Funds.
Prior to founding Artisan Partners, Ms. Ziegler was a co-portfolio manager of
the Strong Common Stock Fund and Strong Opportunity Fund. From 1986 to 1991,
Ms. Ziegler was a co-portfolio manager of the SteinRoe Special Fund. Ms.
Ziegler holds B.A. and M.A. degrees from the University of Illinois and an
M.B.A. from the University of Chicago
16 Prospectus
<PAGE>
Graduate School of Business. She also is a Chartered Financial Analyst.
Mark L. Yockey is a vice president of Artisan Funds and the portfolio manager of
Artisan International Fund. Prior to joining Artisan Funds, Mr. Yockey was
portfolio manager of the United International Growth Fund and vice president of
Waddell & Reed since January 1990. Prior thereto, Mr. Yockey was an equity
analyst for Waddell & Reed. Mr. Yockey holds a B.A. degree and an M.B.A. from
Michigan State University. He is also a Chartered Financial Analyst.
From January 1990 through December 1995, and throughout that time period, Mr.
Yockey had full discretionary authority over the selection of investments for
United International Growth Fund. Average annual returns for that fund, through
September 30, 1995 were:
UNITED INTERNATIONAL
GROWTH FUND(a)
One Year 6.66
Three Years 19.67
Five Years 15.82
(a) Assuming reinvestment of dividends
Of course, historical performance may not be indicative of future performance
even though Mr. Yockey intends to utilize a similar approach to achieve capital
growth in the Fund.
The above-stated average annual returns for United International Growth Fund
have been adjusted to take into account certain expenses of that fund. The
expenses of the Fund may differ from the expenses of United International
Growth Fund. This means that varying management, accounting, transfer agent,
custodian and other fees as well as different asset size will affect
results.
John M. Blaser is chief financial officer of Artisan Funds and acts as the
principal administrative and financial officer. Prior to joining Artisan
Partners, Mr. Blaser was Senior Vice President of Kemper Securities, Inc. since
1993. Prior thereto, Mr. Blaser was with Price Waterhouse. Mr. Blaser holds a
B.B.A. from the University of Wisconsin - Madison.
State Street Bank and Trust Company ("State Street"), 1776 Heritage Drive, North
Quincy, MA 02171, is the Fund's transfer and dividend disbursing agent. State
Street also serves as the Fund's custodian and accounting agent.
EXPENSES
Like all mutual funds, the Fund pays expenses related to its daily operations.
Expenses paid out of the Fund's assets are reflected in its share price or
dividends.
The Fund pays a MANAGEMENT FEE to Artisan Partners for managing its investments
and business affairs. For services furnished by Artisan Partners, the Fund has
agreed to pay an annual fee of (i) 1% of its average daily net assets up to $500
million; (ii) .975 of 1% of its average daily net assets from $500 to $750
million; (iii) .950 of 1% of its average daily net assets from $750 million to
$1 billion and (iv) .925 of 1% of its average daily net assets over $1 billion.
The rate of fee paid by the Fund is higher than that paid by many mutual funds,
reflecting the higher costs involved in actively managing a foreign stock
portfolio.
While the management fee is a significant component of the Fund's annual
operating costs, the Fund has other expenses as well. The Fund pays the fees of
its custodian, transfer agent, fund accountants, independent accountants, and
lawyers. It also pays other expenses such as the cost of compliance with
federal and state laws, proxy solicitations, shareholder reports, taxes,
insurance premiums, and the fees of directors who are not otherwise affiliated
with the Fund or Artisan Partners.
THE FUND'S INVESTMENT PHILOSOPHY
THE FUND INVESTS FOR MAXIMUM LONG-TERM CAPITAL GROWTH. THE FUND GENERALLY
INVESTS IN THE STOCKS OF FOREIGN COMPANIES AND USES ITS OWN DETAILED RESEARCH
PROCESS TO IDENTIFY INVESTMENT OPPORTUNITIES. The Fund's research method is
both "top-down" and "bottom-up." That means that country selection and stock
selection are equally important parts of the investment process.
17 Prospectus
<PAGE>
Country selection involves an evaluation of the regions and countries of the
world in an effort to determine which are enjoying improving or rapid economic
growth. The Fund avoids countries that, while showing favorable economic
growth, appear to have overvalued markets. Economic growth is determined
principally from the standpoint of gross domestic product growth, corporate
profitability, current account and currency issues, interest rates and social
changes.
Having identified favorable areas of the world for growth, the Fund seeks out
the stocks of companies best positioned to capitalize on that growth. In this
process, the Fund emphasizes well-managed companies with dominant or increasing
market share in strong industries. It focuses on companies with above-average
financial characteristics and increasing earnings per share. The Fund also
analyzes relative valuations using a variety of criteria such as price-to-
earnings ratios and avoids stocks that are trading at unsustainable or unusually
high valuations.
International investing allows you to achieve greater diversification and to
take advantage of changes in foreign economies and market conditions. From time
to time, many foreign economies have grown faster than the U.S. economy, and the
returns on investments in these countries have exceeded those of similar U.S.
investments, although there can be no assurance that these conditions will
continue.
The Fund also may invest in types of equity securities other than common stocks,
and in debt securities, and may engage in certain investment practices such as
short sales "against the box;" however, the Fund does not currently intend to
commit more than 5% of its total assets to investment practices such as short
sales against the box.
The Fund intends to be substantially fully invested in foreign equity securities
in ordinary circumstances, although the Fund may invest without limit in short-
term corporate obligations or government obligations (U.S. or foreign) or hold
cash or cash equivalents if Artisan Partners determines that a temporary
defensive position is advisable. See the discussion of debt securities on page
20.
The Fund uses various techniques to increase or decrease its exposure to the
effects of possible changes in security prices, currency exchange rates, or
other factors that affect the value of its portfolio. These techniques include
buying and selling options, futures contracts, and options on futures contracts,
or entering into currency exchange contracts.
Although the Fund does not generally purchase securities with a view to rapid
turnover, there are no limitations on the length of time portfolio securities
must be held. Occasionally, securities purchased on a long-term basis may be
sold within a short period of time after purchase in light of a change in the
circumstances of a particular company or industry or in general market of
economic conditions.
The investment objective of the Fund may be changed by the board of directors
without shareholder approval. If there were such a change, you should consider
whether the Fund would remain an appropriate investment in light of your then
current financial position and needs. The Fund is not intended to present a
balanced investment program.
SECURITIES, INVESTMENT PRACTICES AND RISKS
The following pages contain more detailed information about types of investments
the Fund may make and strategies Artisan Partners may employ in pursuit of the
Fund's investment objective, including information about the risks and
restrictions associated with these instrument types and investment practices.
All investment policies stated throughout this prospectus, other than those
identified as fundamental, can be changed without shareholder approval. A
complete statement of the Fund's investment restrictions is included in the
Statement of Additional Information. Compliance with policies and limitations is
18 Prospectus
<PAGE>
determined at the time of purchase of a security; the Fund is not required to
sell an investment because of a later change in circumstances.
The Fund may not buy all of these instruments or use all of these techniques to
the full extent permitted unless Artisan Partners believes that doing so will
help the Fund achieve its goal. As a shareholder, you will receive semi-annual
and annual reports detailing the Fund's holdings and describing recent
investment practices.
EQUITY SECURITIES
Common stocks represent an equity (ownership) interest in a corporation. This
ownership interest often gives the holder the right to vote on measures
affecting the company's organization and operations. The equity securities in
which the Fund invests may include preferred stocks, including preferred stocks
convertible into common stocks. Although common stocks and other equity
securities have a history of long-term growth in value, their prices tend to
fluctuate in the short term.
The Fund invests mostly in the common stock (or the equivalent of common stock
under the applicable foreign law) of foreign companies.
Restrictions: The Fund may not acquire more than 10% of the outstanding voting
securities of any one issuer.*
FOREIGN SECURITIES
Investments in foreign securities, including American Depository Receipts
("ADRs"), provide opportunities different from those available in the U.S., and
risks which may be greater in some ways than in U.S. investments. ADRs are
receipts typically issued by an American bank or trust company evidencing
ownership of the underlying securities. See the Fund's Statement of Additional
Information for more information.
You should understand and consider carefully the greater risks involved in
foreign investing. Investing in foreign securities, positions in which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts involve certain risks and opportunities not
typically associated with investing in U.S. securities. These include:
fluctuations in exchange rates of foreign currencies; imposition of exchange
control regulation or currency restrictions that would prevent cash from being
brought back to the United States; less public information with respect to
issuers of securities; less governmental supervision of stock exchanges,
securities brokers, and issuers of securities; different accounting, auditing,
and financial reporting standards; different settlement periods and trading
practices; less liquidity and frequently greater price volatility in foreign
markets than in the United States; imposition of foreign taxes; and sometimes
less advantageous legal, operational, and financial protections applicable to
foreign sub-custodial arrangements. In addition, the costs of investing in
foreign securities is higher than the cost of investing in U.S. securities.
Investing in countries outside the U.S. also involves political risk. A foreign
government might restrict investments by foreigners, expropriate assets, seize
or nationalize foreign bank deposits or other assets, establish exchange
controls, or enact other policies that could affect investment in these nations.
Economies in individual markets may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross domestic product, rates of
inflation, currency depreciation, capital reinvestment, resource self-
sufficiency and balance of payments positions. Many emerging market countries
have experienced extremely high rates of inflation for many years. That has had
and may continue to have very negative effects on the economies and securities
markets of those countries.
- --------------------
* The restriction is "fundamental" which means it cannot be changed without
shareholder approval.
19 Prospectus
<PAGE>
The securities markets of emerging countries are substantially smaller, less
developed, less liquid, and more volatile than the securities markets of the
United States and other more developed countries. Disclosure and regulatory
standards in many respects are less stringent than in the U.S. There also may
be a lower level in emerging markets of monitoring and regulation of traders,
insiders, and investors. Enforcement of existing regulations has been extremely
limited.
Restrictions: Under normal circumstances, the Fund will invest at least 65% of
its total assets in securities of foreign issuers.* In addition, under normal
market conditions, the Fund will invest in at least three countries outside the
U.S.
DEBT SECURITIES
Bonds and other debt instruments are methods for an issuer to borrow money from
investors. The issuer pays the investor a fixed or variable rate of interest,
and must repay the amount borrowed at maturity. Debt securities have varying
degrees of quality and varying levels of sensitivity to changes in interest
rates. In general, an increase in interest rates will decrease the value of
debt securities.
"Investment grade" debt securities are those rated within the four highest
ratings categories of Standard & Poor's Corporation ("S&P") or Moody's Investors
Services, Inc. ("Moody's") or, if unrated, determined by Artisan Partners to be
of comparable quality. Securities rated BBB or Baa are considered to be medium
grade and to have speculative characteristics. Investment in non-investment
grade debt securities is speculative and involves a high degree of risk.
Lower-rated debt securities (commonly called "junk bonds") are considered
speculative and involve greater risk of default or price changes due to changes
in the issuer's credit-worthiness. The market prices of these securities may
fluctuate more than higher-rated securities and may decline significantly in
periods of general economic difficulty.
For more information, see the discussion of debt securities in the statement of
additional information.
Restrictions: The Fund intends to be substantially fully invested in equity
securities in ordinary circumstances. Except when a defensive posture is
considered advisable, the Fund's investments in debt securities will not exceed
35% of the Fund's assets, without regard to their ratings. Investments in debt
securities in excess of 35% of the Fund's assets will be restricted to
investment grade debt securities. The Fund does not intend to invest more than
5% of its net assets in securities rated below investment grade.
CONVERTIBLE SECURITIES
The Fund may invest in convertible securities (securities convertible into
underlying equity securities). In determining whether to purchase a convertible
security, Artisan Partners will consider the same criteria that would be
considered in purchasing the underlying stock. Although convertible securities
purchased by the Fund are frequently rated investment grade, the Fund also may
purchase unrated securities or securities rated below investment grade if the
securities meet Artisan Partners' other investment criteria.
Restrictions: The Fund does not intend to invest more than 5% of its net assets
in convertible securities.
MANAGING INVESTMENT EXPOSURE
The Fund uses various techniques to increase or decrease its exposure to the
effects of possible changes in security prices, currency exchange rates or other
factors that affect the value of its portfolio. These techniques include buying
and selling derivative securities such as options, futures contracts, or options
on futures contracts, or
- --------------------
* The restriction is "fundamental" which means it cannot be changed without
shareholder approval.
20 Prospectus
<PAGE>
entering into currency exchange contracts. INVESTMENTS IN DERIVATIVE SECURITIES
INVOLVE SIGNIFICANT RISKS AND MAY INCREASE THE VOLATILITY OF THE FUND.
These techniques are used by Artisan Partners to adjust the risk and return
characteristics of the Fund's portfolio. If Artisan Partners judges market
conditions incorrectly or employs a strategy that does not correlate well with
the Fund's investments, or if the counterparty to the transaction does not
perform as promised, the transaction could result in a loss. Use of these
techniques may increase the volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. These
techniques are used by the Fund for hedging, risk management, or portfolio
management purposes and not for speculation. There is no limitation on the
percentage of assets that can be committed to derivative securities. However,
derivative securities will be used only for hedging purposes. In addition,
particular types of derivative securities are subject to certain limitations and
restrictions described in the Statement of Additional Information under the
heading "Investment Techniques -- Managing Investment Exposure."
CURRENCY EXCHANGE TRANSACTIONS. A currency exchange transaction may be
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through a forward
currency exchange contract ("forward contract"). A forward contract is an
agreement to purchase or sell a specified currency at a specified future date
(or within a specified time period) and price set at the time of the contract.
Forward contracts are usually entered into with banks and broker-dealers, are
not exchange-traded and are usually for less than one year, but may be renewed.
Currency exchange transactions may involve currencies of the different countries
in which the Fund may invest and serve as hedges against possible variations in
the exchange rate between these currencies. The Fund's currency transactions
are limited to TRANSACTION HEDGING and PORTFOLIO HEDGING involving either
specific transactions or actual or anticipated positions. Transaction hedging
is the purchase or sale of a forward contract with respect to a specific
receivable or payable of the Fund accruing in connection with the purchase or
sale of portfolio securities. Portfolio hedging is the use of a forward
contract with respect to an actual or anticipated portfolio security position
denominated or quoted in a particular currency. The Fund may engage in
portfolio hedging with respect to the currency of a particular country in
amounts approximating actual or anticipated positions in securities denominated
in such currency. When the Fund owns or anticipates owning securities in
countries whose currencies are linked, Artisan Partners may aggregate such
positions as to the currency hedged. Although forward contracts may be used to
protect the Fund from adverse currency movements, the use of such hedges may
reduce or eliminate the potentially positive effect of currency revaluations on
the Fund's total return.
OPTIONS AND FUTURES. The Fund may enter into stock index or currency futures
contracts (or options thereon) to hedge a portion of its portfolio, to provide
an efficient means of regulating its exposure to the equity markets, or as a
hedge against changes in prevailing levels of currency exchange rates. The Fund
may write covered call options and purchase put and call options on foreign
currencies, securities, and stock indices. Futures contracts and options can be
highly volatile and are subject to price movements in underlying securities.
The Fund's attempt to use such investments for hedging purposes may not be
successful and could result in a loss. In addition, the loss from investing in
futures transactions is potentially unlimited and the Fund may be unable to
control losses by closing its position where a liquid secondary market does not
exist.
21 Prospectus
<PAGE>
ILLIQUID AND RESTRICTED SECURITIES
Some investments may be determined by Artisan Partners to be illiquid, which
means that they may be difficult to sell promptly at an acceptable price. Other
securities, such as securities acquired in private placements, may be sold only
in compliance with certain legal restrictions. These securities are often
referred to as Rule 144A securities. Difficulty in selling securities may
result in delays or a loss, or may be costly to the Fund. A Rule 144A security
may be treated as liquid if the board of directors of the Fund so determines
based on an analysis of relevant information including trading activity and
availability of reliable price information.
Restrictions: The Fund may not invest more than 10% of its net assets in
illiquid or restricted securities other than Rule 144A securities.
DIVERSIFICATION
Diversifying the investment portfolio can reduce the risks of investing. This
may include limiting the amount of money invested in any one company, or on a
broader scale, limiting the amount invested in any one industry or country.
Restrictions: With respect to 75% of its total assets, the Fund may not invest
more than 5% of its total assets in the securities of any one issuer. The Fund
may not invest more than 25% of its total assets in any one industry. These
limitations do not apply to U.S. government securities.*
LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
The Fund may make loans of its portfolio securities to broker-dealers and banks.
In addition, the Fund may invest in securities purchased on a when-issued or
delayed-delivery basis. Although the payment terms of these securities are
established at the time the Fund enters into the commitment, the securities may
be delivered and paid for a month or more after the date of purchase, when their
value may have changed. The Fund will make such commitments only with the
intention of actually acquiring the securities, but may sell the securities
before settlement date if it is deemed advisable for investment reasons.
Restrictions: The Fund may not lend securities if, as a result, the aggregate
value of all securities loaned would exceed one-third of its total assets./* /
The Fund does not currently intend to loan more than 5% of its net assets or to
have commitments to purchase when-issued securities in excess of 5% of its net
assets.
BORROWING
The Fund may establish and maintain a line of credit with a major bank in order
to permit borrowing on a temporary basis. The Fund will not purchase securities
when total borrowings by the Fund are greater than 5% of its net asset value.
Restrictions: The Fund may not borrow money, except as a temporary measure for
extraordinary or emergency purposes, and then the aggregate borrowings at any
one time may not exceed 33 1/3% of its total assets (at market).**
OTHER INVESTMENT COMPANIES
Certain markets are closed in whole or in part to equity investments by
foreigners. The Fund may be able to invest in such markets solely or primarily
through governmentally-authorized investment companies.
Investment in another investment company may involve the payment of a premium
above the value of the issuer's portfolio securities and is subject to market
availability. In the case of a purchase of
- --------------------
* The restriction is "fundamental" which means it cannot be changed without
shareholder approval.
** The restriction is "fundamental" which means it cannot be changed without
shareholder approval.
22 Prospectus
<PAGE>
shares of such a company in a public offering, the purchase price may include an
underwriting spread. The Fund does not intend to invest in other investment
companies unless, in the judgment of Artisan Partners, the potential benefits of
such investment justify the payment of any applicable premium or sales charge.
As a shareholder in an investment company, the Fund would bear its ratable share
of that investment company's expenses, including its advisory and administration
fees. At the same time the Fund would continue to pay its own management fees
and other expenses.
Restrictions. The Fund generally may invest up to 10% of its assets in shares
of other investment companies and up to 5% of its assets in any one investment
company (in each case measured at the time of investment). No investment in
another investment company may represent more than 3% of the outstanding voting
stock of the acquired investment company at the time of investment.
PORTFOLIO TURNOVER
During normal market conditions, it is anticipated that the Fund's portfolio
turnover rate generally will be between 75% and 100%, but may vary significantly
from year to year. Flexibility of investment and emphasis on long-term capital
appreciation may involve greater portfolio turnover than that of mutual funds
that have the objectives of income or maintenance of a balanced investment
position. A higher rate of portfolio turnover may result in increased
transaction expenses and the realization of capital gains and losses. Portfolio
turnover in excess of 100% is considered to be high.
23 Prospectus
<PAGE>
Artisan Funds, Inc.
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
(414) 390-6100
(800) 344-1770
STATEMENT OF ADDITIONAL INFORMATION
December 28, 1995
Artisan International Fund
________________________________________________________________________________
Artisan International Fund (the "Fund") is a series of Artisan Funds,
Inc. ("Artisan Funds"). This statement of additional information is not a
prospectus. It should be read in conjunction with the prospectus of the Fund
dated December 28, 1995 and any supplement to the prospectus. That prospectus
can be obtained without charge by calling or writing to the Fund.
TABLE OF CONTENTS
Page
----
Information about the Fund......................................... 2
Investment Objective and Policies.................................. 2
Investment Techniques and Risks.................................... 2
Investment Restrictions............................................ 13
Performance Information............................................ 16
Directors and Officers............................................. 19
Investment Advisory Services....................................... 22
Portfolio Transactions............................................. 23
Purchasing and Redeeming Shares.................................... 24
Additional Tax Information......................................... 24
Custodian.......................................................... 25
Independent Accountants............................................ 25
<PAGE>
INFORMATION ABOUT THE FUND
The Fund is a series of Artisan Funds, Inc. ("Artisan Funds").
Artisan Partners Limited Partnership ("Artisan Partners") provides investment
advisory services to the Fund.
The discussion below supplements the description in the prospectus of
the Fund's investment objective, policies and restrictions.
INVESTMENT OBJECTIVE AND POLICIES
Artisan International Fund invests for maximum long-term capital
growth. The Fund seeks to achieve its objective by investing primarily in the
stocks of foreign companies. The investment objective of the Fund may be
changed by the board of directors without the approval of a "majority of the
outstanding voting securities" (as defined in the Investment Company Act of
1940) of the Fund.
The Fund invests primarily in equity securities, including common and
preferred stocks, warrants or other similar rights, and convertible securities,
of foreign issuers. The Fund also may invest in any other type of security,
including debt securities.
INVESTMENT TECHNIQUES AND RISKS
Foreign Securities
Under normal market conditions, the Fund invests at least 65% of its
total assets in foreign securities (including American Depository Receipts
("ADRs")), which may entail a greater degree of risk (including risks relating
to exchange rate fluctuations, tax provisions, or expropriation of assets) than
does investment in securities of domestic issuers. ADRs are receipts typically
issued by an American bank or trust company evidencing ownership of the
underlying securities. The Fund may invest in sponsored or unsponsored ADRs.
In the case of an unsponsored ADR, the Fund is likely to bear its proportionate
share of the expenses of the depository and it may have greater difficulty in
receiving shareholder communications than it would have with a sponsored ADR.
The Fund does not intend to invest more than 5% of its net assets in unsponsored
ADRs.
With respect to portfolio securities that are issued by foreign
issuers or denominated in foreign currencies, the Fund's investment performance
is affected by the strength or weakness of the U.S. dollar against these
currencies. For example, if the dollar falls in value relative to the Japanese
yen, the dollar value of a yen-denominated stock held in the portfolio will rise
even though the price of the stock remains unchanged. Conversely, if the dollar
rises in value relative to the yen, the dollar value of the yen-denominated
stock will fall. (See discussion of transaction hedging and portfolio hedging
under "Managing Investment Exposure.")
Investors should understand and consider carefully the risks involved
in foreign investing. Investing in foreign securities, positions in which are
generally denominated in foreign currencies, and utilization of forward foreign
currency exchange contracts involve certain considerations comprising both risks
and opportunities not typically associated with investing in U.S. securities.
These considerations include: fluctuations in exchange rates of foreign
currencies; possible imposition of exchange control regulation or currency
restrictions that would prevent cash from being brought back to the United
States; less public information with respect to issuers of securities; less
governmental supervision of stock exchanges, securities brokers, and issuers of
securities; lack of uniform accounting, auditing, and financial reporting
standards; lack of uniform settlement periods and trading practices; less
liquidity and frequently greater price volatility in foreign markets than in the
United States; possible
B-2
<PAGE>
imposition of foreign taxes; possible investment in securities of companies in
developing as well as developed countries; and sometimes less advantageous
legal, operational, and financial protections applicable to foreign sub-
custodial arrangements.
Although the Fund will try to invest in companies and governments of
countries having stable political environments, there is the possibility of
expropriation or confiscatory taxation, seizure or nationalization of foreign
bank deposits or other assets, establishment of exchange controls, the adoption
of foreign government restrictions, or other adverse political, social or
diplomatic developments that could affect investment in these nations.
Debt Securities
In pursuing its investment objective, the Fund may invest in debt
securities of corporate and governmental issuers. The risks inherent in debt
securities depend primarily on the term and quality of the obligations in the
Fund's portfolio as well as on market conditions. A decline in the prevailing
levels of interest rates generally increases the value of debt securities, while
an increase in rates usually reduces the value of those securities.
Investments in debt securities by the Fund may be in those that are
within the four highest ratings categories of Standard & Poor's Corporation
("S&P") or Moody's Investors Services, Inc. ("Moody's") (generally referred to
as "investment grade") or, if unrated, deemed to be of comparable quality by
Artisan Partners. However, the Fund may invest up to 35% of its net assets in
debt securities that are rated below investment grade. The Fund does not
currently intend to invest more than 5% of its net assets in securities rated
below investment grade.
Debt securities in the fourth highest grade may possess speculative
characteristics, and changes in economic conditions are more likely to affect
the issuer's capacity to pay interest and repay principal. If the rating of a
security held by the Fund is lost or reduced below investment grade, the Fund is
not required to dispose of the security, but Artisan Partners will consider that
fact in determining whether the Fund should continue to hold the security.
Securities that are rated below investment grade are considered
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal according to the terms of the obligation and therefore carry
greater investment risk, including the possibility of issuer default and
bankruptcy.
Defensive Investments
The Fund intends to be substantially fully invested in equity
securities of non-U.S. issuers in ordinary circumstances, although the Fund may
invest without limit in corporate or government obligations (U.S. or non-U.S.)
or hold cash or cash equivalents if Artisan Partners determines that a temporary
defensive position is advisable.
Convertible Securities
Convertible securities include any corporate debt security or
preferred stock that may be converted into underlying shares of common stock.
The common stock underlying convertible securities may be issued by a different
entity than the issuer of the convertible securities. Convertible securities
entitle the holder to receive interest payments paid on corporate debt
securities or the dividend preference on a preferred stock until such time as
the convertible security matures or is redeemed or until the holder elects to
exercise the conversion privilege.
B-3
<PAGE>
The value of convertible securities is influenced by both the yield of
non-convertible securities of comparable issuers and by the value of a
convertible security viewed without regard to its conversion feature (i.e.,
strictly on the basis of its yield) is sometimes referred to as its 'investment
value.' The investment value of the convertible security will typically
fluctuate inversely with changes in prevailing interest rates. However, at the
same time, the convertible security will be influenced by its `conversion
value,' which is the market value of the underlying common stock that would be
obtained if the convertible security were converted. Conversion value
fluctuates directly with the price of the underlying common stock.
By investing in convertible securities, the Fund obtains the right to
benefit from the capital appreciation potential in the underlying stock upon
exercise of the conversion right, while earning higher current income than would
be available if the stock were purchased directly. In determining whether to
purchase a convertible security, Artisan Partners will consider the same
criteria that would be considered in purchasing the underlying stock. Although
convertible securities purchased by the Fund are frequently rated investment
grade, the Fund also may purchase unrated securities or securities rated below
investment grade if the securities meet Artisan Partners' other investment
criteria. Convertible securities rated below investment grade (a) tend to be
more sensitive to interest rate and economic changes, (b) may be obligations of
issuers who are less creditworthy than issuers of higher quality convertible
securities, and (c) may be more thinly traded due to such securities being less
well known to investors than either common stock or conventional debt
securities. As a result, Artisan Partners' own investment research and analysis
tends to be more important in the purchase of such securities than other
factors.
Managing Investment Exposure
The Fund uses various techniques to increase or decrease its exposure
to the effects of possible changes in security prices, currency exchange rates
or other factors that affect the value of its portfolio. These techniques
include buying and selling options, futures contracts, or options on futures
contracts, or entering into currency exchange contracts.
These techniques are used by Artisan Partners to adjust the risk and
return characteristics of the Fund's portfolio. If Artisan Partners judges
market conditions incorrectly or employs a strategy that does not correlate well
with the Fund's investments, or if the counterparty to the transaction does not
perform as promised, the transaction could result in a loss. Use of these
techniques may increase the volatility of the Fund and may involve a small
investment of cash relative to the magnitude of the risk assumed. These
techniques are used by the Fund for hedging, risk management or portfolio
management purposes and not for speculation.
Currency Exchange Transactions. Currency exchange transactions may be
conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or
selling currency prevailing in the foreign exchange market or through forward
currency exchange contracts ("forward contracts"). Forward contracts are
contractual agreements to purchase or sell a specified currency at a specified
future date (or within a specified time period) and price set at the time of the
contract. Forward contracts are usually entered into with banks and broker-
dealers, are not exchange traded, and are usually for less than one year, but
may be renewed.
Forward currency transactions may involve currencies of the different
countries in which the Fund may invest, and serve as hedges against possible
variations in the exchange rate between these currencies. Currency transactions
are limited to transaction hedging and portfolio hedging involving either
specific transactions or portfolio positions. Transaction hedging is the
purchase or sale of forward contracts with respect to specific receivables or
payables of the Fund accruing in connection with the purchase and sale of its
portfolio securities. Portfolio hedging is the use of forward contracts with
respect to portfolio security positions denominated or quoted in a particular
currency. Portfolio hedging
B-4
<PAGE>
allows the Fund to limit or reduce exposure in a foreign currency by entering
into a forward contract to sell or buy such foreign currency (or another foreign
currency that acts as a proxy for that currency) so that the U.S. dollar value
of certain underlying foreign portfolio securities can be approximately matched
by an equivalent U.S. dollar liability. The Fund may not engage in portfolio
hedging with respect to the currency of a particular country to an extent
greater than the aggregate market value (at the time of making such sale) of the
securities held in its portfolio denominated or quoted in that particular
currency, except that the Fund may hedge all or part of its foreign currency
exposure through the use of a basket of currencies or a proxy currency where
such currencies or currency act as an effective proxy for other currencies. In
such a case, the Fund may enter into a forward contract where the amount of the
foreign currency to be sold exceeds the value of the securities denominated in
such currency. The use of this basket hedging technique may be more efficient
and economical than entering into separate forward contracts for each currency
held in the Fund. The Fund may not engage in "speculative" currency exchange
transactions.
At the maturity of a forward contract to deliver a particular
currency, the Fund may either sell the portfolio security related to such
contract and make delivery of the currency, or it may retain the security and
either acquire the currency on the spot market or terminate its contractual
obligation to deliver the currency by purchasing an offsetting contract with the
same currency trader obligating it to purchase on the same maturity date the
same amount of the currency.
It is impossible to forecast with absolute precision the market value
of portfolio securities at the expiration of a forward contract. Accordingly,
it may be necessary for the Fund to purchase additional currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of currency the Fund is obligated to deliver
and if a decision is made to sell the security and make delivery of the
currency. Conversely, it may be necessary to sell on the spot market some of the
currency received upon the sale of the portfolio security if its market value
exceeds the amount of currency the Fund is obligated to deliver.
If the Fund retains the portfolio security and engages in an
offsetting transaction, the Fund will incur a gain or a loss to the extent that
there has been movement in forward contract prices. If the Fund engages in an
offsetting transaction, it may subsequently enter into a new forward contract to
sell the currency. Should forward prices decline during the period between the
Fund's entering into a forward contract for the sale of a currency and the date
it enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to purchase exceeds the price of the currency it has
agreed to sell. A default on the contract would deprive the Fund of unrealized
profits or force the Fund to cover its commitments for purchase or sale of
currency, if any, at the current market price.
Hedging against a decline in the value of a currency does not
eliminate fluctuations in the prices of portfolio securities or prevent losses
if the prices of such securities decline. Such transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Moreover,
it may not be possible for the Fund to hedge against a devaluation that is so
generally anticipated that the Fund is not able to contract to sell the currency
at a price above the devaluation level it anticipates. The cost to the Fund of
engaging in currency exchange transactions varies with such factors as the
currency involved, the length of the contract period, and prevailing market
conditions. Because currency exchange transactions are usually conducted on a
principal basis, no fees or commissions are involved.
B-5
<PAGE>
Options on Securities and Indexes. The Fund may purchase and sell put
options and call options on securities, indexes or foreign currencies in
standardized contracts traded on recognized securities exchanges, boards of
trade, or similar entities, or quoted on NASDAQ. The Fund may purchase
agreements, sometimes called cash puts, that may accompany the purchase of a new
issue of bonds from a dealer.
An option on a security (or index) is a contract that gives the
purchaser (holder) of the option, in return for a premium, the right to buy from
(call) or sell to (put) the seller (writer) of the option the security
underlying the option (or the cash value of the index) at a specified exercise
price at any time during the term of the option (normally not exceeding nine
months). The writer of an option on an individual security or on a foreign
currency has the obligation upon exercise of the option to deliver the
underlying security or foreign currency upon payment of the exercise price or to
pay the exercise price upon delivery of the underlying security or foreign
currency. Upon exercise, the writer of an option on an index is obligated to
pay the difference between the cash value of the index and the exercise price
multiplied by the specified multiplier for the index option. (An index is
designed to reflect specified facets of a particular financial or securities
market, a specific group of financial instruments or securities, or certain
economic indicators.)
The Fund will write call options and put options only if they are
"covered." For example, in the case of a call option on a security, the option
is "covered" if the Fund owns the security underlying the call or has an
absolute and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, cash or cash
equivalents in such amount are held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio.
A put option is "covered" if the Fund maintains cash, Treasury bills,
or other higher-grade short-term obligations with a value equal to the exercise
price in a segregated account with its custodians, or owns on a share-for-share
or equal principal amount basis a put on the same security as the put written
where the exercise price of the put held is equal to or greater than the
exercise price of the put written.
If an option written by the Fund expires, the Fund realizes a capital
gain equal to the premium received at the time the option was written. If an
option purchased by the Fund expires, the Fund realizes a capital loss equal to
the premium paid.
Prior to the earlier of exercise or expiration, an option may be
closed out by an offsetting purchase or sale of an option of the same series
(type, exchange, underlying security or index, exercise price, and expiration).
There can be no assurance, however, that a closing purchase or sale transaction
can be effected when the Fund desires.
The Fund will realize a capital gain from a closing purchase
transaction if the cost of the closing option is less than the premium received
from writing the option, or, if it is more, the Fund will realize a capital
loss. If the premium received from a closing sale transaction is more than the
premium paid to purchase the option, the Fund will realize a capital gain or, if
it is less, the Fund will realize a capital loss. The principal factors
affecting the market value of a put or a call option include supply and demand,
interest rates, the current market price of the underlying security or index in
relation to the exercise price of the option, the volatility of the underlying
security or index, and the time remaining until the expiration date.
A put or call option purchased by the Fund is an asset of the Fund,
valued initially at the premium paid for the option. The premium received for an
option written by the Fund is recorded as a deferred credit. The value of an
option purchased or written is marked-to-market daily and is valued at the
closing price on the exchange on which it is traded or, if not traded on an
exchange or no closing price is available, at the mean between the last bid and
asked prices.
B-6
<PAGE>
Risks Associated with Options on Securities and Indexes. There are
several risks associated with transactions in options. For example, there are
significant differences between the securities markets, the currency markets,
and the options markets that could result in an imperfect correlation between
these markets, causing a given transaction not to achieve its objectives. A
decision as to whether, when and how to use options involves the exercise of
skill and judgment, and even a well-conceived transaction may be unsuccessful to
some degree because of market behavior or expected events.
There can be no assurance that a liquid market will exist when the
Fund seeks to close out an option position. If the Fund were unable to close
out an option that it had purchased on a security, it would have to exercise the
option in order to realize any profit or the option would expire and become
worthless. If the Fund were unable to close out a covered call option that it
had written on a security, it would not be able to sell the underlying security
until the option expired. As the writer of a covered call option on a security,
the Fund foregoes, during the option's life, the opportunity to profit from
increases in the market value of the security covering the call option above the
sum of the premium and the exercise price of the call.
If trading were suspended in an option purchased or written by the
Fund, the Fund would not be able to close out the option. If restrictions on
exercise were imposed, the Fund might be unable to exercise an option it has
purchased.
Futures Contracts and Options on Futures Contracts. The Fund may use
interest rate futures contracts, index futures contracts, and foreign currency
futures contracts. An interest rate, index or foreign currency futures contract
provides for the future sale by one party and purchase by another party of a
specified quantity of a financial instrument or the cash value of an index/1/ at
a specified price and time. A public market exists in futures contracts
covering a number of indexes (including, but not limited to: the Standard &
Poor's 500 Index, the Value Line Composite Index, and the New York Stock
Exchange Composite Index) as well as financial instruments (including, but not
limited to: U.S. Treasury bonds, U.S. Treasury notes, Eurodollar certificates
of deposit, and foreign currencies). Other index and financial instrument
futures contracts are available and it is expected that additional futures
contracts will be developed and traded.
The Fund may purchase and write call and put futures options. Futures
options possess many of the same characteristics as options on securities,
indexes and foreign currencies (discussed above). A futures option gives the
holder the right, in return for the premium paid, to assume a long position
(call) or short position (put) in a futures contract at a specified exercise
price at any time during the period of the option. Upon exercise of a call
option, the holder acquires a long position in the futures contract and the
writer is assigned the opposite short position. In the case of a put option,
the opposite is true. The Fund might, for example, use futures contracts to
hedge against or gain exposure to fluctuations in the general level of stock
prices, anticipated changes in interest rates or currency fluctuations that
might adversely affect either the value of the Fund's securities or the price of
the securities that the Fund intends to purchase. Although other techniques
could be used to reduce or increase the Fund's exposure to stock price, interest
rate and currency fluctuations, the Fund may be able to achieve its exposure
more effectively and perhaps at a lower cost by using futures contracts and
futures options.
- --------------------
/1/ A futures contract on an index is an agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to the
difference between the value of the index at the close of the last trading
day of the contract and the price at which the index contract was
originally written. Although the value of a securities index is a function
of the value of certain specified securities, no physical delivery of those
securities is made.
B-7
<PAGE>
The Fund will only enter into futures contracts and futures options
that are standardized and traded on an exchange, board of trade, or similar
entity, or quoted on an automated quotation system.
The success of any futures transaction depends on Artisan Partners
correctly predicting changes in the level and direction of stock prices,
interest rates, currency exchange rates and other factors. Should those
predictions be incorrect, the Fund's return might have been better had the
transaction not been attempted; however, in the absence of the ability to use
futures contracts, Artisan Partners might have taken portfolio actions in
anticipation of the same market movements with similar investment results but,
presumably, at greater transaction costs.
When a purchase or sale of a futures contract is made by the Fund, the
Fund is required to deposit with its custodian (or broker, if legally permitted)
a specified amount of cash or U.S. Government securities or other securities
acceptable to the broker ("initial margin"). The margin required for a futures
contract is set by the exchange on which the contract is traded and may be
modified during the term of the contract. The initial margin is in the nature
of a performance bond or good faith deposit on the futures contract, which is
returned to the Fund upon termination of the contract, assuming all contractual
obligations have been satisfied. The Fund expects to earn interest income on
its initial margin deposits. A futures contract held by the Fund is valued
daily at the official settlement price of the exchange on which it is traded.
Each day the Fund pays or receives cash, called "variation margin," equal to the
daily change in value of the futures contract. This process is known as
"marking-to-market." Variation margin paid or received by the Fund does not
represent a borrowing or loan by the Fund but is instead settlement between the
Fund and the broker of the amount one would owe the other if the futures
contract had expired at the close of the previous day. In computing daily net
asset value, the Fund will mark-to-market its open futures positions.
The Fund is also required to deposit and maintain margin with respect
to put and call options on futures contracts written by it. Such margin
deposits will vary depending on the nature of the underlying futures contract
(and the related initial margin requirements), the current market value of the
option, and other futures positions held by the Fund.
Although some futures contracts call for making or taking delivery of
the underlying securities, usually these obligations are closed out prior to
delivery by offsetting purchases or sales of matching futures contracts (same
exchange, underlying security or index, and delivery month). If an offsetting
purchase price is less than the original sale price, the Fund engaging in the
transaction realizes a capital gain, or if it is more, the Fund realizes a
capital loss. Conversely, if an offsetting sale price is more than the original
purchase price, the Fund engaging in the transaction realizes a capital gain, or
if it is less, the Fund realizes a capital loss. The transaction costs must
also be included in these calculations.
Risks Associated with Futures. There are several risks associated
with the use of futures contracts and futures options. A purchase or sale of a
futures contract may result in losses in excess of the amount invested in the
futures contract. In trying to increase or reduce market exposure, there can be
no guarantee that there will be a correlation between price movements in the
futures contract and in the portfolio exposure sought. In addition, there are
significant differences between the securities and futures markets that could
result in an imperfect correlation between the markets, causing a given
transaction not to achieve its objectives. The degree of imperfection of
correlation depends on circumstances such as: variations in speculative market
demand for futures, futures options and the related securities, including
technical influences in futures and futures options trading and differences
between the securities market and the securities underlying the standard
contracts available for trading. For example, in the case of index futures
contracts, the composition of the index, including the issuers and the weighting
of each issue, may differ from the composition of the Fund's portfolio, and, in
the case of interest rate futures contracts, the interest rate levels,
maturities, and creditworthiness of the issues underlying the futures contract
may differ from the financial instruments held in the Fund's portfolio. A
B-8
<PAGE>
decision as to whether, when and how to use futures contracts involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected stock price
or interest rate trends.
Futures exchanges may limit the amount of fluctuation permitted in
certain futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of the
current trading session. Once the daily limit has been reached in a futures
contract subject to the limit, no more trades may be made on that day at a price
beyond that limit. The daily limit governs only price movements during a
particular trading day and therefore does not limit potential losses because the
limit may work to prevent the liquidation of unfavorable positions. For
example, futures prices have occasionally moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing prompt
liquidation of positions and subjecting some holders of futures contracts to
substantial losses. Stock index futures contracts are not normally subject to
such daily price change limitations.
There can be no assurance that a liquid market will exist at a time
when the Fund seeks to close out a futures or futures option position. The Fund
would be exposed to possible loss on the position during the interval of
inability to close, and would continue to be required to meet margin
requirements until the position is closed. In addition, many of the contracts
discussed above are relatively new instruments without a significant trading
history. As a result, there can be no assurance that an active secondary market
will develop or continue to exist.
Limitations on Options and Futures. If other options, futures
contracts, or futures options of types other than those described herein are
traded in the future, the Fund also may use those investment vehicles, provided
the board of directors determines that their use is consistent with the Fund's
investment objective.
The Fund will not enter into a futures contract or purchase an option
thereon if, immediately thereafter, the initial margin deposits for futures
contracts held by the Fund plus premiums paid by it for open futures option
positions, less the amount by which any such positions are "in-the-money,"/2/
would exceed 5% of the Fund's total assets.
When purchasing or selling a futures contract or writing a put option
on a futures contract, the Fund must maintain with its custodian (or broker, if
legally permitted) cash or cash equivalents (including any margin) equal to the
market value of such contract. When writing a call option on a futures
contract, the Fund similarly will maintain with its custodian cash or cash
equivalents (including any margin) equal to the amount by which such option is
in-the-money until the option expires or is closed out by the Fund.
The Fund may not maintain open short positions in futures contracts,
call options written on futures contracts or call options written on indexes if,
in the aggregate, the market value of all such open positions exceeds the
current value of the securities in its portfolio, plus or minus unrealized gains
and losses on the open positions, adjusted for the historical relative
volatility of the relationship between the portfolio and the positions. For
this purpose, to the extent the Fund has written call options on specific
securities in its portfolio, the value of those securities will be deducted from
the current market value of the securities portfolio.
- --------------------
/2/ A call option is "in-the-money" if the value of the futures contract that
is the subject of the option exceeds the exercise price. A put option is
"in-the-money" if the exercise price exceeds the value of the futures
contract that is the subject of the option.
B-9
<PAGE>
In order to comply with Commodity Futures Trading Commission
Regulation 4.5 and thereby avoid being deemed a "commodity pool operator," the
Fund will use commodity futures or commodity options contracts solely for bona
fide hedging purposes within the meaning and intent of Regulation 1.3(z), or,
with respect to positions in commodity futures and commodity options contracts
that do not come within the meaning and intent of Regulation 1.3(z), the
aggregate initial margin and premiums required to establish such positions will
not exceed 5% of the fair market value of the assets of the Fund, after taking
into account unrealized profits and unrealized losses on any such contracts it
has entered into (in the case of an option that is in-the-money at the time of
purchase, the in the-money amount (as defined in Section 190.01(x) of the
Commission Regulations) may be excluded in computing such 5%).
As long as the Fund continues to sell its shares in certain states,
the Fund's options and futures transactions also will be subject to certain non-
fundamental investment restrictions set forth under "Investment Restrictions" in
this statement of additional information.
Taxation of Options and Futures. If the Fund exercises a call or put
option that it holds, the premium paid for the option is added to the cost basis
of the security purchased (call) or deducted from the proceeds of the security
sold (put). For cash settlement options and futures options exercised by the
Fund, the difference between the cash received at exercise and the premium paid
is a capital gain or loss.
If a call or put option written by the Fund is exercised, the premium
is included in the proceeds of the sale of the underlying security (call) or
reduces the cost basis of the security purchased (put). For cash settlement
options and futures options written by the Fund, the difference between the cash
paid at exercise and the premium received is a capital gain or loss.
Entry into a closing purchase transaction will result in capital gain
or loss. If an option written by the Fund is in-the-money at the time it was
written and the security covering the option was held for more than the long-
term holding period prior to the writing of the option, any loss realized as a
result of a closing purchase transaction will be long-term. The holding period
of the securities covering an in-the-money option will not include the period of
time the option is outstanding.
If the Fund writes an equity call option/3/ other than a "qualified
covered call option," as defined in the Internal Revenue Code, any loss on such
option transaction, to the extent it does not exceed the unrealized gains on the
securities covering the option, may be subject to deferral until the securities
covering the option have been sold.
A futures contract held until delivery results in capital gain or loss
equal to the difference between the price at which the futures contract was
entered into and the settlement price on the earlier of delivery notice date or
expiration date. If the Fund delivers securities under a futures contract, the
Fund also realizes a capital gain or loss on those securities.
For Federal income tax purposes, the Fund generally is required to
recognize for each taxable year its net unrealized gains and losses as of the
end of the year on futures, futures options and non-equity options positions
("year-end mark-to-market"). Generally, any gain or loss recognized with
- --------------------
/3/ An equity option is defined to mean any option to buy or sell stock, and
any other option the value of which is determined by reference to an index
of stocks of the type that is ineligible to be traded on a commodity
futures exchange (e.g., an option contract on a sub-index based on the
price of nine hotel-casino stocks). The definition of equity option
excludes options on broad-based stock indexes (such as the Standard &
Poor's 500 index).
B-10
<PAGE>
respect to such positions (either by year-end mark-to-market or by actual
closing of the positions) is considered to be 60% long-term and 40% short-term,
without regard to the holding periods of the contracts. However, in the case of
positions classified as part of a "mixed straddle," the recognition of losses on
certain positions (including options, futures and futures options positions, the
related securities and certain successor positions thereto) may be deferred to a
later taxable year. Sale of futures contracts or writing of call options (or
futures call options) or buying put options (or futures put options) that are
intended to hedge against a change in the value of securities held by the Fund
may affect the holding period of the hedged securities.
If the Fund were to enter into a short index future, short index
futures option or short index option position and the Fund's portfolio were
deemed to "mimic" the performance of the index underlying such contract, the
option or futures contract position and the Fund's stock positions may be deemed
to be positions in a mixed straddle, subject to the above-mentioned loss
deferral rules.
In order for the Fund to continue to qualify for Federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities or foreign currencies, or other income (including but not limited to
gains from options, futures, or forward contracts). In addition, gains realized
on the sale or other disposition of securities held for less than three months
must be limited to less than 30% of the Fund's annual gross income. Any net
gain realized from futures (or futures options) contracts will be considered
gain from the sale of securities and therefore be qualifying income for purposes
of the 90% requirement. In order to avoid realizing excessive gains on
securities held less than three months, the Fund may be required to defer the
closing out of certain positions beyond the time when it would otherwise be
advantageous to do so.
The Fund intends to distribute to shareholders annually any capital
gains that have been recognized for Federal income tax purposes (including year-
end mark-to-market gains) on options and futures transactions, together with
gains on other Fund investments, to the extent such gains exceed recognized
capital losses and any net capital loss carryovers of the Fund. Shareholders
will be advised of the nature of such capital gain distributions.
Rule 144A Securities
The Fund may purchase securities that have been privately placed but
that are eligible for purchase and sale under Rule 144A under the 1933 Act.
(Such securities are hereinafter referred to as "Rule 144A securities.") That
Rule permits certain qualified institutional buyers, including investment
companies that own and invest at least $100 million in securities, to trade in
privately placed securities that have not been registered for sale under the
1933 Act. Artisan Partners, under the supervision of the board of directors,
will consider whether Rule 144A securities are illiquid and thus subject to the
Fund's restriction of investing no more than 10% of its net assets in illiquid
securities. A determination of whether a Rule 144A security is liquid or not is
a question of fact. In making this determination, Artisan Partners will
consider the trading markets for the specific security, taking into account the
unregistered nature of a Rule 144A security. In addition, Artisan Partners
could consider the (1) frequency of trades and quotes, (2) number of dealers and
potential purchasers, (3) dealer undertakings to make a market, and (4) nature
of the security and of marketplace trades (e.g., the time needed to dispose of
the security, the method of soliciting offers, and the mechanics of transfer).
The liquidity of Rule 144A securities would be monitored and, if as a result of
changed conditions, Artisan Partners determined that a Rule 144A security is no
longer liquid, the Fund's holdings of illiquid securities would be reviewed to
determine what, if any, steps are required to assure that the Fund does not
invest more than 10% of its assets in illiquid securities. Investing in Rule
144A securities could have the effect of increasing the amount of the Fund's
assets invested in illiquid securities if qualified institutional buyers are
unwilling to purchase such securities.
B-11
<PAGE>
Lending of Portfolio Securities
Subject to restriction (3) under "Investment Restrictions" in this
statement of additional information, the Fund may lend its portfolio securities
to broker-dealers and banks. Any such loan must be continuously secured by
collateral in cash or cash equivalents maintained on a current basis in an
amount at least equal to the market value of the securities loaned by the Fund.
The Fund would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned, and also would receive an
additional return that may be in the form of a fixed fee or a percentage of the
collateral. The Fund would have the right to call the loan and obtain the
securities loaned at any time on notice of not more than five business days.
The Fund would not have the right to vote the securities during the existence of
the loan but would call the loan to permit voting of the securities if, in
Artisan Partners' judgment, a material event requiring a shareholder vote would
otherwise occur before the loan was repaid. In the event of bankruptcy or other
default of the borrower, the Fund could experience both delays in liquidating
the loan collateral or recovering the loaned securities and losses, including
(a) possible decline in the value of the collateral or in the value of the
securities loaned during the period while the Fund seeks to enforce its rights
thereto, (b) possible subnormal levels of income and lack of access to income
during this period, and (c) expenses of enforcing its rights. The Fund does not
currently intend to loan more than 5% of its net assets.
When-Issued and Delayed-Delivery Securities; Reverse Repurchase Agreements
The Fund may purchase securities on a when-issued or delayed-delivery
basis. Although the payment and interest terms of these securities are
established at the time the Fund enters into the commitment, the securities may
be delivered and paid for a month or more after the date of purchase, when their
value may have changed. The Fund makes such commitments only with the intention
of actually acquiring the securities, but may sell the securities before
settlement date if Artisan Partners deems it advisable for investment reasons.
The Fund does not currently intend to have commitments to purchase when-issued
securities in excess of 5% of its net assets.
The Fund may enter into reverse repurchase agreements with banks and
securities dealers. A reverse repurchase agreement is a repurchase agreement in
which the Fund is the seller of, rather than the investor in, securities and
agrees to repurchase them at an agreed-upon time and price. Use of a reverse
repurchase agreement may be preferable to a regular sale and later repurchase of
securities because it avoids certain market risks and transaction costs.
However, reverse repurchase agreements will be treated as borrowing and subject
to the Artisan Funds' fundamental limitation on borrowing.
At the time the Fund enters into a binding obligation to purchase
securities on a when-issued or delayed-delivery basis or enters into a reverse
repurchase agreement, liquid assets (cash, U.S. Government securities or other
"high-grade" debt obligations) of the Fund having a value at least as great as
the purchase price of the securities to be purchased will be segregated on the
books of the Fund and held by the custodian throughout the period of the
obligation. The use of these investment strategies, as well as borrowing under
a line of credit as described below, may increase net asset value fluctuation.
Short Sales
The Fund may make short sales "against the box." In a short sale, the
Fund sells a borrowed security and is required to return the identical security
to the lender. A short sale "against the box" involves the sale of a security
with respect to which the Fund already owns an equivalent security in kind and
amount. A short sale "against the box" enables the Fund to obtain the current
market price of a security which it desires to sell but is unavailable for
settlement. The Fund does not currently intend to have commitments to make
short sales "against the box" in excess of 5% of its net assets.
B-12
<PAGE>
Line of Credit
Subject to restriction (4) under "Investment Restrictions" in this
statement of additional information, the Fund may establish and maintain a line
of credit with a bank in order to permit borrowing on a temporary basis to meet
share redemption requests in circumstances in which temporary borrowing may be
preferable to liquidation of portfolio securities.
Portfolio Turnover
Although the Fund does not purchase securities with a view to rapid
turnover, there are no limitations on the length of time that portfolio
securities must be held. At times, the Fund may invest for short-term capital
appreciation. Portfolio turnover can occur for a number of reasons such as
general conditions in the securities markets, more favorable investment
opportunities in other securities, or other factors relating to the desirability
of holding or changing a portfolio investment. Because of the Fund's
flexibility of investment and emphasis on growth of capital, it may have greater
portfolio turnover than that of mutual funds that have primary objectives of
income or maintenance of a balanced investment position. The future turnover
rate may vary greatly from year to year. A high rate of portfolio turnover in
the Fund, if it should occur, would result in increased transaction expense,
which must be borne by the Fund. High portfolio turnover also may result in the
realization of capital gains or losses and, to the extent net short-term capital
gains are realized, any distributions resulting from such gains will be
considered ordinary income for Federal income tax purposes. (See "Dividend,
Capital Gains, and Taxes" in the prospectus, and "Additional Tax Information" in
this statement of additional information.)
INVESTMENT RESTRICTIONS
Fundamental Restrictions
Artisan Funds has adopted the following investment restrictions for
Artisan International Fund, which may not be changed without the approval of the
Fund's shareholders, under which the Fund may not:
(1) act as an underwriter of securities, except insofar as it may be
deemed an underwriter for purposes of the Securities Act of 1933 on disposition
of securities acquired subject to legal or contractual restrictions on resale;
(2) purchase or sell real estate (although it may purchase securities
secured by real estate or interests therein, or securities issued by companies
which invest in real estate or interests therein), commodities, or commodity
contracts, except that it may enter into (a) futures and options on futures and
(b) forward contracts;
(3) make loans, but this restriction shall not prevent the Fund from
(a) buying a part of an issue of bonds, debentures, or other obligations which
are publicly distributed, or from investing up to an aggregate of 15% of its
total assets (taken at market value at the time of each purchase) in parts of
issues of bonds, debentures or other obligations of a type privately placed with
financial institutions, (b)
B-13
<PAGE>
investing in repurchase agreements,/4/ or (c) lending portfolio securities,
provided that it may not lend securities if, as a result, the aggregate value of
all securities loaned would exceed 33% of its total assets (taken at market
value at the time of such loan);
(4) borrow (including entering into reverse repurchase agreements),
except that it may (a) borrow up to 33 1/3% of its total assets, taken at market
value at the time of such borrowing, as a temporary measure for extraordinary or
emergency purposes, but not to increase portfolio income and (b) enter into
transactions in options, futures, and options on futures;/5/
(5) invest in a security if more than 25% of its total assets (taken
at market value at the time of a particular purchase) would be invested in the
securities of issuers in any particular industry, except that this restriction
does not apply to securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities;
(6) issue any senior security except to the extent permitted under the
Investment Company Act of 1940;
(7) with respect to 75% of its total assets, invest more than 5% of
its total assets, taken at market value at the time of a particular purchase, in
the securities of a single issuer, except for securities issued or guaranteed by
the Government of the U.S. or any of its agencies or instrumentalities or
repurchase agreements for such securities;
(8) acquire more than 10%, taken at the time of a particular purchase,
of the outstanding voting securities of any one issuer.
The Fund's investment objective is not a fundamental restriction and,
therefore, a change in the objective is not subject to shareholder approval.
However, investors in the Fund will receive written notification at least 30
days' prior to any change in the Fund's investment objective.
Non-Fundamental Restrictions
The Fund also is subject to the following non-fundamental restrictions
and policies, which may be changed by the board of directors. The Fund may not:
- --------------------
/4/ A repurchase agreement involves the sale of securities to the Fund, with
the concurrent agreement of the seller to repurchase the securities at the
same price plus an amount representing interest at an agreed-upon interest
rate, within a specified time, usually less than one week, but, on
occasion, at a later time. Repurchase agreements entered into by the Fund
will be fully collateralized and will be marked-to-market daily. In the
event of a bankruptcy or other default of a seller of a repurchase
agreement, the Fund could experience both delays in liquidating the
underlying securities and losses, including: (a) possible decline in the
value of the collateral during the period while the Fund seeks to enforce
its rights thereto; (b) possible subnormal levels of income and lack of
access to income during this period; and (c) expenses of enforcing its
rights.
/5/ The Fund will not purchase securities when total borrowings by the Fund are
greater than 5% of its net asset value.
B-14
<PAGE>
(a) invest in any of the following: (i) interests in oil, gas, or
other mineral leases or exploration or development programs (except readily
marketable securities, including but not limited to master limited partnership
interests, that may represent indirect interests in oil, gas, or other mineral
exploration or development programs); (ii) puts, calls, straddles, spreads, or
any combination thereof if by reason thereof the value of the Fund's aggregate
investment in such securities exceed 5% of its total assets (except that the
Fund may enter into transactions in options, futures, and options on futures);
and (iii) limited partnerships in real estate unless they are readily
marketable;
(b) invest in companies for the purpose of exercising control or
management;
(c) purchase more than 3% of the stock of another investment company
or purchase stock of other investment companies equal to more than 5% of the
Fund's total assets (valued at time of purchase) in the case of any one other
investment company and 10% of such assets (valued at time of purchase) in the
case of all other investment companies in the aggregate; any such purchases are
to be made in the open market where no profit to a sponsor or dealer results
from the purchase, other than the customary broker's commission, except for
securities acquired as part of a merger, consolidation, acquisition or
reorganization;/6/
(d) purchase or hold securities of an issuer if 5% of the securities
of such issuer are owned by those officers, directors or partners of the Fund or
of its investment adviser, who each own beneficially more than 1/2 of 1% of the
securities of that issuer;
(e) purchase securities of issuers (other than issuers of Federal
agency obligations or securities issued or guaranteed by any foreign country or
asset-backed securities) that, including their predecessors or unconditional
guarantors, have been in operation for less than three years, if by reason of
such purchase the value of the Fund's investment in all such securities will
exceed 5% of its total assets (valued at time of purchase);
(f) mortgage, pledge, or hypothecate its assets, except as may be
necessary in connection with permitted borrowings or in connection with options,
futures, and options on futures;
(g) invest more than 5% of its net assets (valued at time of purchase)
in warrants, nor more than 2% of its net assets in warrants that are not listed
on the New York or American stock exchange;
(h) buy or sell an option on a security, a futures contract, or an
option on a futures contract unless the option, the futures contract, or the
option on the futures contract is offered through the facilities of a recognized
securities association or listed on a recognized exchange or similar entity;
(i) purchase a put or call option if the aggregate premiums paid for
all put and call options exceed 5% of its net assets (less the amount by which
any such positions are in-the-money), excluding put and call options purchased
as closing transactions;
(j) invest more than 10% of its net assets in restricted securities,
other than securities eligible for resale pursuant to Rule 144A of the
Securities Act of 1933;
(k) purchase securities on margin (except for use of short-term
credits as are necessary for the clearance of transactions), or sell securities
short unless (i) the Fund owns or has the right to obtain securities equivalent
in kind and amount to those sold short at no added cost or (ii) the
- --------------------
/6/ As long as Fund shares are offered for sale in California, the Fund will
not acquire or retain the shares of other open-end investment companies.
B-15
<PAGE>
securities sold are "when issued" or "when distributed" securities which the
Fund expects to receive in recapitalization, reorganization, or other exchange
for securities the Fund contemporaneously owns or has the right to obtain and
provided that transactions in options, futures, and options on futures are not
treated as short sales; or
(l) invest more than 10% of its net assets (taken at market value at
the time of each purchase) in illiquid securities, including repurchase
agreements maturing in more than seven days.
PERFORMANCE INFORMATION
From time to time the Fund may quote total return figures. "Total
Return" for a period is the percentage change in value during the period of an
investment in shares of a fund, including the value of shares acquired through
reinvestment of all dividends and capital gains distributions. "Average Annual
Total Return" is the average annual compounded rate of change in value
represented by the Total Return for the period.
Average Annual Total Return is computed as follows:
n
ERV = P(l+T)
Where: P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment
made at the beginning of the period, at the end of the
period (or fractional portion thereof)
The Fund imposes no sales charges and pays no distribution expenses.
Income taxes are not taken into account. Performance figures quoted by the Fund
are not necessarily indicative of future results. The Fund's performance is a
function of conditions in the securities markets, portfolio management, and
operating expenses. Although information about past performance is useful in
reviewing the Fund's performance and in providing some basis for comparison with
other investment alternatives, it should not be used for comparison with other
investments using different reinvestment assumptions or time periods.
In advertising and sales literature, the performance of the Fund may
be compared with that of other mutual funds, indexes or averages of other mutual
funds, indexes of related financial assets or data, other accounts or
partnerships managed by Artisan Partners, and other competing investment and
deposit products available from or through other financial institutions. The
composition of these indexes, averages or accounts differs from that of the
Fund. Comparison of the Fund to an alternative investment should consider
differences in features and expected performance.
All of the indexes and averages noted below will be obtained from the
indicated sources or reporting services, which the Fund generally believes to be
accurate. The Fund also may note its mention (including performance or other
comparative rankings) in newspapers, magazines, or other media from time to
time. However, the Fund assumes no responsibility for the accuracy of such
data. Newspapers and magazines and other media which might mention the Fund
include, but are not limited to, the following:
B-16
<PAGE>
Atlanta Constitution Mutual Fund Letter
Barron's Mutual Fund News Service
Boston Herald Mutual Fund Values
Business Week Morningstar Publications
Chicago Tribune Newsweek
Chicago Sun-Times The New York Times
Cleveland Plain Dealer No-Load Fund Investor
CNBC Outstanding Investor Digest
CNN Pension World
Crain's Chicago Pensions and Investments
Business Personal Investor
Consumer Reports Jane Bryant Quinn (syndicated
Consumer Digest column)
Financial World Louis Rukeyser's Mutual Fund
Forbes The San Francisco Chronicle
Fortune Smart Money
Fund Action Stranger's Investment Adviser
Investor's Business Daily 13D Opportunities Report
Kiplinger's Personal Time
Finance Magazine United Mutual Fund Selector
Knight-Ridder USA Today
Los Angeles Times U.S. News and World Report
Milwaukee Business Journal The Wall Street Journal
Milwaukee Journal Sentinel Working Woman
Money Worth
Your Money
When a newspaper, magazine or other publication mentions the Fund,
such mention may include: (i) listings of some or all of the Fund's holdings,
(ii) descriptions of characteristics of some or all of the securities held by
the Fund, including price-earnings ratios, earnings, growth rates and other
statistical information, and comparisons of that information to similar
statistics for the securities comprising any of the indexes or averages listed
above; and (iii) descriptions of the Fund's or a portfolio manager's economic
and market outlook, generally and for the Fund.
The Fund may compare its performance to the Consumer Price Index (All
Urban), a widely recognized measure of inflation.
The performance of the Fund may be compared to the following indexes
or averages:
Dow-Jones Industrial Average New York Stock Exchange Composite
Standard & Poor's 500 Stock Index Index
Standard & Poor's 400 Industrials American Stock Exchange Composite
Standard & Poor's Mid-Cap 400 Index Index
Wilshire 5000 NASDAQ Composite
(These indexes are widely recognized NASDAQ Industrials
indicators of general U.S. stock market (These indexes generally reflect
results.) the performance of stocks traded
in the indicated markets.)
B-17
<PAGE>
EAFE Index
Financial Times-Actuaries World Index (Ex-U.S.)
Morgan Stanley Capital International World Index
(These indexes are widely recognized indicators of the international markets)
The performance of the Fund also may be compared to the following
mutual fund industry indexes or averages: Lipper International & Global Funds
Average; Lipper General Equity Funds Average; Lipper Equity Funds Average;
Lipper International Index; ICD International Equity Funds Average; ICD All
Equity Funds Average; ICD General Equity Average; ICD Global Equity Funds
Average; ICD International Equity and Global Equity Funds Average; ICD Foreign
Securities Index; Morningstar International Stock Average; Morningstar U.S.
Diversified Average; Morningstar Equity Fund Average; Morningstar Hybrid Fund
Average; Morningstar All Equity Funds Average; and Morningstar General Equity
Average.
The ICD Indexes reflect the unweighted average total return of the
largest twenty four funds within their respective category as calculated and
published by ICD.
The Lipper International Fund index reflects the net asset value
weighted return of the ten largest international funds.
The Lipper, ICD and Morningstar averages are unweighted averages of
total return performance of mutual funds as classified, calculated and published
by these independent services that monitor the performance of mutual funds. The
Fund also may use comparative performance as computed in a ranking by Lipper or
category averages and rankings provided by another independent service. Should
Lipper or another service reclassify the Fund to a different category or develop
(and place the Fund into) a new category, the Fund may compare its performance
or ranking against other funds in the newly assigned category, as published by
the service. The Fund may compare its performance or ranking against all funds
tracked by Lipper or another independent service.
The Fund may cite its rating, recognition or other mention by
Morningstar, Inc. ("Morningstar") or any other entity. Morningstar's rating
system is based on risk-adjusted total return performance and is expressed in a
star-rating format. The risk-adjusted number is computed by subtracting a
Fund's risk score (which is a function of the Fund's monthly returns less the 3-
month Treasury bill return) from the Fund's load-adjusted total return score.
This numerical score is then translated into rating categories, with the top 10%
labeled five star, the next 22.5% labeled four star, the next 35% labeled three
star, the next 22.5% labeled two star and the bottom 10% one star. A high
rating reflects either above-average returns or below-average risk, or both.
To illustrate the historical returns on various types of financial
assets, the Fund may use historical data provided by Ibbotson Associates, Inc.
("Ibbotson"), a Chicago-based investment firm. Ibbotson constructs (or obtains)
very long-term (since 1926) total return data (including, for example, total
return indexes, total return percentages, average annual total returns and
standard deviations of such returns) for the following asset types: common
stocks, small company stocks, long-term corporate bonds, long-term government
bonds, intermediate-term government bonds, U.S. Treasury bills and Consumer
Price Index. The Fund also may use historical data compiled by Prudential
Securities, Inc., or by other similar sources believed by the Fund to be
accurate, illustrating the past performance of small-capitalization stocks,
large-capitalization stocks, common stocks, equity securities, growth stocks
(small-capitalization, large-capitalization, or both) and value stocks (small-
capitalization, large-capitalization, or both).
B-18
<PAGE>
DIRECTORS AND OFFICERS
Directors and officers of the Fund, and their principal business
occupations during at least the last five (5) years, are shown below. Directors
deemed to be "interested persons" of the Fund for purposes of the 1940 Act are
indicated with an asterisk.
Positions Held Principal Occupations
Name and Age with Registrant during Past 5 Years
- ------------ --------------- ---------------------
Andrew A. Ziegler* Director, Chairman of the Managing Partner of
(37) Board and Chief Executive Artisan Partners; prior to
Officer founding Artisan Partners,
president and chief
operating officer of
Strong/Corneliuson Capital
Management ("Strong") and
president of the Strong
Funds from 1990 to 1994;
prior thereto, attorney
with the law firm of
Godfrey & Kahn, S.C.,
Milwaukee, WI.
Carlene Murphy Director and President Managing Partner of
Ziegler* Artisan Partners; prior to
(39) founding Artisan Partners,
a co-portfolio manager of
the Strong Common Stock
Fund, Strong Opportunity
Fund and numerous
institutional
small-capitalization
equity portfolios at
Strong since March 1991;
prior thereto, a
co-portfolio manager of
the SteinRoe Special Fund.
David A. Erne Director Partner of the law firm
(52) Reinhart, Boerner, Van
Deuren, Norris &
Rieselbach, S.C.,
Milwaukee, WI.
B-19
<PAGE>
Thomas R. Hefty Director President of United
(48) Wisconsin Services, Inc.
(a provider of managed
care and specialty
business services) since
1986 and chairman of the
board and chief executive
officer since 1991; and
chairman of the board of
Blue Cross & Blue Shield
United of Wisconsin
(parent company of United
Wisconsin Services, Inc.)
since 1988 and president
since 1982.
Howard B. Witt Director President and chief
(55) executive officer of
Littelfuse, Inc. (a
manufacturer of advanced
circuit protection
devices) since 1990 and
chairman of the board of
Littelfuse since 1993;
prior thereto executive
vice president of
Littelfuse; and director
of Franklin Electric Co.,
Inc. (a manufacturer of
electronic motors) since
1994.
John M. Blaser Chief Financial Officer, Chief financial officer of
(38) Treasurer and Secretary Artisan Partners; prior to
joining Artisan Partners,
senior vice president with
Kemper Securities, Inc.
since 1993; prior thereto,
with Price Waterhouse.
Mark L. Yockey Vice President Partner of Artisan
(39) Partners; prior to joining
Artisan Partners,
portfolio manager of the
United International
Growth Fund and vice
president of Waddell &
Reed (investment
management firm) since
January 1990; prior
thereto, equity analyst
for Waddell & Reed.
B-20
<PAGE>
Sandra Jean Vice President Equity trader for Artisan
Voss-Reinhardt Partners; prior to joining
(31) Artisan Partners, equity
trader with Northwestern
Mutual since January 1989,
prior thereto, sales
associate with Dean Witter
Reynolds.
The address of Mr. Ziegler, Ms. Ziegler, Mr. Blaser, Mr. Yockey and
Ms. Voss-Reinhardt is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin
53202. The addresses of the other directors are: Mr. Erne - 1000 N. Water
Street, Milwaukee, Wisconsin 53202; Mr. Hefty - 401 W. Michigan Street,
Milwaukee, Wisconsin 53203; and Mr. Witt - 800 E. Northwest Highway, Des
Plaines, Illinois 60016.
Mr. Ziegler and Ms. Ziegler are married to each other.
Mr. Ziegler and Ms. Ziegler serve as members of the Executive
Committee of the Board of Directors. The Executive Committee, which meets
between regular meetings of the Board, is authorized to exercise all of the
powers of the Board of Directors. The Executive Committee held one meeting
during the fiscal year ended June 30, 1995.
The only compensation paid to directors and officers of Artisan Funds
for their services as such consists of an annual $5,000 retainer fee (per series
of Artisan Funds) paid to directors who are not interested persons of Artisan
Funds or Artisan Partners. Artisan Funds has no retirement or pension plans.
The following table sets forth compensation expected to be paid by
Artisan Funds during the fiscal year ending June 30, 1996 to each of the
directors of Artisan Funds.
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT FROM ARTISAN
COMPENSATION BENEFITS ACCRUED ESTIMATED ANNUAL INTERNATIONAL FUND
FROM ARTISAN AS PART OF FUND BENEFITS UPON AND FUND COMPLEX
NAME OF DIRECTOR INTERNATIONAL FUND EXPENSES RETIREMENT PAID TO DIRECTORS
---------------- ------------------ ---------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Andrew A. Ziegler $ 0 $0 $0 $ 0
Carlene Murphy Ziegler 0 0 0 0
David A. Erne 2,500 0 0 7,500
Thomas R. Hefty 2,500 0 0 7,500
Howard B. Witt 2,500 0 0 7,500
</TABLE>
No shares of the Fund were outstanding on the date of this Statement
of Additional Information. However, prior to the commencement of public
offering of shares of the Fund, Artisan Partners or one or more of its
principals, will purchase shares of the Fund at an initial price of $10.00 per
share.
B-21
<PAGE>
INVESTMENT ADVISORY SERVICES
Artisan Partners Limited Partnership ("Artisan Partners") provides
investment advisory services to the Fund pursuant to an Investment Advisory
Agreement dated December __ , 1995 (the "Advisory Agreement"). Artisan Partners
is a Delaware limited partnership. Artisan Investment Corporation was
incorporated on December 7, 1994 for the sole purpose of acting as general
partner of Artisan Partners. Mr. Ziegler and Ms. Ziegler, as officers of
Artisan Investment Corporation, manage Artisan Partners. The principal address
of Artisan Partners is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin
53202.
In return for its services, the Fund pays Artisan Partners a monthly
fee at the annual rate of 1% of the Fund's average daily net assets up to $500
million; .975 of 1% of average daily net assets from $500 million up to $750
million; .950 of 1% of average daily net assets from $750 million to $1 billion;
and .925 of 1% of average daily net assets over $1 billion. The rate of fees
paid to Artisan Partners is higher than that paid by other mutual funds
reflecting the higher costs involved in actively managing an "overseas"
portfolio. Artisan Partners has undertaken to reimburse the Fund for certain
expenses, as described in the prospectus.
The Advisory Agreement provides that Artisan Partners shall not be
liable for any loss suffered by the Fund or its shareholders as a consequence of
any act of omission in connection with investment advisory or portfolio services
under the agreement, except by reason of willful misfeasance, bad faith or gross
negligence on the part of Artisan Partners in the performance of its duties or
from reckless disregard by Artisan Partners of its obligations and duties under
the Advisory Agreement.
The Advisory Agreement may be continued from year to year only so long
as the continuance is approved annually (a) by the vote of a majority of the
directors of the Fund who are not "interested persons" of the Fund or Artisan
Partners cast in person at a meeting called for the purpose of voting on such
approval, and (b) by the board of directors or by the vote of a majority (as
defined in the 1940 Act) of the outstanding shares of the portfolio. The
Agreement will terminate automatically in the event of its assignment (as
defined in the 1940 Act).
Carlene Murphy Ziegler is a director and president of Artisan Funds,
and the portfolio manager of Artisan Small Cap, another series of Artisan Funds.
Andrew A. Ziegler is a director and chief executive officer of Artisan Funds.
John M. Blaser is the chief financial officer of Artisan Funds and acts as the
principal administrative and financial officer. Mark L. Yockey is vice
president of Artisan Funds. Sandra J. Voss-Reinhardt is also a vice president
of Artisan Funds.
Prior to founding Artisan Partners, Ms. Ziegler was a co-portfolio
manager of the Strong Common Stock Fund and Strong Opportunity Fund. From 1986
to 1991, Ms. Ziegler was a co-portfolio manager of the SteinRoe Special Fund.
Ms. Ziegler holds B.A. and M.A. degrees from the University of Illinois and an
M.B.A. from the University of Chicago Graduate School of Business. She also is
a Chartered Financial Analyst.
Immediately prior to founding Artisan Partners, Mr. Ziegler was
president and chief operating officer of Strong, and president of the Strong
Funds; prior thereto, he was Executive Vice President and General Counsel of
Strong. From 1986 to 1990, Mr. Ziegler was an attorney with the law firm of
Godfrey & Kahn, S.C., Milwaukee, WI. Mr. Ziegler holds a B.S. from the
University of Wisconsin - Madison and a J.D. from the University of Wisconsin
Law School.
Prior to joining Artisan Partners, Mr. Blaser was Senior Vice
President of Kemper Securities, Inc. since 1993; prior thereto, Mr. Blaser was
with Price Waterhouse LLP. Mr. Blaser holds a B.B.A. from the University of
Wisconsin - Madison with majors in accounting and finance. He is a Certified
Public Accountant with a Personal Financial Specialist designation.
B-22
<PAGE>
Prior to joining Artisan Partners, Mr. Yockey was portfolio manager of
the United International Growth Fund and vice president of Waddell & Reed since
January 1990. Prior thereto, Mr. Yockey was an equity analyst for Waddell &
Reed. Mr. Yockey holds a B.A. degree and an M.B.A. from Michigan State
University. He is also a Chartered Financial Analyst.
Prior to joining Artisan Partners, Ms. Voss-Reinhardt was an equity
trader with Northwestern Mutual since January 1989; prior thereto, Ms. Voss-
Reinhardt was a sales associate with Dean Witter Reynolds. Ms. Voss-Reinhardt
holds a B.A. from the University of Wisconsin - Eau Claire.
PORTFOLIO TRANSACTIONS
Artisan Partners places the orders for the purchase and sale of the
Fund's portfolio securities and options and futures contracts. Artisan
Partners' overriding objective in effecting portfolio transactions is to seek to
obtain the best combination of price and execution. The best net price, giving
effect to brokerage commissions, if any, and other transaction costs, normally
is an important factor in this decision, but a number of other judgmental
factors also may enter into the decision. These include: Artisan Partners'
knowledge of negotiated commission rates currently available and other current
transaction costs; the nature of the security being traded; the size of the
transaction; the desired timing of the trade; the activity existing and expected
in the market for the particular security; confidentiality; the execution,
clearance and settlement capabilities of the broker or dealer selected and
others which are considered; Artisan Partners' knowledge of the financial
stability of the broker or dealer selected and such other problems of any broker
or dealer. Recognizing the value of these factors, the Fund may pay a brokerage
commission in excess of that which another broker or dealer may have charged for
effecting the same transaction. Evaluations of the reasonableness of brokerage
commissions, based on the foregoing factors, are made on an ongoing basis by
Artisan Partners' staff while effecting portfolio transactions. The general
level of brokerage commissions paid is reviewed by Artisan Partners, and reports
are made annually to the board of directors.
With respect to issues of securities involving brokerage commissions,
when more than one broker or dealer is believed to be capable of providing the
best combination of price and execution with respect to a particular portfolio
transaction for the Fund, Artisan Partners often selects a broker or dealer that
has furnished it with research products or services such as research reports,
subscriptions to financial publications and research compilations, compilations
of securities prices, earnings, dividends, and similar data, and computer data
bases, quotation equipment and services, research-oriented computer software and
services, and services of economic and other consultants. Selection of brokers
or dealers is not made pursuant to an agreement or understanding with any of the
brokers or dealers; however, Artisan Partners uses internal allocation
procedures to identify those brokers or dealers who provide it with research
products or services and the amount of research products or services they
provide, and endeavors to direct sufficient commissions generated by its
clients' accounts in the aggregate, including the Fund, to such brokers or
dealers to ensure the continued receipt of research products or services Artisan
Partners feels are useful. In certain instances, Artisan Partners receives from
brokers and dealers products or services that are used both as investment
research and for administrative, marketing, or other non-research purposes. In
such instances, Artisan Partners makes a good faith effort to determine the
relative proportions of such products or services which may be considered as
investment research. The portion of the costs of such products or services
attributable to research usage may be defrayed by Artisan Partners (without
prior agreement or understanding, as noted above) through brokerage commissions
generated by transactions by clients (including the Fund), while the portions of
the costs attributable to non-research usage of such products or services is
paid by Artisan Partners in cash. No person acting on behalf of the Fund is
authorized, in recognition of the value of research products or services, to pay
a commission in excess of that which another broker or dealer might have charged
for effecting the same transaction. Research products or services furnished by
brokers and dealers may be used in servicing any or all of the clients of
Artisan Partners and not all such research products or services are used in
connection with the management of the Fund.
B-23
<PAGE>
With respect to the Fund's purchases and sales of portfolio securities
transacted with a broker or dealer on a net basis, Artisan Partners also may
consider the part, if any, played by the broker or dealer in bringing the
security involved to Artisan Partners' attention, including investment research
related to the security and provided to the Fund.
PURCHASING AND REDEEMING SHARES
Purchases and redemptions are discussed in the prospectus under the
headings "How to Buy Shares," and "How to Sell Shares." All of that information
is incorporated herein by reference.
Shares of the Fund may be purchased through certain financial service
companies without incurring any transaction fee. For accounting and shareholder
servicing services provided by such a company with respect to Fund shares held
by that company for its customers, the company may charge a fee of up to 0.35%
of the annual average value of those accounts. The Fund pays a portion of those
fees not to exceed the estimated fees and expenses that the Fund would pay to
its own transfer agent if the shares of the Fund held by such customers of the
company were registered directly in their names on the books of the Fund's
transfer agent. The balance of those fees is paid by Artisan Partners.
Net Asset Value. The net asset value of the shares of the Fund is
determined as of the close of regular session trading on the New York Stock
Exchange ("NYSE") (currently 3:00 p.m., Central time) each day the NYSE is open
for trading. The NYSE is regularly closed on Saturdays and Sundays and on New
Year's Day, the third Monday in February, Good Friday, the last Monday in May,
Independence Day, Labor Day, Thanksgiving, and Christmas. If one of these
holidays falls on a Saturday or Sunday, the NYSE will be closed on the preceding
Friday or the following Monday, respectively. Net asset value will not be
determined on days when the NYSE is closed unless, in the judgment of the board
of directors, net asset value of the Fund should be determined on any such day,
in which case the determination will be made at 3:00 p.m., Central time. The
net asset value per share of the Fund is determined by dividing the value of all
its securities and other assets, less its liabilities, by the number of shares
of the Fund outstanding.
The Fund intends to pay all redemptions in cash and is obligated to
redeem shares solely in cash up to the lesser of $250,000 or one percent of the
net assets of the Fund during any 90-day period for any one shareholder.
However, redemptions in excess of such limit may be paid wholly or partly by a
distribution in kind of readily marketable securities. If redemptions were made
in kind, the redeeming shareholders might incur transaction costs in selling the
securities received in the redemptions.
The Fund reserves the right to suspend or postpone redemptions of its
shares during any period when: (a) trading on the NYSE is restricted, as
determined by the Commission, if the NYSE is closed for other than customary
weekend and holiday closings; (b) the Commission has by order permitted such
suspension; or (c) an emergency, as determined by the Commission, exists, making
disposal of portfolio securities or valuation of net assets of the Fund not
reasonably practicable.
The Fund and Artisan Partners each have adopted a code of ethics that,
among other things, regulates the personal security transactions of certain
officers, directors, partners and employees of the Fund and Artisan Partners.
ADDITIONAL TAX INFORMATION
The Artisan Funds intends for the Fund to qualify and continue to
qualify as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code") and thus not be subject to federal
income taxes on amounts which it distributes to shareholders.
B-24
<PAGE>
To the extent the Fund invests in foreign securities, it may be
subject to withholding and other taxes imposed by foreign countries. Tax
treaties between certain countries and the United States may reduce or eliminate
such taxes. Investors may be entitled to claim U.S. foreign tax credits with
respect to such taxed, subject to certain provisions and limitations contained
in the Code. Specifically, if more than 50% of the Fund's total assets at the
close of any fiscal year consist of stock or securities of foreign corporations,
the Fund may file an election with the Internal Revenue Service pursuant to
which shareholders of the Fund will be required to (i) include in ordinary gross
income (in addition to taxable dividends actually received) their pro rata
shares of foreign income taxes paid by the Fund even though not actually
received, (ii) treat such respective pro rata shares as foreign income taxes
paid by them, and (iii) deduct such pro rata shares in computing their taxable
incomes, or, alternatively, use them as foreign tax credits, subject to
applicable limitations, against their United States income taxes. Shareholders
who do not itemize deductions for Federal income tax purposes will not, however,
be able to deduct their pro rata portion of foreign taxes paid by the Fund,
although such shareholders will be required to include their share of such taxes
in gross income. Shareholders who claim a foreign tax credit may be required to
treat a portion of dividends received from the Fund as separate category income
for purposes of computing the limitations on the foreign tax credit available to
such shareholders. Tax-exempt shareholders will not ordinarily benefit from
this election relating to foreign taxes. Each year, the Fund will notify
shareholders of the amount of (i) each shareholder's pro rata share of foreign
income taxes paid by the Fund, and (ii) the portion of Fund dividends which
represent income from each foreign country if the Fund qualifies to pass along
such credit.
The Fund may purchase the securities of certain foreign investment
funds or trusts called passive foreign investment companies ("PFICs"). In
addition to bearing their proportionate share of the Fund's expenses (management
fees and operating expenses), shareholders will also indirectly bear similar
expenses of PFICs. Capital gains on the sale of PFIC holdings will be deemed to
be ordinary income regardless of how long the Fund holds its investment. In
addition, the Fund may be subject to corporate income tax and an interest charge
on certain dividends and capital gains earned from PFICs, regardless of whether
such income and gains are distributed to shareholders.
In accordance with tax regulations, the Fund intends to treat PFICs as
sold on the last day of the Fund's fiscal year and recognize any gains for tax
purposes at that time; losses will not be recognized. Such gains will be
considered ordinary income which the Fund will be required to distribute even
though it has not sold the security and received cash to pay such distributions.
CUSTODIAN
State Street Bank & Trust Company ("State Street"), 1776 Heritage
Drive, North Quincy, MA 02171, acts as custodian of the securities and other
assets of the Fund. State Street is responsible for, among other things,
safeguarding and controlling the Fund's cash and securities, handling the
receipt and delivery of securities, and collecting interest and dividends on the
Fund's investments. State Street also performs portfolio accounting services for
the Fund. State Street is not an affiliate of Artisan Partners or its
affiliates. State Street is authorized to deposit securities in securities
depositories for the use of services of sub-custodians.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202 serves as the Fund's independent accountants, providing services including
(i) audit of the annual financial statements; (ii) assistance and consultation
in connection with Securities and Exchange Commission filings; and (iii) review
of the annual income tax returns filed on behalf of the Fund.
B-25
<PAGE>
[LOGO OF ARTISAN FUNDS]
ARTISAN SMALL CAP FUND
ANNUAL REPORT
JUNE 30, 1995
INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.
<PAGE>
ARTISAN SMALL CAP FUND
(A Series of Artisan Funds, Inc.)
Schedule of Investments
June 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Quoted
Held Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS - 91.3%
BANKS/SAVINGS AND LOANS - 3.5%
61,450 *Brooklyn Bancorp, Inc. - New York based thrift........ $ 2,073,938
20,000 U.S. Trust Corporation -
Asset management and trust banking.................. 1,440,000
------------
3,513,938
BASIC INDUSTRY - 3.5%
111,850 Material Sciences Corporation -
Specialty coated and laminated materials............ 2,278,944
100,000 *Steel of West Virginia, Inc. -
Specially engineered steel products................. 1,150,000
------------
3,428,944
BUSINESS SERVICES - 6.9%
96,900 *Bell & Howell Holdings Company - Systems and
services for information access and dissemination... 1,962,225
49,100 *CommNet Cellular Inc. -
Rural cellular phone systems in the Rockies......... 1,374,800
93,800 *Intercel, Inc. - Rural cellular telephone and
PCS systems......................................... 1,418,725
107,600 New England Business Service, Inc. -
Business forms and office products.................. 2,125,100
------------
6,880,850
CAPITAL SPENDING - 7.9%
78,150 Belden Inc. - Wire and cable products for electrical
and electronics markets............................. 2,110,050
84,900 Hardinge Inc. - Machine tool manufacturer............. 1,623,713
82,700 *Holophane Corporation -
Highly engineered lighting fixtures................. 1,819,400
66,100 *Insilco Corporation - Multi-industry: office
products, electronics and auto parts................ 2,338,287
------------
7,891,450
COMPUTER RELATED - 3.1%
51,500 *BDM International, Inc. -
Information systems and software consulting......... 1,049,313
50,700 *DH Technology Incorporated - Specialty printers....... 1,394,250
21,300 *UUNET Technologies, Inc. - Internet access software... 585,750
2,000 *VideoServer, Inc. - Multimedia networking equipment... 78,000
------------
3,107,313
</TABLE>
Annual Report
<PAGE>
Schedule of Investments (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Quoted
Held Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS - 2.9%
120,050 *Strattec Security Corporation -
Automotive locks and keys........................... $ 1,470,612
46,500 Superior Industries International, Inc. -
Stainless steel automotive wheels................... 1,447,313
------------
2,917,925
CONSUMER SERVICES- 5.4%
11,800 Catalina Marketing Corporation -
Electronic grocery point-of-sale coupons............ 632,775
77,000 *International Family Entertainment, Inc. -
Family oriented entertainment programming........... 1,212,750
100,600 *Jones Intercable, Inc. - Cable TV system operator..... 1,534,150
27,350 The Marcus Corporation -
Lodging and movie theater operator.................. 827,338
61,400 True North Communications, Inc. - Advertising agency.. 1,158,925
------------
5,365,938
CONSUMER STAPLES - 8.9%
65,600 AptarGroup, Inc. - Pumps, valves and closures
for consumer packaging.............................. 2,107,400
53,300 *Celestial Seasonings, Inc. - Herbal teas.............. 959,400
101,700 *Fossil, Inc. - Fashion watches and accessories........ 1,957,725
94,500 *Libbey Inc. - Consumer and commercial glassware....... 1,960,875
96,900 *Syratech Corporation - Silver flatware and giftware... 1,817,288
------------
8,802,688
ELECTRONICS - 9.4%
5,000 *Anadigics, Inc. - Gallium arsenide integrated circuits 97,500
91,800 Dallas Semiconductor Corporation -
Electronic components and subsystems................ 1,881,900
39,150 Kent Electronics Corporation -
Electronic component distributor.................... 1,482,806
59,600 *Littelfuse, Inc. - Circuit protection devices......... 1,866,225
53,800 Marshall Industries - Electronic component distributor 1,802,300
112,500 Methode Electronics, Inc. -
Electronic interconnect devices..................... 2,193,750
------------
9,324,481
ENERGY SERVICES - 1.8%
65,800 *Tech-Sym Corporation - Electronic systems for
seismic exploration and communications.............. 1,801,275
</TABLE>
Annual Report 2
<PAGE>
Schedule of Investments (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Quoted
Held Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
EXPLORATION/PRODUCTION - 4.9%
153,600 *Cairn Energy USA, Inc. - Oil and gas exploration...... $ 1,689,600
205,800 *Lomak Petroleum, Inc. - Oil and gas exploration....... 1,569,225
77,300 *Nuevo Energy Company - Oil and gas exploration........ 1,555,662
------------
4,814,487
HEALTHCARE SERVICES - 1.6%
43,800 *Community Health Systems, Inc. -
Rural hospitals mainly in the southeast............. 1,483,725
5,000 *OccuSystems, Inc. - Occupational healthcare centers... 85,625
------------
1,569,350
INSURANCE - 1.6%
37,900 PMI Group, Inc. - Private mortgage insurance.......... 1,643,912
MEDICAL DEVICES/SUPPLIES - 3.8%
7,000 *Bird Medical Technologies, Inc. -
Respiratory care and infection control products..... 58,625
44,800 Puritan Bennett Corporation - Respiratory products.... 1,730,400
49,200 *Sybron International Corporation -
Laboratory and dental supplies...................... 1,961,850
------------
3,750,875
REAL ESTATE INVESTMENT TRUSTS - 1.8%
119,100 RFS Hotel Investors, Inc. -
Hotel real estate investment trust.................. 1,816,275
RESTAURANTS - 5.9%
93,250 *Daka International, Inc. - Fuddruckers restaurants
and food service management......................... 2,156,406
63,300 *IHOP Corp. - Casual family restaurants................ 1,629,975
125,500 *Quality Dining, Inc. - Franchisee of Burger King's,
Chili's and Bruegger's Bagels....................... 2,039,375
------------
5,825,756
RETAILING - 8.0%
162,200 *Cole National Corporation -
Retailer of eyeware and gift items.................. 1,682,825
59,100 *Proffitt's, Inc. -
Regional department stores in the southeast......... 1,758,225
90,000 ShopKo Stores, Inc. -
General merchandise discount retailer............... 967,500
58,700 *The Men's Wearhouse, Inc. -
Discount men's clothing stores...................... 1,614,250
142,800 *Zale Corporation - Fine jewelry retailer.............. 1,927,800
------------
7,950,600
</TABLE>
3 Annual Report
<PAGE>
Schedule of Investments (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Shares Quoted
Held Market Value
- --------------------------------------------------------------------------------
<S> <C> <C>
SOFTWARE/TELECOMMUNICATIONS - 3.4%
2,000 *Inference Corporation -
Customer service interaction software............... $ 28,250
60,200 *Plantronics, Inc. - Telephone headsets................ 1,610,350
2,000 *Premisys Communications, Inc. -
Telecommunications access equipment................. 129,125
74,600 *Wholesale Cellular USA, Inc. -
Distributor of cellular telephones.................. 1,603,900
------------
3,371,625
TRANSPORTATION RELATED - 1.4%
86,500 *Truck Components Inc. - Heavy-duty truck parts........ 1,362,375
FOREIGN SECURITIES - 5.6%
BERMUDA - 1.9%
INSURANCE
70,900 Partner Re Holdings Ltd. (USD/NASDAQ) -
Bermuda based catastrophe insurance................. 1,852,262
NORWAY - 1.8%
ENERGY SERVICES
61,700 *Petroleum Geo-Services AS (USD/ADR) -
Seismic data collection............................. 1,773,875
THE NETHERLANDS - 1.9%
CAPITAL SPENDING
67,600 *Elsag Bailey Process Automation N.V. (USD/NYSE) -
Process control systems............................. 1,859,000
------------
TOTAL FOREIGN SECURITIES.............................. 5,485,137
------------
TOTAL COMMON STOCKS
(Cost $84,257,251).................................... $ 90,625,194
</TABLE>
Annual Report 4
<PAGE>
Schedule of Investments (continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Par
Amount Coupon Maturity Market Value
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SHORT TERM INVESTMENTS - 13.7%
U.S. TREASURIES - 13.7%
$13,670,000 United States Treasury Bills 5.00% 07/20/95 $ 13,633,926
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $13,633,926)................................... 13,633,926
TOTAL INVESTMENTS - 105.0%
(Cost $97,891,177)................................... 104,259,120
Other assets less liabilities - (5.0)%............... (4,990,269)
------------
TOTAL NET ASSETS (**)................................ $ 99,268,851
============
</TABLE>
* Non-income producing securities
** Percentage for the various classifications relate to total net assets
The accompanying notes to financial statements are an integral part of this
schedule.
5 Annual Report
<PAGE>
ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value (cost $97,891,177)......... $104,259,120
Cash........................................................... 38,403
Receivable from fund shares sold............................... 6,533,436
Accrued dividends.............................................. 11,942
Organizational costs........................................... 66,237
Prepaid registration expenses.................................. 79,775
------------
Total assets................................................ 110,988,913
LIABILITIES:
Payable for investments purchased.............................. 11,574,050
Payable for organizational costs............................... 66,237
Payable for registration expenses.............................. 79,775
------------
Total liabilities........................................... 11,720,062
------------
Total net assets............................................ $ 99,268,851
============
NET ASSETS CONSIST OF THE FOLLOWING:
Fund shares issued and outstanding............................. $ 93,383,139
Net unrealized appreciation on investments..................... 6,367,943
Accumulated undistributed net realized losses on investments... (425,957)
Accumulated undistributed net investment loss.................. (56,274)
------------
$ 99,268,851
============
NET ASSET VALUE PER SHARE
Net asset value, offering price and redemption price per share
($.01 par value, 5,000,000,000 shares authorized,
[$ 99,268,851/8,614,744 shares outstanding]).................. $11.52
======
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
Annual Report 6
<PAGE>
ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM COMMENCEMENT OF OPERATIONS
(MARCH 28, 1995) THROUGH JUNE 30, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest....................................................... $ 104,648
Dividends...................................................... 28,293
----------
Total investment income..................................... 132,941
EXPENSES:
Advisory fees.................................................. 66,510
Transfer agent fees............................................ 47,078
Professional fees.............................................. 18,108
Registration fees.............................................. 17,418
Shareholder communications..................................... 16,187
Custodian fees................................................. 10,241
Accounting fees................................................ 6,170
Directors' fees................................................ 3,994
Organizational costs........................................... 2,256
Other operating expenses....................................... 1,253
----------
Total expenses.............................................. 189,215
----------
Net investment loss......................................... (56,274)
REALIZED AND UNREALIZED GAINS ON INVESTMENTS - NET:
Net realized loss on investments............................... (425,957)
Net increase in unrealized appreciation on investments......... 6,367,943
----------
Net gain on investments........................................ 5,941,986
----------
Net increase in net assets resulting from operations........ $5,885,712
==========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
7 Annual Report
<PAGE>
ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM COMMENCEMENT OF OPERATIONS
(MARCH 28, 1995) THROUGH JUNE 30, 1995
<TABLE>
<S> <C>
OPERATIONS:
Net investment loss............................................ $ (56,274)
Net realized loss on investments............................... (425,957)
Net increase in unrealized appreciation on investments......... 6,367,943
-----------
Net increase in net assets resulting from operations........ 5,885,712
FUND SHARE ACTIVITIES:
Proceeds from shares issued (8,717,000 shares)................. 94,523,183
Cost of shares redeemed (112,256 shares)....................... (1,240,044)
-----------
Net increase in net assets resulting from Fund
share activities.......................................... 93,283,139
Total increase.............................................. 99,168,851
Net assets at the beginning of the period...................... 100,000
-----------
Net assets at the end of the period............................ $99,268,851
===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
Annual Report 8
<PAGE>
ARTISAN SMALL CAP FUND
(A SERIES OF ARTISAN FUNDS, INC.)
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
<TABLE>
<CAPTION>
PERIOD ENDED
JUNE 30, 1995***
----------------
<S> <C>
Net asset value, commencement of operations
(March 28, 1995) $10.00
Income from investment operations:
Net investment loss (0.01)
Net realized and unrealized gains (losses) on securities 1.53
------
Total from investment operations 1.52
------
Net asset value, end of period $11.52
======
Total Return 15.2%**
Ratios/supplemental data:
Net assets, end of period (millions) $99.3
Ratio of expenses to average net assets 2.00%*
Ratio of net investment income to average net assets (0.59)%*
Portfolio turnover rate 9.28%
</TABLE>
*Annualized
**Not annualized
***For the period from commencement of operations (March 28, 1995) through
June 30, 1995
The accompanying notes to financial statements are an integral part of these
statements.
9 Annual Report
<PAGE>
ARTISAN SMALL CAP FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements
June 30, 1995
(1) Summary of significant accounting policies:
The Artisan Small Cap Fund (the "Fund") is a series of Artisan Funds, Inc.
which was incorporated on January 5, 1995 as a Wisconsin corporation and is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The following is a
summary of significant accounting policies of the Fund:
(a) Security valuation - Each security is valued at the latest sales price
reported by the principal security exchange on which the issue is
traded, or if no sale is reported, the latest sales price reported
from previous days trading activities. Securities for which prices are
not readily available or which management believes that the last sales
price is not reflective of the fair value of the security are valued
at 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 their purchase date are valued at amortized cost which approximates
market.
(b) Income taxes - No provision has been made for federal income taxes
since the Fund intends to 1) distribute substantially all of its
taxable income as well as realized gains from the sale of investment
securities to its shareholders and 2) comply with all provisions of
the Internal Revenue Code applicable to regulated investment
companies.
(c) Portfolio transactions - Security and shareholder transactions are
recorded no later than the first business day after the trade date.
Net realized gains and losses on common stocks are computed on the
specific identification basis.
(d) Other - Dividend income and distributions to shareholders are recorded
on the ex-dividend date. Interest income is reported on the accrual
basis.
(2) Transactions with affiliates:
Artisan Partners Limited Partnership (the "Adviser"), with which certain
officers and directors of the Fund are affiliated, provides investment
advisory and administrative services to the Fund. In exchange for these
services, the Fund pays a monthly management fee to the Adviser as follows:
Average Daily Net Asset Value 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%
Annual Report 10
<PAGE>
ARTISAN SMALL CAP FUND
(A Series of Artisan Funds, Inc.)
Notes to Financial Statements
June 30, 1995
The Fund also incurs other expenses for services such as maintaining
shareholder records and furnishing shareholder statements and reports. The
Adviser has undertaken to reimburse the Fund for any ordinary operating
expenses in excess of 2.00% of average daily net assets annually.
(3) Organization costs and prepaid registration expenses:
Organization costs are amortized over sixty months. These expenses were
paid by the Adviser which will be reimbursed by the Fund over the same time
period. The proceeds of any redemption of the initial shares by the
original shareholders will be reduced by a pro-rata portion of any
unamortized expenses at the time of redemption. Registration expenses of
the Fund are amortized over twelve months.
(4) Investment transactions:
For the period from commencement of operations (March 28, 1995) to June 30,
1995, the cost of purchases and the proceeds from the sales of investment
securities (excluding short-term securities) were $88,488,177 and
$3,804,972, respectively.
(5) Income tax information:
Aggregate gross unrealized appreciation (depreciation) on investments as of
June 30, 1995 based on investment cost of $97,883,712 for federal tax
purposes, is as follows:
Aggregate gross unrealized appreciation on investments $6,765,405
Aggregate gross unrealized depreciation on investments (389,998)
----------
Net unrealized appreciation $6,375,407
==========
11 Annual Report
<PAGE>
[LETTERHEAD OF PRICE WATERHOUSE LLP]
- --------------------------------------------------------------------------------
Price Waterhouse LLP [LOGO]
Report of Independent Accountants
To the Board of Directors and Shareholders of Artisan Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Artisan Small Cap Fund
(constituting Artisan Funds, Inc., hereafter referred to as the "Fund") at June
30, 1995, and the results of its operations, the changes in its net assets and
the financial highlights for the period March 28, 1995 (commencement of
operations) through June 30, 1995, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit, which included
confirmation of securities at June 30, 1995 by correspondence with the
custodian, provides a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
July 19, 1995
<PAGE>
--------------------------------------------------------------------
This report is submitted for the information of shareholders of the
Fund. It is not authorized for distribution to prospective investors
unless preceded or accompanied by an effective prospectus.
--------------------------------------------------------------------
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Financial Statements included in Part A of this registration
statement:
None.
(2) Financial Statements included in Part B of this amendment:
Artisan Small Cap Fund
----------------------
The following financial statements, but no other part of the
report, are incorporated by reference to the following
portions of Registrant's annual report to shareholders for
the fiscal year ended June 30, 1995:
- Schedule of Investments at June 30, 1995
- Statement of Assets and Liabilities at June 30, 1995
- Statement of Operations for the Period Ended June 30, 1995
- Statement of Changes in Net Assets for the Period Ended
June 30, 1995
- Notes to Financial Statements
- Report of Independent Accountants
Note: the following schedules have been omitted for the following
reasons:
Schedule I - The required information is presented in the
Schedule of Investments at June 30, 1995.
Schedules II, III, IV, V, VI and VII - the required
information is not present.
(b) Exhibits:
1.1 Amended and Restated Articles of Incorporation of the
Registrant.
1.2 Articles of Amendment dated October 12, 1995.
2 Bylaws, as amended.
3 None
C-1
<PAGE>
4 None (Registrant does not issue share certificates.)
5.1 Investment Advisory Agreement between the Registrant and
Artisan Partners Limited Partnership relating to Artisan Small
Cap Fund.
5.2 Form of Investment Advisory Agreement between the Registrant
and Artisan Partners Limited Partnership relating to Artisan
International Fund.
6 None
7 None
8 Custodian Agreement and Accounting Services Agreement between
the Registrant and State Street Bank and Trust Company.
9 Transfer Agency Agreement between the Registrant and State
Street Bank and Trust Company.
10.1 Opinion and Consent of Counsel dated March 8, 1995 with
respect to Artisan Small Cap Fund.
10.2 Opinion and Consent of Counsel dated October 13, 1995 with
respect to Artisan International Fund.
11 Consent of Independent Accountants.
12 None
13 Subscription Agreement between the Registrant and Andrew A.
Ziegler and Carlene Murphy Ziegler relating to Artisan Small
Cap Fund.
14 IRA plan booklet dated March 1995.
15 None
16 Schedule of computation of performance quotations.
17 Financial Data Schedule.
18 Form of account application.
ITEM 25. Persons Controlled by or Under Common Control With Registrant.
The Registrant does not consider that there are any persons directly or
indirectly controlling, controlled by, or under common control with, the
Registrant within the meaning of this item. The information in the prospectus
under the caption "The Fund in Detail - Organization - Management" and in the
statement of additional information under the caption "Investment Advisory
Services" is incorporated herein by reference.
ITEM 26. Number of Holders of Securities.
C-2
<PAGE>
Number of Record Holders
Title of Series as of October 2, 1995
--------------- ---------------------
Artisan Small Cap Fund 13,170
Artisan International Fund 0
ITEM 27. Indemnification.
Article VIII of Registrant's Amended Articles of Incorporation
(Exhibit 1.1 and 1.2, which are incorporated herein by reference) provides that
the Registrant shall indemnify and advance expenses to its currently acting and
its former directors and officers to the fullest extent that indemnification of
directors and officers is permitted by the Wisconsin Statutes, and the Board of
Directors may by bylaw, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents to the fullest
extent permitted by the Wisconsin Statutes; provided however, that nothing
therein shall be construed to protect any director or officer of the Registrant
against any liability to the Corporation or its security holders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to directors,
officers, and controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
The Registrant will not advance attorneys' fees or other expenses
incurred by the person to be indemnified unless the Registrant shall have
received an undertaking by or on behalf of such person to repay the advance
unless it is ultimately determined that such person is entitled to
indemnification and one of the following conditions shall have occurred: (i)
such person shall provide security for his undertaking, (ii) the Registrant
shall be insured against losses arising by reason of any lawful advances, or
(iii) a majority of the disinterested, non-party directors of the Registrant, or
an independent legal counsel in a written opinion, shall have determined that
based on a review of readily available facts there is reason to believe that
such person ultimately will be found entitled to indemnification.
Registrant and its directors and officers are insured under a policy
of insurance maintained by Registrant, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities that might
be imposed as a result of such actions, suits or proceedings, to which they
are parties by reason of being or having been such directors or officers. The
policy expressly excludes coverage for any director or officer whose personal
dishonesty, fraudulent breach of trust, lack of good faith, or intention to
deceive or defraud has been finally adjudicated or may be established or who
willfully fails to act prudently.
ITEM 28. Business and Other Connections of Investment Adviser.
C-3
<PAGE>
The information in the prospectus in the second through seventh
paragraphs under the caption "The Fund in Detail - Organization - Management"
is incorporated herein by reference. For a description of other business,
profession, vocation or employment of a substantial nature in which any
general partner, managing general partner, director or officer of Artisan
Partners Limited Partnership has engaged during the last two years for his
account or in the capacity of director, officer, employee, partner or trustee,
see the information under the caption "Directors and Officers" in the
statement of additional information.
ITEM 29. Principal Underwriters.
None
ITEM 30. Location of Accounts and Records.
John M. Blaser
Artisan Partners Limited Partnership
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
ITEM 31. Management Services.
Not applicable.
ITEM 32. Undertakings.
(a) Not applicable.
(b) Registrant undertakes to file a post-effective amendment, using
financial statements of the series designated Artisan International Fund,
that need not be certified, no later than 60 days after the end of the
four to six month period after effectiveness of this Registration
Statement.
(c) Registrant undertakes to furnish to each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(d) Registrant undertakes, if requested to do so by the holders of
at least 10% of the Registrant's outstanding shares, to call a meeting of
shareholders for the purpose of voting upon the question of removal of a
director or directors and to assist in communications with other
shareholders as required by Section 16(c) of the Investment Company Act
of 1940.
C-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it has duly caused
this amendment to the registration statement be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Milwaukee and state of
Wisconsin on November 27, 1995.
ARTISAN FUNDS, INC.
/s/ Andrew A. Ziegler
By __________________________________________
Andrew A. Ziegler, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the registration statement has been signed below by the following
person in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ Andrew A. Ziegler
__________________________ Director, Chief Executive )
Andrew A. Ziegler Officer (principal executive )
officer) )
)
/s/ Carlene Murphy Ziegler )
__________________________ Director and President )
Carlene Murphy Ziegler )
)
/s/ David A. Erne )
__________________________ Director )
David A. Erne ) November 27, 1995
)
/s/ Thomas R. Hefty )
__________________________ Director )
Thomas R. Hefty )
)
/s/ Howard B. Witt )
__________________________ Director )
Howard B. Witt )
)
/s/ John M. Blaser )
__________________________ Chief Financial Officer, )
John M. Blaser Treasurer and Secretary )
(principal financial and )
accounting officer) )
</TABLE>
<PAGE>
Index of Exhibits Filed with this Registration Statement
--------------------------------------------------------
<TABLE>
<CAPTION>
Exhibit Sequential
number Exhibit page
- ------- ------------------------------------------------------------- ----------
<C> <S> <C>
1.1 Amended and Restated Articles of Incorporation of the Registrant.
1.2 Articles of Amendment dated October 12, 1995.
2 Bylaws, as amended.
5.1 Investment Advisory Agreement between the Registrant
and Artisan Partners Limited Partnership relating to Artisan
Small Cap Fund.
5.2 Form of Investment Advisory Agreement between the Registrant
and Artisan Partners Limited Partnership relating to Artisan
International Fund.
8 Custodian Agreement and Accounting Services Agreement between
the Registrant and State Street Bank and Trust Company.
9 Transfer Agency Agreement between the Registrant and State
Street Bank and Trust Company.
10.1 Opinion and Consent of Counsel dated March 8, 1995 with respect
to Artisan Small Cap Fund.
10.2 Opinion and Consent of Counsel dated October 13, 1995 with respect to
Artisan International Fund.
11 Consent of Independent Accountants.
13 Subscription Agreement between the Registrant and Andrew A. Ziegler
and Carlene Murphy Ziegler relating to Artisan Small Cap Fund.
14 IRA plan booklet dated March 1995.
16 Schedule of computation of performance quotations.
17 Financial Data Schedule.
18 Form of account application.
</TABLE>
<PAGE>
EXHIBIT 1.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
ARTISAN FUNDS, INC.
The following Amended and Restated Articles of Incorporation of
Artisan Funds, Inc. duly adopted pursuant to the authority and provisions of
Chapter 180 of the Wisconsin Statutes, supersede and take the place of the
existing articles of incorporation and any amendments thereto:
ARTICLE I
---------
The name of the corporation (hereinafter called the "Corporation") is:
Artisan Funds, Inc.
ARTICLE II
----------
The period of existence shall be perpetual.
ARTICLE III
-----------
The purpose for which the Corporation is organized is to act as an
open-end management investment company registered with the Securities and
Exchange Commission (the "SEC") pursuant to the Investment Company Act of 1940,
as amended from time to time (the "Investment Company Act"), and for any other
purposes for which corporations may be organized under Chapter 180 of the
Wisconsin Statutes, as amended from time to time (the "WBCL").
ARTICLE IV
---------
A. The Corporation is authorized to issue 50,000,000,000 shares of
common stock, par value $.01 per share. Initially, 5,000,000,000 shares
shall be classified as Artisan Small Cap Fund. The remaining 45,000,000,000
shares shall remain unclassified until action is taken by the Board of
Directors pursuant to the following paragraph.
B. The Board of Directors is authorized to classify or to reclassify
(i.e., into classes and series of classes), from time to time, any unissued
shares of stock of the Corporation, whether now or hereafter authorized, by
setting,
<PAGE>
changing or eliminating the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of the stock to the fullest extent permissible under
the WBCL.
C. Unless otherwise provided by the Board of Directors prior to the
issuance of the stock, the shares of any and all classes and series of stock
shall be subject to the following:
(1) The Board of Directors may redesignate a class or series of
stock whether or not shares of such class or series are issued and
outstanding; provided that such redesignation does not affect the
preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or terms or conditions of
redemption of such class or series of stock.
(2) The assets and liabilities and the income and expenses for
each class shall be attributable to that class. The assets and
liabilities and the income and expenses of each series within a class
of the Corporation's stock shall be determined separately and,
accordingly, the net asset value of shares of the Corporation's stock
may vary from series to series within a class. The income or gain and
the expenses or liabilities of the Corporation shall be allocated to
each class or series of stock as determined by or under the direction
of the Board of Directors.
(3) Shares of each class or series of stock shall be entitled to
such dividends or distributions, in stock or in cash or both, as may
be declared from time to time by the Board of Directors with respect
to such class or series. Dividends or distributions shall be paid on
shares of a class or series of stock only out of the assets belonging
to that class or series.
(4) Any shares of stock of the Corporation redeemed by the
Corporation shall be deemed to be cancelled and restored to the status
of authorized but unissued shares of the particular class or series.
(5) In the event of the liquidation or dissolution of the
Corporation, the stockholders of a class or series of the
Corporation's stock shall be entitled to receive, as a class or
series, out of the assets of the Corporation available for
distribution to stockholders, the assets belonging to that class or
series less the liabilities allocated to that class or series. The
assets so distributable to the stockholders of a class or series shall
be distributed among such stockholders in proportion to the number of
shares of that class or series held by them and recorded on the books
of the Corporation. In the event that there are any assets available
for distribution that are not attributable to any particular class or
series of stock, such assets shall be allocated to all classes or
series in proportion to the net asset value of the respective class or
series,
(6) All holders of shares of stock shall vote as a single series
or class except with respect to any matter which affects only one or
more series or class of stock, in which case only the holders of
shares of the series or class affected shall be entitled to vote.
2
<PAGE>
(7) For purposes of the Corporation's Registration Statement
filed with the SEC under the Securities Act of 1933 and the Investment
Company Act, including all prospectuses and statements of additional
information, reference therein to "classes" of the Corporation's
common stock shall mean "series," as used in these Articles of
Incorporation and the WBCL, and reference therein to "series" shall
mean "class," as used in these Articles of Incorporation and the WBCL.
C. The Corporation may issue fractional shares. Any fractional share
shall carry proportionately all the rights of a whole share, excepting any
right to receive a certificate evidencing such fractional share, but
including, without limitation, the right to vote and the right to receive
dividends.
ARTICLE V
---------
A. The number of directors of the Corporation shall initially be one
(1). The number may be changed by the By-Laws of the Corporation or by the
Board of Directors pursuant to the By-Laws.
B. The name of the Director who shall act until the initial meeting
of shareholders and until his successors are elected and qualified is
Andrew A. Ziegler.
ARTICLE VI
----------
A. To the extent the Corporation has funds or property legally
available therefor, each shareholder shall have the right at such times as
may be permitted by the Corporation, but no less frequently than as
required under the Investment Company Act, to require the Corporation to
redeem all or any part of its shares owned by the shareholders at a
redemption price equal to the net asset value per share next determined
after the shares are tendered for redemption, less any applicable
redemption charges as determined by the Board of Directors, which payment
may be made in funds or in assets of the class or series. The Board of
Directors may adopt requirements and procedures for redemption of shares.
Notwithstanding the foregoing, the Corporation may postpone payment or
deposit of the redemption price and may suspend the right of the
shareholders to require the Corporation to redeem shares of any series or
class pursuant to the applicable rules and regulations, or any order, of
the SEC.
B. The Corporation shall have the right, exercisable at the
discretion of the Board of Directors, to redeem any shareholder's shares of
any class or series for their then current net asset value per share if at
such time the shareholder owns shares having an aggregate net asset value
of less than an amount described in the relevant prospectus for such class
or series set forth in the current Registration Statement of the
Corporation filed with the SEC.
C. The Corporation shall have the right, exercisable at the
discretion of the Board of Directors, to redeem any shareholder's shares of
any class or series for their then current net asset value per share if the
Board of Directors
3
<PAGE>
determines, in its sole discretion, that failure to so redeem may have
materially adverse consequences to the holders of shares of any class or series.
ARTICLE VII
-----------
The following provisions are hereby adopted for the purpose of
defining, limiting, and regulating the powers of the Corporation and of the
Directors and shareholders:
A. The presence in person or by proxy of the holders of one-third of
the shares of stock of the Corporation entitled to vote without regard to
class or series shall constitute a quorum at any meeting of the
shareholders, except with respect to any matter which by law requires the
approval of one or more classes or series of stock, in which case the
presence in person or by proxy of the holders of one-third of the shares
of stock of each class or series entitled to vote on the matter shall
constitute a quorum.
B. In addition to its other powers explicitly or implicitly granted
under these Articles of Incorporation, by law or otherwise, the Board of
Directors of the Corporation (1) is expressly authorized to make, alter,
amend or repeal the Bylaws of the Corporation, (2) may from time to time
determine whether, to what extent, at what times and places, and under what
conditions and regulations the accounts and books of the Corporation, or
any of them, shall be open to the inspection of the shareholders, and no
shareholder shall have any right to inspect any account, book or document
of the Corporation except as conferred by statute or as authorized by the
Board of Directors of the Corporation and (3) is empowered to authorize,
without shareholder approval, the issuance and sale from time to time of
shares of stock of the Corporation whether now or hereafter authorized.
C. The Corporation reserves the right from time to make any
amendment to its Articles of Incorporation now or hereafter authorized by
law, including any amendment which alters the contract rights, as expressly
set forth in its Articles of Incorporation, of any outstanding shares of
any class or series.
D. The Board of Directors is expressly authorized to declare and pay
dividends and distributions in cash, securities or other property from any
funds legally available therefor, at such intervals or on such other
periodic basis it shall determine, for any class or series of the
Corporation; to declare such dividends or distributions for any class or
series of the Corporation by means of a formula or other method of
determination, at meetings held less frequently than the frequency of the
effectiveness of such declarations; to establish payment dates for
dividends or any other distributions for any class or series of the
Corporation on any basis, including dates occurring less frequently than
the effectiveness of declarations thereof; and to provide for the
payment of declared dividends on a date earlier or later than the specified
payment date in the case of shareholders of such class or series redeeming
their entire ownership of shares.
E. Any determination made in good faith by or pursuant to the
direction of the Board of Directors as to the amount of the assets, debts,
obligations or liabilities of the Corporation, as to the amount of any
reserves or charges set up and the propriety thereof, as to the time of or
purpose for creating such reserves or charges, as to the use, alteration or
cancellation of any reserves or
4
<PAGE>
charges (whether or not any debt, obligation or liability for which such
reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or
discharged), as to the value of or the method of valuing any investment or
other asset owned or held by the Corporation, as to the number of shares of
any class or series of stock outstanding, as to the income of the
Corporation or as to any other matter relating to the determination of net
asset value, the declaration of dividends or the issue, sale, redemption or
other acquisition of shares of the Corporation, shall be final and
conclusive and shall be binding upon the Corporation and all holders of its
shares, past, present and future, and shares of the Corporation are issued
and sold on the condition and understanding that any and all such
determinations shall be binding as foresaid.
ARTICLE VIII
------------
A. To the fullest extent that limitations on the liability of
directors and officers are permitted by the WBCL, no director or officer of
the Corporation shall have any liability to the Corporation or its
shareholders for damages; provided however, that nothing herein shall be
construed to protect any director or officer of the Corporation against any
liability to the Corporation or its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of
his office. This limitation on liability applies to events occurring at the
time a person serves as a director or officer of the Corporation whether or
not such person is a director or officer at the time of any proceeding in
which liability is asserted.
B. The Corporation shall indemnify and advance expenses to its
currently acting and its former directors and officers to the fullest
extent that indemnification of directors and officers is permitted by the
WBCL, and the Board of Directors may by bylaw, resolution or agreement make
further provision for indemnification of directors, officers, employees and
agents to the fullest extent permitted by the WBCL; provided however, that
nothing herein shall be construed to protect any director or officer of the
Corporation against any liability to the Corporation or its security
holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
C. No amendment to the Articles of Incorporation of the Corporation
shall affect any right of any person under this Article based on any event,
omission or proceeding prior to the amendment.
ARTICLE IX
----------
The address of the initial registered office is 1000 North Water
Street, Milwaukee, WI 53202. The resident agent at such address is John M.
Blaser.
5
<PAGE>
EXHIBIT 1.2
Form 4
Secretary of State
WISCONSIN
10/93
ARTICLES OF AMENDMENT
STOCK (FOR PROFIT)
A. Name of Corporation: Artisan Funds, Inc.
------------------------------------------------------
(prior to any change effected by this amendment)
--------
Text of Amendment (Refer to the existing articles of incorporation and
----------------- instruction A. Determine those items to be changed and
set forth below the number identifying the paragraph being changed and how
the amended paragraph is to read.)
RESOLVED, THAT, the articles of incorporation be amended as follows:
See Rider A
B. Amendment(s) adopted on October , 1995
---------------------------------------------------
(date)
Indicate the method of adoption by checking the appropriate choice below:
(x) In accordance with sec. 180.1002, Wis. Stats. (By the Board of
Directors)
OR
( ) In accordance with sec. 180.1003, Wis. Stats. (By the Board of
Directors and Shareholders)
OR
( ) In accordance with sec. 180.1005, Wis. Stats. (By Incorporators or
Board of Directors, before issuance of shares)
C. Executed on behalf of the corporation on October , 1995
----------------------------------
(date)
/s/ Andrew A. Ziegler
------------------------------------
(signature)
Andrew A. Ziegler
------------------------------------
(printed name)
Chief Executive Officer
------------------------------------
(officer's title)
D. This document was drafted by Stacy H. Winick Chicago, Illinois
----------------------------------------------
(name of individual required by law)
FILING FEE - $40.00 OR MORE
SEE REVERSE for Instructions, Suggestions, Filing Fees and Procedures
-----------
Printed on Recycled Paper
(WISC. 47 - 7/25/94)
<PAGE>
RIDER A
RESOLVED that the Articles of Incorporation of Artisan Funds shall be
amended as follows:
Delete Section A. of Article IV and substitute in its place the following:
"A. The Corporation is authorized to issue 50,000,000,000 shares of
common stock, $.01 par value per share. Subject to the following
paragraph, the authorized shares are classified as follows:
<TABLE>
<CAPTION>
Authorized Number
Class of Shares
----- ---------
<S> <C>
Artisan Small Cap Fund 5,000,000,000
Artisan International Fund 5,000,000,000
</TABLE>
The remaining 40,000,000,000 shares shall remain unclassified until
action is taken by the Board of Directors pursuant to the following
paragraph."
<PAGE>
Exhibit 2
ARTISAN FUNDS, INC.
BYLAWS
As Adopted on January 5, 1995
and
As Amended and Restated on January 24, 1995
ARTICLE I
MEETINGS OF SHAREHOLDERS
Section 1. ANNUAL MEETINGS. The Artisan Funds, Inc. (The "Corporation")
is not required to hold an Annual Meeting of Shareholders in any year in which
the election of Directors, the approval of the investment advisory agreement,
the ratification of the selection of independent public accountants or the
approval or disapproval of a distribution agreement are not required to be acted
upon under the Investment Company Act of 1940. If the Corporation is required
to hold a meeting of Shareholders, the meeting shall be designated the Annual
Meeting of Shareholders for that year. If an Annual Meeting of Shareholders is
held, it shall be held at a date and time determined by the Board of Directors.
Any other business may be considered at the Annual Meeting.
Section 2. SPECIAL MEETINGS. Special Meetings of Shareholders of the
Corporation or of a particular Series or Class may be called by the Chairman or
by the Board of Directors; and shall be called by the Secretary whenever ordered
by the Chairman, any Director, or as requested in writing by Shareholders
entitled to cast at least 10% of the voting shares entitled to be cast on any
issue at the proposed Special Meeting. Such request shall state the purpose of
such Special Meeting and the matters proposed to be acted on thereat, and no
other business shall be transacted at any such Special Meeting. The Secretary
shall inform such Shareholders of the reasonably estimated costs of preparing
and mailing the notice of the meeting, and upon payment to the Corporation of
such costs, the Secretary shall give not less than ten nor more than 60 days'
notice of the Special Meeting. Unless required by Shareholders entitled to cast
a majority of all the votes entitled to be cast at the meeting, a Special
Meeting need not be called to consider any matter which is substantially the
same as a matter voted on at a Special Meeting of the Shareholders held during
the preceding 12 months.
Section 3. PLACE OF MEETINGS. All meetings of the Shareholders of the
Corporation or a particular Series or Class, shall be held at the office of the
Corporation in Milwaukee, Wisconsin, or at such other place within or without
the State of Wisconsin as may be fixed by the Board of Directors.
Section 4. NOTICE. Not less than ten nor more than 60 days before the
date of every Annual or Special Meeting of Shareholders, the Secretary or an
Assistant Secretary shall give to each Shareholder of record of the Corporation
or of the relevant Series or Class written notice of such Meeting. Such notice
shall be deemed to have been given when mailed to the Shareholder at his address
appearing on the books of the Corporation, which shall be maintained separately
for the shares of each Series or Class. It shall not be necessary to set forth
the business proposed to be transacted in the notice of any Annual Meeting.
Notice of a Special Meeting shall include a description of the purpose or
purposes for which it is called.
<PAGE>
Section 5. QUORUM. The presence in person or by proxy of holders of one-
third of the shares of capital stock of the Corporation entitled to vote without
regard to Series or Class shall constitute a quorum at any meeting of the
Shareholders, except with respect to any matter which by law requires the
approval of one or more Series or Classes of stock, in which case the presence
in person or by proxy of the holders of one-third of the shares of stock of each
Series or Class entitled to vote on the matter shall constitute a quorum.
In the absence of a quorum at any meeting, a majority of those Shareholders
present in person or by proxy may adjourn the meeting from time to time to a
date not later than 120 days after the original meeting date without further
notice than by announcement to be given at the meeting until a quorum, as above
defined, shall be present. Any business may be transacted at the adjourned
meeting which might have been transacted at the meeting originally called had
the same been held at the time so called.
Section 6. VOTING. At all meetings of Shareholders each Shareholder shall
be entitled to one vote or fraction thereof for each share or fraction thereof
standing in his name on the books of the Corporation on the date for the
determination of Shareholders entitled to vote at such meeting.
Section 7. PROXIES. Any Shareholder entitled to vote at any meeting of
Shareholders may vote either in person or by proxy, but no proxy which is dated
more than eleven months before the meeting named therein shall be accepted.
Every proxy shall be in writing and signed by the Shareholder or his duly
authorized attorney-in-fact and dated, but need not be sealed, witnessed or
acknowledged.
Section 8. INFORMAL ACTION BY SHAREHOLDERS. Any action required or
permitted to be taken at any meeting of Shareholders may be taken without a
meeting, if a consent in writing, setting forth such action, is signed by all
the Shareholders entitled to vote on the subject matter thereof, and such
consent is filed with the records of the Corporation.
ARTICLE II
BOARD OF DIRECTORS
Section 1. POWERS. The business and affairs of the Corporation shall be
managed under the direction of its Board of Directors. All powers of the
Corporation may be exercised by or under the authority of the Board of Directors
except as conferred on or reserved to the Shareholders by law, by the Articles
of Incorporation or by these Bylaws.
Section 2. NUMBER, QUALIFICATIONS, MANNER OF ELECTION AND TERM OF OFFICE.
The number of Directors of the Corporation can be changed from time to time to
not less than one nor more than ten. Directors need not be Shareholders. The
term of office of a Director shall not be affected by any decrease in the number
of Directors made by the Board pursuant to the foregoing authorization. Each
Director shall hold office until the Annual Meeting next held after he becomes a
Director and until the election and qualification of his successor.
Section 3. PLACE OF MEETING. The Board of Directors may hold its meetings
at such place or places within or without the State of Wisconsin as the Board.
Section 4. ANNUAL MEETINGS. The Board of Directors shall meet annually
for the election of Officers and any other business.
2
<PAGE>
Section 5. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such intervals and on such dates as the Board may from time to
time designate, provided that any Director who is absent when such designation
is made shall be given notice of the designation.
Section 6. SPECIAL MEETINGS. Special Meetings of the Board of Directors
may be held at such times and at such places as may be designated in the call of
such meeting. Special Meetings shall be called by the Secretary or Assistant
Secretary at the request of the Chairman or any Director. If the Secretary when
so requested refuses or fails for more than twenty-four hours to call such
meeting, the Chairman or such Director may in the name of the Secretary call
such meeting by giving due notice in the manner required when notice is given by
the Secretary.
Section 7. NOTICE. The Secretary or Assistant Secretary shall give, at
least two days before the meeting, notice of each meeting of the Board of
Directors, whether Annual, Regular or Special, to each member of the Board by
mail, telegram or telephone to his last known address. It shall not be
necessary to state the purpose or business to be transacted in the notice of any
meeting. Personal attendance at any meeting by a Director other than to protest
the validity of said meeting shall constitute a waiver of the foregoing
requirement of notice. In addition, notice of a meeting need not be given if a
written waiver of notice executed by such Director before or after the meeting
is filed with the records of the meeting.
Section 8. CONDUCT OF MEETINGS AND BUSINESS. The Board of Directors may
adopt such rules and regulations for the conduct of their meetings and the
management of the affairs of the Corporation as they may deem proper and not
inconsistent with applicable law, the Articles of Incorporation of the
Corporation or these Bylaws.
Section 9. QUORUM. At any time when the number of Directors constituting
the whole Board of Directors is greater than one, one-third of the entire Board
of Directors but not less than two Directors shall constitute a quorum at any
meeting of the Board of Directors. The action of a majority of Directors
present at any meeting at which a quorum is present shall be the action of the
Board of Directors unless the concurrence of a greater proportion is required
for such action by statute, the Articles of Incorporation of the Corporation, or
these Bylaws. In the absence of a quorum at any meeting a majority of Directors
present may adjourn the meeting from day to day or for such longer periods as
they may designate until a quorum shall be present. Notice of any adjourned
meeting need not be given other than by announcement at the meeting.
Section 10. RESIGNATIONS. Any Director of the Corporation may resign at
any time by written notice to the Corporation. The resignation of any Director
shall take effect at the time specified therein or, if no time is specified,
when received by the Corporation. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 11. REMOVAL. At any meeting of Shareholders duly called for the
purpose, any Director may by the vote of a majority of all of the shares
entitled to vote be removed from office. At the same meeting, the vacancy in
the Board of Directors may be filled by the election of a Director to serve
until the next Annual Meeting of Shareholders and the election and qualification
of his successor.
Section 12. VACANCIES. Except as otherwise provided by law, any vacancy
occurring in the Board of Directors including a vacancy resulting from an
increase in the number of Directors, may be filled by a majority of the
remaining members of the Board of Directors although such majority is less than
a quorum, a majority of the entire Board of Directors, or by action of the
Shareholders. A Director elected by the Board to fill a vacancy shall be
elected to
3
<PAGE>
hold office until the next Annual Meeting of Shareholders and until his
successor is duly elected and qualified.
Section 13. COMPENSATION OF DIRECTORS. The Directors may receive
compensation for their services as Directors as determined by the Board of
Directors and expenses of attendance at each meeting. Nothing herein contained
shall be construed to preclude any Director from serving the Corporation in any
other capacity, as an Officer, agent or otherwise, and receiving compensation
therefor.
Section 14. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at any Annual, Regular or Special Meeting of the Board of
Directors may be taken without a meeting if a written consent to such action is
signed by all members of the Board and such written consent is filed with the
minutes of proceedings of the Board.
Section 15. TELEPHONE CONFERENCE. Members of the Board of Directors or
any committee thereof may participate in a regular or special meeting of the
Board or such committee by means of a conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other at the same time and participation by such means
shall constitute presence in person at the meeting.
ARTICLE III
EXECUTIVE AND OTHER COMMITTEES
Section 1. APPOINTMENT AND TERM OF OFFICE OF EXECUTIVE COMMITTEE. The
Board of Directors may appoint an Executive Committee, which shall consist of
two (2) or more Directors.
Section 2. VACANCIES IN EXECUTIVE COMMITTEE. Vacancies occurring in the
Executive Committee from any cause may be filled by the Board of Directors.
Section 3. EXECUTIVE COMMITTEE TO REPORT TO BOARD. All action by the
Executive Committee shall be reported to the Board of Directors at its meeting
next succeeding such action.
Section 4. PROCEDURE OF EXECUTIVE COMMITTEE. The Executive Committee
shall fix its own rules of procedure not inconsistent with these Bylaws or with
any directions of the Board of Directors. It shall meet at such times and
places and upon such notice as shall be provided by such rules or by resolution
of the Board of Directors. The presence of a majority shall constitute a quorum
for the transaction of business, and in every case the affirmative vote of a
majority of the members of the Executive Committee present shall be necessary
for the taking of any action.
Section 5. POWERS OF EXECUTIVE COMMITTEE. During the intervals between
the meetings of the Board of Directors the Executive Committee, except as
limited by law or by specific directions of the Board of Directors, shall
possess and may exercise all the powers of the Board of Directors in the
management and direction of the business and conduct of the affairs of the
Corporation.
Section 6. OTHER COMMITTEES. From time to time the Board of Directors may
create any other committee or committees which shall have powers as shall be
specified in the resolution creating the committee and as may be delegated by
law.
4
<PAGE>
Section 7. COMPENSATION. The members of any duly appointed committee
shall receive such compensation as from time to time may be fixed by the Board
of Directors and reimbursement of expenses.
Section 8. INFORMAL ACTION BY EXECUTIVE COMMITTEE OR OTHER COMMITTEES.
Any action required or permitted to be taken at any meeting of the Executive
Committee or any other duly appointed committee may be taken without a meeting
if written consent to such action is signed by all members of such committee and
such written consent is filed with the minutes of the proceedings of such
committee.
ARTICLE IV
OFFICERS
Section 1. GENERAL PROVISIONS. The Officers of the Corporation shall be a
Chairman, a President, one or more Vice Presidents, a Treasurer, and a
Secretary. The Board of Directors may elect or appoint other Officers or
agents, including one or more Assistant Vice Presidents, one or more Assistant
Secretaries and one or more Assistant Treasurers. The same person may hold any
number of offices.
Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Officers
shall be elected annually by the Board of Directors. Each Officer shall hold
office for one year and until the election and qualification of his successor.
Any vacancy in any of the offices may be filled for the unexpired portion of the
term by the Board of Directors at any Regular or Special Meeting of the Board.
The Board of Directors may elect or appoint additional Officers or agents at any
Regular or Special Meeting of the Board.
Section 3. REMOVAL. The Board of Directors may remove any Officer with or
without cause at any time. Any other employee of the Corporation may be removed
or dismissed at any time by the President.
Section 4. RESIGNATIONS. Any Officer may resign at any time by giving
written notice to the Corporation. Any such resignation shall take effect at
the time specified therein or, if no time is specified, at the time of receipt.
Unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. VACANCIES. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these Bylaws for
regular election or appointment to such office.
Section 6. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board
of Directors, if there be a Chairman, shall preside at the meetings of
Shareholders and of the Board of Directors. The Chairman shall be the chief
executive officer of the Corporation. Unless other provisions are made therefor
by the Board or Executive Committee, the Chairman shall employ and define the
duties of all employees of the Corporation, shall have the power to discharge
any such employees, shall exercise general supervision over the affairs of the
Corporation and shall perform such other duties as may be assigned to him from
time to time by the Board of Directors.
Section 7. PRESIDENT. The President in the absence of the Chairman shall
perform all duties and may exercise any of the powers of the Chairman subject to
the control of the Board. In the absence of the Chairman of the Board of
Directors, the President or an Officer or Director appointed by the President,
shall preside at all meetings of Shareholders. The President
5
<PAGE>
shall perform such other duties as may be assigned to him from time to time by
the Board of Directors, the Executive Committee, or the Chairman.
Section 8. VICE PRESIDENT. The Vice President (or if more than one, the
senior Vice President) in the absence of the President shall perform all duties
and may exercise any of the powers of the President subject to the control of
the Board. Each Vice President shall perform such other duties as may be
assigned to him from time to time by the Board of Directors, the Executive
Committee, the Chairman or the President.
Section 9. SECRETARY. The Secretary shall keep or cause to be kept in
books provided for the purpose the minutes of the meetings of the Shareholders,
and of the Board of Directors; shall see that all notices are duly given in
accordance with the provisions of these Bylaws and as required by law; shall be
custodian of the records and of the Seal of the Corporation and shall see that
the Seal is affixed to all documents the execution of which on behalf of the
Corporation under its Seal is duly authorized; shall keep directly or through a
transfer agent a register of the post office address of each Shareholder, and
make all proper changes in such register, retaining and filing his authority for
such entries; shall see that the books, reports, statements, certificates and
all other documents and records required by law are properly kept and filed; and
in general shall perform all duties incident to the Office of Secretary and such
other duties as may, from time to time, be assigned to him by the Board of
Directors, the Executive Committee, the Chairman or the President.
Section 10. TREASURER. The Treasurer shall have supervision of the
custody of all funds and securities of the Corporation, subject to applicable
law. He shall perform such other duties as may be from time to time assigned to
him by the Board of Directors, the Executive Committee, the Chairman or the
President.
Section 11. ASSISTANT VICE PRESIDENT. The Assistant Vice President or
Assistant Vice Presidents of the Corporation shall have such authority and
perform such duties as may be assigned to them by the Board of Directors, the
Executive Committee, the Chairman or the President of the Corporation.
Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant
Secretary or Secretaries and the Assistant Treasurer or Treasurers shall perform
the duties of the Secretary and of the Treasurer respectively, in the absence of
those Officers and shall have such further powers and perform such other duties
as may be assigned to them respectively by the Board of Directors, the Executive
Committee, the Chairman or the President.
Section 13. SALARIES. The salaries of the Officers shall be fixed from
time to time by the Board of Directors. No Officer shall be prevented from
receiving such salary by reason of the fact that he is also a Director of the
Corporation.
ARTICLE V
SHARES AND THEIR TRANSFER
Section 1. CERTIFICATES. No certificates certifying the ownership of
shares shall be issued except as the Board of Directors may otherwise authorize.
In the event that the Directors authorize the issuance of share certificates,
subject to the provisions of Section 4 of this Article V, each Shareholder shall
be entitled to a certificate stating, among other things, the number and class
of shares and the designation of the series, if any, owned by him or her, in
such form as shall be prescribed from time to time by the Directors. All share
certificates shall be signed by the Chairman, the President, or any Vice
President and by the Treasurer or Secretary or
6
<PAGE>
any Assistant Treasurer or Assistant Secretary and may be sealed with the Seal
of the Corporation. The signatures may be either manual or facsimile signatures
and the Seal may be either facsimile or any other form of seal. Certificates for
shares for which the Corporation has appointed an independent Transfer Agent and
Registrar shall not be valid unless countersigned by such Transfer Agent and
registered by such Registrar. In case any Officer who has signed any certificate
ceases to be an Officer of the Corporation before the certificate is issued, the
certificate may nevertheless be issued by the Corporation with the same effect
as if the Officer had not ceased to be such Officer as of the date of its
issuance.
In lieu of issuing certificates for shares, the Directors or the Transfer
Agent shall issue receipts thereof in accordance with the Wisconsin Business
Corporation Law to the record holders of such shares, who shall be deemed, for
all purposes hereunder, to be the holders of certificates for such shares as if
they had accepted such certificates and shall be held to have expressly assented
and agreed to the terms hereof.
Section 2. TRANSFER OF SHARES. Shares of each Series and Class shall be
transferable on the books of the Corporation by the holder thereof in person or
by duly authorized attorney upon surrender of the certificate representing the
shares to be transferred properly endorsed.
Section 3. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. The Board of
Directors may fix in advance a date as the record date for the purpose of
determining Shareholders of a Series or Class entitled to notice of or to vote
at any meeting of Shareholders or to receive payment of any dividend or right.
Such date shall in any case not be more than 70 days prior to the date on which
the particular action requiring such determination of Shareholders is to be
taken. Only Shareholders of record on the record date shall be entitled to
notice of and to vote at such meeting or to receive such dividends or rights, as
the case may be.
Section 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case any share
certificate is lost, mutilated or destroyed the Board of Directors may issue a
new certificate in place thereof upon indemnity to the relevant Series or Class
against loss and upon such other terms and conditions as the Board may deem
advisable.
Section 5. DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Directors may
at any time discontinue the issuance of share certificates and may, by written
notice to each shareholder, require the surrender of share certificates to the
Corporation for cancellation. Such surrender and cancellation shall not affect
the ownership of shares in the Corporation.
ARTICLE VI
AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.
Section 1. AGREEMENTS, ETC. The Board of Directors or the Executive
Committee may authorize any Officer or Officers, or agent or agents of the
Corporation to enter into any Agreement or execute and deliver any instrument in
the name of the Corporation and such authority may be general or confined to
specific instances; and, unless so authorized by the Board of Directors or by
the Executive Committee or by these Bylaws, no Officer, agent or employee shall
have any power or authority to bind the Corporation by any agreement or
engagement or to pledge its credit or to render it liable pecuniarily for any
purpose or to any amount.
7
<PAGE>
Section 2. CHECKS, DRAFTS, ETC. All checks, drafts, or orders for the
payment of money, notes and other evidences of indebtedness shall be signed by
such Officer or Officers, employee or employees, or agent or agents as shall be
from time to time designated by the Board of Directors or the Executive
Committee, or as may be specified in or pursuant to the agreement between the
Corporation on behalf of any Series or Class and a bank or trust company
appointed as custodian of the Corporation's assets.
Section 3. ENDORSEMENTS, ASSIGNMENTS AND TRANSFER OF SECURITIES. All
endorsements, assignments, stock powers or other instruments of transfer of
securities standing in the name of the Corporation or its nominee or directions
for the transfer of securities belonging to the Corporation shall be made by
such Officer or Officers, employee or employees, or agent or agents as may be
authorized by the Board of Directors or the Executive Committee.
ARTICLE VII
BOOKS AND RECORDS
Section 1. LOCATION. The books and records of the Corporation, including
the stock ledger or ledgers, may be kept in or outside the State of Wisconsin at
such office or agency of the Corporation as may be from time to time determined
by the Board of Directors.
ARTICLE VIII
MISCELLANEOUS
Section 1. SEAL. The Seal of the Corporation shall be a disk inscribed
with the words "Artisan Funds, Inc. 1995 - Incorporated Wisconsin".
Section 2. FISCAL YEAR. The Fiscal Year of the Corporation shall be
designated from time to time by the Board of Directors.
ARTICLE IX
INDEMNIFICATION
Section 1. MANDATORY INDEMNIFICATION. The Corporation shall indemnify, to
the fullest extent permitted by the Wisconsin Business Corporation Law, as in
effect from time to time, the persons described in Sections 180.0850 through
180.0859 (or any successor provisions) of the Wisconsin Business Corporation Law
or other provisions of the law of the State of Wisconsin relating to
indemnification of directors and officers, as in effect from time to time. The
indemnification afforded such persons by this section shall not be exclusive of
other rights to which they may be entitled as a matter of law.
Section 2. INDEMNIFICATION OF AGENTS. An agent of the Corporation shall
only be entitled to indemnification upon a determination by the Board of
Directors or a committee appointed thereby, as evidenced by a resolution of the
Board of Directors, that such Agent shall be entitled to indemnification.
Section 3. PERMISSIVE SUPPLEMENTARY BENEFITS. The Corporation may, but
shall not be required to, supplement the right of indemnification under Section
1 hereof by (i)
8
<PAGE>
the purchase of insurance of behalf of any one or more of such persons, whether
or not the Corporation would be obligated to indemnify such person under Section
1 hereof; (ii) individual or group indemnification agreements with any one or
more of such persons; and (iii) advances for related expenses of such persons.
Section 4. INVESTMENT COMPANY ACT. This Article shall not protect any such
person against any liability to the Corporation or any Shareholder thereof to
which such person would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Section 5. AMENDMENTS. References in this Article are to the Wisconsin
Business Corporation Law and to the Investment Company Act of 1940, as from to
time to time amended. No amendment of these Bylaws shall affect any right of
any person under this Article based on any event, omission or proceeding prior
to the amendment.
ARTICLE X
AMENDMENTS
Section 1. The Board of Directors shall have the power to alter, amend or
repeal any Bylaws of the Corporation and to make new Bylaws.
9
<PAGE>
Exhibit 5.1
ARTISAN FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
Artisan Funds, Inc., a Wisconsin corporation registered under the
Investment Company Act of 1940 ("1940 Act") as an open-end diversified
management investment company ("Artisan Funds"), and Artisan Partners Limited
Partnership, a Delaware limited partnership registered under the Investment
Advisers Act of 1940 as an investment adviser ("Artisan Partners"), agree that:
1. ENGAGEMENT OF ARTISAN PARTNERS. Artisan Partners shall manage the
investment and reinvestment of the assets of Artisan Small Cap Fund, a series of
Artisan Funds ("the Fund"), subject to the supervision of the board of directors
of Artisan Funds, for the period and on the terms set forth in this agreement.
Artisan Partners shall give due consideration to the investment policies and
restrictions and the other statements concerning Fund in Artisan Fund's articles
of incorporation, bylaws, and registration statements under the 1940 Act and the
Securities Act of 1933 ("1933 Act"), and to the provisions of the Internal
Revenue Code applicable to Fund as a regulated investment company. Artisan
Partners shall be deemed for all purposes to be an independent contractor and
not an agent of Artisan Fund or the Fund, and unless otherwise expressly
provided or authorized, shall have no authority to act or represent Artisan Fund
or the Fund in any way.
Artisan Partners is authorized to make the decisions to buy and sell
securities, options and futures contracts for the Fund, to place the Fund's
portfolio transactions with broker-dealers, and to negotiate the terms of such
transactions including brokerage commissions on brokerage transactions, on
behalf of the Fund. Artisan Partners is authorized to exercise discretion
within the Fund's policy concerning allocation of its portfolio brokerage, as
permitted by law, including but not limited to section 28(e) of the Securities
Exchange Act of 1934, and in so doing shall not be required to make any
reduction in its investment advisory fees.
Artisan Partners represents that it will notify Artisan Funds of any
change in the membership of Artisan Partners within a reasonable time after any
such change.
2. EXPENSES TO BE PAID BY ARTISAN PARTNERS. Artisan Partners shall
furnish to Artisan Funds, at its own expense, office space and all necessary
office facilities, equipment and personnel for managing that portion of Artisan
Funds' business relating to the Fund. Artisan Partners shall also assume and
pay all other expenses incurred by it in connection with managing the assets of
the Fund, all expenses of marketing shares of the Fund, all expenses of
maintaining the registration of shares of the Fund under the 1933 Act (not
including typesetting and printing expenses referred to in section 3), all
expenses in determination of daily price computations, placement of securities
orders and related bookkeeping and one-half of all fees, dues and other expenses
related to membership of Artisan Funds in any trade association or other
investment company organization.
3. EXPENSES TO BE PAID BY ARTISAN FUNDS. Artisan Funds shall pay all
charges of depositories, custodians and other agencies for the safekeeping and
servicing of its cash,
<PAGE>
securities and other property and of its transfer agents and registrars and its
dividend disbursing and redemption agents, if any; all charges of legal counsel
and of independent accountants; all compensation of directors other than those
affiliated with Artisan Partners and all expenses incurred in connection with
their services to Artisan Funds; all costs of borrowing money; all expenses of
publication of notices and reports to its shareholders and to governmental
bodies or regulatory agencies; all expenses of proxy solicitations of the Fund
or of the board of directors of the Artisan Funds; all expenses of shareholder
meetings; all expenses of typesetting of the Fund's prospectus and of printing
and mailing copies of the prospectus furnished to each then-existing shareholder
or beneficial owner; all taxes and fees payable to federal, state or other
governmental agencies, domestic or foreign, all stamp or other taxes; all
expenses of printing and mailing certificates for shares of the Fund; all
expenses of bond and insurance coverage required by law or deemed advisable by
Artisan Funds' board of directors; all expenses of qualifying and maintaining
qualification of shares of the Fund under the securities laws of such United
States jurisdictions as the Artisan Funds may from time to time reasonably
designate and all expenses of maintaining the registration of Artisan Funds
under the 1940 Act and one-half of all fees, dues and other expenses related to
membership of Artisan Funds in any trade association or other investment company
organization. In addition to the payment of expenses, the Fund also shall pay
all brokers' commissions and other charges relative to the purchase and sale of
portfolio securities for the Fund. Any expenses borne by Artisan Funds that are
attributable solely to the organization, operation or business of the Fund shall
be paid solely out of the Fund's assets. Any expense borne by Artisan Funds that
is not solely attributable to the Fund, nor solely to any other series of shares
of Artisan Funds, if applicable, shall be apportioned in such manner as Artisan
Partners determines is fair and appropriate, or as otherwise specified by the
board of directors of Artisan Funds.
4. COMPENSATION OF ARTISAN PARTNERS. For the services to be rendered
and the charges and expenses to be assumed and to be paid by Artisan Partners
hereunder, the Fund shall pay to Artisan Partners a monthly fee at the annual
rate of 1% of the Fund's average daily net assets up to $500 million; .975 of 1%
of average daily net assets from $500 million to $750 million; .950 of 1% of
average daily net assets from $750 million to $1 billion and .925 of 1% of
average daily net assets over $1 billion.
5. LIMITATION OF EXPENSES OF THE FUND. The total expenses of the
Fund, exclusive of taxes, of interest and of extraordinary litigation expenses,
but including fees paid to Artisan Partners, shall not in any fiscal year of the
Fund exceed the most restrictive limits prescribed by any state in which the
Fund's shares are then being offered for sale, and Artisan Partners agrees that
Artisan Partners' compensation under paragraph 4 of this agreement shall be
reduced by the amount of any such expenses in excess of that limit. If Artisan
Partners' expenses would still exceed that limit after Artisan Partners'
compensation has been reduced to zero, Artisan Partners shall reimburse the Fund
for sums expended for such expenses to the extent necessary to cause the Fund's
expenses to be within the limit. Brokers' commissions and other charges
relating to the purchase and sale of portfolio securities shall not be regarded
as expenses.
6. SERVICES OF ARTISAN PARTNERS NOT EXCLUSIVE. The services of
Artisan Partners to the Fund hereunder are not to be deemed exclusive, and
Artisan Partners shall be free to render
2
<PAGE>
similar services to others so long as its services under this agreement are not
impaired by such other activities.
7. SERVICES OTHER THAN AS INVESTMENT ADVISER. Artisan Partners (or
an affiliate of Artisan Partners) may act as broker for the Fund in connection
with the purchase or sale of securities by or to the Fund if and to the extent
permitted by procedures adopted from time to time by the board of directors of
Artisan Funds. Such brokerage services are not within the scope of the duties
of Artisan Partners under this agreement, and, within the limits permitted by
law and the board of directors of Artisan Funds, Artisan Partners (or an
affiliate of Artisan Partners) may receive brokerage commissions, fees or other
remuneration from the Fund for such services in addition to its fee for services
as Artisan Partners. Within the limits permitted by law, Artisan Partners may
receive compensation from the Fund for other services performed by it for the
Fund which are not within the scope of the duties of Artisan Partners under this
agreement.
8. LIMITATION OF LIABILITY OF ARTISAN PARTNERS. Artisan Partners
shall not be liable to Artisan Funds or its shareholders for any loss suffered
by Artisan Funds or its shareholders from or as a consequence of any act or
omission of Artisan Partners, or of any of the partners, employees or agents of
Artisan Partners, in connection with or pursuant to this agreement, except by
reason of willful misfeasance, bad faith or gross negligence on the part of
Artisan Partners in the performance of its duties or by reason of reckless
disregard by Artisan Partners of its obligations and duties under this
agreement.
9. DURATION AND RENEWAL. Unless terminated as provided in Section
10, this agreement shall continue in effect until March 26, 1997, and thereafter
from year to year only so long as such continuance is specifically approved at
least annually (a) by a majority of those directors who are not interested
persons of Artisan Funds or of Artisan Partners, voting in person at a meeting
called for the purpose of voting on such approval, and (b) by either the board
of directors of Artisan Fund or vote of the holders of a "majority of the
outstanding shares of the Fund" (which term as used throughout this agreement
shall be construed in accordance with the definition of "vote of a majority of
the outstanding voting securities of a company" in section 2(a)(42) of the 1940
Act).
10. TERMINATION. This agreement may be terminated at any time,
without payment of any penalty, by the board of directors of Artisan Funds, or
by a vote of the holders of a majority of the outstanding shares of the Fund,
upon 60 days' written notice to Artisan Partners. This agreement may be
terminated by Artisan Partners at any time upon 60 days' written notice to
Artisan Fund. This agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a)(4) of the 1940 Act).
11. NON-LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any obligation of
Artisan Funds hereunder shall be binding only upon the assets of Artisan Funds
(or applicable series thereof) and shall not be binding upon any director,
officer, employee, agent or shareholder of Artisan Funds. Neither the
authorization of any action by the directors or shareholders of Artisan Funds
nor the execution of this agreement on behalf of Artisan Funds shall impose any
liability upon any director, officer or shareholder of Artisan Partners.
3
<PAGE>
12. AMENDMENT. This agreement may not be amended without the
affirmative vote (a) of a majority of those directors who are not "interested
persons" (as defined in section 2(a)(19) of the 1940 Act) of Artisan Fund or of
Artisan Partners, voting in person at a meeting called for the purpose of voting
on such approval, and (b) of the holders of a majority of the outstanding shares
of the Fund.
Dated: March 27, 1995
ARTISAN FUNDS, INC.
By /s/ Andrew A. Ziegler
------------------------------------
ARTISAN PARTNERS LIMITED
PARTNERSHIP
By: Artisan Investment Corporation
Its general partner
By: /s/ Andrew A. Ziegler
------------------------------------
Andrew A. Ziegler
President
4
<PAGE>
Exhibit 5.2
ARTISAN FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
Artisan Funds, Inc., a Wisconsin corporation registered under the
Investment Company Act of 1940 ("1940 Act") as an open-end diversified
management investment company ("Artisan Funds"), and Artisan Partners Limited
Partnership, a Delaware limited partnership registered under the Investment
Advisers Act of 1940 as an investment adviser ("Artisan Partners"), agree that:
1. ENGAGEMENT OF ARTISAN PARTNERS. Artisan Partners shall manage the
investment and reinvestment of the assets of Artisan International Fund, a
series of Artisan Funds ("the Fund"), subject to the supervision of the board of
directors of Artisan Funds, for the period and on the terms set forth in this
agreement. Artisan Partners shall give due consideration to the investment
policies and restrictions and the other statements concerning Fund in Artisan
Fund's articles of incorporation, bylaws, and registration statements under the
1940 Act and the Securities Act of 1933 ("1933 Act"), and to the provisions of
the Internal Revenue Code applicable to Fund as a regulated investment company.
Artisan Partners shall be deemed for all purposes to be an independent
contractor and not an agent of Artisan Fund or the Fund, and unless otherwise
expressly provided or authorized, shall have no authority to act or represent
Artisan Fund or the Fund in any way.
Artisan Partners is authorized to make the decisions to buy and sell
securities, options and futures contracts for the Fund, to place the Fund's
portfolio transactions with broker-dealers, and to negotiate the terms of such
transactions including brokerage commissions on brokerage transactions, on
behalf of the Fund. Artisan Partners is authorized to exercise discretion
within the Fund's policy concerning allocation of its portfolio brokerage, as
permitted by law, including but not limited to section 28(e) of the Securities
Exchange Act of 1934, and in so doing shall not be required to make any
reduction in its investment advisory fees.
Artisan Partners represents that it will notify Artisan Funds of any
change in the membership of Artisan Partners within a reasonable time after any
such change.
2. EXPENSES TO BE PAID BY ARTISAN PARTNERS. Artisan Partners shall
furnish to Artisan Funds, at its own expense, office space and all necessary
office facilities, equipment and personnel for managing that portion of Artisan
Funds' business relating to the Fund. Artisan Partners shall also assume and
pay all other expenses incurred by it in connection with managing the assets of
the Fund, all expenses of marketing shares of the Fund, all expenses of
maintaining the registration of shares of the Fund under the 1933 Act (not
including typesetting and printing expenses referred to in section 3), all
expenses in determination of daily price computations, placement of securities
orders and related bookkeeping and one-half of all fees, dues and other expenses
related to membership of Artisan Funds in any trade association or other
investment company organization.
3. EXPENSES TO BE PAID BY ARTISAN FUNDS. Artisan Funds shall pay all
charges of depositories, custodians and other agencies for the safekeeping and
servicing of its cash,
<PAGE>
securities and other property and of its transfer agents and registrars and its
dividend disbursing and redemption agents, if any; all charges of legal counsel
and of independent accountants; all compensation of directors other than those
affiliated with Artisan Partners and all expenses incurred in connection with
their services to Artisan Funds; all costs of borrowing money; all expenses of
publication of notices and reports to its shareholders and to governmental
bodies or regulatory agencies; all expenses of proxy solicitations of the Fund
or of the board of directors of the Artisan Funds; all expenses of shareholder
meetings; all expenses of typesetting of the Fund's prospectus and of printing
and mailing copies of the prospectus furnished to each then-existing shareholder
or beneficial owner; all taxes and fees payable to federal, state or other
governmental agencies, domestic or foreign, all stamp or other taxes; all
expenses of printing and mailing certificates for shares of the Fund; all
expenses of bond and insurance coverage required by law or deemed advisable by
Artisan Funds' board of directors; all expenses of qualifying and maintaining
qualification of shares of the Fund under the securities laws of such United
States jurisdictions as the Artisan Funds may from time to time reasonably
designate and all expenses of maintaining the registration of Artisan Funds
under the 1940 Act and one-half of all fees, dues and other expenses related to
membership of Artisan Funds in any trade association or other investment company
organization. In addition to the payment of expenses, the Fund also shall pay
all brokers' commissions and other charges relative to the purchase and sale of
portfolio securities for the Fund. Any expenses borne by Artisan Funds that are
attributable solely to the organization, operation or business of the Fund shall
be paid solely out of the Fund's assets. Any expense borne by Artisan Funds that
is not solely attributable to the Fund, nor solely to any other series of shares
of Artisan Funds, if applicable, shall be apportioned in such manner as Artisan
Partners determines is fair and appropriate, or as otherwise specified by the
board of directors of Artisan Funds.
4. COMPENSATION OF ARTISAN PARTNERS. For the services to be rendered
and the charges and expenses to be assumed and to be paid by Artisan Partners
hereunder, the Fund shall pay to Artisan Partners a monthly fee at the annual
rate of 1% of the Fund's average daily net assets up to $500 million; .975 of 1%
of average daily net assets from $500 million to $750 million; .950 of 1% of
average daily net assets from $750 million to $1 billion and .925 of 1% of
average daily net assets over $1 billion.
5. LIMITATION OF EXPENSES OF THE FUND. The total expenses of the
Fund, exclusive of taxes, of interest and of extraordinary litigation expenses,
but including fees paid to Artisan Partners, shall not in any fiscal year of the
Fund exceed the most restrictive limits prescribed by any state in which the
Fund's shares are then being offered for sale, and Artisan Partners agrees that
Artisan Partners' compensation under paragraph 4 of this agreement shall be
reduced by the amount of any such expenses in excess of that limit. If Artisan
Partners' expenses would still exceed that limit after Artisan Partners'
compensation has been reduced to zero, Artisan Partners shall reimburse the Fund
for sums expended for such expenses to the extent necessary to cause the Fund's
expenses to be within the limit. Brokers' commissions and other charges
relating to the purchase and sale of portfolio securities shall not be regarded
as expenses.
6. SERVICES OF ARTISAN PARTNERS NOT EXCLUSIVE. The services of
Artisan Partners to the Fund hereunder are not to be deemed exclusive, and
Artisan Partners shall be free to render
2
<PAGE>
similar services to others so long as its services under this agreement are not
impaired by such other activities.
7. SERVICES OTHER THAN AS INVESTMENT ADVISER. Artisan Partners (or
an affiliate of Artisan Partners) may act as broker for the Fund in connection
with the purchase or sale of securities by or to the Fund if and to the extent
permitted by procedures adopted from time to time by the board of directors of
Artisan Funds. Such brokerage services are not within the scope of the duties
of Artisan Partners under this agreement, and, within the limits permitted by
law and the board of directors of Artisan Funds, Artisan Partners (or an
affiliate of Artisan Partners) may receive brokerage commissions, fees or other
remuneration from the Fund for such services in addition to its fee for services
as Artisan Partners. Within the limits permitted by law, Artisan Partners may
receive compensation from the Fund for other services performed by it for the
Fund which are not within the scope of the duties of Artisan Partners under this
agreement.
8. LIMITATION OF LIABILITY OF ARTISAN PARTNERS. Artisan Partners
shall not be liable to Artisan Funds or its shareholders for any loss suffered
by Artisan Funds or its shareholders from or as a consequence of any act or
omission of Artisan Partners, or of any of the partners, employees or agents of
Artisan Partners, in connection with or pursuant to this agreement, except by
reason of willful misfeasance, bad faith or gross negligence on the part of
Artisan Partners in the performance of its duties or by reason of reckless
disregard by Artisan Partners of its obligations and duties under this
agreement.
9. DURATION AND RENEWAL. Unless terminated as provided in Section
10, this agreement shall continue in effect until December 26, 1997, and
thereafter from year to year only so long as such continuance is specifically
approved at least annually (a) by a majority of those directors who are not
interested persons of Artisan Funds or of Artisan Partners, voting in person at
a meeting called for the purpose of voting on such approval, and (b) by either
the board of directors of Artisan Fund or vote of the holders of a "majority of
the outstanding shares of the Fund" (which term as used throughout this
agreement shall be construed in accordance with the definition of "vote of a
majority of the outstanding voting securities of a company" in section 2(a)(42)
of the 1940 Act).
10. TERMINATION. This agreement may be terminated at any time,
without payment of any penalty, by the board of directors of Artisan Funds, or
by a vote of the holders of a majority of the outstanding shares of the Fund,
upon 60 days' written notice to Artisan Partners. This agreement may be
terminated by Artisan Partners at any time upon 60 days' written notice to
Artisan Fund. This agreement shall terminate automatically in the event of its
assignment (as defined in Section 2(a)(4) of the 1940 Act).
11. NON-LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any obligation of
Artisan Funds hereunder shall be binding only upon the assets of Artisan Funds
(or applicable series thereof) and shall not be binding upon any director,
officer, employee, agent or shareholder of Artisan Funds. Neither the
authorization of any action by the directors or shareholders of Artisan Funds
nor the execution of this agreement on behalf of Artisan Funds shall impose any
liability upon any director, officer or shareholder of Artisan Partners.
3
<PAGE>
12. AMENDMENT. This agreement may not be amended without the
affirmative vote (a) of a majority of those directors who are not "interested
persons" (as defined in section 2(a)(19) of the 1940 Act) of Artisan Funds or of
Artisan Partners, voting in person at a meeting called for the purpose of voting
on such approval, and (b) of the holders of a majority of the outstanding shares
of the Fund.
Dated: December , 1995
ARTISAN FUNDS, INC.
By
---------------------------------------
ARTISAN PARTNERS LIMITED
PARTNERSHIP
By: Artisan Investment Corporation
Its general partner
By:
---------------------------------------
Andrew A. Ziegler
President
4
<PAGE>
EXHIBIT 8
CUSTODIAN CONTRACT
Between
ARTISAN FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
Page
----
1. Employment of Custodian and Property to be Held By It 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 4
2.4 Bank Accounts 4
2.5 Availability of Federal Funds 5
2.6 Collection of Income 5
2.7 Payment of Fund Monies 5
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased 7
2.9 Appointment of Agents 7
2.10 Deposit of Fund Assets in Securities System 7
2.11 Fund Assets Held in the Custodian's Direct Paper
System 8
2.12 Segregated Account 9
2.13 Ownership Certificates for Tax Purposes 10
2.14 Proxies 10
2.15 Communications Relating to Portfolio Securities 10
2.16 Reports to Fund by Independent Public Accountants 10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States 11
3.1 Appointment of Foreign Sub-Custodians 11
3.2 Assets to be Held 11
3.3 Foreign Securities Systems 11
3.4 Agreements with Foreign Banking Institutions 11
3.5 Access of Independent Accountants of the Fund 12
3.6 Reports by Custodian 12
3.7 Transactions in Foreign Custody Account 12
3.8 Liability of Foreign Sub-Custodians 12
3.9 Liability of Custodian 13
3.10 Reimbursement for Advances 13
3.11 Monitoring Responsibilities 13
3.12 Branches of U.S. Banks 14
3.13 Tax Law 14
</TABLE>
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
<S> <C>
Page
----
4. Payments for Sales or Repurchases or Redemptions
of Shares of the Fund 14
5. Proper Instructions 15
6. Actions Permitted Without Express Authority 15
7. Evidence of Authority 16
8. Duties of the Custodian with Respect to the Books of Account and
Calculations of Net Asset value and Net Income 16
9. Records 16
10. Opinion of Fund's Independent Accountants 17
11. Reports to Fund by Independent Public Accountants 17
12. Compensation of Custodian 17
13. Responsibility of Custodian 17
14. Effective Period, Termination and Amendment 19
15. Successor Custodian 20
16. Interpretive and Additional Provisions 20
17. Additional Funds 21
18. Computerized Reporting Services 21
18.1 Protection of Equipment, Confidential or
Proprietary Programs and Information 21
18.2 Fund Acknowledgement 22
19. Massachusetts Law to Apply 22
20. Prior Contracts 22
21. Shareholder Communications Election 22
</TABLE>
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between Artisan Funds, Inc., an open-end, management
investment company organized and existing under the laws of Wisconsin, having
its principal place of business at 1000 North Water Street, Suite 1770,
Milwaukee, Wisconsin 53202 (the "Fund"), and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110 (the "Custodian").
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in one series, the
Artisan Small Cap Fund (such series together with all other series subsequently
established by the Fund and made subject to this Contract in accordance with
Article 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation, as amended and restated (the "Articles of Incorporation"). The
Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian all
securities and cash of the Portfolios, and all payments of income, payments of
principal or capital distributions received by it with respect to all
securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of beneficial
interest of the Fund representing interests in the Portfolios ("Shares") as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Directors of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian to employ than any such sub-custodian
has to the
<PAGE>
Custodian. The Custodian may employ as sub-custodian for the Fund's foreign
securities on behalf of the applicable Portfolio(s) the foreign banking
institutions and foreign securities depositories designated in Schedule A hereto
but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository or
in a book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies (each a "U.S. Securities System") and (b)
commercial paper of an issuer for which State Street Bank and Trust Company
acts as issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian pursuant to Section
2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions from the Fund on behalf of the applicable
Portfolio, which may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of the
Portfolio or into the name of any nominee or nominees of the Custodian
or into the name or
2
<PAGE>
nominee name of any agent appointed pursuant to Section 2.9 or into
the name or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate face
amount or number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio, to
the broker or its clearing agent, against a receipt, for examination
in accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such case,
the new securities and cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities owned
by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund
on behalf of the Portfolio requiring a pledge of assets by the Fund on
behalf of the Portfolio, but only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the "Exchange
Act") and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national
3
<PAGE>
securities exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions
by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange Act,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board of
Directors or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized in
writing the appointment of a nominee to be used in common with other
registered investment companies having the same investment adviser as the
Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the Custodian
on behalf of the Portfolio under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, subject only to
4
<PAGE>
draft or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
Portfolio, other than cash maintained by the Portfolio in a bank account
established and used in accordance with Rule 17f-3 under the Investment
Company Act of 1940. Funds held by the Custodian for a Portfolio may be
deposited by it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however, that every such
bank or trust company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust company and
the funds to be deposited with each such bank or trust company shall on
behalf of each applicable Portfolio be approved by vote of a majority of
the Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on
behalf of each applicable Portfolio and the Custodian, the Custodian shall,
upon the receipt of Proper Instructions from the Fund on behalf of a
Portfolio, make federal funds available to such Portfolio as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of such Portfolio which are
deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to bearer domestic securities if, on the date
of payment by the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all coupons
and other income items requiring presentation as and when they become due
and shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions of
Section 2.2(10) shall be the responsibility of the Fund. The Custodian will
have no duty or responsibility in connection therewith, other than to
provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing instructions
when deemed appropriate by the parties, the Custodian shall pay out monies
of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts
or options on futures contracts for the account of the Portfolio but
only (a) against the delivery
5
<PAGE>
of such securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or any
bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment Company Act
of 1940, as amended, to act as a custodian and has been designated by
the Custodian as its agent for this purpose) registered in the name of
the Portfolio or in the name of a nominee of the Custodian referred to
in Section 2.3 hereof or in proper form for transfer; (b) in the case
of a purchase effected through a U.S. Securities System, in accordance
with the conditions set forth in Section 2.10 hereof; (c) in the case
of a purchase involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund on behalf of the
Portfolio and the Custodian, or another bank, or a broker-dealer which
is a member or NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Portfolio of
securities owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from the
Portfolio or (e) for transfer to a time deposit account of the Fund in
any bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Fund as defined in
Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the Portfolio,
including but not limited to the following payments for the account of
the Portfolio: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio declared
pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition to
Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant
6
<PAGE>
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons to whom such
payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and every
case where payment for purchase of domestic securities for the account of
a Portfolio is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund on behalf of such Portfolio to so pay in advance, the Custodian
shall be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such of
the provisions of this Article 2 as the Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies (collectively
referred to herein as "U.S. Securities System") in accordance with
applicable Federal Reserve Board and Securities and Exchange Commission
rules and regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in an
account ("Account") of the Custodian in the U.S. Securities System
which shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to reflect
such payment and transfer for the account of the Portfolio. The
Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. Securities System
that payment
7
<PAGE>
for such securities has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
transfer and payment for the account of the Portfolio. Copies of all
advices from the U.S. Securities System of transfers of securities for
the account of the Portfolio shall identify the Portfolio, be
maintained for the Portfolio by the Custodian and be provided to the
Fund at its request. Upon request, the Custodian shall furnish the
Fund on behalf of the Portfolio confirmation of each transfer to or
from the account of the Portfolio in the form of a written advice or
notice and shall furnish to the Fund on behalf of the Portfolio copies
of daily transaction sheets reflecting each day's transactions in the
U.S. Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any report
obtained by the Custodian on the U.S. Securities System's accounting
system, internal accounting control and procedures for safeguarding
securities deposited in the U.S. Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the Portfolio
for any loss or damage to the Portfolio resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any
claim against the U.S. Securities System or any other person which the
Custodian may have as a consequence of any such loss or damage if and
to the extent that the Portfolio has not been made whole for any such
loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the Direct
Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
8
<PAGE>
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to the
account of the Portfolio. The Custodian shall transfer securities sold
for the account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such transfer and receipt of
payment for the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the Portfolio,
in the form of a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets reflecting
each day's transaction in the U.S. Securities System for the account
of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on behalf
of each such Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Directors or
of the Executive Committee signed by an officer of the Fund and certified
by the Secretary or an Assistant Secretary,
9
<PAGE>
setting forth the purpose or purposes of such segregated account and
declaring such purposes to be proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio held by it and in
connection with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for each
Portfolio all written information (including, without limitation, pendency
of calls and maturities of domestic securities and expirations of rights
in connection therewith and notices of exercise of call and put options
written by the Fund on behalf of the Portfolio and the maturity of futures
contracts purchased or sold by the Portfolio) received by the Custodian
from issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Portfolio all written information received by the Custodian from issuers
of the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Portfolio
desires to take action with respect to any tender offer, exchange offer or
any other similar transaction, the Portfolio shall notify the Custodian at
least three business days prior to the date on which the Custodian is to
take such action.
2.16 Reports to Fund by Independent Public Accountants. The Custodian shall
provide the Fund, at such times as the Fund may reasonably require, with
reports by independent public accountants on the accounting system,
internal accounting control and procedures for safeguarding securities,
futures contracts and options on futures contracts, including domestic
securities deposited and/or maintained in a U.S. Securities System,
relating to the services provided by the Custodian under this Contract;
such reports shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, the reports shall so state.
10
<PAGE>
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of Directors, the
Custodian and the Fund may agree to amend Schedule A hereto from time to
time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Portfolio's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the
foreign securities of the Fund held by each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside the United States (each a "Foreign Securities System") only
through arrangements implemented by the foreign banking institutions
serving as sub-custodians pursuant to the terms hereof (Foreign Securities
Systems and U.S. Securities Systems are referred to collectively herein as
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.4
hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set forth
in Exhibit 1 hereto and shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records will
be maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accountants for the Fund, will be
given access to the books and records of the foreign
11
<PAGE>
banking institution relating to its actions under its agreement with the
Custodian; and (e) assets of the Portfolios held by the foreign sub-
custodian will be subject only to the instructions of the Custodian or its
agents.
3.5 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants for the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian
insofar as such books and records relate to the performance of such
foreign banking institution under its agreement with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Portfolio(s) held by foreign sub-custodians, including
but not limited to an identification of entities having possession of the
Portfolio(s) securities and other assets and advices or notifications of
any transfers of securities to or from each custodial account maintained
by a foreign banking institution for the Custodian on behalf of each
applicable Portfolio indicating, as to securities acquired for a
Portfolio, the identity of the entity having physical possession of such
securities.
3.7 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.7, the provision of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities of the Fund held outside the United States by foreign sub-
custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Portfolio and delivery of securities maintained for the account
of each applicable Portfolio may be effected in accordance with the
customary established securities trading or securities processing
practices and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering securities
to the purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of receiving
later payment for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees to hold any
such nominee harmless from any liability as a holder of record of such
securities.
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-
custodian shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be
12
<PAGE>
subrogated to the rights of the Custodian with respect to any claims
against a foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that the
Fund has not been made whole for any such loss, damage, cost, expense,
liability or claim.
3.9 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a branch
of a U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian
shall not be liable for any loss, damage, cost, expense, liability or
claim resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism or any loss where the sub-
custodian has otherwise exercised reasonable care. Notwithstanding the
foregoing provisions of this paragraph 3.9, in delegating custody duties
to State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b)
other losses (excluding a bankruptcy or insolvency of State Street London
Ltd. not caused by political risk) due to Acts of God, nuclear incident or
other losses under circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care.
3.10 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for
foreign exchange, or in the event that the Custodian to its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security
therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of
such Portfolio's assets to the extent necessary to obtain reimbursement.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign sub-
custodians employed by the Custodian. Such information shall be similar in
kind and scope to that furnished to the Fund in connection with the
initial approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign sub-
custodian or any material loss of the assets of the Fund or in the case of
any foreign sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission is notified by such foreign sub-
custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent
13
<PAGE>
thereof) or that its shareholders' equity has declined below $200 million
(in each case computed in accordance with generally accepted U.S.
accounting principles).
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a sub-
custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom shall
be maintained in an interest bearing account established for the Fund with
the Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.13 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the responsibility
of the Fund to notify the Custodian of the obligations imposed on the Fund
or the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental
charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall be to
use reasonable efforts to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which the Fund
has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the
14
<PAGE>
Custodian shall honor checks drawn on the Custodian by a holder of Shares, which
checks have been furnished by the Fund to the holder of Shares, when presented
to the Custodian in accordance with such procedures and controls as are mutually
agreed upon from time to time between the Fund and the Custodian.
5. Proper Insructions
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Directors
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three - party agreement which requires a segregated asset account in
accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Portfolio except as
other directed by the Board of Directors of the Fund.
15
<PAGE>
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus and shall
advise the Fund and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Fund to do so, shall
advise the Transfer Agent periodically of the division of such net income among
its various components. The calculations of the net asset value per share and
the daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective prospectus.
9. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
16
<PAGE>
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
17
<PAGE>
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities markets, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been
given in accordance with this Contract; (iii) the insolvency of or acts or
omissions by a Securities System; (iv) any delay or failure of any broker, agent
or intermediary, central bank or other commercially prevalent payment or
clearing system to deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance of payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of the Custodian,
the Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article I hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign
18
<PAGE>
exchange contracts and assumed settlement) for the benefit of a Portfolio
including the purchase or sale of foreign exchange or of contracts for foreign
exchange or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the applicable
Portfolio shall be security therefor and should the Fund fail to repay the
Custodian promptly, the Custodian shall be entitled to utilize available cash
and to dispose of such Portfolio's assets to the extent necessary to obtain
reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties thereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Directors of the Fund has approved the
initial use of a particular Securities System by such Portfolio, as required by
Rule 17f-4 under the Investment Company Act of 1940, as amended and the
Custodian shall not with respect to a Portfolio act under Section 2.11 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors has approved the initial use of
the Direct Paper System by such Portfolio; provided further, however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
the Portfolios may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
19
<PAGE>
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any
20
<PAGE>
provision of the Articles of Incorporation of the Fund. No interpretive or
additional provisions made as provided in the preceding sentence shall be deemed
to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to Artisan Small-Cap Fund with respect to which it desires to have the
Custodian render services as custodian under the terms hereof, it shall so
notify the Custodian in writing, and if the Custodian agrees in writing to
provide such services, such series of Shares shall become a Portfolio hereunder.
18. Computerized Reporting Services
18.1 Protection of Equipment, Confidential or Proprietary Programs and
Information. The Fund agrees to use the equipment, computer programs and
other information supplied by the Custodian under this Contract solely for
its own internal use and benefit and not for resale or other transfer or
disposition to, or use by or for the benefit of, any other person or
organization without the prior written approval of the Custodian.
The Fund acknowledges that the data bases, computer programs, screen
formats, screen designs, report formats, interactive design techniques,
and other information furnished to the Fund by the Custodian constitute
copyrighted trade secrets or proprietary information of substantial value
to the Custodian. Such data bases, programs and other information are
collectively referred to below as "Proprietary Information". The Fund
agrees that it shall treat all Proprietary Information as proprietary to
the Custodian and that it shall not divulge any Proprietary Information to
any person or organization except as expressly permitted hereunder.
Without limiting the foregoing, the Fund agrees for itself and its
employees and agents:
1) to use such programs and data bases (i) solely on the Custodian's
computers, (ii) solely from equipment at Fund locations agreed to between
the Fund and the Custodian and (iii) solely in accordance with the
Custodian's applicable user documentation;
2) to use equipment supplied by the Custodian solely with programs
supplied by the Custodian and no other programs or software;
3) to refrain from copying or duplicating in any way (other than in the
normal course of performing processing on Custodian's computers) any part
of any Proprietary Information;
21
<PAGE>
4) to refrain from obtaining unauthorized access to any programs, data or
other information not owned by the Fund, and if such access is
accidentally obtained, to respect and safeguard the same as Proprietary
Information:
5) to refrain from causing or allowing information transmitted from the
Custodian's computer to the Fund's terminals to be retransmitted to
another computer, terminal or other device;
6) that the Fund shall have access to only those authorized transactions
as agreed to between the Fund and the Custodian;
7) to honor reasonable written requests made by the Custodian to protect
at the Custodian's expense the rights of the Custodian in Proprietary
Information at common law, under the Federal copyright statutes and under
other Federal and state statutes.
18.2 Fund Acknowledgement. The Fund hereby acknowledges that the data and
information it will be accessing from Custodian is unaudited and may not
be accurate due to inaccurate pricing of securities, delays of a day or
more in updating the Account and other causes for which Custodian will not
be liable to the Fund.
19. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
20. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
21. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check
22
<PAGE>
either "yes" or "no" below, the Custodian is required by the rule to treat the
Fund as consenting to disclosure of this information for all securities owned by
the Fund or any funds or accounts established by the Fund. For the Fund's
protection, the Rule prohibits the requesting company from using the Fund's name
and address for any purpose other than corporate communications. Please indicate
below whether the Fund consents or objects by checking one of the alternatives
below.
YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.
NO [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
23
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of March 7, 1995.
ARTISAN FUNDS, INC.
By: /s/ John M. Blaser
---------------------------------
Name: John M. Blaser
---------------------------------
Title: Chief Financial Officer
---------------------------------
STATE STREET BANK AND TRUST
COMPANY
By: /s/ Ronald E. Logue
---------------------------------
Name: Ronald E. Logue
---------------------------------
Title: Executive Vice President
---------------------------------
24
<PAGE>
Schedule A
----------
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of Artisan Funds, Inc.
(the "Fund") for use as sub-custodians for the Fund's securities and other
assets:
(Insert banks and securities depositories)
Certified:
- -------------------------
Fund's Authorized Officer
Date:
-------------------
<PAGE>
EXHIBIT I
SUBCUSTODIAN AGREEMENT
----------------------
AGREEMENT made on this day of , 19 , between State Street
Bank and Trust Company, A Massachusetts Trust Company (hereinafter referred to
as the "Custodian"), having its principal place of business at 225 Franklin
Street, Boston, MA, and
(hereinafter referred to as the "Subcustodian"), a organized
under the laws of and having an office at
.
WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;
WHEREAS, Custodian wishes to establish Account (the "Account") with the
Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and
WHEREAS, Subcustodian agrees to establish the Account and to hold and
maintain all Property in the Account in accordance with the terms and conditions
herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:
I. The Account
A. Establishment of the Account. Custodian hereby requests that
Subcustodian establish for each client of the Custodian an Account which shall
be composed of:
1. A Custody Account for any and all Securities (as hereinafter
defined) from time to time received by Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as hereinafter defined)
from time to time received by Subcustodian therefor.
B. Use of the Account. The Account shall be used exclusively to hold,
acquire, transfer or otherwise care for, on behalf of Custodian as custodian and
the customers of Custodian and not for Custodian's own interest, Securities and
such Cash or cash equivalents as are transferred to Subcustodian or as are
received in payment of any transfer of, or as payment on, or interest on, or
dividend from, any such Securities (herein collectively called "Cash").
C. Transfer of Property in the Account. Beneficial ownership of the
Securities and Cash in the Account shall be freely transferable without payment
of money or value other than for safe custody and administration.
D. Ownership and Segregation of Property in the Account. The ownership
of the property in the Account, whether Securities, Cash or both, and whether
any such property is held by Subcustodian in an Eligible Depository, shall be
clearly recorded on Subcustodian's books as belonging to Custodian on behalf of
Custodian's customers, and not for Custodian's own interest and, to the extent
that Securities are physically held in the Account, such Securities shall also
be physically segregated from the general assets of Subcustodian, the assets of
Custodian in its individual capacity and the assets of Subcustodian's other
1
<PAGE>
customers. In addition, Subcustodian shall maintain such other records as may be
necessary to identify the property hereunder as belonging to each Account.
E. Registration of Securities in the Account. Securities which are
eligible for deposit in a depository as provided for in Paragraph III may be
maintained with the depository in an account for Subcustodian's customers.
Securities which are not held in a depository and that are ordinarily held in
registered form will be registered in the name of Subcustodian or in the name of
Subcustodian's nominee, unless alternate Instructions are furnished by
Custodian.
II. Services to Be Provided By the Subcustodian
The services Subcustodian will provide to Custodian and the manner in
which such services will be performed will be as set forth below in this
Agreement.
A. Services Performed Pursuant to Instructions. All transactions
involving the Securities and Cash in the Account shall be executed solely in
accordance with Custodian's Instructions as that term is defined in Paragraph IV
hereof, except those described in paragraph B below.
B. Services to Be Performed Without Instructions. Subcustodian will,
unless it receives Instructions from Custodian to the contrary:
1. Collect Cash. Promptly collect and receive all dividends, income,
principal, proceeds from transfer and other payments with respect to property
held in the Account, and present for payment all Securities held in the Account
which are called, redeemed or retired or otherwise become payable and all
coupons and other income items which call for payment upon presentation, and
credit Cash receipts therefrom to the Deposit Account.
2. Exchange Securities. Promptly exchange Securities where the
exchange is purely ministerial including, without limitation, the exchange of
temporary Securities for those in definitive form and the exchange of warrants,
or other documents of entitlement to Securities, for the Securities themselves.
3. Sale of Rights and Fractional Interests. Whenever notification of
a rights entitlement or a fractional interest resulting from a rights issue,
stock dividend or stock split is received from the Account and such rights
entitlement or fractional interest bears an expiration date, Subcustodian will
promptly endeavor to obtain Custodian's Instructions, but should these not be
received in time for Subcustodian to take timely action, Subcustodian is
authorized to sell such rights entitlement or fractional interest and to credit
the Account.
4. Execute Certificates. Execute in Custodian's name for the Account,
whenever Subcustodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income from the
Securities held in the Account.
5. Pay Taxes and Receive Refunds. To pay or cause to be paid from the
Account any and all taxes and levies in the nature of taxes imposed on the
property in the account by any governmental authority, and to take all steps
necessary to obtain all tax exemptions, privileges or other benefits, including
reclaiming and recovering any foreign withholding tax, relating to the Account
and to execute any declaration, affidavits, or certificates of ownership which
may be necessary in connection therewith.
6. Prevent Losses. Take such steps as may be reasonably necessary to
secure or otherwise prevent the loss of, entitlements attached to or otherwise
relating to property held in the Account.
2
<PAGE>
c. Additional Services.
1. Transmission of Notices of Corporate Action. By such means as will
permit Custodian to take timely action with respect thereto, Subcustodian will
promptly notify Custodian upon receiving notices or reports, or otherwise
becoming aware, of corporate action affecting Securities held in the Account
(including, but not limited to, calls for redemption, mergers, consolidations,
reorganizations, recapitalizations, tender offers, rights offerings, exchanges,
subscriptions and other offerings) and dividend, interest and other income
payments relating to such Securities.
2. Communications Regarding the Exercise of Entitlements. Upon
request by Custodian, Subcustodian will promptly deliver, or cause any Eligible
Depository authorized and acting hereunder to deliver, to Custodian all notices,
proxies, proxy soliciting materials and other communications that call for
voting or the exercise of rights or other specific action (including material
relative to legal proceedings intended to be transmitted to security holders)
relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting instruments
to be executed by the registered holder of the Securities, but without
indicating the manner in which such Securities are to be voted.
3. Monitor Financial Service. In furtherance of its obligations under
this Agreement, Subcustodian will monitor a leading financial service with
respect to announcements and other information respecting property held in the
Account, including announcements and other information with respect to corporate
actions and dividend, interest and other income payments.
III. Use of Securities Depository
Subcustodian may, with the prior written approval of Custodian, maintain all or
any part of the Securities in the Account with a securities depository or
clearing agency which is incorporated or organized under the laws of a country
other than the United States of America and is supervised or regulated by a
government agency or regulatory authority in the foreign jurisdiction having
authority over such depositories or agencies, and which operates (a) the central
system for handling of designated securities or equivalent book entries in
, or (b) a transnational system for the central handling
of securities or equivalent book entries (herein called "Eligible Depository"),
provided however, that, while so maintained, such Securities shall be subject
only to the directions of Subcustodian, and that Subcustodian duties,
obligations and responsibilities with regard to such Securities shall be the
same as if such Securities were held by Subcustodian on its premises.
IV. Claims Against Property in the Account
The property in the account shall not be subject to any right, charge, security
interest, lien or claim of any kind (collectively "Charges") in favor of
Subcustodian or any Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment for such property's safe
custody or administration in accordance with the terms of this Agreement.
Subcustodian will immediately notify Custodian of any attempt by any party to
assert any Charge against the property held in the Account and shall take all
lawful actions to protect such property from such Charges until Custodian has
had a reasonable time to respond to such notice.
V. Subcustodian's Warranty
Subcustodian represents and warrants that:
(A) It is a branch of a "qualified U.S. bank" or an "eligible foreign
custodian" as those terms are defined in Rule 17f-5 of the Investment Company
Act
3
<PAGE>
of 1940, a copy of which is attached hereto as Attachment A (the "Rule"), and
Subcustodian shall immediately notify Custodian, in writing or by other
authorized means, in the event that there appears to be a substantial likelihood
that Subcustodian will cease to qualify under the Rule as currently in effect or
as hereafter amended, or
(B) It is the subject of an exemptive order issued by the United States
Securities and Exchange Commission which order permits Custodian to employ
Subcustodian notwithstanding the fact that Subcustodian fails to qualify under
the terms of the Rule, and Subcustodian shall immediately notify Custodian, in
writing or by other authorized means, if for any reason it is no longer covered
by such exemptive order.
Upon receipt of any such notification required under (A) or (B) of this section,
Custodian may terminate this Agreement immediately without prior notice to
Subcustodian.
VI. Definitions
A. Instructions. The term "Instructions" means:
1. instructions in writing signed by authorized individuals designated
as such by Custodian;
2. telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable form as shall
customarily be used for the transmission of like information, and
4. such other forms of communication as from time to time may be
agreed upon by Custodian and Subcustodian, which Subcustodian believes in good
faith to have been given by Custodian or which are transmitted with proper
testing or authentication pursuant to terms and conditions which Custodian may
specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. Subcustodian shall act in
accordance with Instructions and shall not be liable for any act or omission in
respect of any Instruction except in the case of willful default, negligence,
fraud, bad faith, willful misconduct, or reckless disregard of duties on the
part of Subcustodian. Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry practice and local
settlement practice.
B. Account. The term "Account" means collectively the Custody Account
and the Deposit Account.
C. Securities. The term "Securities" includes, without limitation,
stocks, shares, bonds, debentures, debt securities (convertible or non-
convertible), notes, or other obligations or securities and any certificates,
receipts, futures contracts, foreign exchange contracts, options, warrants,
scrip or other instruments representing rights to receive, purchase or subscribe
for the same, or evidencing or representing any other rights or interests
therein, or in any property or assets.
VII. Miscellaneous Provisions
A. Statements Regarding the Account. Subcustodian will supply Custodian
with such statements regarding the Account as Custodian may request, including
the identity and location of any Eligible Depository authorized and acting
hereunder. In addition, Subcustodian will supply Custodian advice or
notification of any transfers of Securities to or from the Account indicating,
4
<PAGE>
as to Securities acquired for the Account, if applicable, the Eligible
Depository having physical possession of such Securities.
B. Examination of Books and Records. Subcustodian agrees that its books
and records relating to the Account and Subcustodian's action under this
Agreement shall be open to the physical, on-premises inspection and audit at
reasonable times by officers of, auditors employed by or other representatives
of Custodian including (to the extent permitted under the law of ) the
independent public accountants for any customer of Custodian whose property is
being held hereunder and such books and records shall be retained for such
period as shall be agreed upon by Custodian and Subcustodian.
As Custodian may reasonably request from time to time, Subcustodian will furnish
its auditor's report on its system of internal controls, and Subcustodian will
use its best efforts to obtain and furnish similar reports of any Eligible
Depository authorized and acting hereunder.
C. Standard of Care. In holding, maintaining, servicing and disposing of
Property under this Agreement, and in fulfilling any other obligations
hereunder, Subcustodian shall exercise the same standard of care that it
exercises over its own assets, provided that Subcustodian shall exercise at
least the degree of care and maintain adequate insurance as expected of a
prudent professional Subcustodian for hire and shall assume the burden of
proving that it has exercised such care in its maintenance of Property held by
Subcustodian in its Account. The maintenance of the Property in an Eligible
Depository shall not affect Subcustodian's standard of care, and Subcustodian
will remain as fully responsible for any loss or damage to such securities as if
it had itself retained physical possession of them. Subcustodian shall also
indemnify and hold harmless Custodian and each of Custodian's customers from and
against any loss, damage, cost, expense, liability or claim (including
reasonable attorney's fees) arising out of or in connection with the improper or
negligent performance or the nonperformance of the duties of Subcustodian.
Subcustodian shall be responsible for complying with all provisions of the law
of , or any other law, applicable to Subcustodian in
connection with its duties hereunder, including (but not limited to) the payment
of all transfer taxes or other taxes and compliance with any currency
restrictions and securities laws in connection with its duties as Subcustodian.
D. Loss of Cash or Securities. Subcustodian agrees that, in the event of
any loss of Securities or Cash in the Account, Subcustodian will use its best
efforts to ascertain the circumstances relating to such loss and will promptly
report the same to Custodian and shall use every legal means available to it to
effect the quickest possible recovery.
E. Compensation of Subcustodian. Custodian agrees to pay to Subcustodian
from time to time such compensation for its services and such out-of-pocket or
incidental expenses of Subcustodian pursuant to this Agreement as may be
mutually agreed upon in writing from time to time.
F. Operating Requirements. The Subcustodian agrees to follow such
Operating Requirements as the Custodian may establish from time to time. A copy
of the current Operating Requirements is attached as Attachment B to this
Agreement.
G. Termination. This Agreement may be terminated by Subcustodian or
Custodian on 60 day's written notice to the other party, sent by registered
mail, provided that any such notice, whether given by Subcustodian or Custodian,
shall be followed within 60 days by Instructions specifying the names of the
persons to whom Subcustodian shall deliver the Securities in the Account and to
whom the Cash in the Account shall be paid. If within 60 days following the
giving of such notice of termination, Subcustodian does not receive such
Instructions,
5
<PAGE>
Subcustodian shall continue to hold such Securities and Cash subject to this
Agreement until such Instructions are given. The obligations of the parties
under this Agreement shall survive the termination of this Agreement.
G. Notices. Unless otherwise specified in this Agreement, all notices
and communications with respect to matters contemplated by this Agreement shall
be in writing, and delivered by mail, postage prepaid, telex, SWIFT, or other
mutually agreed telecommunication methods to the following addresses (or to such
other address as either party hereto may from time to time designate by notice
duly given in accordance with this paragraph):
To Subcustodian:
To Custodian: State Street Bank and Trust Company
Securities Operations/
Network Administration
P.O. Box 1631
Boston, MA 02105
H. Confidentiality. Subcustodian and Custodian shall each use its best
efforts to maintain the confidentiality of the property in the Account and the
beneficial owners thereof, subject, however, to the provisions of any laws
requiring disclosure. In addition, Subcustodian shall safeguard any test keys,
identification codes or other security devices which Custodian shall make
available to it. The Subcustodian further agrees it will not disclose the
existence of this Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has secured the
Custodian's written consent.
I. Assignment. This Agreement shall not be assignable by either party
but shall bind any successor in interest of Custodian and Subcustodian
respectively.
J. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of . To the extent inconsistent
with this Agreement or Custodian's Operating Requirements as attached hereto,
Subcustodian's rules and conditions regarding accounts generally or custody
accounts specifically shall not apply.
CUSTODIAN: STATE STREET BANK AND TRUST COMPANY
By:
--------------------------
Date:
-------------------------
AGREED TO BY SUBCUSTODIAN
- -------------------------------
By:
--------------------------
Date:
-------------------------
6
<PAGE>
Exhibit 9
TRANSFER AGENCY AND SERVICE AGREEMENT
between
ARTISAN FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
1. Terms of Appointment: Duties of the Bank.............................. 1
2. Fees and Expenses..................................................... 3
3. Representations and Warranties of the Bank............................ 4
4. Representations and Warranties of the Fund............................ 4
5. Data Access and Proprietary Information............................... 5
6. Indemnification....................................................... 6
7. Standard of Care...................................................... 7
8. Covenants of the Fund and the Bank.................................... 7
9. Termination of Agreement.............................................. 8
10. Additional Funds...................................................... 8
11. Assignment............................................................ 10
12. Amendment............................................................. 10
13. Massachusetts Law to Apply............................................ 10
14. Force Majeure......................................................... 10
15. Consequential Damages................................................. 10
16. Merger of Agreement................................................... 11
17. Counterparts.......................................................... 11
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the _____ day of March, 1995, by and between Artisan Funds,
Inc., a Wisconsin corporation, having its principal office and place of business
at 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202 (the "Fund"),
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having
its principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in one series, the Artisan
Small Cap Fund (such series, together with all other series subsequently
established by the Fund and made subject to this Agreement in accordance with
Article 10, being herein referred to as a "Portfolio", and collectively as the
"Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its
transfer agent, dividend disbursing agent, custodian of certain retirement plans
and agent in connection with certain other activities, and the Bank desires to
accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Terms of Appointment: Duties of the Bank
----------------------------------------
1.1 Subject to the terms and conditions set forth in this Agreement, the Fund,
on behalf of the Portfolio(s), hereby employs and appoints the Bank to act
as, and the Bank agrees to act as its transfer agent for the Fund's
authorized and issued shares of its common stock, $.01 par value,
("Shares"), dividend disbursing agent, custodian of certain retirement
plans and agent in connection with any accumulation, open-account or
similar plans provided to the shareholders of each of the respective
Portfolios of the Fund ("Shareholders") and set out in the currently
effective prospectus and statement of additional information ("prospectus")
of the Fund on behalf of the applicable Portfolio, including without
limitation any periodic investment plan or periodic withdrawal program.
1.2 The Bank agrees that it will perform the following services:
(a) In accordance with procedures established from time to time by
agreement between the Fund on behalf of each of the Portfolios, as
applicable and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof
to the Custodian of the Fund authorized pursuant to the
Articles of Incorporation as amended and restated (the
"Articles of Incorporation") of the Fund (the "Custodian");
<PAGE>
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to
the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Fund who shall thereby be
deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(viii) Issue replacement certificates for those certificates alleged
to have been lost, stolen or destroyed upon receipt by the Bank
of indemnification satisfactory to the Bank and protecting the
Bank and the Fund, and the Bank at its option, may issue
replacement certificates in place of mutilated stock
certificates upon presentation thereof and without such
indemnity;
(ix) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(x) Record the issuance of shares of the Fund and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of shares
of the Fund which are authorized, based upon data provided to
it by the Fund, and issued and outstanding. The Bank shall also
provide the Fund on a regular basis with the total number of
Shares which are authorized and issued and outstanding and
shall have no obligation, when recording the issuance of
Shares, to monitor the issuance of such Shares or to take
cognizance of any laws relating to the issue or sale of such
Shares, which functions shall be the sole responsibility of the
Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the Bank shall: (i)
perform the customary services of a transfer agent, dividend
disbursing agent, custodian of certain retirement plans and, as
relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment
plan or periodic withdrawal program), including but not limited to:
maintaining all Shareholder
2
<PAGE>
accounts, preparing Shareholder meeting lists, mailing proxies,
mailing Shareholder reports and prospectuses to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts,
preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions
by federal authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all
purchases and redemptions of Shares and other confirmable transactions
in Shareholder accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account information and (ii)
provide a system which will enable the Fund to monitor the total
number of Shares sold in each State.
(c) In addition, the Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky
reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and
thereafter monitor the daily activity for each State. The
responsibility of the Bank for the Fund's blue sky State registration
status is solely limited to the initial establishment of transactions
subject to blue sky compliance by the Fund and the reporting of such
transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services in
Section 1 may be established from time to time by agreement between
the Fund on behalf of each Portfolio and the Bank per the attached
service responsibility schedule. The Bank may at times perform only a
portion of these services and the Fund or its agent may perform these
services on the Fund's behalf.
(e) The Bank shall provide additional services on behalf of the Fund
(i.e., escheatment services) which may be agreed upon in writing
between the Fund and the Bank.
2. Fees and Expenses
-----------------
2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees
on behalf of each of the Portfolios to pay the Bank an annual maintenance
fee for each Shareholder account as set out in the initial fee schedule
attached hereto. Such fees and out-of-pocket expenses and advances
identified under Section 2.2 below may be changed from time to time subject
to mutual written agreement between the Fund and the Bank.
2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on
behalf of each of the Portfolios to reimburse the Bank for out-of-pocket
expenses, including but not limited to confirmation production, postage,
forms, telephone, microfilm, microfiche, tabulating proxies, records
storage, or advances incurred by the Bank for the items set out in the fee
schedule attached hereto. In addition, any other expenses incurred by the
Bank at the request or with the consent of the Fund, will be reimbursed by
the Fund on behalf of the applicable Portfolio.
3
<PAGE>
2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and
reimbursable expenses within five days following the receipt of the
respective billing notice. Postage for mailing of dividends, proxies, Fund
reports and other mailings to all Shareholder accounts shall be advanced to
the Bank by the Fund at least seven (7) days prior to the mailing date of
such materials.
3. Representations and Warranties of the Bank
------------------------------------------
The Bank represents and warrants to the Fund that:
3.1 It is a trust company duly organized and existing and in good standing
under the laws of the Commonwealth of Massachusetts.
3.2 It is duly qualified to carry on its business in the Commonwealth of
Massachusetts.
3.3 It is empowered under applicable laws and by its Charter and By-Laws to
enter into and perform this Agreement.
3.4 All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement.
3.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under this
Agreement.
4. Representations and Warranties of the Fund
------------------------------------------
The Fund represents and warrants to the Bank that:
4.1 It is a corporation duly organized and existing and in good standing under
the laws of
4.2 It is empowered under applicable laws and by its Articles of Incorporation
and By-Laws to enter into and perform this Agreement.
4.3 All corporate proceedings required by said Articles of Incorporation and
By-Laws have been taken to authorize it to enter into and perform this
Agreement.
4.4 It is an open-end, diversified management investment company registered
under the Investment Company Act of 1940, as amended.
4.5 A registration statement under the Securities Act of 1933, as amended on
behalf of each of the Portfolios will be effective on the date Shares are
first offered for sale to the public and will remain effective thereafter,
and appropriate state securities law filings have been made and will
continue to be made, with respect to all Shares of the Fund being offered
for sale.
4
<PAGE>
5. Data Access and Proprietary Information
---------------------------------------
5.1 The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals furnished to the Fund by the Bank as part of the Fund's ability to
access certain Fund-related data ("Customer Data") maintained by the Bank
on data bases under the control and ownership of the Bank or other third
party ("Data Access Services") constitute copyrighted, trade secret, or
other proprietary information (collectively, "Proprietary Information") of
substantial value to the Bank or other third party. In no event shall
Proprietary Information be deemed Customer Data. The Fund agrees to treat
all Proprietary Information as proprietary to the Bank and further agrees
that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Fund agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by the Bank and solely in accordance with the Bank's
applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform the Bank in a timely manner of such fact and dispose of such
information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the Bank;
(e) that the Fund shall have access only to those authorized actions
agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to protect
at the Bank's expense the rights of the Bank in Proprietary
Information at common law, under federal copyright law and under other
federal or state law.
Each party shall take reasonable efforts to advise its employees of their
obligations pursuant to this Section 5. The obligations of this Section shall
survive any earlier termination of this Agreement.
5.2 If the Fund notifies the Bank that any of the Data Access Services do not
operate in material compliance with the most recently issued user
documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain
certain data included in the Data Access Services are solely responsible
for the contents of such data and the Fund agrees to make no claim against
the Bank arising out of the contents of such third-party data, including,
but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL
COMPUTER
5
<PAGE>
PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE
PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED
TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.
5.3 If the transactions available to the Fund include the ability to originate
electronic instructions to the Bank in order to (i) effect the transfer or
movement of cash or Shares or (ii) transmit Shareholder information or
other information, then in such event the Bank shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity
with security procedures established by the Bank from time to time.
6. Indemnification
---------------
6.1 The Bank shall not be responsible for, and the Fund shall on behalf of the
applicable Portfolio indemnify and hold the Bank harmless from and against,
any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required to
be taken pursuant to this Agreement, provided that such actions are
taken in good faith and without negligence or willful misconduct.
(b) The Fund's lack of good faith, negligence or willful misconduct which
arise out of the breach of any representation or warranty of the Fund
hereunder.
(c) The reliance on or use by the Bank or its agents or subcontractors of
information, records, documents or services which (i) are received by
the Bank or its agents or subcontractors, and (ii) have been prepared,
maintained or performed by the Fund or any other person or firm on
behalf of the Fund including but not limited to any previous transfer
agent or registrar.
(d) The reliance on, or the carrying out by the Bank or its agents or
subcontractors of any instructions or requests of the Fund on behalf
of the applicable Portfolio.
(e) The offer or sale of Shares in violation of any requirement under the
federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state
or in violation of any stop order or other determination or ruling by
any federal agency or any state with respect to the offer or sale of
such Shares in such state.
6.2 At any time the Bank may apply to any officer of the Fund for instructions,
and may consult with legal counsel with respect to any matter arising in
connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents
6
<PAGE>
or subcontractors shall not be liable and shall be indemnified by the Fund
on behalf of the applicable Portfolio for any action taken or omitted by it
in reliance upon such instructions or upon the opinion of such counsel. The
Bank, its agents and subcontractors shall be protected and indemnified in
acting upon any paper or document furnished by or on behalf of the Fund,
reasonably believed to be genuine and to have been signed by the proper
person or persons, or upon any instruction, information, data, records or
documents provided the Bank or its agents or subcontractors by machine
readable input, telex, CRT data entry or other similar means authorized by
the Fund, and shall not be held to have notice of any change of authority
of any person, until receipt of written notice thereof from the Fund. The
Bank, its agents and subcontractors shall also be protected and indemnified
in recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any former transfer agent or former registrar,
or of a co-transfer agent or co-registrar.
6.3 In order that the indemnification provisions contained in this Section 6
shall apply, upon the assertion of a claim for which the Fund may be
required to indemnify the Bank, the Bank shall promptly notify the Fund of
such assertion, and shall keep the Fund advised with respect to all
developments concerning such claim. The Fund shall have the option to
participate with the Bank in the defense of such claim or to defend against
said claim in its own name or in the name of the Bank. The Bank shall in no
case confess any claim or make any compromise in any case in which the Fund
may be required to indemnify the Bank except with the Fund's prior written
consent.
7. Standard of Care
----------------
The Bank shall at all times act in good faith and agrees to use its best
efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement. The Bank shall be responsible for any and
all losses, damages, costs, charges, counsel fees, payments, expenses and
liability arising out of or attributable to any action or failure or
omission to act by the Bank as a result of the Bank's negligence, bad
faith, or willful misconduct or that of its employees.
8. Covenants of the Fund and the Bank
----------------------------------
8.1 The Fund shall on behalf of each of the Portfolios promptly furnish to the
Bank the following:
(a) A certified copy of the resolution of the Board of Directors of the
Fund authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund and
all amendments thereto.
7
<PAGE>
8.2 The Bank hereby agrees to establish and maintain facilities and procedures
reasonably acceptable to the Fund for safekeeping of stock certificates,
check forms and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such certificates, forms
and devices.
8.3 The Bank shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained
and made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
8.4 The Bank and the Fund agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement
shall remain confidential, and shall not be voluntarily disclosed to any
other person, except as may be required by law.
8.5 In case of any requests or demands for the inspection of the Shareholder
records of the Fund, the Bank will endeavor to notify the Fund and to
secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the
Shareholder records to any person whenever it is advised by its counsel
that it may be held liable for the failure to exhibit the Shareholder
records to such person.
9. Termination of Agreement
------------------------
9.1 This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other.
9.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses
associated with the movement of records and material will be borne by the
Fund on behalf of the applicable Portfolio(s). Additionally, the Bank
reserves the right to charge for any other reasonable expenses associated
with such termination.
10. Additional Funds
----------------
In the event that the Fund establishes one or more series of Shares in
addition to Artisan Small Cap Fund with respect to which it desires to have
the Bank render services as transfer agent under the terms hereof, it shall
so notify the Bank in writing, and if the Bank agrees in writing to provide
such services, such series of Shares shall become a Portfolio hereunder.
8
<PAGE>
11. Assignment
----------
11.1 Except as provided in Section 10.3 below, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party without
the written consent of the other party.
11.2 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
11.3 The Bank may, without further consent on the part of the Fund, subcontract
for the performance hereof with (i) Boston Financial Data Services, Inc.,
a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange
Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly
registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a
BFDS affiliate duly registered as a transfer agent pursuant to Section
17A(c)(1); provided, however, that the Bank shall be as fully responsible
to the Fund for the acts and omissions of any subcontractor as it is for
its own acts and omissions.
12. Amendment
---------
This Agreement may be amended or modified by a written agreement executed
by both parties and authorized or approved by a resolution of the Board of
Directors of the Fund.
13. Massachusetts Law to Apply
--------------------------
This Agreement shall be construed and the provisions thereof interpreted
under and in accordance with the laws of the Commonwealth of
Massachusetts.
14. Force Majeure
-------------
In the event either party is unable to perform its obligations under the
terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to
perform or otherwise from such causes.
15. Consequential Damages
---------------------
Neither party to this Agreement shall be liable to the other party for
consequential damages under any provision of this Agreement or for any
consequential damages arising out of any act or failure to act hereunder.
9
<PAGE>
16. Merger of Agreement
-------------------
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject matter
hereof whether oral or written.
17. Counterparts
------------
This Agreement may be executed by the parties hereto on any number of
counterparts, and all of said counterparts taken together shall be deemed
to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
ARTISAN FUNDS, INC.
By:_________________________________________
John M. Blaser
Name:_______________________________________
Chief Financial Officer, Treasurer and
Title:______________________________________
Secretary
_________
STATE STREET BANK AND TRUST COMPANY
By:_________________________________________
Ronald E. Logue
Name:_______________________________________
Executive Vice President
Title:______________________________________
10
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES*
Service Performed Responsibility
- ----------------- --------------
Bank Fund
---- ----
1. Receives orders for the
purchase of Shares. X
2. Issue Shares and hold Shares
in Shareholders accounts. X
3. Receive redemption requests. X
4. Effect transactions 1-3 above
directly with broker-dealers. X
5. Pay over monies to redeeming
Shareholders. X
6. Effect transfers of Shares. X
7. Prepare and transmit dividends
and distributions. X
8. Issue Replacement Certificates. X
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and
accurate control book for each
issue of securities. X
12. Mail proxies. X
13. Mail Shareholder reports. X
14. Mail prospectuses to current
Shareholders. X
15. Withhold taxes on U.S. resident
and non-resident alien accounts. X
16. Prepare and file U.S. Treasury
Department forms. X
17. Prepare and mail account and
confirmation statements for
Shareholders. X
18. Provide Shareholder account
information. X
19. Blue sky reporting. X
* Such services are more fully described in Section 1.2(a), (b) and (c) of
the Agreement.
<PAGE>
Exhibit 10.1
[LETTERHEAD OF BELL, BOYD & LLOYD]
March 8, 1995
Artisan Funds, Inc.
1000 North Water Street
Suite 1770
Milwaukee, Wisconsin 53202
Ladies and Gentlemen:
Shares of Common Stock
Par Value $.01
--------------------
We have acted as counsel for Artisan Funds, Inc., a Wisconsin corporation
("Artisan Funds"), in connection with the registration under the Securities Act
of 1933 (the "Act") of an indefinite number of shares of common stock, par value
$.01, of the series of Artisan Funds designated Artisan Small Cap Fund (the
"Fund") in registration statement no. 33-88316 on form N-1A (the "Registration
Statement").
In this connection we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, records,
certificates and other papers as we deemed it necessary to examine for the
purpose of this opinion, including the amended and restated articles of
incorporation and bylaws of Artisan Funds, actions of the board of directors of
Artisan Funds authorizing the issuance of shares of the Fund and the
Registration Statement.
Based on the foregoing examination, we are of the opinion that:
1. Artisan Funds is a corporation duly and validly existing in good
standing under the laws of the state of Wisconsin.
2. Upon the issuance and delivery of the shares of the Fund in
accordance with the articles of incorporation and bylaws and the actions of
the board of directors authorizing the issuance of such shares, and the
receipt by Artisan Funds of the authorized consideration therefor, the
shares so issued will be validly issued and outstanding, fully paid and
nonassessable shares of common stock, par value $.01, of the Fund, except
to the extent provided in Section 180.0622(2)(b) of the Wisconsin Statutes,
or any successor provision, which provides that shareholders of a
corporation organized under Chapter 180 of the Wisconsin Statutes may be
assessed up to the par value of their shares to satisfy the obligations of
such corporation to its employees for services rendered, but not exceeding
six months service in the case of any individual employee;
<PAGE>
Artisan Funds, Inc.
March 8, 1995
Page 2
certain Wisconsin courts have interpreted "par value" to mean the full
amount paid by the purchaser of shares upon the issuance thereof.
In giving this opinion we have relied upon the attached opinion of Godfrey
& Kahn, S.C. to us dated March 7, 1995.
We consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not admit that we are in the category
of persons whose consent is required under section 7 of the Act.
Very truly yours,
<PAGE>
Exhibit 10.2
[LETTERHEAD OF BELL, BOYD & LLOYD]
October 13, 1995
Artisan Funds, Inc.
1000 North Water Street
Suite 1770
Milwaukee, Wisconsin 53202
Ladies and Gentlemen:
Shares of Common Stock
Par Value $.01
--------------------
We have acted as counsel for Artisan Funds, Inc., a Wisconsin corporation
("Artisan Funds"), in connection with the registration under the Securities Act
of 1933 (the "Act") of an indefinite number of shares of common stock, par value
$.01, of the series of Artisan Funds designated Artisan International Fund (the
"Fund") in post-effective amendment no. 2 to registration statement no. 33-88316
on form N-1A (the "Registration Statement").
In this connection we have examined originals, or copies certified or
otherwise identified to our satisfaction, of such documents, records,
certificates and other papers as we deemed it necessary to examine for the
purpose of this opinion, including the amended articles of incorporation and
bylaws of Artisan Funds, actions of the board of directors of Artisan Funds
authorizing the issuance of shares of the Fund and the Registration Statement.
Based on the foregoing examination, we are of the opinion that:
1. Artisan Funds is a corporation duly and validly existing in good
standing under the laws of the state of Wisconsin.
2. Upon the issuance and delivery of the shares of the Fund in
accordance with the amended articles of incorporation and bylaws and the
actions of the board of directors authorizing the issuance of such shares,
and the receipt by Artisan Funds of the authorized consideration therefor,
the shares so issued will be validly issued and outstanding, fully paid and
nonassessable shares of common stock, par value $.01, of the Fund, except
to the extent provided in Section 180.0622(2)(b) of the Wisconsin Statutes,
or any successor provision, which provides that shareholders of a
corporation organized under Chapter 180 of the Wisconsin Statutes may be
assessed up to the par value of their shares to satisfy the obligations of
such corporation to its employees for services rendered, but not exceeding
six months service in the case of any individual employee;
<PAGE>
Artisan Funds, Inc.
October 13, 1995
Page 2
certain Wisconsin courts have interpreted "par value" to mean the full
amount paid by the purchaser of shares upon the issuance thereof.
In giving this opinion we have relied upon the attached opinion of Godfrey
& Kahn, S.C. to us dated October 13, 1995.
We consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not admit that we are in the category
of persons whose consent is required under section 7 of the Act.
Very truly yours,
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 3 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated July
19, 1995, relating to the financial statements and financial highlights of
Artisan Small Cap Fund (constituting Artisan Funds, Inc.), which appears in such
Statement of Additional Information, and to the incorporation by reference of
our report into the Prospectus which constitutes part of this Registration
Statement. We also consent to the reference to us under the heading "Independent
Accountants" in such Statement of Additional Information.
Milwaukee, Wisconsin
November 22, 1995
<PAGE>
Exhibit 13
ARTISAN FUNDS, INC.
Subscription Agreement
----------------------
1. Subscription for Shares. We agree to purchase from Artisan Funds, Inc.
(the "Artisan Funds") 10,000 shares of the series designated Artisan Small Cap
Fund (the "Fund") for a price of $10.00 per share, on the terms and conditions
set forth herein and in the preliminary prospectus described below, and agree to
tender $100,000 in payment therefor at such time as the board of directors or
the president of Artisan Funds determines.
We understand that Artisan Funds has filed a registration statement with
the Securities and Exchange Commission (No. 33-88316) on Form N-1A, which
contains the preliminary prospectus describing Artisan Funds, the Fund and the
shares. We acknowledge receipt of a copy of the preliminary prospectus.
We recognize that Artisan Funds will not be fully operational until it
commences a public offering of its shares. Accordingly, a number of features of
the Fund described in the preliminary prospectus, including redemption of shares
upon request of shareholders, will not be available until Artisan Funds'
registration statement becomes effective under the Securities Act of 1933.
1. Representations and Warranties. We represent and warrant as follows:
(a) We are aware that no federal or state agency has made any finding or
determination as to the fairness for investment, nor any
recommendation nor endorsement, of the shares;
(b) We have such knowledge and experience of financial and business
matters as will enable us to utilize the information made available to
us in connection with the offering of the shares to evaluate the
merits and risks of the prospective investment and to make an informed
investment decision;
(c) We recognize that Artisan Funds has only recently been organized, that
the Fund has no financial or operating history and, further, that
investment in the Fund involves certain risks, and we have taken full
cognizance of and understand all of the risks related to the purchase
of the shares and we acknowledge that we have suitable financial
resources and anticipated income to bear the economic risks of such an
investment;
(d) We are purchasing the shares for our own account, for investment, and
not with any intention of redemption, distribution, or resale of the
shares, either in whole or in part;
<PAGE>
(e) We will not sell the shares purchased by us without registration of
them under the Securities Act of 1933 or exemption therefore;
(f) We have been furnished with and have read this agreement, the
preliminary prospectus and such other documents relating to the Fund
and Artisan Funds as we have requested and as have been provided to us
by Artisan Funds, and
(g) We have also had the opportunity to ask questions of, and receive
answers from, officers of Artisan Funds concerning Artisan Funds and
the terms of the offering.
3. Rejection of Subscriptions. We recognize that Artisan Funds reserves
the right to reject or limit any subscription.
4. Social Security Numbers. We certify under penalties of perjury that
the numbers shown on this form are our correct taxpayer identification numbers
and that we are not subject to backup withholding as a result of a failure to
report all interest and dividend income to the Internal Revenue Service.
______________________________________
Taxpayer Identification Number
By: _____________________________
Andrew A. Ziegler
______________________________________
Taxpayer Identification Number
By: _____________________________
Carlene Murphy Ziegler
Dated: March 6, 1995
2
<PAGE>
Exhibit 14
THE ARTISAN FUNDS
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following provisions of Articles I to VII are in the form promulgated by
the Internal Revenue Service in Form 5305-A for use in establishing an
individual retirement custodial account.
ARTICLE I.
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c)(but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993 include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code or an
employer contribution to a simplified employee pension plan as described in
section 408(k).
ARTICLE II.
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III.
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within the
meaning of section 408(m)) except as otherwise permitted by section 408(m)(3)
which provides an exception for certain gold and silver coins and coins issued
under the laws of any state.
ARTICLE IV.
1. Notwithstanding any provisions of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be made
in accordance with the following requirements and shall otherwise comply with
section 408(a)(6) and Proposed Regulations section 1.408-8, including the
incidental death benefit provisions of Proposed Regulations section 1.401(a)(9)-
2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to begin
to the Depositor under paragraph 3, or to the surviving spouse under paragraph
4, other than in the case of a life annuity, life expectancies shall be
recalculated annually. Such election shall be irrevocable as to the Depositor
and the surviving spouse and shall apply to all subsequent years. The life
expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or begin
to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 70 1/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal monthly,
quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period that
may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period that
may not be longer than the joint life and last survivor expectancy of the
Depositor and his or her designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed to
him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest has
begun, distribution must continue to be made in accordance with paragraph
3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of the
beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the fifth
anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the year
of the Depositor's death. If, however,
<PAGE>
the beneficiary is the Depositor's surviving spouse, then this
distribution is not required to begin before December 31 of the year in
which the Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on the
Depositor's required beginning date, even though payments may actually
have been made before that date.
(d) Depositor dies before his or her entire interest has been distributed and
if the beneficiary is other than the surviving spouse, no additional cash
contributions or rollover contributions may be accepted in the account.
5. In the case of distribution over life expectancy in equal or substantially
equal annual payments, to determine the minimum annual payment for each year,
divide the Depositor's entire interest in the Custodial account as of the close
of business on December 31 of the preceding year by the life expectancy of the
Depositor (or the joint life and last survivor expectancy of the Depositor and
the Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies.) In the case of distributions under paragraph
3, determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Depositor and designated beneficiary
as of their birthdays in the year the Depositor reaches age 70 1/2. In the case
of a distribution in accordance with paragraph 4(b)(ii), determine life
expectancy using the attained age of the designated beneficiary as of the
beneficiary's birthday in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the
minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
ARTICLE V.
1. The Depositor agrees to provide the Custodian with information necessary
for the Custodian to prepare any reports required under section 408(i) and
Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue Service and
the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VI.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) and the related
regulations will be invalid.
ARTICLE VII.
This Agreement will be amended from time to time to comply with the provisions
of the Code and related regulations. Other amendments may be made with the
consent of the persons whose signatures appear on the Adoption Agreement.
ARTICLE VIII.
1. As used in this Article VIII the following terms have the following
meanings:
"Custodian" means State Street Bank and Trust Company.
"Fund" means a mutual fund or registered investment company which is specified
in the Adoption Agreement, or which is designated by the Distributor named in
the Adoption Agreement, as being available as an investment for the custodial
account; provided, however, that such a mutual fund or registered investment
company must be legally offered for sale in the state of the Depositor's
residence in order to be a Fund hereunder.
"Distributor" means the entity which has a contract with the Fund(s) to serve
as distributor of the shares of such Fund(s).
In any case where there is no Distributor, the duties assigned hereunder to
the Distributor may be performed by the Fund(s) or by an entity that has a
contract to perform management or investment advisory services for the Fund(s).
"Service Company" means any entity employed by the Custodian or the
Distributor, including the transfer agent for the Fund(s), to perform various
administrative duties of either the Custodian or the Distributor.
In any case where there is no Service Company, the duties assigned hereunder
to the Service Company will be performed by the Distributor (if any) or by an
entity specified in the second preceding paragraph.
2. The Depositor may revoke the custodial account established hereunder by
mailing or delivering a written notice of revocation to the Custodian within
seven days after the Depositor receives the Disclosure Statement related to the
custodial account. Mailed notice is treated as given to the Custodian on date
of the postmark (or on the date of Post Office certification or registration in
the case of notice sent by certified or registered mail). Upon timely
revocation, the Depositor's initial contribution will be returned, without
adjustment for administrative expenses, commissions or sales charges,
fluctuations in market value or other changes.
3. All contributions to the custodial account shall be invested and
reinvested in full and fractional shares of one or more Funds. Such investments
shall be made in such proportions and/or in such amounts as Depositor from time
to time in the Adoption Agreement or by other written notice to the Service
Company (in
2
<PAGE>
such form as may be acceptable to the Service Company) may direct.
The Service Company shall be responsible for promptly transmitting all
investment directions by the Depositor for the purchase or sale of shares of one
or more Funds hereunder to the Funds' transfer agent for execution. However, if
investment directions with respect to the investment of any contribution
hereunder are not received from the Depositor as required or, if received, are
unclear or incomplete in the opinion of the Service Company, the contribution
will be returned to the Depositor without liability for interest or for loss of
income or appreciation. If any directions or other orders by the Depositor with
respect to the sale or purchase of shares of one or more Funds for the custodial
account are unclear or incomplete in the opinion of the Service Company, the
Service Company will refrain from carrying out such investment directions or
from executing any such sale or purchase, without liability for loss of income
or for appreciation or depreciation of any asset, pending receipt of
clarification or completion from the Depositor.
All investment directions by Depositor will be subject to any minimum initial
or additional investment or minimum balance rules applicable to a Fund as
described in its prospectus.
All dividends and capital gains or other distributions received on the shares
of any Fund held in the Depositor's account shall be retained in the account and
(unless received in additional shares) shall be reinvested in full and
fractional shares of such Fund.
4. Subject to the minimum initial or additional investment, minimum balance
and other exchange rules applicable to a Fund, the Depositor may at any time
direct the Service Company to exchange all or a specified portion of the shares
of a Fund in the Depositor's account for shares and fractional shares of one or
more other Funds. The Depositor shall give such directions by written or
telephonic notice acceptable to the Service Company, and the Service Company
will process such directions as soon as practicable after receipt thereof
(subject to the second paragraph of Section 3 of this Article VIII).
5. Any purchase or redemption of shares of a Fund for or from the Depositor's
account will be effected at the public offering price or net asset value of such
Fund (as described in the then effective prospectus for such Fund) next
established after the Service Company has transmitted the Depositor's investment
directions to the transfer agent for the Fund(s).
Any purchase, exchange, transfer or redemption of shares of a Fund for or from
the Depositor's account will be subject to any applicable sales, redemption or
other charge as described in the then effective prospectus for such Fund.
6. The Service Company shall maintain adequate records of all purchases or
sales of shares of one or more Funds for the Depositor's custodial account. Any
account maintained in connection herewith shall be in the name of the Custodian
for the benefit of the Depositor. All assets of the custodial account shall be
registered in the name of the Custodian or of a suitable nominee. The books and
records of the Custodian shall show that all such investments are part of the
custodial account.
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the custodial account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the account
hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefor. The Service Company agrees to furnish the Custodian
with any information the Custodian requires to carry out the Custodian's
recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the
custodial account will have any responsibility for rendering advice with respect
to the investment and reinvestment of Depositor's custodial account, nor shall
such parties be liable for any loss or diminution in value which results from
Depositor's exercise of investment control over his custodial account.
Depositor shall have and exercise exclusive responsibility for and control over
the investment of the assets of his custodial account, and neither Custodian nor
any other such party shall have any duty to question his directions in that
regard or to advise him regarding the purchase, retention or sale of shares of
one or more Funds for the custodial account.
8. The Depositor may appoint an investment advisor with respect to the
custodial account on a form acceptable to the Custodian and the Service Company.
The investment advisor's appointment will be in effect until written notice to
the contrary is received by the Custodian and the Service Company. While an
investment advisor's appointment is in effect, the investment advisor may issue
investment directions or may issue orders for the sale or purchase of shares of
one or more Funds to the Service Company, and the Service Company will be fully
protected in carrying out such investment directions or orders to the same
extent as if they had been given by the Depositor.
The Depositor's appointment of any investment advisor will also be deemed to
be instructions to the Custodian and the Service Company to pay such investment
advisor's fees to the investment advisor from the custodial account hereunder
without additional authorization by the Depositor or the Custodian.
9. Distribution of the assets of the custodial account shall be made at such
time and in such form as Depositor (or the Beneficiary if Depositor is deceased)
shall elect by written order to the Custodian. Depositor acknowledges that any
distribution (except for distribution on account of Depositor's disability or
death, return of an "excess contribution" referred to in Code Section 408(d), or
a "rollover" from this custodial account) made earlier than age 59 1/2 may
subject Depositor to an "additional tax on early distributions" under Code
Section 72(t). For that purpose, Depositor will be considered disabled if
Depositor can prove, as provided in Code Section 72(m)(7), that Depositor is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or be of long-continued and indefinite duration. It is the responsibility
of the Depositor (or the Beneficiary) by appropriate distribution instructions
to the Custodian to insure that the distribution requirements of Code Section
401(a)(9) and Article IV above are met. If the Depositor (or Beneficiary) does
not direct the Custodian to make distributions from the custodial account by the
time that such distributions are required to commence in accordance with such
distribution requirements, the Custodian (and Service Company) shall assume that
the Depositor (or Beneficiary) is meeting the
3
<PAGE>
minimum distribution requirements from another individual retirement arrangement
maintained by the Depositor (or Beneficiary) and the Custodian and Service
Company shall be fully protected in so doing. The Depositor (or the Depositor's
surviving spouse) may elect to comply with the distribution requirements in
Article IV using the recalculation of life expectancy method, or may elect that
the life expectancy of the Depositor (and/or the Depositor's surviving spouse)
will not be recalculated; any such election may be in such form as the Depositor
(or surviving spouse) provides (including the calculation of minimum
distribution amounts in accordance with a method that does not provide for
recalculation of the life expectancy of one or both of the Depositor and
surviving spouse and instructions to the Custodian in accordance with such
method). Neither Custodian nor any other party providing services to the
custodial account assumes any responsibility for the tax treatment of any
distribution from the custodial account; such responsibility rests solely with
the person ordering the distribution.
10. Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Depositor (or Beneficiary if
Depositor is deceased) containing such information as the Custodian may
reasonably request. Also, before making any distribution or honoring any
assignment of the custodial account, Custodian shall be furnished with any and
all applications, certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with an order which appears on its face to be genuine, or for refusing
to comply if not satisfied it is genuine, and Custodian has no duty of further
inquiry. Any distributions from the account may be mailed, first-class postage
prepaid, to the last known address of the person who is to receive such
distribution, as shown on the Custodian's records, and such distribution shall
to the extent thereof completely discharge the Custodian's liability for such
payment.
11. (a) The term "Beneficiary" means the person or persons designated as such
by the "designating person" (as defined below) on a form acceptable to
the Custodian for use in connection with the custodial account, signed
by the designating person, and filed with the Custodian. The form may
name individuals, trusts, estates, or other entities as either primary
or contingent beneficiaries. However, if the designation does not
effectively dispose of the entire custodial account as of the time
distribution is to commence, the term "Beneficiary" shall then mean the
designating person's estate with respect to the assets of the custodial
account not disposed of by the designation form. The form last accepted
by the Custodian before such distribution is to commence, provided it
was received by the Custodian (or deposited in the U.S. Mail or with a
delivery service) during the designating person's lifetime, shall be
controlling and, whether or not fully dispositive of the custodial
account, thereupon shall revoke all such forms previously filed by that
person. The term "designating person" means Depositor during his/her
lifetime; after Depositor's death, it also means Depositor's spouse if
the spouse begins to receive a portion of the custodial account
(pursuant to such a designation by Depositor) under a form of
distribution permitted by Article IV. A designation by Depositor's
spouse shall relate solely to the balance remaining in the spouse's
portion of the custodial account after the death of the spouse.
(b) When and after distributions from the custodial account to Depositor's
Beneficiary commence, all rights and obligations assigned to Depositor
hereunder shall inure to, and be enjoyed and exercised by, Beneficiary
instead of Depositor.
(12)(a) The Depositor agrees to provide information to the Custodian at such
time and in such manner as may be necessary for the Custodian to
prepare any reports required under Section 408(i) of the Code and the
regulations thereunder or otherwise.
(b) The Custodian or the Service Company will submit reports to the
Internal Revenue Service and the Depositor at such time and manner and
containing such information as is prescribed by the Internal Revenue
Service.
(c) The Depositor, Custodian and Service Company shall furnish to each
other such information relevant to the custodial account as may be
required under the Code and any regulations issued or forms adopted by
the Treasury Department thereunder or as may otherwise be necessary for
the administration of the custodial account.
(d) The Depositor shall file any reports to the Internal Revenue Service
which are required of him by law (including Form 5329), and neither the
Custodian nor Service Company shall have any duty to advise Depositor
concerning or monitor Depositor's compliance with such requirement.
13. (a) Depositor retains the right to amend this custodial account document
in any respect at any time, effective on a stated date which shall be
at least 60 days after giving written notice of the amendment
(including its exact terms) to Custodian by registered or certified
mail, unless Custodian waives notice as to such amendment. If the
Custodian does not wish to continue serving as such under this
custodial account document as so amended, it may resign in accordance
with Section 17 below.
(b) Depositor delegates to the Custodian the Depositor's right so to amend,
provided the Custodian amends in the same manner all agreements
comparable to this one, having the same Custodian, permitting
comparable investments, and under which such power has been delegated
to it; this includes the power to amend retroactively if necessary or
appropriate in the opinion of the Custodian in order to conform this
custodial account to pertinent provisions of the Code and other laws or
successor provisions of law, or to obtain a governmental ruling that
such requirements are met, to adopt a prototype or master form of
agreement in substitution for this
4
<PAGE>
Agreement, or as otherwise may be advisable in the opinion of the
Custodian. Such an amendment by the Custodian shall be communicated in
writing to Depositor, and Depositor shall be deemed to have consented
thereto unless, within 30 days after such communication to Depositor is
mailed, Depositor either (i) gives Custodian a written order for a
complete distribution or transfer of the custodial account, or (ii)
removes the Custodian and appoints a successor under Section 17 below.
Pending the adoption of any amendment necessary or desirable to conform
this custodial account document to the requirements of any amendment to
the Internal Revenue Code or regulations or rulings thereunder, the
Custodian and the Service Company may operate the Depositor's custodial
account in accordance with such requirements to the extent that the
Custodian and/or the Service Company deem necessary to preserve the tax
benefits of the account.
(c) Notwithstanding the provisions of subsections (a) and (b) above, no
amendment shall increase the responsibilities or duties of Custodian
without its prior written consent.
(d) This Section 13 shall not be construed to restrict the Custodian's
right to substitute fee schedules in the manner provided by Section 16
below, and no such substitution shall be deemed to be an amendment of
this Agreement.
(14)(a) Custodian shall terminate the custodial account if this Agreement is
terminated or if, within 30 days (or such longer time as Custodian may
agree) after resignation or removal of Custodian under Section 17,
Depositor has not appointed a successor which has accepted such
appointment. Termination of the custodial account shall be effected by
distributing all assets thereof in a single payment in cash or in kind
to Depositor, subject to Custodian's right to reserve funds as provided
in Section 17.
(b) Upon termination of the custodial account, this custodial account
document shall have no further force and effect, and Custodian shall be
relieved from all further liability hereunder or with respect to the
custodial account and all assets thereof so distributed.
15. (a) In its discretion, the Custodian may appoint one or more contractors
or service providers to carry out any of its functions and may
compensate them from the custodial account for expenses attendant to
those functions.
(b) The Service Company shall be responsible for receiving all
instructions, notices, forms and remittances from Depositor and for
dealing with or forwarding the same to the transfer agent for the
Fund(s).
(c) The parties do not intend to confer any fiduciary duties on Custodian
or Service Company (or any other party providing services to the
custodial account), and none shall be implied. Neither shall be liable
(or assumes any responsibility) for the collection of contributions,
the proper amount, time or deductibility of any contribution to the
custodial account or the propriety of any contributions under this
Agreement, or the purpose, time, amount (including any minimum
distribution amounts) or propriety of any distribution hereunder, which
matters are the responsibility of Depositor and Depositor's
Beneficiary.
(d) As soon as is practicable after the close of each taxable year, and
whenever required by the Code, or Regulations thereunder, the Custodian
and Service Company shall each file with Depositor a written report or
reports reflecting the transactions effected by it during such period
and the assets of the custodial account at its close. Upon the
expiration of 60 days after such a report is sent to Depositor (or
Beneficiary), the Custodian and Service Company shall be forever
released and discharged from all liability and accountability to anyone
with respect to transactions shown in or reflected by such report
except with respect to any such acts or transactions as to which
Depositor shall have filed written objections with the Custodian or
Service Company within such 60 day period.
(e) The Service Company shall deliver, or cause to be delivered, to Deposit
or all notices, prospectuses, financial statements and other reports to
shareholders, proxies and proxy soliciting materials relating to the
shares of the Funds(s) credited to the custodial account. No shares
shall be voted, and no other action shall be taken pursuant to such
documents, except upon receipt of adequate written instructions from
Depositor.
(f) Depositor shall always fully indemnify Service Company, Distributor,
the Fund(s) and Custodian and save them harmless from any and all
liability whatsoever which may arise either (i) in connection with this
Agreement and the matters which it contemplates, except that which
arises directly out of the Service Company's, Distributor's or
Custodian's negligence or willful misconduct, or (ii) with respect to
making or failing to make any distribution, other than for failure to
make distribution in accordance with an order therefor which is in full
compliance with Section 10. Neither Service Company nor Custodian shall
be obligated or expected to commence or defend any legal action or
proceeding in connection with this Agreement or such matters unless
agreed upon by that party and Depositor, and unless fully indemnified
for so doing to that party's satisfaction.
(g) The Custodian and Service Company shall each be responsible solely for
performance of those duties expressly assigned to it in this Agreement,
and
5
<PAGE>
neither assumes any responsibility as to duties assigned to anyone else
hereunder or by operation of law.
(h) Custodian and Service Company may each conclusively rely upon and shall
be protected in acting upon any written order from Depositor or
Beneficiary, or any investment advisor appointed under Section 8, or
any other notice, request, consent, certificate or other instrument or
paper believed by it to be genuine and to have been properly executed,
and so long as it acts in good faith, in taking or omitting to take any
other action in reliance thereon. In addition, Custodian will carry out
the requirements of any apparently valid court order relating to the
custodial account and will incur no liability or responsibility for so
doing.
(16)(a) The Custodian, in consideration of its services under this Agreement,
shall receive the fees specified on the applicable fee schedule. The
fee schedule originally applicable shall be the one specified in the
Disclosure Statement furnished to the Depositor. The Custodian may
substitute a different fee schedule at any time upon 30 days' written
notice to Depositor. The Custodian shall also receive reasonable fees
for any services not contemplated by any applicable fee schedule and
either deemed by it to be necessary or desirable or requested by
Depositor.
(b) Any income, gift, estate and inheritance taxes and other taxes of any
kind whatsoever, including transfer taxes incurred in connection with
the investment or reinvestment of the assets of the custodial account,
that may be levied or assessed in respect to such assets, and all other
administrative expenses incurred by the Custodian in the performance of
its duties (including fees for legal services rendered to it in
connection with the custodial account) shall be charged to the
custodial account.
(c) All such fees and taxes and other administrative expenses charged to
the custodial account shall be collected either from the amount of any
contribution or distribution to or from the account, or (at the option
of the person entitled to collect such amounts) to the extent possible
under the circumstances by the conversion into cash of sufficient
shares of one or more Funds held in the custodial account (without
liability for any loss incurred thereby). Notwithstanding the
foregoing, the Custodian or Service Company may make demand upon the
Depositor for payment of the amount of such fees, taxes and other
administrative expenses. Fees which remain outstanding after 60 days
may be subject to a collection charge.
(17)(a) Upon 30 days' prior written notice to the Custodian, Depositor may
remove it from its office hereunder. Such notice, to be effective,
shall designate a successor custodian and shall be accompanied by the
successor's written acceptance. The Custodian also may at any time
resign upon 30 days' prior written notice to Depositor, whereupon the
Depositor shall appoint a successor to the Custodian.
(b) The successor custodian shall be a bank, insured credit union, or other
person satisfactory to the Secretary of the Treasury under Code Section
408(a)(2). Upon receipt by Custodian of written acceptance by its
successor of such successor's appointment, Custodian shall transfer and
pay over to such successor the assets of the custodial account and all
records (or copies thereof) of Custodian pertaining thereto, provided
that the successor custodian agrees not to dispose of any such records
without the Custodian's consent. Custodian is authorized, however, to
reserve such sum of money or property as it may deem advisable for
payment of all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or against
the assets of the custodial account or on or against the Custodian,
with any balance of such reserve remaining after the payment of all
such items to be paid over to the successor custodian.
(c) Any Custodian shall not be liable for the acts or omissions of its
predecessor or its successor.
18. References herein to the "Internal Revenue Code" or "Code" and sections
thereof shall mean the same as amended from time to time, including successors
to such sections.
19. Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.
20. Depositor or Depositor's Beneficiary shall not have the right or power to
anticipate any part of the custodial account or to sell, assign, transfer,
pledge or hypothecate any part thereof. The custodial account shall not be
liable for the debts of Depositor or Depositor's Beneficiary or subject to any
seizure, attachment, execution or other legal process in respect thereof. At no
time shall it be possible for any part of the assets of the custodial account to
be used for or diverted to purposes other than for the exclusive benefit of the
Depositor or his/her Beneficiary.
21. When accepted by the Custodian, this Agreement is accepted in and shall
be construed and administered in accordance with the laws of the Commonwealth of
Massachusetts. Any action involving the Custodian brought by any other party
must be brought in a state or federal court in such Commonwealth.
This Agreement is intended to qualify under Code Section 408(a) as an
individual retirement custodial account and to entitle Depositor to the
retirement savings deduction under Code Section 219 if available, and if any
provision hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall be
resolved in favor of that interpretation or construction which is consistent
with that intent.
6
<PAGE>
However, Custodian shall not be responsible for whether or not such
intentions are achieved through use of this Agreement, and Depositor is referred
to Depositor's attorney for any such assurances.
22. Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the custodial account, and
ordering Custodian to make distributions from the account. Depositor
acknowledges that Custodian and Service Company (and any company associated
therewith) are prohibited by law from rendering such advice.
23. Articles I through VII of this Agreement are in the form promulgated by
the Internal Revenue Service. It is anticipated that if and when the Internal
Revenue Service promulgates changes to Form 5305-A, the Custodian will amend
this Agreement correspondingly.
24. The Depositor acknowledges that he or she has received and read the
current prospectus for each Fund in which his or her account is invested and the
Individual Retirement Account Disclosure Statement related to the Account. The
Depositor represents under penalties of perjury that his or her Social Security
number (or other Taxpayer Identification Number) as stated in the Adoption
Agreement is correct.
7
<PAGE>
THE ARTISAN FUNDS
STATE STREET BANK AND TRUST COMPANY INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
TRANSFER OF IRA ASSETS FORM
_______________________________________________________________________________
1. NAME AND ADDRESS OF DEPOSITOR
Name _______________________________________________________________________
Address ____________________________________________________________________
Street City State Zip
Day Telephone No. (____)____________ Social Security No. __________________
_______________________________________________________________________________
2. INSTRUCTIONS TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor)
Name of Custodian/Trustee __________________________________________________
Attn: Mr./Ms. _____________________________________________________________
Address ____________________________________________________________________
Street City State Zip
Account no. _________________________
Please transfer assets of my present Individual Retirement Account to State
Street Bank and Trust Company.
All assets should be transferred as cash according to the following
instructions:
( ) Transfer the total amount in my account or Transfer $____________
and retain the balance.
Make check payable to: State Street Bank and Trust Company, Custodian
FBO [____________insert_your_name____________]
P.O. Box _____________________________________
Boston, MA ________________
_______________________________________________________________________________
3. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY
(Depositor - check one box and complete if necessary)
( ) Invest the transferred amount in accordance with the investment
instructions in the Adoption Agreement for my State Street Bank and
Trust Company Individual Retirement Custodial Account.
( ) Invest the transferred amount in Artisan Small Cap Fund
I acknowledge that I have sole responsibility for my investment choices and
that I have received a current prospectus for Artisan Small Cap Fund. Please
read the prospectus before investing.
_______________________________________________________________________________
4. SIGNATURE OF DEPOSITOR
_______________________________ __________________________________
Date Signature of Depositor
SIGNATURE GUARANTEE (only if required by current IRA Sponsor)
Signatured guaranteed by: __________________________________________________
Name of Bank or Dealer Firm
__________________________________________________
Signature of Officer and Title
_______________________________________________________________________________
5. ACCEPTANCE BY NEW CUSTODIAN (To be completed by State Street Bank and Trust
Company) State Street Bank and Trust Company agrees to accept transfer of the
above amount for deposit to the Depositor's State Street Bank and Trust
Company Individual Retirement Custodial Account, and requests the liquidation
and transfer of assets as indicated above.
______________________________ By:____________________________
Date
<PAGE>
THE ARTISAN FUNDS
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
Instructions for Opening Your IRA
1. Read carefully the IRA Disclosure Statement, the Individual Retirement
Custodial Account document, the Adoption Agreement, and the prospectus of
Artisan Small Cap Fund. Consult your lawyer or other tax adviser if you
have any questions about how opening an IRA will affect your financial and
tax situation.
2. Complete the Adoption Agreement
- Print the identifying information in Part 1 of the form.
- In Part 2, check the box that shows the type of IRA you are opening.
If this is an Accumulation IRA (an IRA to which you will make
contributions each year), enclose a check in the amount of your first
contribution. Be sure to indicate whether this is a contribution for
last year or for the current year.
- In Part 3, indicate your investment choices.
- Sign and date the Adoption Agreement at the end.
3. If you are transferring assets directly from your existing IRA to this IRA,
complete the Transfer of IRA Assets Form.
4. Complete and sign the Designation of Beneficiary.
5. Enclose a separate check for $________________ payable to State Street Bank
and Trust Company. This is to pay the custodian fee for opening the IRA
and the first year's annual maintenance fee.
6. Check to be sure you have properly completed all necessary forms and
enclosed a check for the custodian's fees and a check for the first
contribution to your State Street Bank IRA (if applicable). Your IRA
cannot be accepted without the properly completed documents or the
custodian fees.
Send the completed forms and checks to:
12/92
State Street Bank and Trust Company
Attention, Artisan Funds
P. O. Box _______________________
Boston, Massachusetts _____________
<PAGE>
ARTISAN FUNDS
STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
ADOPTION AGREEMENT
I, the person signing this Adoption Agreement (hereinafter called the
"Depositor"), establish an Individual Retirement Account (the "Account") with
State Street Bank and Trust Company as Custodian. I agree to the terms of my
Account, which are contained in the document entitled "State Street Bank and
Trust Company Individual Retirement Custodial Account" and this Adoption
Agreement. I certify the accuracy of the information in this Adoption
Agreement. My Account will be effective upon acceptance by State Street Bank
and Trust Company.
1. DEPOSITOR INFORMATION
- -
_________________________________________ _ _ _ _ _ _ _ _ _
Print Full Name Social Security Number
_________________________________________ _______________________
Address Date of Birth
_________________________________________ (_____)________________
City State Zip Daytime Telephone No.
2. TYPE OF ACCOUNT
A. [_] Accumulation IRA or [_] Spousal IRA (A separate Adoption
Agreement must be submitted for each IRA account.)
[_] Current Contribution for the year 19____. Check enclosed for
$_________ payable to "Artisan Funds." This contribution
does not exceed the maximum permitted amount as described in
the IRA Disclosure Statement.
[_] Transfer of existing IRA directly from current Custodian or
Trustee. Check this box if the existing IRA is one to which
you made contributions (as opposed to an IRA you established
by rolling over a distribution from an employer plan).
Complete the separate Transfer of IRA Assets Form.
B. [_] Rollover IRA
The requirements for a valid rollover are complex. See the IRA
Disclosure Statement for additional information and consult your
tax advisor for help if needed. Check enclosed for $____________
payable to "Artisan Funds."
[_] Rollover of a qualifying rollover distribution to Depositor
from an employer plan, or rollover from an IRA which held
assets distributed to Depositor from an employer plan and to
which Depositor made no direct contributions.
[_] Rollover of assets distributed to Depositor from another IRA
where the IRA contained amounts contributed directly by the
Depositor.
C. [_] Direct Rollover
[_] Direct rollover of an eligible distribution from a qualified
plan.
[_] Direct rollover of an eligible distribution from a 403(b)
account or annuity.
Direct rollovers are described in the IRA Disclosure
Statement. The plan administrator or 403(b) sponsor should
make the check payable to "Artisan Funds."
D. [_] SEP Provision - check here if the Depositor intends to use this
Account in connection with a Simplified Employee Pension Plan
established by the Depositor's employer.
3. INVESTMENTS
Invest contributions to my Account in the Artisan Small Cap Fund:
I acknowledge that I have sole responsiblity for my investment
choices and that I have received a current prospectus Artisan
Small Cap Fund I select. Please read the prospectus before
investing.
<PAGE>
4. CERTIFICATIONS AND SIGNATURES
In the case of a Rollover IRA or Direct Rollover IRA, Depositor certifies
that contribution does not include any employee contributions to any qualified
plan (other than accumulated deductible employee contributions); that any assets
transferred in kind by Depositor are the same assets received by the Depositor
in the distribution being rolled over; if the distribution is from an IRA, that
no rollover into such IRA has been made within the one-year period immediately
preceding this rollover; and that such distribution was received within 60 days
of making the rollover to the Account.
Depositor has received and read the "IRA Disclosure Statement" relating to
this Account (including the Custodian's fee schedule), the Custodial Account
document, and the "Instructions" pertaining to this Adoption Agreement.
Depositor acknowledges receipt of the Custodial Account document and IRA
Disclosure Statement at least 7 days before the date inscribed below and
acknowledges that Depositor has no further right of revocation.
CUSTODIAN ACCEPTANCE. State Street Bank and Trust
- --------------------------- Company will accept appointment as Custodian of
Signature of Depositor the Depositor's Account. However, this Agreement
is not binding upon the Custodian until the
Depositor has received a statement of the
Date_______________ transaction. Receipt by the Depositor of a
confirmation of the purchase of the Fund shares
indicated above will serve as notification of
State Street Bank and Trust Company's acceptance
of appointment as Custodian of the Depositor's
Account.
1/93 RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS
<PAGE>
THE ARTISAN FUNDS
IRA DISCLOSURE STATEMENT
ESTABLISHING YOUR IRA
This disclosure statement contains information about your Individual
Retirement Custodial Account with State Street Bank and Trust Company as
Custodian. Your IRA gives you several tax benefits. Earnings on the assets
held in your IRA are not subject to federal income tax until withdrawn by you.
You may be able to deduct all or part of your IRA contribution on your federal
income tax return. State income tax treatment of your IRA may differ from
federal treatment; ask your state tax department or your personal tax advisor
for details.
All IRAs must meet certain requirements. Contributions generally must be
made in cash. The IRA trustee or custodian must be a bank or other person who
has been approved by the Secretary of the Treasury. Your contributions may not
be invested in life insurance or be commingled with other property except in a
common trust or investment fund. Your interest in the account must be
nonforfeitable at all times. You may obtain further information on IRAs from
any district office of the Internal Revenue Service.
You may revoke a newly established IRA at any time within seven days after
the date on which you receive this Disclosure Statement. An IRA established
more than seven days after the date of your receipt of this Disclosure Statement
may not be revoked.
To revoke your IRA, mail or deliver a written notice of revocation to the
Custodian at the address which appears at the end of this Disclosure Statement.
Mailed notice will be deemed given on the date that it is postmarked (or, if
sent by certified or registered mail, on the date of certification or
registration). If you revoke your IRA within the seven-day period, you are
entitled to a return of the entire amount you contributed into your IRA, without
adjustment for such items as sales charges, administrative expenses or
fluctuations in market value.
FEES AND EXPENSES
CUSTODIAN'S FEES
The following is a list of the fees charged by the Custodian for
maintaining your IRA.
Account Installation Fee $
Annual Maintenance Fee per mutual fund $
Termination, Rollover, or Transfer of
Account to Successor Custodian $
GENERAL FEE POLICIES
. Fees may be paid by you directly or the Custodian may deduct them from your
IRA.
. Fees may be changed upon 30 days written notice to you.
. The full annual maintenance fee will be charged for any calendar year
during which you have an IRA with us. This fee is not prorated for periods
of less than one full year.
. Termination fees are charged when your account is closed whether the funds
are distributed to you or transferred to a successor custodian or trustee.
. The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.
OTHER CHARGES
. There may be sales or other charges associated with the purchase or
redemption of shares of a Fund in which your IRA is invested. Be sure to
read carefully the current prospectus of any Fund you are considering as an
investment for your IRA for a description of applicable charges.
ELIGIBILITY
WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR AN IRA?
You are eligible to establish and contribute to an IRA for a year if:
. You received compensation (or earned income if you are self employed)
during the year for personal services you rendered. If you received taxable
alimony, this is treated like compensation for IRA purposes.
. You did not reach age 70 1/2 during the year.
CAN I CONTRIBUTE TO AN IRA FOR MY SPOUSE?
For each year before the year when your spouse attains age 70 1/2, you can
contribute to a separate IRA for your spouse, regardless of whether your spouse
had any compensation or earned income in that year. This is called a "spousal
IRA." To make a contribution to a spousal IRA for your spouse, you must file a
joint tax return and your spouse must either have no compensation or earned
income or must elect to be treated as having no compensation or earned income
for that year. For a spousal IRA, your spouse must set up a different IRA,
separate from yours, to which you contribute.
CONTRIBUTIONS
WHEN CAN I MAKE CONTRIBUTIONS TO AN IRA?
You may make a contribution to your existing IRA or establish a new IRA for
a taxable year by the due date (not including any extensions) for your federal
income tax return for the year. Usually this is April 15 of the following year.
HOW MUCH CAN I CONTRIBUTE TO MY IRA?
For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed). However, under the tax laws, all or a portion of your
contribution may not be deductible.
If you and your spouse have spousal IRAs, you may contribute each year up
to a maximum of $2,250 from your compensation (or earned income) to both spousal
IRAs. You may divide the contribution between the spousal IRAs as you wish, as
long as you do not contribute more than $2,000 to either of the spousal IRAs.
HOW DO I KNOW IF MY CONTRIBUTION IS TAX DEDUCTIBLE?
The deductibility of your contribution depends upon whether you are (or
your spouse is) an active participant in any employer-sponsored retirement plan.
If neither you nor your spouse is an active participant, the entire IRA
contribution is deductible.
If either you or your spouse is an active participant, your IRA
contribution may still be completely or partly deductible on your tax return.
This depends on the amount of your income.
HOW DO I DETERMINE MY OR MY SPOUSE'S "ACTIVE PARTICIPANT" STATUS?
Your Form W-2 (or your spouse's W-2) should indicate if you were an active
participant in an employer-sponsored retirement plan for a year. If you have a
question, you should ask your employer or the plan administrator.
In one situation, your spouse's "active participant" status will not affect
the deductibility of your contributions to your IRA. This rule applies only if
you and your spouse file separate tax returns for the taxable year and you lived
apart at all times during the taxable year.
<PAGE>
WHAT ARE THE DEDUCTION RESTRICTIONS?
The portion of your contribution that is deductible depends upon your
filing status and the amount of your adjusted gross income ("AGI"). The
following table shows the deduction rules.
FOR ACTIVE PARTICIPANTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
IF YOU ARE SINGLE IF YOU ARE THEN YOUR IRA
MARRIED CONTRIBUTION IS
FILING JOINTLY
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
Up to $25,000 Up to $40,000 Fully Deductible
-----------------------------------------------------
ADJUSTED GROSS INCOME Over $25,000 Over $40,000 Partly Deductible
but less than but less than
$35,000 $50,000
-----------------------------------------------------
$35,000 and up $50,000 and up Not Deductible
- --------------------------------------------------------------------------------
</TABLE>
HOW DO I CALCULATE MY DEDUCTION IF I FALL IN THE "PARTLY DEDUCTIBLE" RANGE?
If your AGI falls in the partly deductible range, you must calculate the
portion of your contribution that is deductible. To do this, multiply your
contribution by a fraction. The numerator is the amount by which your AGI
exceeds the lower limit of the partly deductible range ($25,000 if single, or
$40,000 if married filing jointly). The denominator is $10,000. Subtract this
from your contribution and then round up to the nearest $10. The deductible
amount is the greater of the amount calculated or $200 (provided you contributed
at least $200). If your contribution was less than $200, then the entire
contribution is deductible.
For example, assume that you make a $2,000 contribution to your IRA in a
year in which you are an active participant in your employer's retirement plan.
Also assume that your AGI for the year is $47,555 and you are married, filing
jointly. You would calculate the deductible portion of your contribution this
way:
1. The amount by which your AGI exceeds the lower limit of the partly -
deductible range:
(47,555-40,000) = 7,555
2. Divide this by 10,000: 7,555
----- /=0.7555/
10,000
3. Multiply this by your contribution:
0.7555 x $2,000 = $1,511
4. Subtract this from your contributions:
($2,000 - $1,511) = $489
5. Round this up to the nearest $10: = $490
6. Your deductible contribution is the greater of this amount or $200.
Even though part or all of your contribution is not deductible, you may still
contribute to your IRA up to the limit on contributions ($2,000, or $2,250 for
spousal IRAs). When you file your tax return for the year, you must designate
the amount of non-deductible IRA contributions for the year. See IRS Form 8606.
HOW DO I DETERMINE MY AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
WHAT HAPPENS IF I CONTRIBUTE MORE THAN ALLOWED TO MY IRA?
The maximum contribution you can make to an IRA is $2,000 ($2,250 for spousal
IRAs) or 100% of compensation or earned income, whichever is less. Any amount
contributed to the IRA above the maximum is considered an "excess contribution."
The excess is calculated using your contribution limit, not the deductible
limit. An excess contribution is subject to excise tax of 6% for each year it
remains in the IRA.
HOW CAN I CORRECT AN EXCESS CONTRIBUTION?
Excess contributions may be corrected without paying a 6% penalty. To do so,
you must withdraw the excess and any earnings on the excess before the due date
(including extensions) for filing your federal income tax return for the year
for which you made the excess contribution. A deduction should not be taken for
any excess contribution. Earnings on the amount withdrawn must also be
withdrawn. The earnings must be included in your income for the tax year for
which the contribution was made and may be subject to a 10% premature withdrawal
tax if you have not reached age 59 1/2.
WHAT HAPPENS IF I DON'T CORRECT THE EXCESS CONTRIBUTION BY THE TAX RETURN DUE
DATE?
Any excess contribution withdrawn after the tax return due date (including any
extensions) for the year for which the contribution was made will be subject to
the 6% excise tax. There will be an additional 6% excise tax for each year the
excess remains in your account.
Under limited circumstances, you may correct an excess contribution after tax
filing time by withdrawing the excess contribution (leaving the earnings in the
account). This withdrawal will not be includible in income nor will it be
subject to any premature withdrawal penalty if (1) your contributions to all
IRAs do not exceed $2,250 and (2) you did not take a deduction for the excess
amount (or you file an amended return (Form 1040X) which removes the excess
deduction).
HOW ARE EXCESS CONTRIBUTIONS TREATED IF NONE OF THE PRECEDING RULES APPLY?
Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includible in taxable income and may be subject to a 10% premature
withdrawal penalty. No deduction will be allowed for the excess contribution
for the year in which it is made.
Excess contributions may be corrected in a subsequent year to the extent that
you contribute less than your maximum amount. As the prior excess contribution
is reduced or eliminated, the 6% excise tax will become correspondingly reduced
or eliminated for subsequent tax years. Also, you may be able to take an income
tax deduction for the amount of excess that was reduced or eliminated, depending
on whether you would be able to take a deduction if you had instead contributed
the same amount.
TRANSFERS/ROLLOVERS
CAN I TRANSFER OR ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S
RETIREMENT PLAN INTO AN IRA?
Almost all distributions from employer plans or 403(b) arrangements (for
employees of tax-exempt employers) are eligible for rollover to an IRA. The
main exceptions are
. payments over the lifetime or life expectancy of the participant (or
participant and a designated beneficiary),
. installment payments for a period of 10 years or more,
. required distributions starting at age 70 1/2, and
. payments of employee after-tax contributions.
If you are eligible to receive a distribution from a tax qualified retirement
plan as a result of, for example, termination of employment, plan
discontinuance, or retirement, all or part of the distribution may be
transferred directly into your IRA. This is a called a "direct rollover." Or,
you may receive the distribution and make a regular rollover to your IRA within
60 days. By making a direct rollover or a regular rollover, you can defer
income taxes on the amount rolled over until you subsequently make withdrawals
from your IRA.
2
<PAGE>
The maximum amount you may roll over is the amount of employer
contributions and earnings distributed. You may not roll over any after-tax
employee contributions you made to the employer retirement plan. If you are
over age 70 1/2 and are required to take minimum distributions under the tax
laws, you may not roll over any amount required to be distributed to you under
the minimum distribution rules. Also, if you are receiving periodic payments
over your or your and your designated beneficiary's life expectancy or for a
period of at least 10 years, you may not roll over these payments. A regular
rollover to an IRA must be completed within 60 days after the distribution from
the employer retirement plan to be valid.
NOTE: A qualified plan administrator or 403(b) sponsor MUST WITHHOLD 20%
OF YOUR DISTRIBUTION for federal income taxes UNLESS you elect a direct
rollover. Your plan or 403(b) sponsor is required to provide you with
information about direct and regular rollovers and withholding taxes before you
receive your distribution and must comply with your directions to make a direct
rollover.
The rules governing rollovers are complicated. Be sure to consult your tax
advisor or the IRS if you have a question about rollovers.
ONCE I HAVE ROLLED OVER A PLAN DISTRIBUTION INTO AN IRA, CAN I SUBSEQUENTLY ROLL
OVER INTO ANOTHER EMPLOYER'S QUALIFIED RETIREMENT PLAN?
Yes. Part or all of an eligible distribution received from a qualified
plan may be transferred to another qualified plan through the medium of an IRA.
However, the IRA must have no assets other than those which were previously
distributed to you from the qualified plan. Specifically, the IRA cannot
contain any regular IRA contributions. Also, the new qualified plan must accept
rollovers.
HOW OFTEN CAN I MAKE A REGULAR ROLLOVER FROM MY IRA TO ANOTHER IRA?
You may make a regular rollover from one IRA to another only once in any
365-day period. This rule applies to each individual IRA.
WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY REGULAR CONTRIBUTIONS
IN ONE IRA?
If you wish to make both a regular annual contribution and a rollover
contribution, you may wish to open two separate IRAs by completing two adoption
agreements and two sets of forms. You should consult a tax advisor before
making your regular contribution to the IRA you established with rollover
contributions (or make a rollover contribution to the IRA to which you make your
regular contributions). This is because combining your regular annual
contributions and rollover contributions originating from an employer plan
distribution would prohibit the future rollover of the assets of the IRA into
another qualified plan. If despite this, you still wish to combine a rollover
contribution and the IRA holding your regular contributions, you should
establish the account as an Accumulation IRA on the Adoption Agreement and make
the contributions to that account.
HOW DO ROLLOVERS AFFECT MY CONTRIBUTION OR DEDUCTION LIMITS?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers are not deductible and they do not affect your
deduction limits as described above.
INVESTMENTS
HOW ARE MY IRA CONTRIBUTIONS INVESTED?
You control the investment and reinvestment of contributions to your IRA.
Investments must be in one or more of the Fund(s) available from time to time as
listed in the Adoption Agreement for your IRA or in an investment selection form
included with your IRA Adoption Agreement. You direct the investment of your
IRA by giving your investment instructions to the Distributor or Service Company
for the Fund(s). Since you control the investment of your IRA, you are
responsible for any losses; neither the Custodian, the Distributor nor the
Service Company has any responsibility for any loss or diminution in value
occasioned by your exercise of investment control. Transactions for your IRA
will generally be effected at the applicable public offering price or net asset
value for shares of the Fund(s) involved next established after the Distributor
or the Service Company (whichever may apply) receives proper investment
instructions from you; consult the current prospectus for the Fund(s) involved
for additional information.
Before making any investment, read carefully the current prospectus for any
Fund you are considering as an investment for your IRA. The prospectus will
contain information about the Fund's investment objectives and policies, as well
as any minimum initial investment or minimum balance requirements and any sales,
redemption or other charges.
Because you control the selection of investments for your IRA, the growth
in value of your IRA cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY IRA ASSETS?
The tax-exempt status of your IRA will be revoked if you engage in any of
the prohibited transactions listed in Section 4975 of the tax code. The fair
market value of your IRA will be includible in your taxable income in the year
in which such prohibited transaction takes place. The fair market value of your
IRA may also be subject to a 10% penalty tax as a premature withdrawal if you
have not yet reached the age of 59 1/2.
Any investment in a collectible (for example, rare stamps) by your IRA is
treated as a taxable withdrawal; the only exception involves certain types of
government-sponsored coins.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the assets in
your IRA. Some examples of prohibited transactions are:
. Direct or indirect sale or exchange of property between you and your IRA.
. Transfer of any property from your IRA to yourself or from yourself to your
IRA.
Your IRA could lose its tax exempt status if you use all or part of your
interest in your IRA as security for a loan or borrow any money from your IRA.
Any portion of your IRA used as security for a loan will be taxed as ordinary
income in the year in which the money is borrowed. If you are under age 59 1/2,
this amount will also be subject to a 10% penalty tax as a premature
distribution.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY IRA?
You may withdraw from your IRA at any time. However, withdrawals before
age 59 1/2 may be subject to a 10% penalty tax in addition to regular income
taxes (see below).
WHEN MUST I START MAKING WITHDRAWALS?
If you have not withdrawn your entire IRA by the April 1 following the year
in which you reach 70 1/2, you must make minimum withdrawals in order to avoid
penalty taxes. The minimum withdrawal amount is determined by dividing the
balance in your IRA (or IRAs) by your life expectancy or the combined life
expectancy of you and your designated beneficiary. The minimum withdrawal rules
are complex. Consult your tax advisor for assistance.
The penalty tax is 50% of the difference between the minimum withdrawal
amount and your actual withdrawals during a year. The IRS may waive or reduce
the penalty tax if you can show that your failure to make the required minimum
withdrawals was due to reasonable cause and you are taking reasonable steps to
remedy the problem.
3
<PAGE>
HOW ARE WITHDRAWALS FROM MY IRA TAXED?
Amounts withdrawn by you are includible in your gross income in the taxable
year that you receive them, and are taxable as ordinary income. Lump sum
withdrawals from an IRA are not eligible for averaging treatment available to
certain lump sum distributions from qualified employer retirement plans.
Since the purpose of the IRA is to accumulate funds for retirement, your
receipt or use of any portion of your IRA before you attain age 59 1/2 generally
will be considered as an early withdrawal and subject to a 10% penalty tax.
The 10% penalty tax for early withdrawal will not apply if the distribution
. was a result of your death or disability, or
. is one of a scheduled series of substantially equal periodic payments for
your life or life expectancy (or the joint lives or life expectancies of
you and your beneficiary).
If there is an adjustment to the scheduled series of payments, the 10%
penalty tax will apply. For example, if you begin receiving payments at age 50
under a withdrawal program providing for substantially equal payments over your
life expectancy, and at age 58 you elect to receive the remaining amount in your
IRA in a lump-sum, the 10% penalty tax will apply to the lump sum and to the
amounts previously paid to you before age 59 1/2.
HOW ARE NONDEDUCTIBLE CONTRIBUTIONS TAXED WHEN THEY ARE WITHDRAWN?
A withdrawal of nondeductible contributions (not including earnings) will
be tax-free. However, if you made both deductible and nondeductible IRA
contributions, then each distribution will be treated as partly a return of your
nondeductible contributions (not taxable) and partly a distribution of
deductible contributions and earnings (taxable). The nontaxable amount is the
portion of the amount withdrawn which bears the same ratio as your total
nondeductible IRA contributions bear to the total balance of all your IRAs
(including rollover IRAs and SEPs).
For example, assume that you made the following IRA contributions:
<TABLE>
<CAPTION>
Year Deductible Nondeductible
---- ---------- -------------
<S> <C> <C>
1988 $2,000
1989 $2,000
1990 $1,000 $1,000
1991 $1,000
------ ------
$5,000 $2,000
</TABLE>
In addition assume that your IRA has total investment earnings through 1992
of $1,000. During 1992 you withdraw $500. Your total account balance as of 12-
31-92 is $7,500 as shown below.
<TABLE>
<S> <C>
Deductible Contributions $5,000
Nondeductible Contributions $2,000
Earnings On IRAs $1,000
Less 1992 Withdrawal $ 500
------
Total Account Balance as of 12/31/92 $7,500
</TABLE>
To determine the nontaxable portion of your 1992 withdrawal, the total 1992
withdrawal ($500) must be multiplied by a fraction. The numerator of the
fraction is the total of all nondeductible contributions remaining in the
account before the 1992 withdrawal ($2,000). The denominator is the total
account balance as of 12-31-92 ($7,500) plus the 1992 withdrawal ($500) or
$8,000. The calculation is:
Total Remaining
Nondeductible Contributions $2,000
--------------------------- ------ x $500 = $125
Total Account Balance $8,000
Thus, $125 of the $500 withdrawal in 1992 will not be included in your
taxable income. The remaining $375 will be taxable for 1992. In addition, for
future calculations the remaining nondeductible contribution total will be
$2,000 minus $125, or $1,875.
A loss in your IRA investment may be deductible. You should consult your
tax advisor for further details on the appropriate calculation for this
deduction if applicable.
TAX MATTERS
WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE?
The Custodian will report all withdrawals to the IRS and the recipient on
the appropriate form. For reporting purposes, a direct transfer of assets to a
successor custodian or trustee is not considered a withdrawal.
The Custodian will report to the IRS the year-end value of your account and
the amount of any rollover or accumulation contribution made during a calendar
year, as well as the tax year for which a contribution is made. Unless the
Custodian receives an indication from you to the contrary, it will treat any
amount as a contribution for the tax year in which it is received. It is most
important that a contribution between January and April 15th for the prior year
be clearly designated as such.
WHAT TAX INFORMATION MUST I REPORT TO THE IRS?
You must file Form 5329 with the IRS for each taxable year for which you
made an excess contribution, or you take a premature withdrawal, or you withdraw
less than the required minimum amount from your IRA.
You must also report each nondeductible contribution to the IRS by
designating it a nondeductible contribution on your tax return. Use Form 8606.
In addition, for any year in which you make a nondeductible contribution or take
a withdrawal, you must include additional information on your tax return. The
information required includes: (1) the amount of your nondeductible
contributions for that year; (2) the amount of withdrawals from IRAs in that
year; (3) the amount by which your total nondeductible contributions for all the
years exceed the total amount of your distributions previously excluded from
gross income; and (4) the total value of all your IRAs as of the end of the
year. If you fail to report any of this information, the IRS will assume that
all your contributions were deductible. This will result in the taxation of the
portion of your withdrawals that should be treated as a nontaxable return of
your nondeductible contributions.
ARE IRA WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your IRA, unless you elect not to have tax withheld.
Withdrawals from an IRA are not subject to the mandatory 20% income tax
withholding that applies to most distributions from qualified plans or 403(b)
accounts that are not directly rolled over to another plan or IRA.
ARE THE EARNINGS ON MY IRA FUNDS TAXED?
Any earnings on investments held in your IRA are generally exempt from
federal income taxes and will not be taxed until withdrawn by you, unless the
tax exempt status of your IRA is revoked.
4
<PAGE>
ACCOUNT TERMINATION
You may terminate your IRA at any time after its establishment by sending a
complete withdrawal form, or a transfer authorization form, to:
STATE STREET BANK AND TRUST COMPANY
P.O. Box
Boston, MA
Your IRA with State Street Bank will terminate upon the first to occur of
the following:
. The date your properly executed withdrawal form (as described above) is
received and accepted by the Custodian or, if later, the termination date
specified in the withdrawal form.
. The date the IRA ceases to qualify under the tax code. This will be deemed
a termination.
. The transfer of the IRA to another custodian/trustee.
. The rollover of the amounts in the IRA to another custodian/trustee.
Any outstanding fees must be received prior to such a termination of your
account.
The amount you receive from your IRA will be treated as a withdrawal, and thus
the rules relating to IRA withdrawals will apply. For example, if the IRA is
terminated before you reach age 59 1/2, the 10% early withdrawal penalty may
apply on the amount you receive.
IRA DOCUMENTS
The terms contained in Articles I to VII of the State Street Bank and Trust
Company Individual Retirement Custodial Account document have been promulgated
by the IRS in Form 5305-A for use in establishing an IRA custodial account that
meets the requirements of the tax laws for a valid IRA. This IRS approval
relates only to the form of Articles I to VIII and is not an approval of the
merits of the IRA or of any investment permitted by the IRA.
[ADDRESS]
---------
5
<PAGE>
Exhibit 16
ARTISAN SMALL CAP FUND
TOTAL RETURN CALCULATION
Initial Investment: $1,000.00
Period: From commencement of operations (3/28/95)
Number of Days in Period: 95
Total Return: 15.2000%
<TABLE>
<CAPTION>
Dividend Dividend Dividend Total Account
Date NAV Shares Rate Dollars Shares Shares Value
(a) (b) (c) (d) (e)=(c)X(d) (f)=(e)/(b) (g)=(c)+(f) (h)=(g)X(b)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Initial Investment $1,000.00
3/28/95 $10.00 100.000 0.000 $0.00 0.000 100.000 $1,000.00
6/30/95 $11.52 100.000 0.000 $0.00 0.000 100.000 $1,152.00
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND> This schedule contains summary financial information extracted from
the Form N_SAR and the Financial Statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> MAR-28-1995
<PERIOD-END> JUN-30-1995
<INVESTMENTS-AT-COST> 97,891,177
<INVESTMENTS-AT-VALUE> 104,259,120
<RECEIVABLES> 6,571,839
<ASSETS-OTHER> 157,954
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 110,988,913
<PAYABLE-FOR-SECURITIES> 11,574,050
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 146,012
<TOTAL-LIABILITIES> 11,720,062
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,383,139
<SHARES-COMMON-STOCK> 8,614,744
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (56,274)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (425,957)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 6,367,943
<NET-ASSETS> 99,268,851
<DIVIDEND-INCOME> 28,293
<INTEREST-INCOME> 104,648
<OTHER-INCOME> 0
<EXPENSES-NET> 189,215
<NET-INVESTMENT-INCOME> (56,274)
<REALIZED-GAINS-CURRENT> (425,957)
<APPREC-INCREASE-CURRENT> 6,367,943
<NET-CHANGE-FROM-OPS> 5,885,712
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,717,000
<NUMBER-OF-SHARES-REDEEMED> 112,256
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 99,168,851
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 66,510
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 189,215
<AVERAGE-NET-ASSETS> 36,731,268
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (0.01)
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.52
<EXPENSE-RATIO> 2.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
Exhibit 18
[LOGO OF ARTISAN FUNDS] ARTISAN SMALL CAP FUND
ARTISAN INTERNATIONAL FUND
ACCOUNT APPLICATION
. If you need assistance, call 1-800-344-1770, 24 hours.
. Do not use this application for IRA accounts.
. Mail completed application to:
Artisan Funds, Inc.
c/o Boston Financial Data Services
P.O. Box 8412
Boston, MA 02266-8412
- --------------------------------------------------------------------------------
1 ACCOUNT REGISTRATION
Please Print in CAPITAL LETTERS.
[_] Individual or [_] Joint Account
- --------------------------------------------------------------------
Owner's Name (first, middle initial, last)
- --------------------------------------------------------------------
Joint Owner's Name (first, middle initial, last)
Joint accounts are registered joint with right of survivorship unless otherwise
specified.
[_] Custodial Account
- --------------------------------------------------------------------
Custodian's Name (first, middle initial, last)
- --------------------------------------------------------------------
Minor's Name (first, middle initial, last)
[_][_] [_][_]-[_][_]-[_][_]
Minor's State Minor's Date of Birth
[_] Trust, Corporation, or Other Entity
Refer to the prospectus for required documentation.
- --------------------------------------------------------------------
Trustee Name or Authorized Signee Name (first, middle initial, last)
- --------------------------------------------------------------------
Name of Trust, Corporation, or Other Entity
[_][_]-[_][_]-[_][_]
Date of Trust Agreement
2 MAILING ADDRESS
- --------------------------------------------------------------------
Street or P.O. Box
- --------------------------------------------------------------------
City
[_][_] [_][_][_][_][_]-[_][_][_][_]
State Zip Code
[_][_][_]-[_][_][_]-[_][_][_][_] [_][_][_][_]
Day Time Phone Number Extension
[_][_][_]-[_][_][_]-[_][_][_][_] [_][_][_][_]
Evening Phone Number Extension
3 SOCIAL SECURITY/TAX ID NUMBER
SS or tax ID # [_][_][_][_][_][_][_][_][_]
For individual or joint accounts use owner's Social Security Number.
For custodial accounts use minor's Social Security Number.
For trust, corporation, or other entity use tax ID Number.
[_] U.S. Citizen
[_] Non-resident Alien
[_] Resident Alien
4 INITIAL INVESTMENT
Please be sure to read the prospectus.
The minimum initial investment is $1000 per account,
(no minimum if you are using the Automatic Investment Plan).
$[_],[_][_][_],[_][_][_].[_][_] SMALL CAP FUND
$[_],[_][_][_],[_][_][_].[_][_] INTERNATIONAL FUND
Payment Method:
[_] Check
[_] Wire (Please call 1-800-344-1770 for wiring instructions)
[_] By exchange from my identically registered Artisan Fund Account
Account Number [_][_][_][_][_][_][_][_]
Amount $[_],[_][_][_],[_][_][_].[_][_]
5 DISTRIBUTION OPTIONS
If no option is selected, all distributions will be reinvested.
[_] Reinvest dividends and capital gains.
[_] Pay dividends in cash, reinvest capital gains.
[_] Pay dividends and capital gains in cash.
6 AUTOMATIC INVESTMENT PLAN
Date of month for investment: [_][_]
(Between the 3rd and 28th only)
Amount of monthly
investment: $[_][_],[_][_][_].[_][_]
($50 minimum)
Please complete section 9 on back.
continued on back -
<PAGE>
7 TELEPHONE REDEMPTION
You may redeem shares by telephone ($500 minimum) unless you choose not to have
that option by checking the box below. The proceeds will be mailed to your
address of record, transferred to your bank account by Electronic Funds Transfer
(EFT), or wired to your bank account.
[_] I do not want telephone redemption.
---
For EFT or wire transactions, please complete section 9, below.
8 TELEPHONE PURCHASE
You may purchase shares by telephone, with payment by Electronic Funds Transfer
(EFT) from your designated bank account, by checking the box below.
[_] I want telephone purchase.
For EFT purchases, please complete section 9, below.
9 BANK INFORMATION
If you want the Automatic Investment Plan or telephone redemption, or if you
would like to purchase shares by telephone with payment by EFT, please fill in
the information below for the bank account into which funds should be deposited
by EFT or wire (for telephone redemption) and from which funds should be
withdrawn by EFT (for AIP or telephone purchase). Please print in CAPITAL
LETTERS.
<TABLE>
<CAPTION>
<S> <C>
- --------------------------------------------------- --------------------------------------------------------------------
| | | |
- --------------------------------------------------- --------------------------------------------------------------------
Name of Bank Branch
- -------------------------- -------------------- ----- ----- ---- ---- ---- ---- ---- ---- ---- ---- ----
| | | | | | | | | | | | | | | | | | | | | | | | | |
- -------------------------- -------------------- ----- ----- ---- ---- ---- ---- ---- ---- ---- ---- ----
Street City State Zip Code
- ---------------------------------------------------
| |
- ---------------------------------------------------
Name(s) on Account
[_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_] ---- ---- ---- ---- ---- ---- ---- ---- ----
Account Number | | | | | | | | | | | | | | | | | |
---- ---- ---- ---- ---- ---- ---- ---- ----
ABA Routing Number (Please verify with your bank)
-----------------------------------------------------------------------
Please attach a voided bank check
-----------------------------------------------------------------------
</TABLE>
The following authorization is required for Electronic Funds Transfer (EFT)
transactions: By signing section 10, below, I/we authorize Artisan Funds to
initiate (i) credit entries (deposits) (for telephone redemption with payment by
EFT), (ii) debit entries (withdrawals) (for the Automatic Investment Plan or
telephone purchases with payment by EFT) and (iii) debit or credit entries and
adjustments for any entries made in error to my/our bank account identified
above. This authorization will remain effective until I/we notify Artisan Funds
in writing of its termination and until Artisan Funds has a reasonable time to
act on that termination.
10 SIGNATURE(S)
By signing this form, I/we certify that I/we have received, read, and agree to
be bound by the terms of the prospectus and that I/we have the authority and
legal capacity to purchase shares pursuant to this application.
Under penalties of perjury, I/we certify that: (1) the number shown on this form
is the correct Social Security number or Taxpayer Identification number, (2) I
am not subject to backup withholding either because I have not been notified by
the Internal Revenue Service (IRS) that I am subject to backup withholding, or
the IRS has notified me that I am no longer subject to backup withholding. You
must cross out item (2), above, if you have been notified by the IRS that you
are subject to backup withholding because of under reporting interest or
dividends on your tax returns, and you have not received a notice from the IRS
advising you that backup withholding has terminated.
- ----------------------------------------------------------------------------
/ \
/ \
/ \
- ----------------------------------------------------------------------------
Signature as registered in Section I Date
- ----------------------------------------------------------------------------
/ \
/ \
/ \
- ----------------------------------------------------------------------------
Signature as registered in Section I Date
PLEASE RETURN THIS APPLICATION WITH YOUR CHECK IN THE ENCLOSED ENVELOPE.
THANK YOU FOR INVESTING IN THE ARTISAN FUNDS.
A confirmation of your account set-up will be sent to you shortly.
