As filed with the Securities and Exchange Commission on April 28, 2000
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 [X]
POST-EFFECTIVE AMENDMENT NO. 12 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 14 [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 LLC
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 , 2000 pursuant to rule 485(b)
---- -----
X 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)
----
on pursuant to rule 485(a)(2)
---- -----------------
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<PAGE>
(ARTISAN LOGO)
Prospectus
ARTISAN MID CAP FUND
(Institutional Shares)
July 1, 2000
This prospectus offers Artisan Mid Cap Fund Institutional Shares to
institutional investors including, but not limited to, employee benefit plans,
endowments, foundations, trusts and corporations able to meet
the Fund's minimum investment requirement of $2 million.
An investment in the Fund is 100% no-load. The Fund pays its own operating
expenses, including the investment management fee. You pay no commissions, no
12b-1 fees, and no hidden charges or expenses.
ARTISAN FUNDS, INC.
Suite 1770
1000 North Water Street
Milwaukee, WI 53202-3197
Be sure to read this prospectus before you invest and please keep it on file
for future reference.
This prospectus presents essential facts about the Fund, including investment
strategies, management fees and services available to you as an investor.
If you have a question about any part of this prospectus, please call the number
below. An Artisan Funds representative will be happy to help you.
--------------
1-800-399-1770
--------------
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED THE FUND'S SHARES OR
DETERMINED WHETHER THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
<PAGE>
TABLE OF CONTENTS
Important Legal Information.......................Cover
Goal, Strategy & Philosophy...........................2
Risks You Should Consider.............................3
Total Return - Calendar Year..........................4
Average Annual Total Returns..........................5
Fees & Expenses.......................................5
Who is Eligible to Invest?............................6
The Fund's Financial Highlights.......................7
Organization, Management & Management Fee.............8
Investing with the Fund...............................8
Minimum Investments..............................8
How to Buy Shares.....................................9
How to Sell Shares...................................10
Shareholder & Account Policies.......................12
Statements & Reports............................12
Share Price.....................................12
Dividends, Capital Gains & Taxes................13
Distribution Options............................13
Taxes...........................................13
1
<PAGE>
GOAL, STRATEGY & PHILOSOPHY
- -----------------------------------------------------------------------------
GOAL
Artisan Mid Cap Fund seeks maximum long-term capital growth. The Fund may change
this goal without the approval of shareholders.
- -----------------------------------------------------------------------------
STRATEGY & PHILOSOPHY
The Fund invests primarily in the common stocks of medium-sized companies.
A medium-sized company is one whose total stock market value falls within the
range of companies in the S&P 400 MidCap Index. As of March 31, 2000, this
Index included companies with capitalizations between approximately $210 million
and $23.2 billion. Over time, the capitalization range of companies in the
Index will change. As it does, the size of the companies in which the Fund
invests may change.
- The Fund prefers to invest in companies with "franchise" characteristics.
These could be a proprietary technology, dominant market share or some other
form of sustainable competitive advantage.
The Fund also favors companies with predictable streams of cash flow through
real growth in demand for their products or services. Such companies are
well-positioned to leverage opportunities in their markets.
If Artisan Partners, the adviser to the Fund, is impressed with a company's
competitive position and prospects for growth, it then defines and
researches key investment issues. It also estimates the company's intrinsic
value, and generally will buy the stock only if it sells below that
estimate.
- Under ordinary circumstances, the Fund is fully invested in common stocks. At
times, however, Artisan Partners may determine that market or economic
conditions warrant a temporary defensive position. During those periods, the
Fund's assets may not be invested in accordance with its strategy and the
Fund may not achieve its investment objective. In this case, the Fund may
hold up to 100% of its assets in cash, cash equivalents, or short-term
government or corporate obligations.
The Fund may engage in active and frequent trading to achieve its principal
investment strategies. A higher rate of portfolio turnover results in increased
transaction expenses, the realization of capital gains or losses and may reduce
performance.
Artisan Partners may decide to sell a stock when a company's valuation
approaches its growth rate, changing circumstances affect the original reasons
for a company's purchase, a company exhibits deteriorating fundamentals or more
attractive alternatives exist.
2
<PAGE>
RISKS YOU SHOULD CONSIDER
The Fund invests primarily in common stocks. Over time, 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.
When you sell your shares, they may be worth more or less than you paid for
them. You can lose money by investing in the Fund.
The Fund does not pursue income and is not a balanced investment plan. In
addition, there can be no assurance that it will achieve its investment goal.
Below are the principal investment risks of the Fund.
- Stocks of medium-sized companies tend to be more volatile than those of
large companies.
- Compared to large companies, medium-sized companies typically have analyst
coverage by fewer Wall Street firms. For this reason, they are more likely
to be trading at prices that reflect incomplete or inaccurate information.
- During some periods, stocks of mid-sized companies, as a class, have
underperformed the stocks of small and large companies.
The Fund tries to lower the risks of investing in medium-sized companies through
broad diversification by industry and company, as well as continuous monitoring
of each holding.
3
<PAGE>
INVESTMENT RETURNS
The bar chart and table below illustrate certain risks of investing in the Fund.
As you can see, the bar chart shows the returns achieved year by year and the
table compares the Fund's average annual total returns for various periods,
compared to a market index. How the Fund has performed in the past does not
necessarily indicate how it will perform in the future. The Fund may invest in
initial public offerings (IPOs). IPOs and other investment techniques may have a
magnified performance impact on a fund with a small asset base. The Fund may not
experience similar performance as assets grow.
NOTE: Because Institutional Shares have not been offered for a full calendar
year, the information provided in the bar chart and table represents the
performance of Investor Shares, the Fund's other class of shares, which are
offered to individual investors by a separate prospectus.
TOTAL RETURN - CALENDAR YEAR
ARTISAN MID CAP FUND - INVESTOR SHARES
[BAR CHART APPEARS HERE]
1998 33.37%
1999 57.89%
The Fund's return from January 1, 2000 through March 31, 2000 was 26.14%.
From inception on June 27, 1997 through December 31, 1999, the highest and
lowest quarterly returns for the Investor Shares were 37.66% and (10.54)% for
the quarters ended December 31, 1999 and September 30, 1998, respectively.
4
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------
FOR THE YEAR FROM 6/27/97
ENDED 12/31/99 THROUGH 12/31/99
- --------------------------------------------------------------------------
ARTISAN MID CAP FUND 57.89% 48.39%
(INVESTOR SHARES)
- --------------------------------------------------------------------------
S&P 400 MidCap Index<F1> 14.72% 20.38%
- --------------------------------------------------------------------------
Investor Shares inception date is 6/27/97. All returns reflect reinvested
dividends.
<F1> The S&P 400 MidCap Index is an unmanaged, market-weighted index of 400
mid-cap companies.
Total Return and Average Annual Total Return of Institutional Shares will be
calculated in the same way as for Investor Shares. The performance of
Institutional Shares will be different from the performance of Investor Shares
because the expenses allocated to the classes will be different. Because the
expense ratio for Institutional Shares is expected to be lower, the Total Return
and Average Annual Total Return of Institutional Shares are expected to be
slightly greater than for Investor Shares.
FEES & EXPENSES
Below are the fees and expenses that you will pay if you buy and hold
Institutional Shares of the Fund.
- ------------------------------------------------------------------------------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Sales charge (load) on purchases......None
Exchange fee..........................None
Redemption fee........................None
5
<PAGE>
- ------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES
THAT ARE DEDUCTED FROM FUND ASSETS
- ------------------------------------------------------
EXPENSE MID CAP FUND
(INSTITUTIONAL
SHARES)
- ------------------------------------------------------
MANAGEMENT FEE 1.00%
- ------------------------------------------------------
12B-1 FEE None
- ------------------------------------------------------
OTHER EXPENSES 0.20<F1>
- ------------------------------------------------------
TOTAL OPERATING EXPENSES 1.20<F1>
- ------------------------------------------------------
<F1> In the absence of an operating history, the amount shown for "other
expenses" is the estimated amount that the Fund will incur.
EXAMPLE. This example is intended to help you compare the cost of investing in
Institutional Shares of the Fund with that of investing in other mutual funds.
The example assumes you invest $10,000 for the time periods indicated, earn a 5%
return each year, and that operating expenses remain constant.
- ------------------------------------------------------
TIME PERIOD MID CAP FUND
(INSTITUTIONAL
SHARES)
- ------------------------------------------------------
1 YEAR $122
- ------------------------------------------------------
3 YEARS $381
- ------------------------------------------------------
5 YEARS $660
- ------------------------------------------------------
10 YEARS $1,455
- ------------------------------------------------------
This example is for illustration only. It is not meant to suggest actual or
expected costs or returns, which may be more or less than the amounts shown.
WHO IS ELIGIBLE TO INVEST?
Institutional Shares are designed for institutional investors who are able to
meet the high minimum investment requirements, 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 mid cap companies.
6
<PAGE>
TO REDUCE COSTS, INSTITUTIONAL SHARES ARE NOT AVAILABLE FOR SALE IN ALL STATES.
TO FIND OUT IF INSTITUTIONAL SHARES ARE AVAILABLE OR CAN BE MADE AVAILABLE IN
YOUR STATE, OR TO OBTAIN AN APPLICATION, CALL 1-800-399-1770. SEE "HOW TO BUY
SHARES."
THE FUND'S FINANCIAL HIGHLIGHTS
The following table is intended to help you understand the financial performance
of the Fund since it began operations as it relates to Investor Shares (not
Institutional Shares). Certain information reflects financial results for a
single Investor Share. Because Institutional Shares have not previously been
issued, similar information does not exist for them. Total return represents
the rate you would have earned (or lost) on an investment, assuming reinvestment
of all dividends and distributions. For periods up to and including the year
ended June 30, 1999, this information has been audited by PricewaterhouseCoopers
LLP, independent accountants, whose report, along with the Fund's financial
statements, is included in the annual report which is available on request.
<TABLE>
<CAPTION>
For a share outstanding throughout the period 6 Months Year Ended Year Ended Year Ended
Ended 12/31/99 6/30/99 6/30/98 6/30/97<F1>
-------------- ---------- ---------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Net asset value, beginning of period $16.67 $13.69 $10.00 $10.00
Income from investment operations:
Net investment loss (0.05) (0.16)<F5> (0.08) --
Net realized and unrealized gains on securities 5.90 4.41 4.56 --
------- -------- ------- ------
TOTAL FROM INVESTMENT OPERATIONS 5.85 4.25 4.48 --
------- -------- ------- ------
Distributions paid to shareholders:
Net realized gains on investment transactions (0.83) (1.27) (0.79) --
------- ------- ------- ------
NET ASSET VALUE, END OF PERIOD $21.69 $16.67 $13.69 $10.00
======= ======= ====== ======
Total return 36.0%<F2> 35.8% 46.1% 0.0%<F2>
Ratios/supplemental data:
Net assets, end of period (millions) $98.0 $43.3 $12.8 $1.8
Ratio of expenses to average net assets 1.60%<F3> 2.00%<F4> 2.00%<F4> 0.00%<F3>
Ratio of net investment income to average net assets (0.84)%<F3> (1.13)% <F4> (0.77)%<F4> 0.00%<F3>
Portfolio turnover rate 133.29%<F2> 202.84% 235.65% 0.00%<F2>
</TABLE>
- -----------------
<F1> For the period from commencement of operations (June 27, 1997) through June
30, 1997.
<F2> Not annualized.
<F3> Annualized.
<F4> The ratios of expenses to average net assets and net investment loss to
average net assets exclude fund expenses paid by Artisan Partners. Absent
fund expenses paid by Artisan Partners, the ratios of expenses to average
net assets and net investment loss to average net assets would have been
2.12% and (1.25)% for the year ended June 30, 1999 and 3.64% and (2.41)%
for the year ended June 30, 1998, respectively.
<F5> Computed based on average shares outstanding.
7
<PAGE>
ORGANIZATION, MANAGEMENT & MANAGEMENT FEE
ORGANIZATION. The Fund is a series of Artisan Funds, Inc. The Fund offers two
classes of shares - Investor Shares and Institutional Shares. This prospectus
describes Institutional Shares. Investor Shares are offered to individual
investors through a separate prospectus.
MANAGEMENT. The Fund is managed by Artisan Partners Limited Partnership (Artisan
Partners), which selects the Fund's investments and handles its business affairs
under the direction of the board of directors. Artisan Partners was organized in
1994 and, as of March 31, 2000, manages approximately $9.5 billion for Artisan
Funds and institutional clients. Artisan Partners is a limited partnership
managed by its general partner, Artisan Investment Corporation. The address is:
Artisan Partners, 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin
53202-3197.
ANDREW C. STEPHENS, Portfolio Manager, is a Managing Director of Artisan
Partners and a Vice President of Artisan Funds. He joined Artisan Partners in
1997. From 1993 to 1997, Mr. Stephens was Co-Manager of the Strong Asset
Allocation Fund. From 1994 to 1996, he served as a Senior Research Analyst for
the Strong Common Stock Fund and Strong Opportunity Fund.
Mr. Stephens holds a BS degree in Economics from the University of Wisconsin -
Madison.
MANAGEMENT FEE. The Fund pays a management fee to Artisan Partners for serving
as its investment adviser and providing administrative services. The fee is
determined as a percentage of average daily net assets. The Fund also pays
expenses related to its daily operations. Expenses paid out of the Fund's
assets are reflected in its share price or dividends. For services furnished by
Artisan Partners, the Fund has agreed to pay an annual fee of 1.00% of the
Fund's average daily net assets.
INVESTING WITH THE FUND
THE FUND IS 100% NO-LOAD. The Fund pays its own operating expenses, including
the investment management fee. You pay no commissions, no 12b-1 fees, and no
hidden charges or expenses.
- -------------------------------------------------------------------------------
MINIMUM INVESTMENTS
To open an account........$2,000,000
To add to an account........$100,000
Minimum balance required..$2,000,000
8
<PAGE>
Each account must separately meet the minimum investment requirements applicable
to Institutional Shares. The Fund reserves the right to close your account if
the value is less than $2 million, unless the reduction in value is due solely
to market depreciation. Before closing an account below this level, the Fund
will notify you and allow you at least 30 days to bring the value of the account
up to the minimum.
HOW TO BUY SHARES
APPLICATIONS FOR INSTITUTIONAL SHARES ARE ONLY MADE AVAILABLE THROUGH ARTISAN
DISTRIBUTORS LLC BY CALLING 1-800-399-1770. Institutional Shares may be
purchased by check or wire. There are no sales commissions or underwriting
discounts.
- -------------------------------------------------------------------------------
BY WIRE
You may purchase shares by instructing your bank to wire money to Artisan Funds'
custodian bank. Your bank may charge you a fee for sending the wire. IF YOU ARE
OPENING A NEW ACCOUNT BY WIRE TRANSFER, YOU MUST FIRST TELEPHONE ARTISAN
DISTRIBUTORS LLC AT 1-800-399-1770 TO REQUEST AN ACCOUNT NUMBER AND FURNISH YOUR
TAX IDENTIFICATION NUMBER. Artisan Funds will not be responsible for the
consequences of delays, including delays in the banking or Federal Reserve wire
systems.
Wire transfer instructions are:
State Street Bank and Trust Company
Attn: Mutual Funds
Boston, MA 02110
Routing #011000028
Credit to Artisan Mid Cap Institutional Shares 1333
Deposit DDA 99050882
- ------------------------------------------------------------------------------
BY CHECK
To make an initial purchase of shares by check, complete and sign the "Account
Application" and send it to the Fund's transfer agent at one of the following
addresses with a check for the total purchase amount payable to "Artisan Funds":
REGULAR MAIL OVERNIGHT DELIVERY
------------- ------------------
Artisan Funds Artisan Funds
c/o Boston Financial c/o Boston Financial
Marina Bay - Floor 3 66 Brooks Drive
500 Victory Road Braintree, MA 02184
Quincy, MA 02171
All investment checks must be delivered to one of the above addresses. Neither
Artisan Funds nor Artisan Distributors LLC is authorized to accept shareholder
investment checks at their corporate offices.
9
<PAGE>
- ------------------------------------------------------------------------------
PURCHASES IN KIND
You may, subject to the approval of Artisan Funds, purchase shares of the Fund
with securities that are eligible for purchase by the Fund (consistent with the
Fund's investment strategy, goal and philosophy) that have value that is readily
ascertainable in accordance with the Fund's valuation policies. Call Artisan
Funds at 1-800-399-1770 if you would like to purchase Fund shares with other
securities.
- ------------------------------------------------------------------------------
SUBSEQUENT INVESTMENTS
You may make subsequent investments by wire transfer using the instructions
given above, or by submitting a check, along with either the stub from your Fund
account confirmation statement or a note indicating the amount of the purchase,
your account number, and the name in which your account is registered. ARTISAN
FUNDS WILL NOT ACCEPT CASH, DRAFTS, THIRD PARTY CHECKS, OR CHECKS DRAWN ON BANKS
OUTSIDE OF THE UNITED STATES. If your order to purchase Institutional Shares is
canceled because your check does not clear, you will be responsible for any
resulting loss incurred by the Fund.
- -------------------------------------------------------------------------------
PURCHASE PRICE & EFFECTIVE DATE
Each purchase of Institutional Shares is made at the net asset value applicable
to Institutional Shares (see "Share Price") next determined after receipt by the
Fund's transfer agent of the check or wire transfer of funds in payment of the
purchase.
- -------------------------------------------------------------------------------
GENERAL
Artisan Funds cannot accept a purchase order specifying a particular purchase
date or price per share. Each purchase order must be accepted by an authorized
officer of Artisan Funds or its transfer agent and is not binding until accepted
and entered on the books of the Fund. Once your purchase order has been
accepted, you may not cancel or revoke it; however, you may redeem the shares.
Artisan Funds reserves the right not to accept any purchase order that it
determines not to be in the best interest of the Fund or the Fund's
shareholders.
HOW TO SELL SHARES
You may redeem all or any part of your Institutional Shares upon your written
request delivered to Artisan Funds' transfer agent at one of the following
addresses:
REGULAR MAIL OVERNIGHT DELIVERY
------------ ------------------
Artisan Funds Artisan Funds
c/o Boston Financial c/o Boston Financial
Marina Bay - Floor 3 66 Brooks Drive
500 Victory Road Braintree, MA 02184
Quincy, MA 02171
10
<PAGE>
Your redemption request must:
- identify the Fund and give your account number;
- specify the number of shares or dollar amount to be redeemed;
- be accompanied by a corporate resolution or other authorization in the case
of a redemption by a corporation, trust, partnership or other entity, as
described below; and
- be signed by the shareholder in ink or by a duly authorized agent of the
shareholder.
- ------------------------------------------------------------------------------
EVIDENCE OF AUTHORITY
Redemption requests by a corporation, trust, partnership or other entity must be
accompanied by evidence of authority of the person or persons signing the
redemption request to so act.
In the case of a corporation, the request must be signed in the name of the
corporation by an officer whose title must be stated, and must be accompanied by
a by-law provision or resolution of the board of directors, certified within 60
days, authorizing the officer to so act. A redemption request from a partnership
or a trust must be signed in the name of the partnership or trust by a general
partner or a trustee and include a signature guarantee. If the trustee is not
named in the account registration, a redemption request by a trust must also
include evidence of the trustee's appointment, such as a certified copy of the
relevant portions of the trust instrument. Under certain circumstances, before
the shares can be redeemed, additional documents may be required in order to
verify the authority of the person seeking to redeem.
- ------------------------------------------------------------------------------
GENERAL REDEMPTION POLICIES
You may not cancel or revoke your redemption order once your instructions have
been received and accepted. Artisan Funds cannot accept a redemption request
that specifies a particular date or price for redemption or any special
conditions. PLEASE CALL 1-800-399-1770 IF YOU HAVE ANY QUESTIONS ABOUT
REQUIREMENTS FOR A REDEMPTION BEFORE SUBMITTING YOUR REQUEST. Artisan Funds
reserves the right to require a properly completed application before making
payment for shares redeemed.
The Fund intends to pay all redemptions in cash. During any 90-day period for
any one shareholder, a Fund is obligated to redeem shares solely in cash up to
the lesser of $250,000 or 1% of the Fund's net assets. Redemptions in excess of
these limits may be paid wholly or partly by an in-kind distribution of
securities.
The price at which your redemption order will be executed is the net asset value
next determined after proper redemption instructions are received by the Fund's
transfer agent. See "Share Price." Because the redemption price you receive
depends upon the net asset value per share of Institutional Shares at the time
of redemption, it may be more or less than the price you originally paid for the
shares and may result in a realized capital gain or loss.
11
<PAGE>
Artisan Funds will generally wire transfer the proceeds of your redemption to
the bank account designated in your purchase application. If you attempt to
redeem shares within 15 days after they have been purchased by check, Artisan
Funds may delay payment of the redemption proceeds to you until it can verify
that payment for the purchase of those shares has been (or will be) collected.
To reduce such delays, Artisan Funds recommends that your purchase be made by
federal funds wire through your bank.
Shares in any account you maintain with Artisan Funds may be redeemed to the
extent necessary to reimburse Artisan Funds for any loss it sustains that is
caused by you (such as losses from uncollected checks or any Fund liability
under the Internal Revenue Code provisions on backup withholding relating to
your account).
SHAREHOLDER & ACCOUNT POLICIES
- -------------------------------------------------------------------------------
STATEMENTS & REPORTS
As a Fund investor, you will receive:
- confirmation statements - after every transaction in your account or change
in your account registration;
- quarterly account statements;
- annual and semi-annual reports with financial statements;
- year-end tax statements.
We suggest you keep each quarterly and year-end account statement with your
other important financial papers. You may need them for tax purposes.
If you need copies of statements, call 1-800-399-1770. Copies of this year's or
last year's statements are free of charge; for earlier years, there is a $10
processing fee.
- -------------------------------------------------------------------------------
SHARE PRICE
The Fund is open for business every day the New York Stock Exchange ("NYSE") is
open. Institutional Shares will not be priced on days when the NYSE is closed.
The Fund buys and sells Institutional Shares each day at the net asset value per
Institutional Share.
The NET ASSET VALUE PER INSTITUTIONAL SHARE is the value of a single
Institutional Share. It is computed by totaling the Institutional Shares' pro
rata share of the value of the Fund's investments, cash and other assets,
subtracting the Institutional Shares' pro rata share of the value of the Fund's
liabilities and the liabilities specifically allocated to Institutional Shares,
then dividing the result by the number of Institutional Shares outstanding. The
net asset value is computed daily at the NYSE closing time - usually 3:00 p.m.
central time, but sometimes earlier.
12
<PAGE>
Fund securities and assets are valued chiefly by quotations from the primary
market in which they are traded. If quotations are not readily available, they
are valued by a method that the board of directors believes reflects a fair
value.
Values of foreign securities are translated from local currencies into U.S.
dollars using current exchange rates. With respect to foreign securities -
traded primarily on foreign exchanges - the price of Institutional Shares may
change on days when the Fund is not open for purchase or sale.
- ------------------------------------------------------------------------------
DIVIDENDS, CAPITAL GAINS & TAXES
AS A SHAREHOLDER IN THE FUND, YOU ARE ENTITLED TO YOUR SHARE OF ITS NET INCOME
AND ANY GAINS REALIZED ON ITS INVESTMENTS. The Fund intends to distribute
substantially all of its net income and net realized capital gains to investors
at least annually.
- ------------------------------------------------------------------------------
DISTRIBUTION OPTIONS
When you open an account, specify on your application how you want to receive
your distributions. If you want to change your distribution option at a later
date, you may either submit a written request or call us at 1-800-399-1770.
The Fund offers three options:
- REINVESTMENT OPTION. Your dividends and capital gain distributions will be
reinvested in additional shares of the Fund. If you do not indicate a
choice on your application, we will automatically reinvest your
distributions.
- INCOME-ONLY OPTION. We will automatically reinvest your capital gain
distributions but send you a check for dividends.
- CASH OPTION. We will send you a check for all distributions.
When you reinvest, the reinvestment price is the net asset value per
Institutional Share at the close of business on the reinvestment date. The
mailing of distribution checks will usually begin on the payment date.
- ------------------------------------------------------------------------------
TAXES
As you should with any investment, consider how the return on your investment in
the Fund will be taxed. If your investment is in a tax-deferred account - an
employee benefit plan account, for example - the following tax discussion does
not apply.
TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and may
be subject to state or local taxes. If you are a U.S. citizen residing outside
the United States, your distributions may also 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 you received
them on December 31.
13
<PAGE>
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. The character of a capital gain depends on the
length of time that the Fund held the asset it sold.
Given its objective and strategy, the Fund will chiefly produce capital gains
distributions, as opposed to current income. Every January, the Fund will send
you and the IRS a statement - called Form 1099 - showing the total amount of
taxable distributions you received in the previous calendar year.
TAXES ON TRANSACTIONS. When you redeem shares, you will experience 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. You may be subject to tax.
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 that reports, among other things, your average
cost basis of the shares you sold. This will allow you or your tax preparer to
determine the tax consequences of each redemption. However, be sure to keep your
regular account statements; their information will be essential in verifying the
amount of your capital gains or losses.
To invest, you must be a U.S. resident with a Social Security or taxpayer
identification number. When you sign your account application, you must 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 this procedure, the IRS can require the Fund
to withhold 31% of your taxable distributions and redemptions.
14
<PAGE>
For more detail on the Fund, you may request the Statement of Additional
Information, which is incorporated herein by reference.
You can find more information about the Fund's investments in its annual and
semi-annual reports to shareholders. These documents discuss the market
conditions and investment strategies that significantly affected the Fund's
performance in its most recent fiscal period.
For a free copy of any of these documents, call 1-800-399-1770. Also call this
number if you have a question or would like to receive other information about
the Fund.
Text-only versions of the Fund's documents can be viewed online or downloaded
from the EDGAR Database on the SEC's Internet web site at www.sec.gov. You may
also review and copy those documents by visiting the SEC's Public Reference Room
in Washington, D.C. Information on the operation of the Public Reference Room
may be obtained by calling the SEC at 202-942-8090. In addition, copies may be
obtained, after mailing the appropriate duplicating fee, by writing to the SEC's
Public Reference Section, 450 5th Street, N.W., Washington, D.C. 20549-0102 or
by e-mail request at [email protected].
15
<PAGE>
(ARTISAN LOGO)
ARTISAN FUNDS
INVESTMENT MANAGEMENT PRACTICED WITH
INTELLIGENCE AND DISCIPLINE IS AN ART.
16
<PAGE>
ARTISAN FUNDS, INC.
ARTISAN MID CAP FUND
INSTITUTIONAL SHARES
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
(414) 390-6100 (800) 344-1770
STATEMENT OF ADDITIONAL INFORMATION
July 1, 2000
- --------------------------------------------------------------------------------
Artisan Mid Cap Fund Institutional Shares (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 July 1, 2000 and any supplement to that prospectus. A copy of the
prospectus can be obtained without charge by calling (800) 344-1770 or by
writing to Artisan Funds.
TABLE OF CONTENTS
Page
----
Information about the Fund and Artisan Partners.........................B-1
Investment Objective and Policies.......................................B-2
Investment Techniques and Risks.........................................B-3
Investment Restrictions................................................B-17
Performance Information................................................B-19
Organization...........................................................B-23
Directors and Officers.................................................B-24
Principal Shareholders.................................................B-28
Investment Advisory Services...........................................B-28
Code of Ethics.........................................................B-29
Distributor............................................................B-29
Portfolio Transactions.................................................B-29
Purchasing and Redeeming Shares........................................B-31
Additional Tax Information.............................................B-32
Custodian and Transfer Agent...........................................B-33
Independent Accountants................................................B-34
Financial Statements...................................................B-34
Appendix - Description of Bond Ratings.........................Appendix - 1
INFORMATION ABOUT THE FUND AND ARTISAN PARTNERS
The Fund is a series of Artisan Funds, Inc. ("Artisan Funds"). Artisan
Partners Limited Partnership ("Artisan Partners") provides investment advisory
services to the Fund.
B-1
<PAGE>
Artisan Funds strives to offer distinctive, high-value-added investment
opportunities. Artisan Funds is not a "family" of indistinguishable products
devised by marketers in a financial services conglomerate. Rather, Artisan
Partners is a small partnership of investment professionals, focused on a
limited number of distinct investment strategies, each of which is offered as a
series of Artisan Funds. The portfolio manager of the Fund is a specialist in
his or her market, with an investment process created and refined through years
of experience - an artisan. At Artisan Funds, we believe that experienced,
active managers investing in inefficient markets can produce superior returns
over time. The Artisan Funds are intended for long-term investors who share
that belief.
The discussion below supplements the description in the prospectus of the
Fund's investment objectives, policies and restrictions.
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks long-term capital growth by investing primarily in the common
stocks of medium-sized companies. Medium-sized companies are those whose market
capitalizations fall within the range of companies in the S&P MidCap 400 Index
(the "MidCap Index"). As of March 31, 2000, the MidCap Index included companies
with capitalizations between approximately $210 million and $23.2 billion. The
market capitalization range in which the Fund invests will change as the range
of the companies included in the MidCap Index changes. The Fund offers two
classes of shares: Artisan Mid Cap Investor Shares ("Mid Cap Investor Shares")
and Artisan Mid Cap Institutional Shares ("Mid Cap Institutional Shares").
As described more fully in the Mid Cap Institutional Shares prospectus, Mid Cap
Institutional Shares are offered to certain institutional investors with a
minimum initial investment of $2 million.
Artisan Partners, investment adviser to the Fund, seeks mid-cap companies
that possess franchise characteristics and whose stock sells at compelling
valuations. This focus may lead it to companies with superior business
potential that are temporarily out of favor or misunderstood by the market.
Artisan Partners attempts to identify these companies when they are experiencing
a change in dynamics that could potentially leverage their inherent strengths.
This strategy rests on a few basic beliefs:
- - An established franchise can protect a company from some of the effects of
competition. Over time, this advantage could lead to more stable cash flow
and, ultimately, to higher valuation. Examples of "franchise
characteristics" are proprietary technology, a defensible brand, a dominant
market share, or the position of a low-cost provider.
- - A franchise company selling at a significant discount to its intrinsic value
offers superior long-term investment potential. Thus, the assessment of
"intrinsic value" - the price that Artisan Partners believes a strategic
buyer would pay to own the entire company - is fundamental to Artisan
Partners' process.
B-2
<PAGE>
- - A company with franchise characteristics and an attractive valuation is
often one experiencing a major change - for instance, new management, a
restructuring, a new product cycle, an acquisition or a divestiture. Such a
change could serve as a catalyst to improved performance, higher earnings,
and, often, powerful, long-term market response. Artisan Partners actively
seeks such opportunities, hoping to identify as early as possible the
potential for positive change.
- - The mid-cap universe provides a fertile ground for identifying franchise
companies trading at attractive prices. Large-cap franchise companies,
because they are heavily followed and sponsored, tend to be priced
efficiently. Small-cap companies typically do not yet possess meaningful
franchise characteristics. By contrast, the mid-cap universe - in which
market caps range between approximately $210 million and $23.2 billion as of
March 31, 2000 - is less efficient than the large-cap, is more mature than
the small-cap, and is populated by many established companies whose
franchise characteristics are emerging or are poised to create powerful
competitive advantages.
The Fund attempts to manage portfolio risk by focusing on stocks that sell
at significant discounts to their intrinsic value as determined by Artisan
Partners, and by diversifying its holdings to avoid concentration in any one
stock or industry sector.
The Fund invests primarily in equity securities, including common and
preferred stocks, warrants or other similar rights, and convertible securities.
The Fund may from time to time have significant portions of its portfolio
invested in foreign securities. The Fund also may invest in any other type of
security, including debt securities.
The Fund's investment objective 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. However, investors
in the Fund will receive at least 30 days' prior written notice of any change in
the Fund's investment objective.
INVESTMENT TECHNIQUES AND RISKS
Foreign Securities
The Fund may invest up to 25% of its total assets in foreign securities
(including American Depository Receipts ("ADRs") European Depositary Receipts
("EDRs"), Global Depositary Receipts ("GDRs"), or other securities representing
underlying shares of foreign issuers) , 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. EDRs are European receipts
evidencing a similar arrangement. GDRs are receipts that may trade in U.S. or
non-U.S. markets. The Fund may invest in sponsored or unsponsored ADRs, EDRs or
GDRs. In the case of an unsponsored depositary receipt, 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
B-3
<PAGE>
would have with a sponsored depositary receipt. The Fund does not intend to
invest more than 5% of its net assets in unsponsored depositary receipts.
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 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.
B-4
<PAGE>
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. The Fund may invest up to 35% of its net assets in debt
securities that are rated below investment grade. However, the Fund currently
does not intend to invest more than 5% of its net assets in debt 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 in
ordinary circumstances, although the Fund may invest without limit in corporate
or government obligations or hold cash or cash equivalents if Artisan Partners
determines that a temporary defensive position is advisable. During those
periods, the Fund's assets may not be invested in accordance with its strategy
and the Fund may not achieve its investment objective.
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.
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). The estimated price at which a convertible security would
be valued by the marketplace if it had no conversion feature 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.
B-5
<PAGE>
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 which 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 may use 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 at a 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 or income receivables. Portfolio hedging is the use of
forward contracts with respect to portfolio security positions denominated or
quoted in a particular currency. Portfolio hedging allows the Fund to limit or
reduce exposure in a foreign currency by entering into a forward contract to
sell or buy
B-6
<PAGE>
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's portfolio. 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
B-7
<PAGE>
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.
Options on Securities and Indexes. The Fund may purchase and write (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 the Nasdaq stock market. 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.
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.
B-8
<PAGE>
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.
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 unexpected 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 was 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 had 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<F1>
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, the Russell 2000 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.
- -------------------------------
<F1> 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-9
<PAGE>
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.
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 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 generally set
by the exchange on which the contract is traded, although the margin requirement
may be modified during the term of the contract and the Fund's broker may
require margin deposits in excess of the minimum required by the exchange. 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.
B-10
<PAGE>
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
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.
B-11
<PAGE>
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,"<F2>
would exceed 5% of the Fund's total assets.
When purchasing a futures contract or writing a put option on a futures
contract, the Fund must maintain with its custodian (or broker, if legally
permitted) assets (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 assets (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.
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%).
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.
- -------------------------------
<F2> 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-12
<PAGE>
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<F3> 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 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.
- -------------------------------
<F3> 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-13
<PAGE>
The Taxpayer Relief Act of 1997 (the "Act") imposed constructive sale
treatment for federal income tax purposes on certain hedging strategies with
respect to appreciated securities. Under these rules taxpayers will recognize
gain, but not loss, with respect to securities if they enter into short sales or
"offsetting notional principal contracts" (as defined by the Act) with respect
to, or futures or "forward contracts" (as defined by the Act) to deliver, the
same or substantially identical property, or if they enter into such
transactions and then acquire the same or substantially identical property.
Furthermore, the Secretary of the Treasury is authorized to promulgate
regulations that will treat as constructive sales certain transactions that have
substantially the same effect as short sales, offsetting notional principal
contracts, and futures or forward contracts to deliver the same or substantially
similar property.
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). Any net gain realized from
futures (or futures options) contracts will be considered gain from the sale of
securities and therefore will be qualifying income for purposes of the 90%
requirement.
The Fund intends to distribute to shareholders at least 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 ("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 on investing more than 10%
of its net assets in illiquid securities. In making a determination of whether
a Rule 144A security is liquid or not, 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-14
<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 currently does not intend to
loan more than 5% of its net assets.
Repurchase Agreements
Repurchase agreements are transactions in which the Fund purchases a
security from a bank or recognized securities dealer and simultaneously commits
to resell that security to the bank or dealer at an agreed-upon price, date, and
market rate of interest unrelated to the coupon rate or maturity of the
purchased security. Although repurchase agreements carry certain risks not
associated with direct investments in securities, the Fund will enter into
repurchase agreements only with banks and dealers believed by Artisan Partners
to present minimal credit risks. Artisan Partners will review and monitor the
creditworthiness of such institutions, and will consider the capitalization of
the institution, Artisan Partners' prior dealings with the institution, any
rating of the institution's senior long-term debt by independent rating
agencies, and other relevant factors.
The Fund will invest only in repurchase agreements collateralized at all
times in an amount at least equal to the repurchase price plus accrued interest.
To the extent that the proceeds from any sale of such collateral upon a default
in the obligation to repurchase were less than the repurchase price, the Fund
would suffer a loss. If the financial institution which is party to the
repurchase agreement petitions for bankruptcy or otherwise becomes subject to
bankruptcy or other liquidation proceedings there may be restrictions on the
Fund's ability to sell the collateral and the Fund could suffer a loss.
However, with respect to financial institutions whose bankruptcy or liquidation
proceedings are subject to the U.S. Bankruptcy Code, the Fund intends to comply
with provisions under such Code that would allow it immediately to resell such
collateral.
B-15
<PAGE>
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 a
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 currently
does not 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 Fund's 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, assets 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 currently does not intend to have commitments to make
short sales "against the box" in excess of 5% of its net assets.
Line of Credit
Artisan Funds maintains 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. Any borrowings under that line of credit by the Fund
would be subject to restriction (4) under "Investment Restrictions" in this
Statement of Additional Information.
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
B-16
<PAGE>
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. For the
years ended June 30, 1999 and 1998, the Fund's portfolio turnover rates were as
follows: 202.84% and 235.65%. 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 costs, 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 "Dividends, 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 which may
not be changed without the approval of the lesser of (i) 67% of the Fund's
shares present at a meeting if more than 50% of the shares outstanding are
present or (ii) more than 50% of the Fund's outstanding shares, 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) investing in repurchase agreements, 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);
B-17
<PAGE>
(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;<F4>
(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
U.S. Government 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 is also subject to the following non-fundamental restrictions and
policies, which may be changed by the board of directors. Many of these
restrictions were formerly required by law or regulation of one or more states
in which shares of the Fund are offered for sale.
The Fund may not:
(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); and (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);
(b) invest in companies for the purpose of exercising control or
management;
- -------------------------------
<F4> The Fund will not purchase securities when total borrowings by the Fund are
greater than 5% of its net asset value.
B-18
<PAGE>
(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;
(d) invest more than 25% of its total assets (valued at time of purchase)
in securities of foreign issuers
(e) 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 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
(f) 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; or
(g) under normal market conditions, invest less than 65% of its total
assets in securities of issuers having aggregate common stock market
capitalizations within the range of the aggregate common stock market
capitalizations of issuers included in the S&P MidCap 400 Index, in each case
at the time of investment.
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(1+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)
B-19
<PAGE>
The Fund's Total Return and Average Annual Total Return for various periods
ended June 30, 1999 is shown below:
Artisan Mid Cap Fund
--------------------
Mid Cap Investor Shares
-----------------------
Average Annual
Total Return Total Return
------------ --------------
1 year 35.82% 35.82%
Life of Fund<F1> 98.39% 40.59%
- -----------------------------------------
<F1> from June 27, 1997 (commencement of operations)
Total Return and Average Annual Total Return of Mid Cap Investor Shares are
calculated in the same way as for Mid Cap Institutional Shares. The performance
of Mid Cap Institutional Shares is expected to be different from the performance
of Mid Cap Investor Shares because the expenses allocated to the classes are
different. Because the expense ratio for Mid Cap Institutional Shares is
expected to be lower, the Total Return and Average Annual Total Return of
Mid Cap Institutional Shares are expected to be greater than for Mid Cap
Investor Shares.
The Fund imposes no sales charges and pays no distribution expenses. Income
taxes are not taken into consideration. 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. The Fund
may invest in initial public offerings (IPOs). IPOs and other investment
techniques may have a magnified performance impact on a fund with a small asset
base. The Fund may not experience similar performance as its assets grow.
In advertising and sales literature, the Fund's performance 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 those 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 Artisan Funds generally believe 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, Artisan Funds 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-20
<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 13D Opportunities Report
Daily Time
Kiplinger's Personal United Mutual Fund Selector
Finance Magazine USA Today
Knight-Ridder U.S. News and World Report
Los Angeles Times The Wall Street Journal
Milwaukee Business Working Woman
Journal Worth
Milwaukee Journal Sentinel Your Money
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.
Various newspapers and publications including those listed above may also
make mention of the Fund's portfolio manager. Portfolio managers and other
members of the Adviser's staff may make presentations at conferences or trade
shows, appear on television or radio programs, or conduct or participate in
telephone conference calls, and the Fund may announce those presentations,
appearances or calls to some or all shareholders, or to potential investors in
the Fund. Biographical and other information about the Fund's portfolio
manager, including information about awards received by that portfolio manager
or mentions of the manager in the media, may also be described or quoted in Fund
advertisements or sales literature.
The Fund may compare its performance to the Consumer Price Index (All
Urban), a widely recognized measure of inflation.
B-21
<PAGE>
The Fund's performance may be compared to the following indexes or
averages:
Dow-Jones Industrial Average New York Stock Exchange
Russell 2000 Index Composite Index
Russell 2000 Growth Index American Stock Exchange
Russell 2000 Value Index Composite Index
Russell Mid-Cap Stock Index NASDAQ Composite
Russell Mid-Cap Value Index NASDAQ Industrials
Standard & Poor's 500 Stock Index (These indexes generally
Standard & Poor's 400 Industrials reflect the performance of
Standard & Poor's 400 MidCap Index stocks traded in the
Wilshire 5000 indicated markets.)
Wilshire 4500
Wilshire 4000
(These indexes are widely recognized
indicators of general U.S. stock market
results.)
The Fund's performance also may be compared to the following mutual fund
industry indexes or averages: Value Line Index; Lipper Capital Appreciation
Fund Average; Lipper Growth Funds Average; Lipper Mid Cap Fund Index; Lipper
Mid-Cap Core Fund Index, Lipper General Equity Funds Average; Lipper Equity
Funds Average; Morningstar Growth Average; Morningstar Aggressive Growth
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 Lipper Mid Cap Fund Index reflects the net asset value weighted total
return of the thirty largest mid cap funds as calculated and published by
Lipper, Inc. ("Lipper"), an independent service that monitors the performance of
more than 1,000 funds.
The Lipper 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 also 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
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 the 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
B-22
<PAGE>
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,
Artisan Funds 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 Artisan Funds 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).
ORGANIZATION
The Fund is a series of Artisan Funds, Inc. ("Artisan Funds"), an open-end,
diversified management investment company which was incorporated under Wisconsin
law on January 5, 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 Artisan Funds 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). Artisan Funds 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.
Artisan Funds believes that not holding shareholder meetings except as otherwise
required reduces the Fund's expenses and enhances shareholder return.
B-23
<PAGE>
The Fund may hold special meetings of shareholders 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.
DIRECTORS AND OFFICERS
Directors and officers of Artisan Funds, and their principal business
occupations during at least the last five (5) years, are shown below. Directors
deemed to be "interested persons" of Artisan Funds for purposes of the 1940 Act
are indicated with an asterisk.
NAME AND DATE OF POSITIONS HELD PRINCIPAL OCCUPATIONS DURING
BIRTH WITH REGISTRANT PAST 5 YEARS
- --------------------- -------------------- --------------------------------
Andrew A. Ziegler<F1> Director, Chairman Managing Director of Artisan
10/7/57 of the Board and Partners; prior to founding
Chief Executive Artisan Partners in 1994,
Officer President and Chief Operating
Officer of Strong/Corneliuson
Capital Management ("Strong")
and President of the Strong
Funds from 1990 to 1994.
Carlene Murphy Director and Vice Managing Director of Artisan
Ziegler<F1> President Partners; Co-Manager of Artisan
6/20/56 Small Cap Fund; President of
Artisan Funds (1995-1999); prior
to founding Artisan Partners in
1994, 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.
David A. Erne Director Partner of the law firm
5/6/43 Reinhart, Boerner, Van Deuren,
Norris & Rieselbach, S.C.,
Milwaukee, WI, and Director
of Capital Commerce
Banccorporation-Milwaukee
Western Bank since 1994.
Thomas R. Hefty Director President of United Wisconsin
6/9/47 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.
B-24
<PAGE>
NAME AND DATE OF POSITIONS HELD PRINCIPAL OCCUPATIONS DURING
BIRTH WITH REGISTRANT PAST 5 YEARS
- --------------------- -------------------- --------------------------------
Howard B. Witt Director President and Chief Executive
5/17/40 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
Material Sciences Corporation,
(a technology based manufacturer
of continuously processed coated
and specialty engineered
materials and services) since
1997; and Director of Franklin
Electric Co., Inc. (a manufacturer
of electronic motors) since 1994.
Michael C. Roos President Managing Director of Artisan
4/18/58 Partners; President of Artisan
Distributors; prior to joining
Artisan Partners in 1995, Vice
President, Fidelity Investments
(since 1994).
Lawrence A. Totsky Chief Financial Managing Director of Artisan
5/6/59 Officer, Treasurer Partners; Chief Financial
and Secretary Officer, Artisan Partners; prior
to joining Artisan Partners in
1998, Senior Vice President
(since 1994) and Director of
Mutual Fund Administration,
Strong Capital Management, Inc.,
prior thereto.
Mark L. Yockey Vice President Managing Director of Artisan
6/5/56 Partners; Portfolio Manager of
Artisan International Fund;
prior to joining Artisan
Partners in 1995, Portfolio
Manager of the United
International Growth Fund and
Vice President of Waddell & Reed
(investment management firm)
since January 1990.
Sandra Jean Vice President Senior Equity Trader for Artisan
Voss-Reinhardt Partners; prior to joining
3/6/64 Artisan Partners in 1995, Equity
Trader with Northwestern Mutual
Life Insurance Company since
January 1989.
B-25
<PAGE>
NAME AND DATE OF POSITIONS HELD PRINCIPAL OCCUPATIONS DURING
BIRTH WITH REGISTRANT PAST 5 YEARS
- --------------------- -------------------- -------------------------------
Scott C. Satterwhite Vice President Managing Director of Artisan
7/15/57 Partners, and Portfolio Manager,
Artisan Small Cap Value Fund;
prior to joining Artisan
Partners in June 1997, Portfolio
Manager of the Biltmore Special
Values Fund from August 1, 1993
through May 31, 1997 and Senior
Vice President and Manager of
Personal Trust Portfolio
Management for the Personal
Financial Services Group of
Wachovia Bank of North Carolina,
N.A.
Andrew C. Stephens Vice President Managing Director of Artisan
10/31/63 Partners, and Portfolio Manager,
Artisan Mid Cap Fund; prior to
joining Artisan Partners in
1997, Co-Manager of Strong Asset
Allocation Fund at Strong,
February 1993 through March
1997, and Senior Research
Analyst for Strong Common Stock
Fund and Strong Opportunity
Fund, September 1994 through
March 1996.
Marina T. Carlson Vice President Managing Director of Artisan
5/9/64 Partners, and Co-Portfolio
Manager, Artisan Small Cap Fund;
prior to joining Artisan
Partners in 1999, Manager of
Strong Mid Cap Disciplined Fund
from its inception in December
1998 through March 1999 and Co-
Manager of Strong Opportunity
Fund and Strong Common Stock
Fund from 1993 through December
1998.
James C. Kieffer Vice President Research Analyst for Artisan
12/2/64 Partners; Vice President of
Artisan Funds; prior to joining
Artisan Partners in 1997,
Research Analyst for McColl
Partners since 1996; prior to
McColl Partners, Research
Analyst for Wachovia Investment
Management since 1989.
Gregory K. Ramirez Assistant Secretary Controller of Artisan Partners;
7/14/70 and Assistant Assistant Treasurer and
Treasurer Assistant Secretary of Artisan
Funds; prior to joining Artisan
Partners in 1997, Audit Manager
of Price Waterhouse LLP.
B-26
<PAGE>
The business address of the officers and directors affiliated with Artisan
Partners is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202.
The addresses of the other directors are: Mr. Erne - 1000 N. Water Street,
Milwaukee, Wisconsin 53202; Mr. Hefty - 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 many of the powers of the Board
of Directors.
The compensation paid to directors and officers of Artisan Funds for
their services as such consists of an annual retainer fee in the amount of
$27,000. In addition, directors receive $1,000 for any meeting held on a day
other than which a meeting of the full board of directors is held and $500 for
any meeting held by telephone. Compensation is paid only to directors who are
not interested persons of Artisan Funds or Artisan Partners and is allocated
among the series of the Artisan Funds. The Artisan Mid Cap Fund pays $6,000 of
the annual retainer, $222 of each meeting fee, and $111 of each telephone
meeting fee. Artisan Funds has no retirement or pension plans.
The following table sets forth compensation paid by Artisan Funds, Inc.
during the fiscal year ended June 30, 1999 to each of the directors of the Fund.
PENSION OR TOTAL
AGGREGATE RETIREMENT COMPENSATION
COMPENSATION BENEFITS ACCRUED FROM ARTISAN FUND AND
FROM ARTISAN AS PART OF FUND FUND COMPLEX<F4>
NAME OF DIRECTOR FUNDS EXPENSES PAID TO DIRECTORS
- ------------------ ------------- ---------------- -------------------
Andrew A. Ziegler $ 0 $ 0 $ 0
Carlene Murphy 0 0 0
Ziegler
David A. Erne 20,000 0 20,000
Thomas R. Hefty 20,000 0 20,000
Howard B. Witt 20,000 0 20,000
At March 31, 2000, the officers and directors of Artisan Funds as a group
owned less than 1% of the outstanding shares of Artisan Mid Cap Fund.
B-27
<PAGE>
PRINCIPAL SHAREHOLDERS
No person was known by Artisan Funds to own of record or beneficially 5% or
more of the outstanding shares of the Artisan Mid Cap Fund Institutional Shares
at April 28, 2000. The only persons known by Artisan Funds to own of record or
beneficially 5% or more of the outstanding shares of the Artisan Mid Cap Fund
Investor Shares as of March 31, 2000 were:
PERCENTAGE OF
OUTSTANDING
NAME AND ADDRESS SHARES HELD
---------------- -------------
Charles Schwab & Co. Inc.<F1> 29.96%
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp.<F1> 8.94%
One World Financial Center
200 Liberty Street
New York, NY 10281-1003
Wells Fargo Bank, Trustee 6.00%
Stoel Rives LLP Retirement Trust
PO Box 9800
Calabasas, CA 91372-0800
- --------------
<F1> Shares are held of record on behalf of customers, and not beneficially.
INVESTMENT ADVISORY SERVICES
Artisan Partners Limited Partnership ("Artisan Partners") provides
investment advisory services to the Fund pursuant to Investment Advisory
Agreements dated April 10, 1997. 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. Artisan Partners also has
offices at 100 Pine Street, Suite 2950, San Francisco, California, and Five
Concourse Parkway NE, Suite 2120, Atlanta, Georgia 30328.
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 Artisan Mid Cap Fund paid investment advisory fees of $229,384 and
$93,853 in 1999 and 1998, respectively, of which $29,152 and $93,853,
respectively, was waived or reimbursed by Artisan Partners. From its inception
on June 27, 1997 through June 30, 1997, Artisan Mid Cap Fund did not pay any
investment advisory fees. 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.
B-28
<PAGE>
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).
CODE OF ETHICS
The 1940 Act and rules thereunder require that Artisan Funds and Artisan
Partners establish standards and procedures for the detection and prevention of
certain conflicts of interest, including activities by which persons having
knowledge of the investments and investment intentions of Artisan Funds might
take advantage of that knowledge for their own benefit. Artisan Funds and
Artisan Partners have adopted a Code of Ethics to meet those concerns and legal
requirements. Although the Code does not prohibit employees who have knowledge
of the investments and investment intentions of Artisan Funds from engaging in
personal securities investing, it does regulate such personal securities
investing by these employees as a part of the effort by Artisan Funds and
Artisan Partners to detect and prevent conflicts of interest.
DISTRIBUTOR
Shares of the Fund are offered for sale by Artisan Distributors LLC
("Distributors") without any sales commissions, 12b-1 fees, or other charges to
the Fund or its shareholders. Distributors is wholly-owned by Artisan Partners.
All distribution expenses relating to the Fund are paid by Artisan Partners,
including the payment or reimbursement of any expenses incurred by Distributors.
The Distribution Agreement will continue in effect through October 30, 2000 and
thereafter from year to year provided such continuance is approved annually (i)
by a majority of the directors or by a majority of the outstanding voting
securities of the Fund and (ii) by a majority of the directors who are not
parties to the Agreement or interested persons of any such party.
Artisan Funds has agreed to pay all expenses in connection with
registration of its shares with the Securities and Exchange Commission and any
auditing and filing fees required in compliance with various state securities
laws. Artisan Partners bears all sales and promotional expenses, including the
cost of prospectuses and other materials used for sales and promotional purposes
by Distributors. Distributors offers the Fund's shares only on a best efforts
basis. Distributors is located at 1000 North Water Street, Suite 1770,
Milwaukee, Wisconsin 53202.
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
B-29
<PAGE>
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 Artisan Funds, 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 Artisan Funds), 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
Artisan Funds 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 Artisan Funds.
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 Artisan Funds. During fiscal years
1999, 1998 and 1997, Artisan Mid Cap Fund paid brokerage commissions of $175,709
and $72,800 to brokers who furnished research services to the Fund or Artisan
Partners on purchases and sales aggregating $109,326,360 and $50,307,734 (from
its inception on June 27, 1997
B-30
<PAGE>
through June 30, 1997, Artisan Mid Cap Fund had no purchases or sales of its
portfolio securities).
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 or redeemed through certain financial
services companies, some of which may charge a transaction fee. The Fund may
authorize from time to time certain financial services companies, broker-dealers
or their designees ("authorized agents") to accept share purchase and redemption
orders on its behalf. For purchase orders placed through an authorized agent, a
shareholder will pay the Fund's NAV per share (see "Net Asset Value," below)
next computed after the receipt by the authorized agent of such purchase order,
plus any applicable transaction charge imposed by the agent. For redemption
orders placed through an authorized agent, a shareholder will receive redemption
proceeds which reflect the NAV per share next computed after the receipt by the
authorized agent of the redemption order, less any redemption fees imposed by
the agent.
In some instances, an authorized agent or other financial services company
may not charge any transaction fees directly to investors in the Fund. However,
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 based on a percentage 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. Share purchase and redemption orders will be priced at the
Fund's net asset value next computed after such orders are received and accepted
by: (i) the Fund; (ii) a broker-dealer or other financial services company
authorized by the Fund to accept purchase and redemption orders on the Fund's
behalf; or (iii) such authorized broker-dealer's designee. 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 January, 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.
B-31
<PAGE>
Although the Fund intends to pay all redemptions in cash, it reserves the
right, as described below, to pay the redemption price in whole or in part by a
distribution of the Fund's portfolio securities.
Because the Fund has elected to be governed by Rule 18f-1 under the
Investment Company Act of 1940, the Fund is obligated to pay share redemptions
to any one shareholder in cash only up to the lesser of $250,000 or one percent
of the Fund's net assets represented by such share class during any 90-day
period. Redemptions in excess of such limit may be paid wholly or partly by a
distribution in kind of readily marketable securities. If redemptions are 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.
ADDITIONAL TAX INFORMATION
Artisan Funds intends for the Fund to 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. If Artisan Funds should fail to qualify
for pass-through tax treatment under Subchapter M, then it would be required to
pay taxes on any income and realized capital gains, reducing the amount of
income and realized capital gains that would otherwise be available for
distribution to the Fund's shareholders.
Your distributions will be taxable to you, under income tax law, whether
received in cash or reinvested in additional shares. For federal income tax
purposes, any distribution that is paid in January but was declared in October,
November or December of the prior calendar year is deemed paid in the prior
calendar year.
You will be subject to income tax at ordinary rates on income dividends and
distributions of net short-term capital gains. Distributions of net long-term
capital gains are taxable to you as long-term capital gains (currently taxed at
a maximum rate of 20% for individual taxpayers) regardless of the length of time
you have held your shares. Long-term gains are those derived from securities
held by the Fund for more than one year.
You will be advised annually as to the source of distributions for tax
purposes. If you are not subject to tax on your income, you will not be
required to pay tax on these amounts.
If you realize a loss on the sale of Fund shares held for six months or
less, your short-term loss is recharacterized as long-term to the extent of any
long-term capital gain distributions you have received with respect to those
shares.
B-32
<PAGE>
The Fund may be required to withhold federal income tax ("backup
withholding") from certain payments to you, generally redemption proceeds.
Backup withholding may be required if:
- You fail to furnish your properly certified social security or other
tax identification number;
- You fail to certify that your tax identification number is correct or
that you are not subject to backup withholding due to the
underreporting of certain income;
- The IRS informs the Fund that your tax identification number is
incorrect.
These certifications are contained in the application that you complete when
you open your Fund account. Artisan Funds must promptly pay the IRS all amounts
withheld. Therefore, it usually is not possible for Artisan Funds to reimburse
you for amounts withheld. You may, however, claim the amount withheld as a
credit on your federal income tax return.
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 laws, the Fund intends to treat securities in PFICs
as sold on the last day of the Fund's fiscal year and recognize any gains for
tax purposes at that time; losses may be recognized to the extent of any gains
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.
The discussion of taxation above is not intended to be a full discussion of
income tax laws and their effect on shareholders. You are encouraged to consult
your own tax advisor. The foregoing information applies to U.S. shareholders.
U.S. citizens residing in a foreign country should consult their tax advisors as
to the tax consequences of ownership of Fund shares.
CUSTODIAN AND TRANSFER AGENT
State Street Bank & Trust Company ("State Street"), 66 Brooks Drive,
Braintree, MA 02184, 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 transfer agency and 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.
B-33
<PAGE>
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin
53202 serves as the Fund's independent accountants, providing services including
(i) an 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.
FINANCIAL STATEMENTS
The financial statements of Artisan Funds appearing in the prospectus and
this Statement of Additional Information for periods prior to and including the
year ended June 30, 1999 have been audited by PricewaterhouseCoopers LLP,
independent accountants, as indicated in their reports with respect thereto,
and are included in reliance upon such reports given upon the authority of such
firm as experts in accounting and auditing. The unaudited interim financial
statements as of December 31, 1999, reflect all adjustments which are, in the
opinion of management, necessary to present a fair statement of the results for
the six months ended December 31, 1999.
The Artisan Funds, Inc. Annual Report to Shareholders for the fiscal year
ended June 30, 1999 contains financial statements, notes thereto, supplementary
information entitled "Financial Highlights," and a report of independent
accountants, all of which (but no other part of the Annual Report) are
incorporated herein by reference.
The Artisan Funds, Inc. Semi-Annual Report to Shareholders for the period
ended December 31, 1999 contains financial statements, notes thereto,
supplementary information entitled "Financial Highlights" all of which (but
no other part of the Semi-Annual Report) are incorporated herein by reference.
B-34
<PAGE>
APPENDIX
--------
DESCRIPTION OF BOND RATINGS
A rating of a rating service represents the service's opinion as to the credit
quality of the security being rated. However, the ratings are general and are
not absolute standards of quality or guarantees as to the creditworthiness of an
issuer. Consequently, the Fund's investment adviser believes that the quality of
debt securities in which the Fund invests should be continuously reviewed and
that individual analysts give different weightings to the various factors
involved in credit analysis. A rating is not a recommendation to purchase, sell
or hold a security, because it does not take into account market value or
suitability for a particular investor. When a security has received a rating
from more than one service, each rating should be evaluated independently.
Ratings are based on current information furnished by the issuer or obtained by
the ratings services from other sources which they consider reliable. Ratings
may be changed, suspended or withdrawn as a result of changes in or
unavailability of such information, or for other reasons.
The following is a description of the characteristics of rating used by Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Corporation ("S&P").
RATINGS BY MOODY'S
Aaa--Bonds rated Aaa are judged to be the best quality. They carry the smallest
degree of investment risk and are generally referred to as "gilt-edge." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. Although the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such bonds.
Aa--Bonds rated Aa are judged to be high quality by all standards. Together
with the Aaa group they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa bonds or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa bonds.
A--Bonds rated A possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa--Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Appendix-1
<PAGE>
Ba--Bonds rated Ba are judged to have speculative elements; their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B--Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or of maintenance of other terms of
the contract over any long period of time may be small.
Caa--Bonds rated Caa are of poor standing. Such bonds may be in default or
there may be present elements of danger with respect to principal or interest.
Ca--Bonds rated Ca represent obligations which are speculative in a high degree.
Such bonds are often in default or have other marked shortcomings.
S&P RATINGS
AAA--Bonds rated AAA have the highest rating. Capacity to pay principal and
interest is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay principal and interest and
differ from AAA bonds only in small degree.
A--Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay principal and interest for bonds in this capacity
than for bonds in higher rated categories.
BB--B--CCC--CC--Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation among such bonds and CC the highest
degree of speculation. Although such bonds will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or major
risk exposures to adverse conditions.
Appendix-2
<PAGE>
PART C
OTHER INFORMATION
ITEM 23. Exhibits
EXHIBIT
NUMBER DESCRIPTION
(a)(1) Amended and Restated Articles of Incorporation of the
Registrant. (a)
(a)(2) Articles of Amendment dated October 12, 1995. (a)
(a)(3) Articles of Amendment dated January 16, 1997. (b)
(a)(4) Articles of Amendment dated April 10, 1997. (c)
(a)(5) Articles of Amendment dated June 5, 1997. (d)
(a)(6) Articles of Amendment dated April 27, 2000.
(b) Bylaws, as amended. (a)
(c) None. (Registrant does not issue share certificates.)
(d)(1) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan Small Cap Fund.
(a)
(d)(2) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan International
Fund. (a)
(d)(3) Investment Advisory Agreement between the Registrant and Artisan
Partners Limited Partnership relating to Artisan Mid Cap Fund.
(c)
(d)(4) Form of Investment Advisory Agreement between the Registrant and
Artisan Partners Limited Partnership relating to Artisan Small
Cap Value Fund. (d)
(e) Form of Distribution Agreement between the Registrant and
Artisan Distributors LLC. (e)
(f) None.
(g)(1) Custodian Agreement and Accounting Services Agreement between
the Registrant and State Street Bank and Trust Company. (a)
(g)(2) Notification to custodian regarding addition of Artisan Mid Cap
Fund. (c)
(g)(3) Notification to custodian regarding addition of Artisan Small
Cap Value Fund. (d)
(g)(4) Amendment No. 1 to Custodian Agreement.
C-1
<PAGE>
EXHIBIT
NUMBER DESCRIPTION
(h)(1) Transfer Agency Agreement between the Registrant and State
Street Bank and Trust Company. (a)
(h)(2) Amendment No. 1 to Transfer Agency Agreement. (b)
(h)(3) Notification to transfer agent regarding addition of Artisan Mid
Cap Fund. (c)
(h)(4) Notification to transfer agent regarding addition of Artisan
Small Cap Value Fund. (d)
(h)(5) Amendment No. 2 to Transfer Agency Agreement.
(i) Opinion and Consent of Godfrey & Kahn, S.C.
(j) Consent of Independent Accountants.
(k) None.
(l) Subscription Agreement between the Registrant and Andrew A.
Ziegler and Carlene Murphy Ziegler relating to Artisan Small Cap
Fund. (a)
(m) None.
(n) Multiple Class Plan pursuant to Rule 18f-3 for Artisan
International Fund and Artisan Mid Cap Fund.
(p) Artisan Funds, Inc. Code of Ethics for Outside Directors.
(p)(1) Artisan Funds, Inc., Artisan Funds Limited Partnership, Artisan
Distributors LLC Code of Ethics and Policy and Procedures to
Prevent Misuse of Inside Information.
- ------------------------------
(a) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 3 to Registrant's
registration statement, Securities Act file number 33-88316 (the
"Registration Statement"), filed on November 27, 1995.
(b) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 5 to the Registration
Statement, filed on January 21, 1997.
(c) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 6 to the Registration
Statement, filed on April 11, 1997.
(d) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 7 to the Registration
Statement, filed on June 6, 1997.
(e) Previously filed. Incorporated by reference to the exhibit of the same
number filed with post-effective amendment no. 10 to the Registration
Statement, filed on August 31, 1998.
C-2
<PAGE>
ITEM 24. 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 statement of
additional information under the caption "Principal Shareholders" is
incorporated herein by reference.
ITEM 25. Indemnification.
Article VIII of Registrant's Amended Articles of Incorporation (Exhibits
1.1, 1.2, 1.3, 1.4, 1.5 and 1.6, 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.
C-3
<PAGE>
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 26. Business and Other Connections of Investment Adviser.
The information in the prospectus under the caption "Organization,
Management & Management Fees" and in the statement of additional information
under the caption "Investment Advisory Services" 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 27. Principal Underwriters.
Artisan Distributors LLC acts as principal underwriter for Artisan Funds.
NAME POSITIONS AND OFFICES WITH POSITIONS AND OFFICES
UNDERWRITER WITH REGISTRANT
Andrew A. Ziegler Chairman and Principal Chairman, Director and
Chief Executive Officer
Michael C. Roos President and Principal President
Lawrence A. Totsky Chief Financial Officer, Chief Financial Officer,
Treasurer and Secretary Treasurer and Secretary
Carlene Murphy Ziegler Registered Representative Director and Vice President
Scott C. Satterwhite Registered Representative Vice President
Andrew C. Stephens Registered Representative Vice President
Mark L. Yockey Registered Representative Vice President
Marina T. Carlson Registered Representative Vice President
James C. Kieffer Registered Representative Vice President
The principal business address of each officer of Artisan Distributors
LLC is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin
53202.
C-4
<PAGE>
ITEM 28. Location of Accounts and Records.
(1) State Street Bank & Trust Company
66 Brooks Drive
Braintree, MA 02184
Rule 31a-1(a); Rule 31a-1(b)(1), (2), (3), (5), (6), (7), (8)
(2) Artisan Partners Limited Partnership (on its own behalf,
or on behalf of Artisan Funds, Inc. or Artisan Distributors LLC)
1000 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
Rule 31a-1(a); Rule 31a-1(b)(4), (9), (10), (11);
Rule 31a-1(d); Rule 31a-1(f); Rule 31a-2(a);
Rule 31a-2(c); Rule 31a-2(e)
ITEM 29. Management Services.
Not applicable.
ITEM 30. Undertakings.
Not applicable.
C-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Milwaukee and State of Wisconsin on April 28, 2000.
ARTISAN FUNDS, INC.
By /s/ Andrew A. Ziegler
-------------------------------------
Andrew A. Ziegler
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
Name Title Date
/s/ Andrew A. Ziegler Director, Chairman of the )
- -------------------------- Board and Chief Executive
Andrew A. Ziegler Officer (principal executive )
officer) )
)
)
/s/ Carlene Murphy Ziegler Director and Vice President )
- --------------------------
Carlene Murphy Ziegler )
)
)
/s/ David A. Erne Director )
- --------------------------
David A. Erne )
) April 28, 2000
)
/s/ Thomas R. Hefty Director )
- --------------------------
Thomas R. Hefty )
)
)
/s/ Howard B. Witt Director )
- --------------------------
Howard B. Witt )
)
/s/ Michael C. Roos President )
- --------------------------
Michael C. Roos )
)
/s/ Lawrence A. Totsky Chief Financial Officer, )
- --------------------------
Lawrence A. Totsky Treasurer and Secretary )
(principal financial and )
accounting officer) )
C-6
<PAGE>
Index of Exhibits Filed with this Registration Statement
---------------------------------------------------------
Exhibit
Number Description
- ------------------------------------------------------------------------------
(a)(6) Articles of Amendment dated April 27, 2000
(g)(4) Amendment No. 1 to Custodian Agreement
(h)(5) Amendment No. 2 to Transfer Agency Agreement
(i) Opinion and Consent of Godfrey & Kahn, S.C.
(j) Consent of Independent Accountants
(n) Multiple Class Plan pursuant to Rule 18f-3 for Artisan
International Fund and Artisan Mid Cap Fund
(p) Artisan Funds, Inc. Code of Ethics for Outside Directors
(p)(1) Artisan Funds, Inc., Artisan Limited Partnership, Artisan
Distributors LLC Code of Ethics and Policy and Procedures to
Prevent Misuse of Inside Information
Exhibit (a)(6)
AMENDMENT OF AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
ARTISAN FUNDS, INC.
The undersigned Chief Executive Officer of Artisan Funds, Inc. (the
"Corporation"), hereby certifies that in accordance with Section 180.1002 of the
Wisconsin Business Corporation Law and Article IV of the Corporation's Amended
and Restated Articles of Incorporation, as amended (the "Restated Articles"),
the following Amendment was duly adopted to declare an indefinite number of
authorized shares, to redesignate the existing series of the class of shares of
"Artisan International Fund" designated as "Artisan International Fund
International Shares" and "Artisan International Fund International
Institutional Shares" as "Artisan International Fund Investor Shares" and
"Artisan International Fund Institutional Shares," to redesignate the sole
existing series of the class of shares of "Artisan Mid Cap Fund" as "Artisan Mid
Cap Fund Investor Shares" and to create an additional series of shares of the
class "Artisan Mid Cap Fund," such additional series to be designated as the
"Artisan Mid Cap Fund Institutional Shares":
"Article IV is hereby amended by deleting Section A of Article IV in
its entirety and replacing it with the following:
`A. The Corporation is authorized to issue an indefinite number of
shares of common stock, $.01 par value per share. Subject to the following
paragraph, the authorized shares are classified as follows:
Class Series Authorized Number
------ ------ of Shares
----------
Artisan Small Cap Fund Indefinite
Artisan International Fund Investor Shares Indefinite
Artisan International Fund Institutional Shares Indefinite
Artisan Mid Cap Fund Investor Shares Indefinite
Artisan Mid Cap Fund Institutional Shares Indefinite
Artisan Small Cap
Value Fund Indefinite
The remaining shares shall remain unclassified until action is taken
by the Board of Directors pursuant to the following paragraph:' "
This Amendment to the Restated Articles was adopted by the Board of
Directors of the Corporation on April 27, 2000 without shareholder approval in
accordance with Section 180.1002(8m) with respect to the declaration of an
indefinite number of authorized shares, in accordance with Sections 180.1002(8)
and 180.0602(1)(c), with respect to the redesignation of the existing series of
the class of shares of "Artisan International Fund" designated as "Artisan
International Fund International Shares" and "Artisan International Fund
International Institutional Shares" as "Artisan International Fund Investor
Shares" and "Artisan International Fund Institutional Shares," respectively, and
with respect to the redesignation of the sole existing series of the class of
shares of "Artisan Mid Cap Fund" as "Artisan Mid Cap Fund Investor
1
<PAGE>
Shares" and in accordance with Sections 180.1002(8) and 180.0602(1)(b) with
respect to the creation of a new series of "Artisan Mid Cap Fund" designated as
"Artisan Mid Cap Fund Institutional Shares" and each as expressly authorized in
the Restated Articles. Prior to this Amendment, none of the shares of the
Artisan Mid Cap Fund Institutional Shares have been issued.
2
<PAGE>
Executed in duplicate this 27th day of April, 2000.
ARTISAN FUNDS, INC.
By: /s/ Andrew A. Ziegler
---------------------------
Andrew A. Ziegler
Chief Executive Officer
This instrument was drafted by:
Dennis F. Connolly
Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, Wisconsin 53202
3
<PAGE>
Exhibit (g)(4)
AMENDMENT TO CUSTODIAN CONTRACT
This Amendment to the Custodian Contract is made as of April 27, 2000
by and between Artisan Funds, Inc. (the "Fund") and State Street Bank and Trust
Company (the "Custodian"). Capitalized terms used in this Amendment without
definition shall have the respective meanings given to such terms in the
Custodian Contract referred to below.
WHEREAS, the Fund and the Custodian entered into a Custodian Contract
dated as of March 7, 1995 (as amended and in effect from time to time, the
"Contract"); and
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 the Fund has made the series described on Schedule I
hereto subject to the Contract (each such series, together with all other series
subsequently established by the Fund and made subject to the Contract in
accordance with the terms thereof, shall be referred to as a "Portfolio", and,
collectively, the "Portfolios"); and
WHEREAS, the Fund and the Custodian desire to amend certain provisions of
the Contract to reflect revisions to Rule 17f-5 ("Rule 17f-5") promulgated under
the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Fund and the Custodian desire to amend and restate certain
other provisions of the Contract relating to the custody of assets of each of
the Portfolios held outside of the United States.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinafter contained, the parties hereby agree to amend the
Contract, pursuant to the terms thereof, as follows:
I. Article 3 of the Contract is hereby deleted, and Articles 4 through 21 of
the Contract are hereby renumbered, as of the effective date of this
Amendment, as Articles 5 through 22, respectively.
II. New Articles 3 and 4 of the Contract are hereby added, as of the
effective date of this Amendment, as set forth below.
3. THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
-----------------------------------------
3.1. DEFINITIONS
-----------
Capitalized terms in this Article 3 shall have the following meanings:
"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets, as defined below, in a particular country including, but
not limited to, such country's political environment; economic and financial
infrastructure (including any Mandatory Securities Depositories, as defined
below, operating in the country); prevailing or developing
1
<PAGE>
custody and settlement practices; and laws and regulations applicable to the
safekeeping and recovery of Foreign Assets held in custody in that country.
"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the U.S. Securities and Exchange Commission (the "SEC")), or a foreign
branch of a Bank (as defined in Section 2(a)(5) of the 1940 Act) meeting the
requirements of a custodian under Section 17(f) of the 1940 Act, except that the
term does not include Mandatory Securities Depositories.
"Foreign Assets" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.
"Foreign Custody Manager" has the meaning set forth in section (a)(2) of Rule
17f-5.
"Mandatory Securities Depository" means a foreign securities depository or
clearing agency that, either as a legal or practical matter, must be used if the
Fund, on the Portfolio's behalf, determines to place Foreign Assets in a country
outside the United States (i) because required by law or regulation; (ii)
because securities cannot be withdrawn from such foreign securities depository
or clearing agency; or (iii) because maintaining or effecting trades in
securities outside the foreign securities depository or clearing agency is not
consistent with prevailing or developing custodial or market practices.
3.2. DELEGATION TO THE CUSTODIAN AS FOREIGN CUSTODY MANAGER.
-------------------------------------------------------
The Fund, by resolution adopted by its Board of Directors (the "Board"), hereby
delegates to the Custodian, with respect to the Portfolios, subject to Section
(b) of Rule 17f-5, the responsibilities set forth in this Article 3 with respect
to Foreign Assets of the Portfolios held outside the United States, and the
Custodian hereby accepts such delegation, as Foreign Custody Manager with
respect to the Portfolios.
3.3. COUNTRIES COVERED.
------------------
The Foreign Custody Manager shall be responsible for performing the delegated
responsibilities defined below only with respect to the countries and custody
arrangements for each such country listed on Schedule A to this Contract, which
list of countries may be amended from time to time by the Fund with the
agreement of the Foreign Custody Manager. The Foreign Custody Manager shall list
on Schedule A the Eligible Foreign Custodians selected by the Foreign Custody
Manager to maintain the assets of the Portfolios which list of Eligible Foreign
Custodians may be amended from time to time in the sole discretion of the
Foreign Custody Manager. Mandatory Securities Depositories are listed on
Schedule B to this Contract, which Schedule B may be amended from time to time
by the Foreign Custody Manager with such notice to the Fund as is reasonably
practicable. The Foreign
2
<PAGE>
Custody Manager will provide amended versions of Schedules A and B in accordance
with Section 3.7 of this Article 3.
Upon the receipt by the Foreign Custody Manager of Proper Instructions to open
an account or to place or maintain Foreign Assets in a country listed on
Schedule A, and the fulfillment by the Fund on behalf of the Portfolios of the
applicable account opening requirements for such country, the Foreign Custody
Manager shall be deemed to have been delegated by the Board on behalf of the
Fund and each Portfolio responsibility as Foreign Custody Manager with respect
to that country and to have accepted such delegation. Execution of this
Amendment by the Fund shall be deemed to be a Proper Instruction to open an
account, or to place or maintain Foreign Assets, in each country listed on
Schedule A in which the Custodian has previously placed or currently maintains
Foreign Assets pursuant to the terms of the Contract. Following the receipt of
Proper Instructions directing the Foreign Custody Manager to close the account
of a Portfolio with the Eligible Foreign Custodian selected by the Foreign
Custody Manager in a designated country, the delegation by the Board on behalf
of the Portfolios to the Custodian as Foreign Custody Manager for that country
shall be deemed to have been withdrawn and the Custodian shall immediately
cease to be the Foreign Custody Manager of the Portfolios with respect to that
country.
The Foreign Custody Manager may withdraw its acceptance of delegated
responsibilities with respect to a designated country upon written notice to the
Fund. Sixty days (or such longer period as to which the parties agree in
writing) after receipt of any such notice by the Fund, the Custodian shall have
no further responsibility as Foreign Custody Manager to the Fund with respect to
the country as to which the Custodian's acceptance of delegation is withdrawn.
3.4. SCOPE OF DELEGATED RESPONSIBILITIES.
------------------------------------
3.4.1. SELECTION OF ELIGIBLE FOREIGN CUSTODIANS.
-----------------------------------------
Subject to the provisions of this Article 3, the Portfolio's Foreign Custody
Manager may place and maintain the Foreign Assets in the care of the Eligible
Foreign Custodian selected by the Foreign Custody Manager in each country listed
on Schedule A, as amended from time to time.
In performing its delegated responsibilities as Foreign Custody Manager to place
or maintain Foreign Assets with an Eligible Foreign Custodian, the Foreign
Custody Manager shall determine that the Foreign Assets will be subject to
reasonable care, based on the standards applicable to custodians in the country
in which the Foreign Assets will be held by that Eligible Foreign Custodian,
after considering all factors relevant to the safekeeping of such assets,
including, without limitation the factors specified in Rule 17f-5(c)(1), as
amended from time to time.
3
<PAGE>
3.4.2. CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS.
-------------------------------------------
The Foreign Custody Manager shall determine that the contract (or the rules or
established practices or procedures in the case of an Eligible Foreign Custodian
that is a foreign securities depository or clearing agency) governing the
foreign custody arrangements with each Eligible Foreign Custodian selected by
the Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2),
as amended from time to time.
3.4.3. MONITORING.
-----------
In each case in which the Foreign Custody Manager maintains Foreign Assets with
an Eligible Foreign Custodian selected by the Foreign Custody Manager, the
Foreign Custody Manager shall establish a system to monitor (i) the
appropriateness of maintaining the Foreign Assets with such Eligible Foreign
Custodian and (ii) the contract governing the custody arrangements established
by the Foreign Custody Manager with the Eligible Foreign Custodian (or the rules
or established practices and procedures in the case of an Eligible Foreign
Custodian selected by the Foreign Custody Manager which is a foreign securities
depository or clearing agency that is not a Mandatory Securities Depository).
In the event the Foreign Custody Manager determines that the custody
arrangements with an Eligible Foreign Custodian it has selected are no longer
appropriate, the Foreign Custody Manager shall notify the Board in accordance
with Section 3.7 hereunder.
3.5. GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY.
---------------------------------------------------
For purposes of this Article 3, the Board or its delegate (which shall not
include the Foreign Custody Manager) shall be deemed to have considered and
determined to accept such Country Risk as is incurred by placing and maintaining
the Foreign Assets in each country for which the Custodian is serving as Foreign
Custody Manager of the Portfolios. The Fund, on behalf of the Portfolios, and
the Board shall be deemed to be monitoring on a continuing basis such Country
Risk to the extent that the Board considers necessary or appropriate. The Fund
and the Custodian each expressly acknowledge that the Foreign Custody Manager
shall not be delegated any responsibilities under this Article 3 with respect to
Mandatory Securities Depositories.
3.6. STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF PORTFOLIO.
---------------------------------------------------------
In performing the responsibilities delegated to it, the Foreign Custody Manager
agrees to exercise reasonable care, prudence and diligence such as a person
having responsibility for the safekeeping of assets of management investment
companies registered under the 1940 Act would exercise.
3.7. REPORTING REQUIREMENTS.
-----------------------
The Foreign Custody Manager shall report the withdrawal of the Foreign Assets
from an Eligible Foreign Custodian and the placement of such Foreign Assets with
another Eligible Foreign Custodian by providing to the Board amended Schedules A
or B at the end of the
4
<PAGE>
calendar quarter in which an amendment to either Schedule has occurred. The
Foreign Custody Manager shall make written reports notifying the Board of any
other material change in the foreign custody arrangements of the Portfolios
described in this Article 3 after the occurrence of the material change.
The Foreign Custody Manager shall deliver the written reports required by this
Article 3 to the following address, or such other address as the Fund shall from
time to time reasonably request:
Board of Directors
Artisan Funds, Inc.
1100 North Water Street, Suite 1770
Milwaukee, Wisconsin 53202
Attention:
3.8. REPRESENTATIONS WITH RESPECT TO RULE 17f-5.
-------------------------------------------
The Foreign Custody Manager represents to the Fund that it is a U.S. Bank as
defined in section (a)(7) of Rule 17f-5.
The Fund represents to the Custodian that the Board has determined that it is
reasonable for the Board to rely on the Custodian to perform the
responsibilities delegated pursuant to this Contract to the Custodian as the
Foreign Custody Manager of the Portfolios.
3.9. EFFECTIVE DATE AND TERMINATION OF THE CUSTODIAN AS FOREIGN CUSTODY
------------------------------------------------------------------
MANAGER.
--------
The Board's delegation to the Custodian as Foreign Custody Manager of the
Portfolios shall be effective as of the date hereof and shall remain in effect
until terminated at any time, without penalty, by written notice from the
terminating party to the non-terminating party. Termination will become
effective thirty (30) days after receipt by the non-terminating party of such
notice. The provisions of Section 3.3 hereof shall govern the delegation to
and termination of the Custodian as Foreign Custody Manager of the Portfolios
with respect to designated countries.
4. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE PORTFOLIOS HELD
-----------------------------------------------------------------------
OUTSIDE THE UNITED STATES.
--------------------------
4.1. DEFINITIONS.
------------
Capitalized terms in this Article 4 shall have the following meanings:
"Foreign Securities System" means either a clearing agency or a securities
depository listed on Schedule A hereto or a Mandatory Securities Depository
listed on Schedule B hereto.
5
<PAGE>
"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.
4.2. HOLDING SECURITIES.
-------------------
The Custodian shall identify on its books as belonging to each Portfolio the
respective foreign securities held by each Foreign Sub-Custodian or Foreign
Securities System. The Custodian may hold foreign securities for all of its
customers, including the Portfolios, with any Foreign Sub-Custodian in an
account that is identified as belonging to the Custodian for the benefit of its
customers, provided however, that (i) the records of the Custodian with respect
to foreign securities of each Portfolio which are maintained in such account
shall identify those securities as belonging to such Portfolio and (ii), to the
extent permitted and customary in the market in which the account is maintained,
the Custodian shall require that securities so held by the Foreign Sub-Custodian
be held separately from any assets of such Foreign Sub-Custodian or of other
customers of such Foreign Sub-Custodian.
4.3. FOREIGN SECURITIES SYSTEMS.
---------------------------
Foreign securities shall be maintained in a Foreign Securities System in a
designated country only through arrangements implemented by the Foreign Sub-
Custodian in such country pursuant to the terms of this Contract.
4.4. TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.
----------------------------------------
4.4.1. DELIVERY OF FOREIGN ASSETS.
---------------------------
The Custodian or a Foreign Sub-Custodian shall release and deliver foreign
securities of a Portfolio held by such Foreign Sub-Custodian, or in a Foreign
Securities System account, only upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, and only in
the following cases:
(i) upon the sale of such foreign securities for the Portfolio in
accordance with commercially reasonable market practice in the
country where such foreign securities are held or traded,
including, without limitation: (A) delivery against expectation
of receiving later payment; or (B) in the case of a sale effected
through a Foreign Securities System, in accordance with the rules
governing the operation of the Foreign Securities System;
(ii) in connection with any repurchase agreement related to foreign
securities;
(iii) to the depository agent in connection with tender or other
similar offers for foreign securities of the Portfolio;
(iv) to the issuer thereof or its agent when such foreign securities
are called, redeemed, retired or otherwise become payable;
6
<PAGE>
(v) to the issuer thereof, or its agent, for transfer into the name
of the Custodian (or the name of the respective Foreign Sub-
Custodian or of any nominee of the Custodian or such Foreign Sub-
Custodian) or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units;
(vi) to brokers, clearing banks or other clearing agents for
examination or trade execution in accordance with market custom;
provided that in any such case the Foreign Sub-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 Foreign Sub-Custodian's
own negligence or willful misconduct;
(vii) 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;
(viii) in the case of warrants, rights or similar foreign 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;
(ix) for delivery as security in connection with any borrowing by a
Portfolio requiring a pledge of assets by such Portfolio;
(x) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(xi) in connection with the lending of foreign securities; and
(xii) for any other proper purpose, but only upon receipt of Proper
Instructions specifying the foreign securities 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.
4.4.2. PAYMENT OF PORTFOLIO MONIES.
----------------------------
Upon receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out, or direct the
respective Foreign Sub-Custodian or the respective Foreign Securities System to
pay out, monies of a Portfolio in the following cases only:
(i) upon the purchase of foreign securities for the Portfolio, unless
otherwise directed by Proper Instructions, by (A) delivering
money to the seller thereof or to a dealer therefor (or an agent
for such seller or dealer) against
7
<PAGE>
expectation of receiving later delivery of such foreign
securities; or (B) in the case of a purchase effected through a
Foreign Securities System, in accordance with the rules governing
the operation of such Foreign Securities System;
(ii) in connection with the conversion, exchange or surrender of
foreign securities of the Portfolio;
(iii) for the payment of any expense or liability of the Portfolio,
including but not limited to the following payments: interest,
taxes, investment advisory fees, transfer agency fees, fees under
this Contract, legal fees, accounting fees, and other operating
expenses;
(iv) for the purchase or sale of foreign exchange or foreign exchange
contracts for the Portfolio, including transactions executed with
or through the Custodian or its Foreign Sub-Custodians;
(v) in connection with trading in options and futures contracts,
including delivery as original margin and variation margin;
(vi) for payment of part or all of the dividends received in respect
of securities sold short;
(vii) in connection with the borrowing or lending of foreign
securities; and
(viii) for any other proper purpose, but only upon receipt of Proper
Instructions 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 corporate purpose, and naming the person
or persons to whom such payment is to be made.
4.4.3. MARKET CONDITIONS; MARKET INFORMATION.
--------------------------------------
Notwithstanding any provision of this Contract to the contrary, settlement and
payment for Foreign Assets received for the account of the Portfolios and
delivery of Foreign Assets maintained for the account of the Portfolios may be
effected in accordance with the customary established securities trading or
processing practices and procedures in the country or market in which the
transaction occurs, including, without limitation, delivering Foreign Assets to
the purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) with the expectation of receiving later payment for such Foreign Assets
from such purchaser or dealer.
The Custodian shall provide to the Board the information with respect to custody
and settlement practices in countries in which the Custodian employs a Foreign
Sub-Custodian, including without limitation information relating to Foreign
Securities Systems, described on Schedule C hereto at the time or times set
forth on such Schedule. The Custodian may revise
8
<PAGE>
Schedule C from time to time, provided that no such revision shall result in the
Board being provided with substantively less information than had been
previously provided hereunder.
In the event the Custodian, in its capacity as Foreign Custody Manager,
determines that the custody arrangements with an Eligible Foreign Custodian it
has selected are no longer appropriate as provided in Section 3.4.3 hereof, upon
receipt of Proper Instructions the Custodian will assist the Portfolios in
withdrawing their assets from such Eligible Foreign Custodian as soon as
reasonably practicable.
4.5. REGISTRATION OF FOREIGN SECURITIES.
-----------------------------------
The foreign securities maintained in the custody of a Foreign Sub-Custodian
(other than bearer securities) shall be registered in the name of the applicable
Portfolio or in the name of the Custodian or in the name of any Foreign Sub-
Custodian or in the name of any nominee of the foregoing, and the Fund on behalf
of such Portfolio agrees to hold any such nominee harmless from any liability as
a holder of record of such foreign securities, except as such liability may
arise from such nominee's own negligence, misfeasance, bad faith or willful
misconduct. The Custodian or a Foreign Sub-Custodian shall not be obligated to
accept securities on behalf of a Portfolio under the terms of this Contract
unless the form of such securities and the manner in which they are delivered
are in accordance with reasonable market practice.
4.6. BANK ACCOUNTS.
--------------
The Custodian shall identify on its books as belonging to each Portfolio cash
(including cash denominated in foreign currencies) deposited with the Custodian
for such Portfolio. Where the Custodian is unable to maintain, or market
practice does not facilitate the maintenance of, cash on the books of the
Custodian, a bank account or bank accounts opened and maintained outside the
United States on behalf of a Portfolio with a Foreign Sub-Custodian shall be
subject only to draft or order by the Custodian or such Foreign Sub-Custodian,
acting pursuant to the terms of this Contract to hold cash received by or from
or for the account of the Portfolio.
4.7. COLLECTION OF INCOME.
---------------------
The Custodian shall use reasonable commercial efforts to collect all income and
other payments with respect to the Foreign Assets held hereunder to which the
Portfolios shall be entitled and shall credit such income, as collected, to the
applicable Portfolio. In the event that extraordinary measures are required to
collect such income, the Fund and the Custodian shall consult as to such
measures and as to the compensation and expenses of the Custodian relating to
such measures.
4.8. SHAREHOLDER RIGHTS.
-------------------
With respect to the foreign securities held pursuant to this Article 4, the
Custodian will use reasonable commercial efforts to facilitate the exercise of
voting and other shareholder rights,
9
<PAGE>
subject always to the laws, regulations and practical constraints that may exist
in the country where such securities are issued. The Fund acknowledges that
local conditions, including lack of regulation, onerous procedural obligations,
lack of notice and other factors may have the effect of severely limiting the
ability of the Fund to exercise shareholder rights.
4.9. COMMUNICATIONS RELATING TO FOREIGN SECURITIES.
----------------------------------------------
The Custodian shall transmit promptly to the Fund written information
(including, without limitation, pendency of calls and maturities of foreign
securities and expirations of rights in connection therewith) received by the
Custodian via the Foreign Sub-Custodians from issuers of the foreign securities
being held for the account of the Portfolios. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Fund written information so
received by the Custodian from issuers of the foreign securities whose tender or
exchange is sought or from the party (or its agents) making the tender or
exchange offer. Absent the Custodian's failure to observe the standard of care
set forth in Section 14, the Custodian shall not be liable for any untimely
exercise of any tender, exchange or other right or power in connection with
foreign securities or other property of the Portfolios at any time held by it
unless (i) the Custodian or the respective Foreign Sub-Custodian is in actual
possession of such foreign securities or property and (ii) the Custodian
receives Proper Instructions with regard to the exercise of any such right or
power, and both (i) and (ii) occur at least three business days prior to the
date on which the Custodian is to take action to exercise such right or power.
4.10. LIABILITY OF FOREIGN SUB-CUSTODIANS AND FOREIGN SECURITIES SYSTEMS.
-------------------------------------------------------------------
Each agreement pursuant to which the Custodian employs a Foreign Sub-Custodian
shall, to the extent possible, require the Foreign Sub-Custodian to exercise
reasonable care in the performance of its duties and, to the extent possible, to
indemnify, and hold harmless, the Custodian from and against any loss, damage,
cost, expense, liability or claim arising out of or in connection with the
Foreign Sub-Custodian's performance of such obligations. At the Fund's election,
the Portfolios shall be entitled to be subrogated to the rights of the Custodian
with respect to any claims against a Foreign Sub-Custodian as a consequence of
any such loss, damage, cost, expense, liability or claim if and to the extent
that the Portfolios have not been made whole for any such loss, damage, cost,
expense, liability or claim.
4.11. TAX LAW.
--------
The Custodian shall have no responsibility or liability for any obligations now
or hereafter imposed on the Fund, the Portfolios or the Custodian as custodian
of the Portfolios by the tax law of the United States or of 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 with respect to the
Portfolios or the Custodian as custodian of the Portfolios by the tax law of
countries 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
10
<PAGE>
shall be to use reasonable efforts to assist the Fund with respect to any claim
for exemption or refund under the tax law of countries for which the Fund has
provided such information.
4.12. LIABILITY OF CUSTODIAN.
-----------------------
Except as may arise from the Custodian's own negligence or willful misconduct or
the negligence or willful misconduct of a Foreign Sub-Custodian, the Custodian
shall be without liability to the Fund for any loss, liability, claim or expense
resulting from or caused by anything which is part of Country Risk.
The Custodian shall be liable for the acts or omissions of a Foreign Sub-
Custodian to the same extent as set forth with respect to sub-custodians
generally in the Contract and, regardless of whether assets are maintained in
the custody of a Foreign Sub-Custodian or a Foreign Securities Depository, 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 other loss where the Foreign Sub-Custodian has
otherwise acted with reasonable care.
III. Except as specifically superseded or modified herein, the terms
and provisions of the Contract shall continue to apply with full
force and effect. In the event of any conflict between the terms
of the Contract prior to this Amendment and this Amendment, the
terms of this Amendment shall prevail. If the Custodian is
delegated the responsibilities of Foreign Custody Manager
pursuant to the terms of Article 3 hereof, in the event of any
conflict between the provisions of Articles 3 and 4 hereof, the
provisions of Article 3 shall prevail.
11
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and behalf by its duly authorized representative as of the
date first above written.
WITNESSED BY: STATE STREET BANK AND TRUST COMPANY
By: By:
-------------------------------- --------------------------------
Nelson H. Graves, Vice President Ronald E. Logue, Vice Chairman
WITNESSED BY: ARTISAN FUNDS, INC.
By: By:
-------------------------------- --------------------------------
Name: Name:
-------------------------------- --------------------------------
Title: Title:
-------------------------------- --------------------------------
12
<PAGE>
Schedule I
to
Amendment to Custodian Contract
by and between
Artisan Funds, Inc.
and
State Street Bank and Trust Company
List of Series
---------------
Artisan Small Cap Fund
Artisan Small Cap Value Fund
Artisan Mid Cap Fund
Artisan International Fund
13
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
COUNTRY SUBCUSTODIAN NON-MANDATORY
DEPOSITORIES
Argentina Citibank, N.A. --
Austrialia Westpac Banking Corporation --
Austria Erste Bank der Oesterreichischen --
Sparkassen AG
Bahrain HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Bangladesh Standard Chartered Bank --
Belgium Fortis Bank NV/as. --
Bermuda The Bank of Bermuda Limited --
Bolivia Citibank, N.A. --
Botswana Barclays Bank of Botswana Limited --
Brazil Citibank, N.A. --
Bulgaria ING Bank N.V. --
Canada State Street Trust Company Canada --
Chile Citibank, N.A. --
People's Republic The Hongkong and Shanghai --
of China Banking Corporation Limited,
Shanghai and Shenzhen branches
Colombia Cititrust Colombia S.A. --
Sociedad Fiduciaria
14
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Costa Rica Banco BCT S.A. --
Croatia Privredna Banka Zagreb d.d. --
Cyprus The Cyprus Popular Bank Ltd. --
Czech Republic Ceskoslovenska Obchodni --
Banka, A.S.
Denmark Den Danske Bank --
Ecuador Citibank, N.A. --
Egypt Egyptian British Bank --
(as delegate of The Hongkong
and Shanghai Banking Corporation
Limited)
Estonia Hansabank --
Finland Merita Bank Plc. --
France Paribas, S.A. --
Germany Dresdner Bank AG --
Ghana Barclays Bank of Ghana Limited --
Greece National Bank of Greece S.A. Bank of Greece,
System for
Monitoring
Transactions in
Securities in
Book-Entry Form
Hong Kong Standard Chartered Bank --
Hungry Citibank Rt. --
15
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Iceland Icebank Ltd. --
India Deutsche Bank A.G. --
The Hongkong and Shanghai
Banking Corporation Limited
Indonesia Standard Chartered Bank --
Ireland Bank of Ireland --
Israel Bank Hapoalim B.M. --
Italy Paribas, S.A. --
Ivory Coast Societe Generale de Banques --
en Cote d'Ivoire
Jamaica Scotiabank Jamaica Trust and Merchant --
Bank Limited
Japan The Fuji Bank, Limited Japan Securities
Depository
Center (JASDEC)
The Sumitomo Bank, Limited
Jordan HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Kenya Barclays Bank of Kenya Limited --
Republic of Korea The Hongkong and Shanghai Banking
Corporation Limited
Latvia A/s Hansabank
16
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Lebanon HSBC Bank Middle East
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Lithuania Vilniaus Bankas AB --
Malaysia Standard Chartered Bank --
Malaysia Berhad
Mauritius The Hongkong and Shanghai --
Banking Corporation Limited
Mexico Citibank Mexico, S.A. --
Morocco Banque Commerciale du Maroc --
Namibia (via) Standard Bank of South Africa --
The Netherlands MeesPierson N.V. --
New Zealand ANZ Banking Group --
(New Zealand) Limited
Norway Christiania Bank og --
Kreditkasse ASA
Oman HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Pakistan Deutsche Bank A.G. --
Palestine HSBC Bank Middle East --
(as delegate of The Hongkong and
Shanghai Banking Corporation Limited)
Peru Citibank, N.A. --
17
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Philippines Standard Chartered Bank --
Poland Citibank (Poland) S.A. --
Portugal Banco Comercial Portugues --
Qatar HSBC Bank Middle East --
Romania ING Bank N.V. --
Russia Credit Suisse First Boston AO, Moscow --
(as delegate of Credit Suisse
First Boston, Zurich)
Singapore The Development Bank --
of Singapore Limited
Slovak Republic Ceskoslovenska Obchodni Banka, A.S. --
Slovenia Bank Austria Creditanstalt d.d. --
Ljubljana
South Africa Standard Bank of South Africa Limited --
Spain Banco Santander Central Hispano, S.A. --
Sri Lanka The Hongkong and Shanghai --
Banking Corporation Limited
Swaziland Standard Bank Swaziland Limited --
Sweden Skandinaviska Enskilda Banken --
Switzerland UBS AG --
18
<PAGE>
STATE STREET SCHEDULE A
GLOBAL CUSTODY NETWORK
SUBCUSTODIANS AND NON-MANDATORY DEPOSITORIES
Taiwan - R.O.C. Central Trust of China --
Thailand Standard Chartered Bank
Trinidad & Tobago Republic Bank Limited --
Tunisia Banque Internationale Arabe de Tunisie --
Turkey Citibank, N.A. --
Ukraine ING Bank Ukraine --
United Kingdom State Street Bank and Trust Company, --
London Branch
Uruguay BankBoston N.A. --
Venezuela Citibank, N.A. --
Vietnam The Hongkong and Shanghai --
Banking Corporation Limited
Zambia Barclays Bank of Zambia Limited --
Zimbabwe Barclays Bank of Zimbabwe Limited --
Euroclear (The Euroclear System)/State Street London Limited
Cedelbank S.A. (Cedel Bank, societe anonyme)/State Street London Limited
INTERSETTLE (for EASDAQ Securities)
19
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MADATORY<F1> DEPOSITORIES
COUNTRY MANDATORY DEPOSITORIES
Argentina Caja de Valores S.A.
Australia Austraclear Limited
Reserve Bank Information and
Transfer System
Austria Oesterreichische Kontrollbank AG
(Wertpapiersammelbank Division)
Belgium Caisse Interprofessionnelle de Depots et
de Virements de Titres S.A.
Banque Nationale de Belgique
Brazil Companhia Brasileira de Liquidacao e
Custodia
Bulgaria Central Depository AD
Bulgarian National Bank
Canada Canadian Depository
for Securities Limited
Chile Deposito Central de Valores S.A.
People's Republic Shanghai Securities Central Clearing &
of China Registration Corporation
Shenzhen Securities Clearing
Co., Ltd.
Columbia Deposito Centralizado de Valores
Costa Rica Central de Valores S.A.
<F1> Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter for market practice.
20
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MADATORY<F1> DEPOSITORIES
Croatia Ministry of Finance
National Bank of Croatia
Sredisnja Depozitarna Agencija
Czech Republic Stredisko cennych papiru
Czech National Bank
Denmark Vaerdipapircentralen (Danish
Securities Center)
Egypt Misr Companyu for Clearing, Settlement,
and Depository
Estonia Eesti Vaartpaberite Keskdepositoorium
Finland Finnish Central Securities
Depository
France Societe Interporfessionnelle
pour la Compensation des
Valeurs Mobilieres
Germany Deutsche Borse Clearing AG
Greece Central Securities Depository
(Apothetirion Titlon AE)
Hong Kong Central Clearing and
Settlement System
Central Moneymarkets Unit
Hungary Kozponti Elszamolohaz es Ertektar
(Budapest) Rt. (KELER)
[Mandatory for Gov't Bonds and dematerialized
equities only; SSB does not use for other securities]
<F1> Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter for market practice.
21
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MADATORY<F1> DEPOSITORIES
India The National Securities Depository Limited
Central Depository Services India Limited
Reserve Bank of India
Indonesia Bank Indonesia
PT Kustodian Sentral Efek Indonesia
Ireland Central Bank of Ireland
Securities Settlement Office
Israel Tel Aviv Stock Exchange Clearing
House Ltd. (TASE Clearinghouse)
Bank of Israel
(As part of the TASE Clearinghouse system)
Italy Monte Titoli S.p.A.
Banca d'Italia
Ivory Coast Depositaire Central - Banque de Reglement
Jamaica Jamaica Central Securities Depository
Japan Bank of Japan Net System
Kenya Central Bank of Kenya
Republic of Korea Korea Securities Depository Corporation
Latvia Latvian Central Depository
<F1> Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter for market practice.
22
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MADATORY<F1> DEPOSITORIES
Lebanon Custodian and Clearing Center of
Financial Instruments for Lebanon
and the Middle East (MIDCLEAR) S.A.L.
The Central Bank of Lebanon
Lithuania Central Securities Depository of Lithuania
Malaysia Malaysian Central Depository Sdn. Bhd.
Bank Negara Malaysia,
Scripless Securities Trading and Safekeeping
System
Mauritius Central Depository & Settlement
Co. Ltd.
Mexico S.D. INDEVAL
(Instituto para el Deposito de
Valores)
Morocco Maroclear
The Netherlands Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V. (NECIGEF)
New Zealand New Zealand Central Securities
Depository Limited
Norway Verdipapirsentralen (the Norwegian Central
Registry of Securities)
<F1> Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter for market practice.
23
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MADATORY<F1> DEPOSITORIES
Oman Muscat Securities Market Depository & Securities
Registration Company
Pakistan Central Depository Company of Pakistan Limited
State Bank of Pakistan
Palestine The Palestine Stock Exchange
Peru Caja de Valores y Liquidaciones
CAVALI ICLV S.A.
Philippines Philippines Central Depository, Inc.
Registry of Scripless Securities
(ROSS) of the Bureau of Treasury
Poland National Depository of Securities
(Krajowy Depozyt Papierow Wartosciowych SA)
Central Treasury Bills Registrar
Portugal Central de Valores Mobiliarios
Qatar Doha Securities Market
Romania National Securities Clearing, Settlement and
Depository Company
Bucharest Stock Exchange Registry Division
National Bank of Romania
Singapore Central Depository (Pte)
Limited
Monetary Authority of Singapore
<F1> Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter for market practice.
24
<PAGE>
STATE STREET SCHEDULE B
GLOBAL CUSTODY NETWORK
MADATORY<F1> DEPOSITORIES
Slovak Republic Stredisko cennych papierov SR
Bratislava, a.s.
National Bank of Slovakia
Slovenia Klirinsko Depotna Druzba d.d.
South Africa The Central Depository Limited
Strate Ltd.
Spain Servicio de Compensacion y
Liquidacion de Valores, S.A.
Banco de Espana,
Central de Anotaciones en Cuenta
Sri Lanka Central Depository System
(Pvt) Limited
Sweden Vardepapperscentralen VPC AB
(the Swedish Central Securities Depository)
Switzerland SIS - SegaIntersettle
Taiwan - R.O.C. Taiwan Securities Central
Depository Co., Ltd.
Thailand Thailand Securities Depository
Company Limited
Tunisia Societe Tunisienne Interprofessionelle pour la
Compensation et de Depots de
Valeurs Mobilieres
<F1> Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter for market practice.
25
<PAGE>
Turkey Takas ve Saklama Bankasi A.S.
(TAKASBANK)
Central Bank of Turkey
Ukraine National Bank of Ukraine
United Kingdom The Bank of England,
The Central Gilts Office and
The Central Moneymarkets Office
Venezuela Central Bank of Vanazuela
Zambia LuSE Central Shares Depository Limited
Bank of Zambia
<F1> Mandatory depositories include entities for which use is mandatory as a
matter of law or effectively mandatory as a matter for market practice.
26
<PAGE>
SCHEDULE C
MARKET INFORMATION
PUBLICATION/TYPE OF INFORMATION BRIEF DESCRIPTION
- ------------------------------- -----------------
(FREQUENCY)
The Guide to Custody in World Markets An overview of safekeeping and
(annually) settlement practices and
procedures in each market in which
State Street Bank and Trust Company
offers custodial services.
Global Custody Network Review Information relating to the operating
(annually) history and structure of depositories
and subcustodians located in the
markets in which State Street Bank and
Trust Company offers custodial
services, including transnational
depositories.
Global Legal Survey With respect to each market in which
(annually) State Street Bank and
Trust Company offers custodial
services, opinions relating to
whether local law restricts (i) access
of a fund's independent public
accountants to books and records of a
Foreign Sub-Custodian or Foreign
Securities System, (ii) the Fund's
ability to recover in the event of
bankruptcy or insolvency of a
Foreign Sub-Custodian or Foreign
Securities System, (iii) the
Fund's ability to recover in the event
of a loss by a Foreign
Sub-Custodian or Foreign Securities
System, and (iv) the ability of a
foreign investor to convert cash and
cash equivalents to U.S. dollars.
Subcustodian Agreements Copies of the subcustodian contracts
(annually) State Street Bank and
Trust Company has entered into with
each subcustodian in the
markets in which State Street Bank and
Trust Company offers subcustody
services to its US mutual fund clients.
Network Bulletins (weekly): Developments of interest to investors
in the markets in which
State Street Bank and Trust Company
offers custodial services.
Foreign Custody Advisories (as With respect to markets in which State
necessary): Street Bank and Trust
Company offers custodial services which
exhibit special custody risks,
developments which may impact State
Street's ability to deliver expected
levels of service.
Exhibit (h)(5)
AMENDMENT NO. 2 TO
TRANSFER AGENCY AND SERVICE AGREEMENT
between
ARTISAN FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
This Amendment (the "Amendment") to the Transfer Agency and Service
Agreement between Artisan Funds, Inc., a Wisconsin corporation (the "Fund"), and
State Street Bank and Trust Company, a Massachusetts trust company (the "Bank"),
is made as of April 27, 2000, and amends the Transfer Agency and Service
Agreement between the parties dated as of March 7, 1995, as amended by an
Amendment to the Transfer Agency and Service Agreement dated January 9, 1997
(the "Agreement").
1. Background. The Fund now issues shares in four series - Artisan Small
Cap Fund, Artisan International Fund, Artisan Mid Cap Fund and Artisan Small Cap
Value Fund. Artisan International Fund consists of two classes -Investor Shares
and Institutional Shares. Effective on or about July 1, 2000, the Fund expects
to begin issuing shares of its series designated Artisan Mid Cap Fund in two
classes -Investor Shares and Institutional Shares. The Bank serves as transfer
agent for all four series of shares.
2. Treatment of Classes of Shares of Artisan Mid Cap Fund. Effective
with the first date on which Institutional Shares are issued, the Bank shall
calculate its fees and expenses pursuant to Section 2 of the Agreement as if the
Investor Shares class of shares and the Institutional Shares class of shares
were separate Portfolios of the Fund.
3. Fee Schedule. The fees payable to the Bank under the Agreement shall
be at the rates shown on the fee schedule attached to this Amendment effective
as of July 1, 2000. Except as modified by the fee schedule attached to this
Amendment, the initial fee schedule attached to the Agreement shall remain in
effect. The fee schedule may be changed from time to time subject to the mutual
written agreement between the Fund and the Bank.
ARTISAN FUNDS, INC. STATE STREET BANK AND TRUST COMPANY
By By
-------------------------------- -------------------------------
Lawrence A. Totsky, Chief Financial Name:
Officer, Treasurer and Secretary ------------------------------
Title:
-----------------------------
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Exhibit (i)
April 28, 2000
Artisan Funds, Inc.
1000 North Water Street
Milwaukee, Wisconsin 53202
RE: Artisan Mid Cap Fund Institutional Shares
Ladies and Gentlemen:
We have acted as Wisconsin corporate counsel for you in connection with the
sale by you of an indefinite number of Artisan Mid Cap Fund Institutional Shares
(the "Mid Cap Shares") of Artisan Funds, Inc. (the "Company") in the manner set
forth in Post-Effective Amendment No. 12 to the Company's Registration Statement
on Form N-1A (the "Registration Statement"). In connection with this opinion, we
have reviewed: (i) Amendment No. 14 to the Registration Statement; (ii) the
Company's Amended and Restated Articles of Incorporation, as amended, and
By-Laws; (iii) corporate proceedings relative to the authorization for issuance
of the Mid Cap Shares; and (iv) such other proceedings, documents and records
as we have deemed necessary to enable us to render this opinion.
Based upon the foregoing, we are of the opinion that the Mid Cap Shares,
when sold as contemplated in Amendment No. 14 to the Registration Statement,
shall be duly authorized, validly issued, fully paid and non-accessable,
except to the extent provided in Section 180.0622(2)(b) of the Wisconsin
Business Corporation Law, as interpreted by courts of competent jurisdiction,
or any successor provision to said Section 180.0622(2)(b).
We hereby consent to the use of this opinion as an exhibit to Amendment
No. 14 to the Registration Statement. In giving this consent, however, we do
not admit that we are experts within the meaning of Section 11 of the
Securities Act of 1933, as amended, or within the category of persons whose
consent is required by Section 7 of said Act.
Very truly yours,
/s/ Godfrey & Kahn, S.C.
GODFREY & KAHN, S.C.
Exhibit (j)
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in this Registration Statement on Form N-1A of
our report dated July 26, 1999, relating to the financial statements and
financial highlights of Artisan Small Cap Fund, Artisan International Fund,
Artisan Mid Cap Fund and Artisan Small Cap Value Fund (constituting Artisan
Funds, Inc.), which appear in such Registration Statement. We also consent
to the references to us under the headings "The Fund's Financial Highlights",
"Independent Accountants" and "Financial Statements" in such Registration
Statement.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
April 28, 2000
Exhibit (n)
ARTISAN FUNDS, INC.
MULTIPLE CLASS PLAN PURSUANT TO RULE 18F-3
Introduction
------------
This Multiple Class Plan (the "Plan") was adopted by the Board of Directors
of Artisan Funds, Inc. ("Artisan Funds") pursuant to Rule 18f-3 under the
Investment Company Act of 1940 (the "1940 Act"). The purpose of the Plan is to
specify the attributes of the two classes of shares of each of Artisan
International Fund (the "International Fund") and Artisan Mid Cap Fund (the "Mid
Cap Fund"), each a series of Artisan Funds. International Fund and Mid Cap Fund
are each called a "Fund" and are collectively called the "Funds". The two
classes of the International Fund are Artisan International Investor Shares
("International Investor Shares") and Artisan International Institutional Shares
("International Institutional Shares"). The two classes of the Mid Cap Fund are
Artisan Mid Cap Investor Shares ("Mid Cap Investor Shares" and, collectively
with International Investor Shares, the "Investor Shares") and Artisan Mid Cap
Institutional Shares ("Mid Cap Institutional Shares" and, collectively with
International Institutional Shares, the "Institutional Shares").
Features of the Classes
------------------------
Shares of each class of International Fund and Mid Cap Fund shall represent
an equal pro rata interest in each Fund, respectively, and generally shall have
identical voting, dividend, liquidation and other rights, preferences, powers,
restrictions, limitations, qualifications, designations and terms and
conditions, except that: (a) each class shall have a different designation; (b)
each class may be offered to different types of investors and may have different
minimum initial and subsequent investments; (c) each class of shares shall bear
any class expenses (which will result in different returns, dividends and net
asset values for the different classes); (d) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to its
arrangement and each class shall have separate voting rights on any matter
submitted to shareholders in which the interests of one class differ from the
interests of any other class; and (e) each class may have different exchange
and/or conversion features.
Institutional Shares of each Fund will be sold directly by each Fund to
institutional investors such as (but not limited to) pension and profit-sharing
plans, other employee benefit plans, endowments, foundations, trusts and
corporations meeting the applicable minimum investment requirements. Sales will
generally be subject to minimum initial and subsequent purchase amounts at a
significantly higher level than are Investor Shares. The minimum initial and
subsequent minimum investments will be specified from time to time in each
Fund's prospectus.
Investor Shares may be offered through broker-dealers and financial
institutions who hold such Investor Shares for the benefit of their customers,
to institutions, employee benefit plans, and individual retirement accounts not
meeting the minimum investment requirements applicable to Institutional Shares,
and directly to individual investors by each Fund.
1
<PAGE>
Beneficial owners of Investor Shares will generally have smaller accounts
than holders of Institutional Shares, are likely to engage in more shareholder
transactions in relation to the size of their holdings, and will require more
services related to information, communication, and transactions, including
automatic investment, telephone exchange and redemption, and systematic
withdrawal programs. These services will be provided by broker-dealers,
financial institutions and/or retirement plan administrators who hold Investor
Shares for the benefit of their customers, as well as by Artisan Partners
Limited Partnership, the investment adviser to Artisan Funds, ("Artisan
Partners"), and by Artisan Funds' transfer agent.
Allocation of Expenses
----------------------
Income, realized and unrealized capital gains and losses, and any expenses
of each Fund other than Class Expenses, as defined below, shall be allocated to
each class of the Fund on the basis of the net asset value of that class in
relation to the net asset value of the Fund. Expenses subject to this
allocation include but are not limited to expenses of Artisan Funds that are not
attributable to any particular series of Artisan Funds ("Artisan Funds
Expenses") and are not attributable to a specific class of shares of a Fund
("Fund Expenses"). Artisan Funds Expenses include, but are not limited to, fees
and expenses of the Board of Directors (except as otherwise provided below),
insurance costs, costs of Artisan Funds' line of credit, membership costs
relating to industry or trade associations, and certain legal fees and other
expenses. Fund Expenses include, but are not limited to, fees and expenses
relating to the custody of the assets of a Fund and investment advisory fees and
other expenses relating to the management of a Fund's assets.
Expenses attributable to a particular class of shares of a Fund shall be
allocated to that class to the extent practicable. Class Expenses shall
initially be: (a) printing and mailing expenses related to preparing and
distributing materials, such as shareholder reports, prospectuses and proxy
statements to current shareholders of a specific class of shares; (b) Securities
and Exchange Commission and state securities authority registration or other
fees relating to sales of shares of a specific class; (c) the fees and expenses
of any service provider to a Fund or Artisan Funds other than Artisan Partners,
including the transfer agent, accounting agent, "blue sky" servicing agent,
lawyers and independent public accountants, identified as being attributable to
a specific class of shares; and (d) expenses incurred in connection with
meetings of the Board of Directors or shareholders solely as a result of issues
relating to a specific class of shares.
In the event that a Class Expense is no longer reasonably allocable by
class or to a particular class, it shall be treated as an Artisan Funds Expense
or a Fund Expense, as appropriate, and in the event that an Artisan Funds
Expense or a Fund Expense becomes allocable as a Class Expense, it shall be so
allocated, subject to compliance with Rule 18f-3 and approval or ratification by
the Board of Directors.
Waivers or Reimbursements of Expenses
--------------------------------------
Expenses of a specific class or specific classes of shares may be waived or
reimbursed by Artisan Partners or any other provider of services to the Funds.
2
<PAGE>
Dividends and Other Distributions
--------------------------------
Dividends and other distributions paid by each Fund to the holders of each
class of shares, to the extent paid, will be paid on the same day and at the
same time, and will be determined in the same manner and will be in the same
amount, except that the amount of the dividends and other distributions declared
and paid to the holders of a specific class of shares may be different from
those declared and paid to the holders of another class because of Class
Expenses and expense waivers or reimbursements.
Voting Rights
--------------
Each class of shares shall have exclusive voting rights on any matter
submitted to shareholders that relates solely to its arrangement and shall have
separate voting rights on any matter submitted to shareholders in which the
interests of one class differ from the interests of any other class.
Exchange Features
------------------
Holders of Investor Shares shall have the ability to exchange Investor
Shares with International Investor Shares, Mid Cap Investor Shares, shares of
Artisan Small Cap Fund, or shares of Artisan Small Cap Value Fund, each a series
of Artisan Funds, as described from time to time in the prospectus relating to
International Investor Shares and Mid Cap Investor Shares. Holders of Investor
Shares shall have the ability to exchange Investor Shares for Institutional
Shares only if the requirements for investment in Institutional Shares as to the
type of investor and minimum initial or subsequent investment are met. Holders
of Institutional Shares shall have the ability to exchange such Institutional
Shares for Investor Shares.
Board Review
------------
The Board of Directors of Artisan Funds shall review this Plan as
frequently as it deems necessary. Prior to any material amendment to the Plan,
the Board of Directors, including a majority of the Directors who are not
interested persons of Artisan Funds, shall find this Plan, as proposed to be
amended (including any proposed amendments to the method of allocating Class
and/or Fund Expenses), is in the best interest of each class of shares of each
Fund individually and each Fund as a whole. In considering whether to approve
any proposed amendment to the Plan, the Directors of Artisan Funds shall request
and evaluate such information as they consider reasonably necessary to evaluate
the proposed amendment.
Adopted April 27, 2000
3
<PAGE>
EXHIBIT (p)
ARTISAN FUNDS, INC.
CODE OF ETHICS FOR OUTSIDE DIRECTORS
(Effective January 27, 2000)
The Investment Company Act and rules require that Artisan Funds, Inc. ("Artisan
Funds") establish standards and procedures for the detection and prevention of
certain conflicts of interest, including activities by which persons having
knowledge of the investments and investment intentions of Artisan Funds might
take advantage of that knowledge for their own benefit. This Code of Ethics for
Outside Directors has been adopted by Artisan Funds to meet those concerns and
legal requirements.
Artisan Funds' outside directors are those members of Artisan Funds' board who
are not affiliated with Artisan Partners Limited Partnership ("Artisan
Partners"), are not officers of Artisan Funds, and are not otherwise "interested
persons" of Artisan Partners. At the date of adoption of this Code, Artisan
Funds' outside directors are David A. Erne, Thomas R. Hefty and Howard B. Witt.
Any questions about the Code or about the applicability of the Code to a
Personal Securities Transaction should be directed to Artisan Funds' compliance
officer or chief executive officer; or counsel to Artisan Funds.
I. STATEMENT OF PRINCIPLE
GENERAL PROHIBITIONS. The Investment Company Act and rules make it illegal for
any person covered by the Code, directly or indirectly, in connection with the
purchase or sale of a security held or to be acquired by Artisan Funds, to:
a. employ any device, scheme, or artifice to defraud Artisan Funds;
b. make any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light
of circumstances under which they are made, not misleading or in any
way mislead Artisan Funds regarding a material fact;
c. engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon Artisan Funds; or
d. engage in any manipulative practice with respect to Artisan Funds.
PERSONAL SECURITIES TRANSACTIONS. The Code regulates Personal Securities
Transactions as a part of the effort by Artisan Funds to detect and prevent
conduct that might violate the general
1
<PAGE>
prohibitions outlined above. A Personal Securities Transaction is a transaction
in a SECURITY in which the person subject to this Code has a BENEFICIAL
INTEREST.
When the phrase "Personal Securities Transaction" is used in this Code, it means
Personal Securities Transaction as defined in these paragraphs.
SECURITY is interpreted very broadly for this purpose, and includes any right to
acquire any security (an option or warrant, for example).
You have a BENEFICIAL INTEREST in a security in which you have, directly or
indirectly, the opportunity to profit or share in any profit derived from a
transaction in the security, or in which you have an indirect interest,
including beneficial ownership by your spouse or minor children or other
dependents living in your household, or your share of securities held by a
partnership of which you are a general partner. Technically, the rules under
section 16 of the Securities Exchange Act of 1934 will be applied to determine
if you have a beneficial interest in a security (even if the security would not
be within the scope of section 16). Examples of beneficial interest are
attached as Appendix A.
In any situation where the potential for conflict exists, transactions for
Artisan Funds must take precedence over any personal transaction. The people
subject to this Code owe a duty to Artisan Funds and its shareholders to conduct
their Personal Securities Transactions in a manner which does not interfere with
the portfolio transactions of Artisan Funds, otherwise take inappropriate
advantage of their relationship with Artisan Funds, or create any actual or
potential conflict of interest between their interests and the interests of
Artisan Funds and its shareholders.
Situations not specifically governed by this Code of Ethics will be resolved in
light of this general principle.
II. RESTRICTIONS ON PERSONAL SECURITIES TRANSACTIONS
A. NO TRANSACTIONS WITH ARTISAN FUNDS. No outside director shall
knowingly sell to or purchase from Artisan Funds any security or other
property, except securities issued by Artisan Funds.
B. NO CONFLICTING TRANSACTIONS. No outside director shall purchase or
sell any security in which such person has or would thereby acquire a
beneficial interest which the person knows, or in the ordinary course
of fulfilling his duties as a director should know, is being purchased
or sold or considered for purchase or sale by Artisan Funds until
Artisan Funds' transactions have been completed or consideration of
such transactions has been abandoned. If an outside director has such
knowledge and is considering a transaction in that security, the
outside director is strongly encouraged to contact the compliance
officer prior to their transaction to verify that the Funds'
transaction has been completed or its consideration of such
transaction has been abandoned.
2
<PAGE>
III. COMPLIANCE PROCEDURES
A. REPORTING PERSONAL SECURITIES TRANSACTIONS. An outside director shall
report to Artisan Partners' compliance officer, within ten days after
the end of the calendar quarter in which a reportable transaction
occurs, any Personal Securities Transaction in which the outside
director, at the time of the transaction, knew, or in the ordinary
course of fulfilling his duties as a director should have known, that
on the day of the transaction, or within 15 days before or after that
day, a purchase or sale of that security was made by or considered for
Artisan Funds.
For example, if an outside director knows on the date of a purchase of
a security for his or her own account that Artisan Funds purchased the
same security within 15 days before or after the outside director's
purchase, the outside director would be required to report his or her
purchase transaction to the compliance officer. No reporting
requirement would exist, however, if an outside director purchased a
security for his or her own account and subsequently, but within the
15-day reporting period, learned that Artisan Funds was considering a
purchase of the same security.
1. Time Reports are Due. Reports of Personal Securities
Transactions required by this section shall be delivered to
Artisan Partners' compliance officer within 10 days after the end
of the calendar quarter in which the transaction occurred.
2. Content and Form of Reports. Reports of Personal Securities
Transactions may be in any form (including copies of transaction
confirmations or monthly brokerage statements) but must include
(i) the date of the transaction, (ii) the title, interest rate
and maturity date (if applicable), number of shares, and the
principal amount of each security involved; (iii) the nature of
the transaction (i.e., purchase, sale, gift, or other type of
acquisition or disposition); (iv) the price at which the
transaction was effected; (v) the name of the broker, dealer, or
bank with or through which the transaction was effected; (vi) the
name of the reporting person; and (vii) the date the report is
submitted.
B. REVIEW OF TRANSACTIONS. Artisan Partners' compliance officer will
review the reported transactions of the outside directors for any
conflict or potential conflict with the transactions of Artisan Funds.
C. CERTIFICATION OF COMPLIANCE. Each outside director is required to
certify annually that he or she has read and understands the Code and
recognizes that he or she is subject to the Code, and that he or she
has reported all Personal Securities Transactions required to be
reported under the Code. To accomplish this, the Secretary of Artisan
Funds shall annually distribute a copy of the Code and request
certification. The Secretary shall be responsible for ensuring that
all personnel comply with the certification requirement.
3
<PAGE>
D. REVIEW BY ARTISAN FUNDS' BOARD. The officers of Artisan Funds shall
prepare an annual report to the board of Artisan Funds that:
1. summarizes existing procedures concerning personal investing and
any changes in those procedures during the past year;
2. describes issues that arose during the previous year under the
Code or procedures concerning personal investing, including but
not limited to information about material violations of the Code
and sanctions imposed;
3. certifies to the board that Artisan Funds has adopted procedures
reasonably necessary to prevent its investment persons and access
persons from violating the Code; and
4. identifies any recommended changes in existing restrictions or
procedures based upon experience under the Code, evolving
industry practices, or developments in applicable laws or
regulations.
IV. EXEMPT TRANSACTIONS
The provisions of this Code are intended to restrict the personal investment
activities of the outside directors only to the extent necessary to accomplish
the purposes of the Code. Therefore, the provisions of Sections II and III of
this Code shall not apply to:
A. Purchases or sales effected in any account over which the persons
subject to this Code have no direct or indirect influence or control;
B. Purchases or sales of:
1. U.S. government securities;
2. shares of open-end investment companies (mutual funds), including
but not limited to shares of any Artisan Funds portfolio; and
3. bank certificates of deposit or commercial paper.
C. Purchases that are part of an automatic dividend reinvestment plan;
D. Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of securities to the extent such rights
were acquired from such issuer, and sales of such rights so acquired;
and
E. Purchases or sales that receive the prior approval of the Compliance
Officer or Mr. Ziegler because they are not inconsistent with this
Code or the provisions of Rule 17j-1(a) under the Investment Company
Act of 1940. A copy of Rule 17j-1 is attached as Appendix B.
4
<PAGE>
V. CONSEQUENCES FOR FAILURE TO COMPLY WITH THE CODE
Compliance with this Code of Ethics is a condition of retention of positions
with Artisan Funds. The board of Artisan Funds shall determine what action is
appropriate for any breach of the provisions of the Code by an outside board
member, which may include removal from the board.
Reports filed pursuant to the Code will be maintained in confidence but will be
reviewed by Artisan Partners or Artisan Funds to verify compliance with the
Code. Additional information may be required to clarify the nature of
particular transactions.
VI. RETENTION OF RECORDS
The Secretary of Artisan Funds shall maintain the records listed below for a
period of five years at Artisan Funds' principal place of business in an easily
accessible place:
A. a list of all persons subject to the Code during the period;
B. receipts signed by all persons subject to the Code acknowledging
receipt of copies of the Code and acknowledging that they are subject
to it;
C. a copy of each code of ethics that has been in effect at any time
during the period; and
D. a copy of each report filed pursuant to the Code and a record of any
known violation and action taken as a result thereof during the
period.
Adopted 10/9/96
Revised 8/6/98, 1/27/00
5
<PAGE>
ARTISAN FUNDS, INC.
ANNUAL CODE OF ETHICS CERTIFICATION
I affirm that I have received a copy of this Code of Ethics and have read and
understand it. I will comply with the Code in all respects.
I further certify that I have reported all Personal Securities Transactions
required to be reported under the Code.
Date:
-------------------
------------------------------------
6
<PAGE>
APPENDIX A
EXAMPLES OF BENEFICIAL INTEREST
For purposes of the Code, you will be deemed to have a beneficial interest
in a security if you have the opportunity, directly or indirectly, to profit or
share in any profit derived from a transaction in the security. Examples of
beneficial ownership under this definition include:
- - securities you own, no matter how they are registered, and including
securities held for you by others (for example, by a custodian or broker, or
by a relative, executor or administrator) or that you have pledged to another
(as security for a loan, for example);
- - securities held by a trust of which you are a beneficiary (except that, if
your interest is a remainder interest and you do not have or participate in
investment control of trust assets, you will not be deemed to have a
beneficial interest in securities held by the trust);
- - securities held by you as trustee or co-trustee, where either you or any
member of your immediate family (i.e., spouse, children or descendants,
stepchildren, parents and their ancestors, and stepparents, in each case
treating a legal adoption as blood relationship) has a beneficial interest
(using these rules) in the trust.
- - securities held by a trust of which you are the settlor, if you have the
power to revoke the trust without obtaining the consent of all the
beneficiaries and have or participate in investment control;
- - securities held by any partnership in which you are a general partner, to the
extent of your interest in partnership capital or profits;
- - securities held by a personal holding company controlled by you alone or
jointly with others;
- - securities held by (i) your spouse, unless legally separated, or you and your
spouse jointly, or (ii) your minor children or any immediate family member of
you or your spouse (including an adult relative), directly or through a
trust, who is sharing your home, even if the securities were not received
from you and the income from the securities is not actually used for the
maintenance of your household; or
- - securities you have the right to acquire (for example, through the exercise
of a derivative security), even if the right is not presently exercisable, or
securities as to which, through any other type of arrangement, you obtain
benefits substantially equivalent to those of ownership.
You will NOT be deemed to have beneficial ownership of securities in the
following situations:
7
<PAGE>
APPENDIX A
- - securities held by a limited partnership in which you do not have a
controlling interest and do not have or share investment control over the
partnership's portfolio; and
- - securities held by a foundation of which you are a trustee and donor,
provided that the beneficiaries are exclusively charitable and you have no
right to revoke the gift.
THESE EXAMPLES ARE NOT EXCLUSIVE. THERE ARE OTHER CIRCUMSTANCES IN WHICH YOU
MAY BE DEEMED TO HAVE A BENEFICIAL INTEREST IN A SECURITY. ANY QUESTIONS ABOUT
WHETHER YOU HAVE A BENEFICIAL INTEREST SHOULD BE DIRECTED TO THE COMPLIANCE
OFFICER OR MR. ZIEGLER.
8
<PAGE>
APPENDIX B
S. 270.17J-1 PERSONAL INVESTMENT ACTIVITIES OF INVESTMENT COMPANY PERSONNEL.
(a) Definitions. For purposes of this section:
(1) Access Person means:
(i) Any director, officer, general partner or Advisory Person of a
Fund or of a Fund's investment adviser.
(A) If an investment adviser is primarily engaged in a business
or businesses other than advising Funds or other advisory
clients, the term Access Person means any director, officer,
general partner or Advisory Person of the investment adviser
who, with respect to any Fund, makes any recommendation,
participates in the determination of which recommendation
will be made, or whose principal function or duties relate
to the determination of which recommendation will be made,
or who, in connection with his or her duties, obtains any
information concerning recommendations on Covered Securities
being made by the investment adviser to any Fund.
(B) An investment adviser is "primarily engaged in a business or
businesses other than advising Funds or other advisory
clients" if, for each of its most recent three fiscal years
or for the period of time since its organization, whichever
is less, the investment adviser derived, on an
unconsolidated basis, more than 50 percent of its total
sales and revenues and more than 50 percent of its income
(or loss), before income taxes and extraordinary items, from
the other business or businesses.
(ii) Any director, officer or general partner of a principal
underwriter who, in the ordinary course of business, makes,
participates in or obtains information regarding, the purchase or
sale of Covered Securities by the Fund for which the principal
underwriter acts, or whose functions or duties in the ordinary
course of business relate to the making of any recommendation to
the Fund regarding the purchase or sale of Covered Securities.
(2) Advisory Person of a Fund or of a Fund's investment adviser means:
(i) Any employee of the Fund or investment adviser (or of any company
in a control relationship to the Fund or investment adviser) who,
in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or
sale of Covered Securities by a Fund, or whose functions relate
to the making of any recommendations with respect to the
purchases or sales; and
(ii) Any natural person in a control relationship to the Fund or
investment adviser who obtains information concerning
recommendations made to the Fund with regard to the purchase or
sale of Covered Securities by the Fund.
(3) Control has the same meaning as in section 2(a)(9) of the Act [15
U.S.C. 80a-2(a)(9)].
(4) Covered Security means a security as defined in section 2(a)(36) of
the Act [15 U.S.C. 80a-2(a)(36)], except that it does not include:
(i) Direct obligations of the Government of the United States;
9
<PAGE>
APPENDIX B
(ii) Bankers' acceptances, bank certificates of deposit, commercial
paper and high quality short-term debt instruments, including
repurchase agreements; and
(iii) Shares issued by open-end Funds.
(5) Fund means an investment company registered under the Investment
Company Act.
(6) An Initial Public Offering means an offering of securities registered
under the Securities Act of 1933 [15 U.S.C. 77a], the issuer of which,
immediately before the registration, was not subject to the reporting
requirements of sections 13 or 15(d) of the Securities Exchange Act of
1934 [15 U.S.C. 78m or 78o(d)].
(7) Investment Personnel of a Fund or of a Fund's investment adviser
means:
(i) Any employee of the Fund or investment adviser (or of any company
in a control relationship to the Fund or investment adviser) who,
in connection with his or her regular functions or duties, makes
or participates in making recommendations regarding the purchase
or sale of securities by the Fund.
(ii) Any natural person who controls the Fund or investment adviser
and who obtains information concerning recommendations made to
the Fund regarding the purchase or sale of securities by the
Fund.
(8) A Limited Offering means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to section 4(2) or section
4(6) [15 U.S.C. 77d(2) or 77d(6)] or pursuant to rule 504, rule 505,
or rule 506 [17 CFR 230.504, 230.505, or 230.506] under the Securities
Act of 1933.
(9) Purchase or sale of a Covered Security includes, among other things,
the writing of an option to purchase or sell a Covered Security.
(10) Security Held or to be Acquired by a Fund means:
(i) Any Covered Security which, within the most recent 15 days:
(A) Is or has been held by the Fund; or
(B) Is being or has been considered by the Fund or its
investment adviser for purchase by the Fund; and
(ii) Any option to purchase or sell, and any security convertible into
or exchangeable for, a Covered Security described in paragraph
(a)(10)(i) of this section.
(b) Unlawful Actions. It is unlawful for any affiliated person of or principal
underwriter for a Fund, or any affiliated person of an investment adviser
of or principal underwriter for a Fund, in connection with the purchase or
sale, directly or indirectly, by the person of a Security Held or to be
Acquired by the Fund:
(1) To employ any device, scheme or artifice to defraud the Fund;
(2) To make any untrue statement of a material fact to the Fund or omit to
state a material fact necessary in order to make the statements made
to the Fund, in light of the circumstances under which they are made,
not misleading;
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APPENDIX B
(3) To engage in any act, practice or course of business that operates or
would operate as a fraud or deceit on the Fund; or
(4) To engage in any manipulative practice with respect to the Fund.
(c) Code of Ethics.
(1) Adoption and Approval of Code of Ethics.
(i) Every Fund (other than a money market fund or a Fund that does
not invest in Covered Securities) and each investment adviser of
and principal underwriter for the Fund, must adopt a written code
of ethics containing provisions reasonably necessary to prevent
its Access Persons from engaging in any conduct prohibited by
paragraph (b) of this section.
(ii) The board of directors of a Fund, including a majority of
directors who are not interested persons, must approve the code
of ethics of the Fund, the code of ethics of each investment
adviser and principal underwriter of the Fund, and any material
changes to these codes. The board must base its approval of a
code and any material changes to the code on a determination that
the code contains provisions reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by
paragraph (b) of this section. Before approving a code of a Fund,
investment adviser or principal underwriter or any amendment to
the code, the board of directors must receive a certification
from the Fund, investment adviser or principal underwriter that
it has adopted procedures reasonably necessary to prevent Access
Persons from violating the investment adviser's or principal
underwriter's code of ethics. The Fund's board must approve the
code of an investment adviser or principal underwriter before
initially retaining the services of the investment adviser or
principal underwriter. The Fund's board must approve a material
change to a code no later than six months after adoption of the
material change.
(iii) If a Fund is a unit investment trust, the Fund's principal
underwriter or depositor must approve the Fund's code of ethics,
as required by paragraph (c)(1)(ii) of this section. If the Fund
has more than one principal underwriter or depositor, the
principal underwriters and depositors may designate, in writing,
which principal underwriter or depositor must conduct the
approval required by paragraph (c)(1)(ii) of this section, if
they obtain written consent from the designated principal
underwriter or depositor.
(2) Administration of Code of Ethics.
(i) The Fund, investment adviser and principal underwriter must use
reasonable diligence and institute procedures reasonably
necessary to prevent violations of its code of ethics.
(ii) No less frequently than annually, every Fund (other than a unit
investment trust) and its investment advisers and principal
underwriters must furnish to the Fund's board of directors, and
the board of directors must consider, a written report that:
(A) Describes any issues arising under the code of ethics or
procedures since the last report to the board of directors,
including, but not limited to, information about material
violations of the code or procedures and sanctions imposed
in response to the material violations; and
(B) Certifies that the Fund, investment adviser or principal
underwriter, as applicable, has adopted procedures
reasonably necessary to prevent Access Persons from
violating the code.
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APPENDIX B
(3) Exception for Principal Underwriters. The requirements of paragraphs
(c)(1) and (c)(2) of this section do not apply to any principal
underwriter unless:
(i) The principal underwriter is an affiliated person of the Fund or
of the Fund's investment adviser; or
(ii) An officer, director or general partner of the principal
underwriter serves as an officer, director or general partner of
the Fund or of the Fund's investment adviser.
(d) Reporting Requirements of Access Persons.
(1) Reports Required. Unless excepted by paragraph (d)(2) of this section,
every Access Person of a Fund (other than a money market fund or a
Fund that does not invest in Covered Securities) and every Access
Person of an investment adviser of or principal underwriter for the
Fund, must report to that Fund, investment adviser or principal
underwriter:
(i) Initial Holdings Reports. No later than 10 days after the person
becomes an Access Person, the following information:
(A) The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct
or indirect beneficial ownership when the person became an
Access Person;
(B) The name of any broker, dealer or bank with whom the Access
Person maintained an account in which any securities were
held for the direct or indirect benefit of the Access Person
as of the date the person became an Access Person; and
(C) The date that the report is submitted by the Access Person.
(ii) Quarterly Transaction Reports. No later than 10 days after the
end of a calendar quarter, the following information:
(A) With respect to any transaction during the quarter in a
Covered Security in which the Access Person had any direct
or indirect beneficial ownership:
(1) The date of the transaction, the title, the interest
rate and maturity date (if applicable), the number of
shares and the principal amount of each Covered
Security involved;
(2) The nature of the transaction (i.e., purchase, sale or
any other type of acquisition or disposition);
(3) The price of the Covered Security at which the
transaction was effected;
(4) The name of the broker, dealer or bank with or through
which the transaction was effected; and
(5) The date that the report is submitted by the Access
Person.
(B) With respect to any account established by the Access Person
in which any securities were held during the quarter for the
direct or indirect benefit of the Access Person:
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APPENDIX B
(1) The name of the broker, dealer or bank with whom the
Access Person established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the Access
Person.
(iii) Annual Holdings Reports. Annually, the following information
(which information must be current as of a date no more than 30
days before the report is submitted):
(A) The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct
or indirect beneficial ownership;
(B) The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held
for the direct or indirect benefit of the Access Person; and
(C) The date that the report is submitted by the Access Person.
(2) Exceptions from Reporting Requirements.
(i) A person need not make a report under paragraph (d)(1) of this
section with respect to transactions effected for, and Covered
Securities held in, any account over which the person has no
direct or indirect influence or control.
(ii) A director of a Fund who is not an "interested person" of the
Fund within the meaning of section 2(a)(19) of the Act [15 U.S.C.
80a-2(a)(19)], and who would be required to make a report solely
by reason of being a Fund director, need not make:
(A) An initial holdings report under paragraph (d)(1)(i) of this
section and an annual holdings report under paragraph
(d)(1)(iii) of this section; and
(B) A quarterly transaction report under paragraph (d)(1)(ii) of
this section, unless the director knew or, in the ordinary
course of fulfilling his or her official duties as a Fund
director, should have known that during the 15-day period
immediately before or after the director's transaction in a
Covered Security, the Fund purchased or sold the Covered
Security, or the Fund or its investment adviser considered
purchasing or selling the Covered Security.
(iii) An Access Person to a Fund's principal underwriter need not make
a report to the principal underwriter under paragraph (d)(1) of
this section if:
(A) The principal underwriter is not an affiliated person of the
Fund (unless the Fund is a unit investment trust) or any
investment adviser of the Fund; and
(B) The principal underwriter has no officer, director or
general partner who serves as an officer, director or
general partner of the Fund or of any investment adviser of
the Fund.
(iv) An Access Person to an investment adviser need not make a
quarterly transaction report to the investment adviser under
paragraph (d)(1)(ii) of this section if all the information in
the report would duplicate information required to be recorded
under S. 275.204-2(a)(12) or 275.204-2(a)(13) of this chapter.
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APPENDIX B
(v) An Access Person need not make a quarterly transaction report
under paragraph (d)(1)(ii) of this section if the report would
duplicate information contained in broker trade confirmations or
account statements received by the Fund, investment adviser or
principal underwriter with respect to the Access Person in the
time period required by paragraph (d)(1)(ii), if all of the
information required by that paragraph is contained in the broker
trade confirmations or account statements, or in the records of
the Fund, investment adviser or principal underwriter.
(3) Review of Reports. Each Fund, investment adviser and principal
underwriter to which reports are required to be made by paragraph
(d)(1) of this section must institute procedures by which appropriate
management or compliance personnel review these reports.
(4) Notification of Reporting Obligation. Each Fund, investment adviser
and principal underwriter to which reports are required to be made by
paragraph (d)(1) of this section must identify all Access Persons who
are required to make these reports and must inform those Access
Persons of their reporting obligation.
(5) Beneficial Ownership. For purposes of this section, beneficial
ownership is interpreted in the same manner as it would be under S.
240.16a-1(a)(2) of this chapter in determining whether a person is the
beneficial owner of a security for purposes of section 16 of the
Securities Exchange Act of 1934 [15 U.S.C. 78p] and the rules and
regulations thereunder. Any report required by paragraph (d) of this
section may contain a statement that the report will not be construed
as an admission that the person making the report has any direct or
indirect beneficial ownership in the Covered Security to which the
report relates.
(e) Pre-approval of Investments in IPOs and Limited Offerings. Investment
Personnel of a Fund or its investment adviser must obtain approval from the
Fund or the Fund's investment adviser before directly or indirectly
acquiring beneficial ownership in any securities in an Initial Public
Offering or in a Limited Offering.
(f) Recordkeeping Requirements.
(1) Each Fund, investment adviser and principal underwriter that is
required to adopt a code of ethics or to which reports are required to
be made by Access Persons must, at its principal place of business,
maintain records in the manner and to the extent set out in this
paragraph (f), and must make these records available to the Commission
or any representative of the Commission at any time and from time to
time for reasonable periodic, special or other examination:
(A) A copy of each code of ethics for the organization that is in
effect, or at any time within the past five years was in effect,
must be maintained in an easily accessible place;
(B) A record of any violation of the code of ethics, and of any
action taken as a result of the violation, must be maintained in
an easily accessible place for at least five years after the end
of the fiscal year in which the violation occurs;
(C) A copy of each report made by an Access Person as required by
this section, including any information provided in lieu of the
reports under paragraph (d)(2)(v) of this section, must be
maintained for at least five years after the end of the fiscal
year in which the report is made or the information is provided,
the first two years in an easily accessible place;
(D) A record of all persons, currently or within the past five years,
who are or were required to make reports under paragraph (d) of
this section, or who are or were responsible for reviewing these
reports, must be maintained in an easily accessible place; and
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APPENDIX B
(E) A copy of each report required by paragraph (c)(2)(ii) of this
section must be maintained for at least five years after the end
of the fiscal year in which it is made, the first two years in an
easily accessible place.
(2) A Fund or investment adviser must maintain a record of any decision,
and the reasons supporting the decision, to approve the acquisition by
investment personnel of securities under paragraph (e), for at least
five years after the end of the fiscal year in which the approval is
granted.
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Exhibit (p)(1)
ARTISAN FUNDS, INC.
ARTISAN PARTNERS LIMITED PARTNERSHIP
ARTISAN DISTRIBUTORS LLC
CODE OF ETHICS
AND
POLICY AND PROCEDURES TO PREVENT
MISUSE OF INSIDE INFORMATION
(Effective April 27, 2000)
The policy of Artisan Partners Limited Partnership ("Artisan Partners") and
Artisan Distributors LLC ("Artisan Distributors") is to avoid any conflict of
interest, or the appearance of any conflict of interest, between the interests
of any client of Artisan Partners ("Client"), including Artisan Funds, Inc.
("Artisan Funds") and its shareholders, and the interests of Artisan Partners
and Artisan Distributors or their officers, partners, and employees.
The Investment Company Act and rules require that Artisan Funds, Artisan
Partners and Artisan Distributors establish standards and procedures for the
detection and prevention of certain conflicts of interest, including activities
by which persons having knowledge of the investments and investment intentions
of Artisan Funds might take advantage of that knowledge for their own benefit.
The Code has been adopted by Artisan Funds, Artisan Partners and Artisan
Distributors to meet those concerns and legal requirements.
This Code also contains procedures designed to prevent the misuse of inside
information by Artisan Partners and Artisan Distributors or their personnel.
The business of Artisan Partners depends on investor confidence in the fairness
and integrity of the securities markets. Insider trading poses a significant
threat to that confidence. Trading securities while in possession of
inside information or improperly communicating that information to others may
expose you to stringent penalties. Criminal sanctions may include a fine of up
to $1,000,000 and/or ten years imprisonment. The Securities and Exchange
Commission can recover the profits gained or losses avoided, a penalty of up to
three times the illicit windfall and an order permanently barring you from the
securities industry. Finally, you may be sued by investors seeking to recover
damages for insider trading violations.
The Code is drafted broadly; it will be applied and interpreted in a similar
manner. You may legitimately be uncertain about the application of the Code in
a particular circumstance. Often, a single question can forestall disciplinary
action or complex legal problems. You should direct any questions relating to
this policy to Lawrence A. Totsky, Artisan Partners' Compliance Officer;
Janet D. Olsen, Counsel to Artisan Funds; or Andrew A. Ziegler, Managing
Director. You also must notify the Compliance Officer
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immediately if you have any reason to believe that a violation of the
policy has occurred or is about to occur.
I. INVESTMENT COMPANY ACT PROHIBITIONS
The Investment Company Act and rules make it illegal for any person covered by
the Code, directly or indirectly, in connection with the purchase or sale of a
security held or to be acquired by Artisan Funds to:
a. employ any device, scheme, or artifice to defraud Artisan Funds;
b. make any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light
of circumstances under which they are made, not misleading or in any
way mislead Artisan Funds regarding a material fact;
c. engage in any act, practice, or course of business which operates or
would operate as a fraud or deceit upon Artisan Funds; or
d. engage in any manipulative practice with respect to Artisan Funds.
The restrictions on Personal Securities Transactions contained in this Code are
intended to help Artisan Partners monitor for compliance with these
prohibitions.
II. DEFINITIONS
When used in this Code, the following terms have the meanings described below:
A. Personal Securities Transaction. The Code regulates Personal Securities
Transactions as a part of the effort by Artisan Funds, Artisan Partners and
Artisan Distributors to detect and prevent conduct that might violate the
general prohibitions outlined above. A Personal Securities Transaction is
a transaction in a security in which the person subject to this Code has a
beneficial interest.
1. Security. Security is defined very broadly, and means any note,
stock, bond, debenture, investment contract, or limited partnership
interest, and includes any right to acquire any security (an option or
warrant, for example).
2. Beneficial interest. You have a beneficial interest in a
security in which you have, directly or indirectly, the opportunity to
profit or share in any profit derived from a transaction in the
security, or in which you have an indirect interest, including
beneficial ownership by your spouse or minor children or other
dependents living in your household, or your share of securities held
by a partnership of which you are a general partner.
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Technically, the rules under section 16 of the Securities Exchange Act
of 1934 will be applied to determine if you have a beneficial interest
in a security (even if the security would not be within the scope of
section 16). Examples of beneficial interest are attached as Appendix
A.
B. Inside Information. Inside information is information that is both
material and non-public that was (i) acquired in violation of a duty to
keep the information confidential, or (ii) misappropriated. For example,
if an officer of an issuer breaches his duty to the issuer and conveys
information that should have been kept confidential, that information is
"inside information," even if you learn it third- or fourth-hand. In
contrast, a conclusion drawn by a securities analyst from publicly-
available information is not inside information, even if the analyst's
conclusion is both material and non-public.
Deciding whether information that is material and non-public is "inside"
information is often difficult. For that reason, Artisan Partners'
policies are triggered by the possession of material, non-public
information, whether or not the information is "inside" information
that will result in a trading restriction.
1. Material Information. Information is "material" when there is a
substantial likelihood that a reasonable investor would consider it
important in making his or her investment decisions. Generally, this
is information whose disclosure will have a substantial effect on the
price of a company's securities. No simple "bright line" test exists
to determine when information is material; assessments of materiality
involve a highly fact-specific inquiry. For this reason, you should
direct any questions about whether information is material to the
Compliance Officer.
Material information often relates to a company's results and
operations including, for example, dividend changes, earnings results,
changes in previously released earnings estimates, significant merger
or acquisition proposals or agreements, major litigation, liquidation
problems, and extraordinary management developments.
Material information also may relate to the market for a company's
securities. Information about a significant order to purchase or sell
securities may, in some contexts, be deemed material. Similarly,
prepublication information regarding reports in the financial press
also may be deemed material. For example, the Supreme Court upheld
the criminal convictions of insider trading defendants who capitalized
on prepublication information about The Wall Street Journal's Heard on
the Street column.
2. Non-Public Information. Information is "public" when it has been
disseminated broadly to investors in the marketplace. Tangible
evidence
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of such dissemination is the best indication that the information is
public. For example, information is public after it has become
available to the general public through a public filing with the SEC
or some other governmental agency, the Dow Jones "tape" or The Wall
Street Journal or some other publication of general circulation, and
after sufficient time has passed so that the information has been
disseminated widely.
C. Investment Personnel. The restrictions on Personal Securities Transactions
and some of the compliance procedures contained in this Code differentiate
among groups of people based on their positions and responsibilities with
Artisan Partners and Artisan Distributors. Investment personnel
(individually, an "investment person") are those who make, or participate
in making, investment decisions or recommendations for Clients, or who,
because of their positions with Artisan Funds, Artisan Partners or Artisan
Distributors, can be expected to have more information about the portfolio
transactions of Clients. Investment personnel are:
- - each portfolio manager working for Artisan Funds/Artisan Partners;
- - each analyst working for Artisan Partners;
- - each trader;
- - support staff working directly with portfolio managers and analysts;
- - each officer or director of Artisan Funds employed by Artisan
Partners or an affiliated company of Artisan Partners;
- - each partner or officer of Artisan Partners; and
- - employees of Artisan Partners who work on fund accounting matters.
D. Access Personnel. Access personnel are all employees of Artisan Partners
or Artisan Distributors who are not investment personnel described above.
III. RESTRICTIONS
Every person subject to the Code shall comply with the following restrictions:
A. No Insider Trading. No person subject to the Code may engage in any
transaction in a security (either a Personal Securities Transaction or a
transaction for a Client), while in possession of inside information.
If you think that you might have material, non-public information, you
should take the following steps:
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1. Report the information and proposed trade immediately to the
Compliance Officer.
2. Do not purchase or sell the securities on behalf of yourself or
others, including investment companies or private accounts managed by
Artisan Partners until Artisan Partners has made a determination as to
the need for trading restrictions.
3. Do not communicate the information inside or outside Artisan Partners,
other than to the Compliance Officer.
4. After the Compliance Officer has reviewed the issue, Artisan Partners
will determine whether the information is material and non-public and,
if so, whether any trading restrictions apply and what action, if any,
the firm should take.
Trading during a tender offer represents a particular concern in the
law of insider trading. Each person subject to this Code should
exercise particular caution any time they become aware of non-public
information relating to a tender offer.
Contacts with public companies represent an important part of Artisan
Partners' research efforts. Difficult legal issues arise, however,
when, in the course of these contacts, an Artisan Partners employee or
other person subject to this policy becomes aware of material, non-
public information. In such situations, Artisan Partners must make a
judgment as to its further conduct.
Consult with the Compliance Officer before taking any action.
B. No Communication of Material Non-Public Information. No person subject to
the Code may communicate material, non-public information to others in
violation of the law. Conversations containing such information, if
appropriate at all, should be conducted in private (for example, not by
cellular telephone, to avoid potential interception).
Access to files containing material, non-public information and computer
files containing such information should be restricted, including by
maintenance of such materials in locked cabinets, or through the use of
passwords or other security devices for electronic data.
C. Foreign Corrupt Practices. As required by the Foreign Corrupt Practices
Act, no person covered by the Code shall offer, pay, promise to pay or
authorize payment of any money or anything of value to a foreign official,
foreign political party (or
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official thereof) or any candidate for foreign political office for
purposes of influencing any act or decision of that person in his or its
official capacity, or inducing that person to use his or its influence with
a foreign government to influence any act or decision of that government.
D. No Transactions with Artisan Funds or a Client. No investment person or
access person shall knowingly sell to or purchase from Artisan Funds or any
other Client any security or other property, except that shares of a
portfolio of Artisan Funds may be purchased from and redeemed by Artisan
Funds.
E. No Conflicting Transactions. No investment person or access person shall
engage in a Personal Securities Transaction which the person knows or has
reason to believe is being purchased or sold or considered for purchase or
sale by a Client, until the Client's transactions have been completed or
consideration of such transactions has been abandoned. A security will be
treated as "under consideration" if an investment team anticipates
purchasing or selling the security within 14 calendar days or if it is on
an investment team's "watch list."
F. Initial Public Offerings. No investment person or access person shall
acquire any security in an initial public offering, except (i) with the
prior consent of the Compliance Officer or Andrew A. Ziegler based on a
determination that the acquisition does not conflict with the Code or its
underlying policies, or the interests of Artisan Partners or its Clients,
and (ii) in circumstances in which the opportunity to acquire the security
has been made available to the person for reasons other than the person's
relationship with Artisan Partners or its Clients. Such circumstances
might include, for example:
- an opportunity to acquire securities of an insurance company
converting from a mutual ownership structure to a stockholder
ownership structure, if the person's ownership of an insurance
policy issued by that company conveys that opportunity;
- an opportunity resulting from the person's pre-existing ownership
of an interest in the IPO company or an investor in the IPO
company; or
- an opportunity made available to the person's spouse, in
circumstances permitting the Compliance Officer or Mr. Ziegler
reasonably to determine that the opportunity is not being made
available indirectly because of the person's relationship with
Artisan Partners or its Clients (for example, because of the
spouse's employment).
G. Private Placements. No investment person or access person shall acquire
any security in a private placement without the express written prior
approval of the Compliance Officer or Andrew A. Ziegler. In deciding
whether that approval
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should be granted, each of those persons will consider whether the
investment opportunity should be reserved for Clients, and whether the
opportunity has been offered because of the person's relationship with
Artisan Partners or its Clients. An investment person who has been
authorized to acquire a security in a private placement must disclose that
investment if he or she later participates in consideration of an
investment in that issuer for a Client's account. Any investment decision
for a Client relating to that security must be made by other investment
personnel.
H. Short-Term Trading. No investment person may profit from the purchase and
sale, or sale and purchase, of the same (or equivalent) securities within
60 days. Any profit so realized will be returned to Artisan Partners and
then donated to a charitable organization selected by Artisan Partners.
However, such prohibition shall not apply to any option or futures contract
on a broadly traded index, or to any transaction which has received the
prior approval of the Compliance Officer or Andrew A. Ziegler.
I. High-Risk Trading Activities. Certain high-risk trading activities, if
used in the management of a partner, officer or employee's personal trading
portfolio, are risky not only because of the nature of the securities
transactions themselves, but also because of the potential that action
necessary to close out the transactions may become prohibited during the
duration of the transactions. Examples of such activities include short
sales of common stock and trading in derivative instruments. If Artisan
Partners becomes aware of material, non-public information about
the issuer of the underlying securities, Artisan Partners personnel may
find themselves "frozen" in a position in a derivative security. Artisan
Partners will not bear any losses in personal accounts as a result of
implementation of this policy.
J. Gifts. No investment person or access person may accept any gift or other
thing of more than a $100 value from any person or entity that does
business with or on behalf of Artisan Partners, Artisan Funds or Artisan
Distributors, or seeks to do business with or on behalf of Artisan
Partners, Artisan Funds or Artisan Distributors. Gifts in excess of this
value must either be returned to the donor or paid for by the recipient.
It is not the intent of the Code to prohibit the everyday courtesies of
business life. Therefore, excluded from this prohibition are an occasional
meal or ticket to a theater, entertainment, or sporting event that is an
incidental part of a meeting that has a clear business purpose.
K. Service as a Director. No investment person or access person may serve as
a member of the board of directors or trustees of any business
organization, other than a civic or charitable organization, without the
prior written approval of the Compliance Officer or Mr. Ziegler based on a
determination that the board service would not be inconsistent with the
interests of Artisan Partners or of its Clients. If an investment person
is serving as a board member, that investment person shall
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not participate in making investment decisions relating to the securities
of the company on whose board he or she sits.
No investment person or access person may purchase
or sell, for his or her own account or for others, including
investment companies or private accounts managed by Artisan Partners,
securities of any public company of which an Artisan Partner investment
person or access person is a director or trustee, except that the person
who is the director or the trustee of the public company may purchase and
sell securities of that company with express prior approval of the
Compliance Officer or Mr. Ziegler.
IV. COMPLIANCE PROCEDURES
A. Execution of Personal Securities Transactions through Disclosed Brokerage
Accounts; Duplicate Confirmations. All Personal Securities Transactions
must be conducted through brokerage or other accounts that have been
identified to the Compliance Officer. Each such brokerage or other account
must be set up to deliver duplicate copies of all confirmations and
statements to the Compliance Officer. No exceptions will be made to this
policy. All investment personnel and access persons shall cooperate in all
aspects with the Compliance Officer and/or his designee in securing
confirmations and statements in a timely manner.
B. Preclearance. Except as provided below, all Personal Securities
Transactions must be cleared in advance by the Compliance Officer or Mr.
Ziegler. Personal Securities Transactions by Mr. Totsky must be approved
by Mr. Ziegler. Personal Securities Transactions by Ms. Ziegler or Mr.
Ziegler must be approved by Mr. Totsky. If the proposed trade is not
executed within two business days after preclearance, the preclearance will
expire and the request must be made again.
Transactions in the following securities are exempt from the preclearance
requirement:
1. securities listed as exempt in Section V;
2. municipal securities;
3. straight debt securities;
4. securities of companies with aggregate market capitalizations of
greater than $10 billion;
5. listed index options and futures; and
6. transactions in an account (including an investment advisory account,
trust account or other account) of such person (either alone or with
others) over
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which a person other than the investment person or access person
(including an investment adviser or trustee) exercises investment
discretion if:
- the investment person or access person does not know of the
proposed transaction until after the transaction has been
executed;
- the investment person or access person has previously identified
the account to the Compliance Officer and has affirmed to the
Compliance Officer that (in some if not all cases) he or she does
not know of proposed transactions in that account until
after they are executed.
This exclusion from the preclearance requirement is based upon the
employee not having knowledge of any transaction until after that
transaction is executed. Therefore, notwithstanding this general
exclusion, if the investment person or access person becomes aware of
any transaction in such investment advisory account before it is
executed, the investment person must seek preclearance of that
transaction before it is executed.
C. Blackout Periods.
1. Investment Personnel. No Personal Securities Transaction of an
investment person will be cleared (as provided in B., above) if
Artisan Funds or any Client (1) has a conflicting order pending or (2)
is actively considering a purchase or sale of the same security. A
conflicting order is any order for the same security, or an option on
or warrant for that security, that has not been fully executed. A
purchase or sale of a security is being "actively considered" (a)
when a recommendation to purchase or sell has been made for a Client
and is pending, or, (b) with respect to the person making the
recommendation, when that person is seriously considering making the
recommendation within 14 calendar days, or, (c) the security is on the
"watch list."
Absent extraordinary circumstances, a Personal Securities Transaction
for an investment person will not be approved until the sixth business
day after completion of any transaction for a Client.
2. Access Personnel. No Personal Securities Transaction of an access
person may be executed on a day during which Artisan Funds or any
other client has a pending order in the same security until that order
is fully executed or withdrawn.
D. Disclosure of Personal Holdings. Each investment person and access person
shall disclose his or her personal securities holdings (not including
shares of open-end
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investment companies (mutual funds), direct obligations of the U.S.
government (U.S. treasury bills, notes and bonds) and money market
instruments, including bank certificates of deposit, bankers' acceptances,
commercial paper and repurchase agreements) no later than ten days after
commencement of employment with Artisan Partners, and annually thereafter
as of December 31 of each year. Annual reports shall be delivered to the
Compliance Officer no later than January 30 of the following year. The
initial holdings and annual holdings reports shall contain the following
information:
- title, interest rate and maturity date (if applicable), number of
shares and the principal amount of each security held beneficially;
- the name of any broker, dealer or bank with or through which the
investment person maintains an account; and
- the date the report is submitted.
E. Dealing with Certificated Securities. The receipt of certificated
securities must be reported as described in F., below. Any
subsequent transaction in such securities must be conducted through a
disclosed brokerage account for which the Compliance Officer receives
duplicate confirmations and account statements. No person subject to the
Code shall request withdrawal of securities from such a brokerage account
in certificated form.
F. Reporting Personal Securities Transactions.
1. Each investment person and access person shall (i) identify to Artisan
Partners each brokerage or other account in which the access person
has a beneficial interest and (ii) instruct the broker or custodian to
deliver to the Compliance Officer duplicate confirmations of all
transactions and duplicate monthly statements.
2. Each investment person and access person shall report all Personal
Securities Transactions during a month to the Compliance Officer no
later than ten days after the end of the month.
MONTHLY TRANSACTION REPORTS SHALL INCLUDE THE FOLLOWING INFORMATION:
FOR EACH TRANSACTION:
- the date of the transaction;
- title, interest rate and maturity date (if applicable), number of
shares and the principal amount of each security involved;
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- the nature of the transaction (i.e., purchase, sale, gift, or
other type of acquisition or disposition);
- the price at which the transaction was effected;
- the name of the broker, dealer or bank with or through which the
transaction was effected; and
- the date the report is submitted.
In addition, for each account established during the month in which
securities are held for the benefit of an investment person or access
person, the monthly report shall include:
- the name of the broker, dealer or bank with whom the account was
established;
- the date the account was established; and
- the date the report is submitted.
3. Reports relating to the Personal Securities Transactions of the
Compliance Officer shall be delivered to Mr. Ziegler.
G. Form of Reports. Reports of Personal Securities Transactions may be in any
form (including copies of confirmations or monthly statements) but must
include the information required by Section IV(F)(2).
If a Personal Securities Transaction has been executed through Artisan
Partners' trading desk, the trading department will provide the necessary
information to the Compliance Officer and no further report will be
required.
Any Personal Securities Transaction of an investment person or access
person which for any reason does not appear in the trading or brokerage
records described above (for example, the receipt of certificated
securities by gift or inheritance) shall be reported as required by Section
IV(F)(2).
H. Monitoring of Transactions. Artisan Partners' Compliance Officer or his
designee will monitor the trading patterns of investment personnel and
access personnel, the trading of Artisan Funds and other Clients, and
trading for Artisan Partners' own account (if any) for compliance with this
Code, including the provisions intended to prevent the misuse of inside
information. The trading of the Compliance Officer will be monitored by
Mr. Ziegler.
I. Educational Efforts. The Compliance Officer shall provide, on a regular
basis, an education program to familiarize persons subject to the Code with
the provisions
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of the Code and to answer questions regarding the Code. The Compliance
Officer shall also be available to answer questions regarding the Code and
to resolve issues of whether information is inside information and to
determine what action, if any, should be taken.
J. Certification of Compliance. Each investment person and access
person is required to certify annually that (i) he or she has read and
understands the Code, (ii) recognizes that he or she is subject to the
Code, and (iii) he or she has disclosed or reported all Personal Securities
Transactions required to be disclosed or reported under the Code. Artisan
Partners' Compliance Officer shall annually distribute a copy of the Code
and request certification by all covered persons and shall be responsible
for ensuring that all personnel comply with the certification requirement.
Each investment person and access person who has not engaged in any
Personal Securities Transaction during the preceding year for which a
report was required to be filed pursuant to the Code shall include a
certification to that effect in his or her annual certification.
K. Report to Artisan Funds' Board. The officers of Artisan Funds shall
prepare an annual report to the board of Artisan Funds that:
1. summarizes existing procedures concerning personal investing and any
changes in those procedures during the past year;
2. describes issues that arose during the previous year under the Code or
procedures concerning personal investing, including but not limited to
information about material violations of the Code and sanctions
imposed;
3. certifies to the board that Artisan Funds has adopted procedures
reasonably necessary to prevent its investment persons and access
persons from violating the Code; and
4. identifies any recommended changes in existing restrictions or
procedures based upon experience under the Code, evolving industry
practices, or developments in applicable laws or regulations.
L. Reporting to Artisan Partners' Management. The Compliance Officer shall
report the following to the management of Artisan Partners:
1. Special Reports. The Compliance Officer shall report the existence of
a potential violation of this Code to management of Artisan Partners
promptly providing full details, which may include (1) the name of
particular securities involved, if any; (2) the date(s) the Compliance
Officer learned of the potential violation and began investigating;
(3) the
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accounts and individuals involved; (4) actions taken as a result of
the investigation, if any; and (5) recommendations for further action.
2. Regular Reports. On an as-needed or periodic basis, the Compliance
Officer shall report to the management of Artisan Partners as it may
request, which may include some or all of the following:
i. a summary of existing procedures of the Code;
ii. a summary of changes in procedures made in the last year;
iii. full details of any investigation since the last report
(either internal or by a regulatory agency) of any suspected
insider trading, the results of the investigation and a
description of any changes in procedures prompted by an such
investigation;
iv. an evaluation of the current procedures and a description of
anticipated changes in procedures; and
v. a description of Artisan Partners' continuing educational
program regarding insider trading, including the dates of such
programs since the last report to management.
V. EXEMPT TRANSACTIONS
The provisions of this Code are intended to restrict the personal investment
activities of persons subject to the Code only to the extent necessary to
accomplish the purposes of the Code. Therefore, the preclearance, blackout and
reporting provisions of this Code shall not apply to the following Personal
Securities Transactions:
A. Purchases or sales effected in any account over which the persons subject
to this Code have no direct or indirect influence or control;
B. Purchases or sales of:
1. securities that are direct obligations of the U.S. government (that
is, U.S. treasury bills, notes and bonds);
2. shares of open-end investment companies (mutual funds), including but
not limited to shares of any Artisan Funds portfolio; and
3. bank certificates of deposit, banker's acceptances, repurchase
agreements or commercial paper.
C. Purchases that are part of an automatic dividend reinvestment plan;
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D. Purchases effected upon the exercise of rights issued by an issuer pro rata
to all holders of a class of securities to the extent such rights were
acquired from such issuer, and sales of such rights so acquired; and
E. Purchases or sales that receive the prior approval of the Compliance
Officer or Mr. Ziegler because they are not inconsistent with this Code or
the provisions of Rule 17j-1(a) under the Investment Company Act of 1940.
A copy of Rule 17j-1 is attached as Appendix B.
VI. ENFORCEMENT OF THE CODE AND CONSEQUENCES FOR FAILURE TO COMPLY
The Compliance Officer shall be responsible for promptly investigating all
reports of possible violations of the provisions of this Code.
Compliance with this Code of Ethics is a condition of employment by Artisan
Partners and retention of positions with Artisan Funds. Taking into
consideration all relevant circumstances, Artisan Partners will determine what
action is appropriate for any breach of the provisions of the Code. Possible
actions include letters of sanction, suspension or termination of employment, or
removal from office.
Reports filed pursuant to the Code will be maintained in confidence but will be
reviewed by Artisan Partners or Artisan Funds to verify compliance with the
Code. Additional information may be required to clarify the nature of
particular transactions.
VII. RETENTION OF RECORDS
Artisan Partners' Compliance Officer shall maintain the records listed below for
a period of five years at Artisan Partners' principal place of business in an
easily accessible place:
A. a list of all persons subject to the Code during the period;
B. receipts signed by all persons subject to the Code acknowledging receipt of
copies of the Code and acknowledging that they are subject to it;
C. a copy of each code of ethics that has been in effect at any time during
the period;
D. a copy of each report filed pursuant to the Code and a record of any known
violation and action taken as a result thereof during the period; and
E. records evidencing prior approval of, and the rationale supporting, an
acquisition by an investment person or access person of securities in a
private placement.
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Adopted: March 27, 1995
Revised: July 18, 1996
August 6, 1998
April 28, 1999
January 27, 2000
April 27, 2000
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APPENDIX A
EXAMPLES OF BENEFICIAL INTEREST
For purposes of the Code, you will be deemed to have a beneficial interest
in a security if you have the opportunity, directly or indirectly, to profit or
share in any profit derived from a transaction in the security. Examples of
beneficial ownership under this definition include:
- - securities you own, no matter how they are registered, and including
securities held for you by others (for example, by a custodian or broker, or
by a relative, executor or administrator) or that you have pledged to
another (as security for a loan, for example);
- - securities held by a trust of which you are a beneficiary (except that, if
your interest is a remainder interest and you do not have or participate in
investment control of trust assets, you will not be deemed to have a
beneficial interest in securities held by the trust);
- - securities held by you as trustee or co-trustee, where either you or any
member of your immediate family (i.e., spouse, children or descendants,
stepchildren, parents and their ancestors, and stepparents, in each case
treating a legal adoption as blood relationship) has a beneficial interest
(using these rules) in the trust.
- - securities held by a trust of which you are the settlor, if you have the
power to revoke the trust without obtaining the consent of all the
beneficiaries and have or participate in investment control;
- - securities held by any partnership in which you are a general partner, to
the extent of your interest in partnership capital or profits;
- - securities held by a personal holding company controlled by you alone or
jointly with others;
- - securities held by (i) your spouse, unless legally separated, or you and
your spouse jointly, or (ii) your minor children or any immediate family
member of you or your spouse (including an adult relative), directly or
through a trust, who is sharing your home, even if the securities were not
received from you and the income from the securities is not actually used
for the maintenance of your household; or
- - securities you have the right to acquire (for example, through the exercise
of a derivative security), even if the right is not presently exercisable,
or securities as to which, through any other type of arrangement, you obtain
benefits substantially equivalent to those of ownership.
A-1
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APPENDIX A
You will NOT be deemed to have beneficial ownership of securities in the
following situations:
- - securities held by a limited partnership in which you do not have a
controlling interest and do not have or share investment control over the
partnership's portfolio; and
- - securities held by a foundation of which you are a trustee and donor,
provided that the beneficiaries are exclusively charitable and you have no
right to revoke the gift.
THESE EXAMPLES ARE NOT EXCLUSIVE. THERE ARE OTHER CIRCUMSTANCES IN WHICH YOU
MAY BE DEEMED TO HAVE A BENEFICIAL INTEREST IN A SECURITY. ANY QUESTIONS ABOUT
WHETHER YOU HAVE A BENEFICIAL INTEREST SHOULD BE DIRECTED TO THE COMPLIANCE
OFFICER OR MR. ZIEGLER.
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APPENDIX B
S. 270.17J-1 PERSONAL INVESTMENT ACTIVITIES OF INVESTMENT COMPANY PERSONNEL.
(a) Definitions. For purposes of this section:
(1) Access Person means:
(i) Any director, officer, general partner or Advisory Person of a
Fund or of a Fund's investment adviser.
(A) If an investment adviser is primarily engaged in a business
or businesses other than advising Funds or other advisory
clients, the term Access Person means any director, officer,
general partner or Advisory Person of the investment adviser
who, with respect to any Fund, makes any recommendation,
participates in the determination of which recommendation
will be made, or whose principal function or duties relate
to the determination of which recommendation
will be made, or who, in connection with his or her duties,
obtains any information concerning recommendations on
Covered Securities being made by the investment adviser to
any Fund.
(B) An investment adviser is "primarily engaged in a business or
businesses other than advising Funds or other advisory
clients" if, for each of its most recent three fiscal years
or for the period of time since its organization, whichever
is less, the investment adviser derived, on an
unconsolidated basis, more than 50 percent of its total
sales and revenues and more than 50 percent of its income
(or loss), before income taxes and extraordinary items, from
the other business or businesses.
(ii) Any director, officer or general partner of a principal
underwriter who, in the ordinary course of business, makes,
participates in or obtains information regarding, the purchase or
sale of Covered Securities by the Fund for which the principal
underwriter acts, or whose functions or duties in the ordinary
course of business relate to the making of any recommendation to
the Fund regarding the purchase or sale of Covered Securities.
(2) Advisory Person of a Fund or of a Fund's investment adviser means:
(i) Any employee of the Fund or investment adviser (or of any company
in a control relationship to the Fund or investment adviser) who,
in connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase or
sale of Covered Securities by a Fund, or whose functions relate
to the making of any recommendations with respect to the
purchases or sales; and
(ii) Any natural person in a control relationship to the Fund or
investment adviser who obtains information concerning
recommendations made to the Fund with regard to the purchase or
sale of Covered Securities by the Fund.
(3) Control has the same meaning as in section 2(a)(9) of the Act [15
U.S.C. 80a-2(a)(9)].
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APPENDIX B
(4) Covered Security means a security as defined in section 2(a)(36) of
the Act [15 U.S.C. 80a-2(a)(36)], except that it does not include:
(i) Direct obligations of the Government of the United States;
(ii) Bankers' acceptances, bank certificates of deposit,
commercial paper and high quality short-term debt
instruments, including repurchase agreements; and
(iii) Shares issued by open-end Funds.
(5) Fund means an investment company registered under the Investment
Company Act.
(6) An Initial Public Offering means an offering of securities
registered under the Securities Act of 1933 [15 U.S.C. 77a], the
issuer of which, immediately before the registration,
was not subject to the reporting requirements of sections 13 or
15(d) of the Securities Exchange Act of 1934 [15 U.S.C. 78m or
78o(d)].
(7) Investment Personnel of a Fund or of a Fund's investment adviser
means:
(i) Any employee of the Fund or investment adviser (or of any
company in a control relationship to the Fund or
investment adviser) who, in connection with his or her
regular functions or duties, makes or participates in
making recommendations regarding the purchase or sale of
securities by the Fund.
(ii) Any natural person who controls the Fund or investment
adviser and who obtains information concerning
recommendations made to the Fund regarding the purchase or
sale of securities by the Fund.
(8) A Limited Offering means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to section
4(2) or section 4(6) [15 U.S.C. 77d(2) or 77d(6)] or pursuant to
rule 504, rule 505, or rule 506 [17 CFR 230.504, 230.505, or
230.506] under the Securities Act of 1933.
(9) Purchase or sale of a Covered Security includes, among other
things, the writing of an option to purchase or sell a Covered
Security.
(10) Security Held or to be Acquired by a Fund means:
(i) Any Covered Security which, within the most recent 15
days:
(A) Is or has been held by the Fund; or
(B) Is being or has been considered by the Fund or its
investment adviser for purchase by the Fund; and
(ii) Any option to purchase or sell, and any security
convertible into or exchangeable for, a Covered Security
described in paragraph (a)(10)(i) of this section.
(b) Unlawful Actions. It is unlawful for any affiliated person of or principal
underwriter for a Fund, or any affiliated person of an investment adviser
of or principal underwriter for a Fund, in
B-2
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APPENDIX B
connection with the purchase or sale, directly or indirectly, by the person
of a Security Held or to be Acquired by the Fund:
(1) To employ any device, scheme or artifice to defraud the Fund;
(2) To make any untrue statement of a material fact to the Fund or omit to
state a material fact necessary in order to make the statements made
to the Fund, in light of the circumstances under which they are made,
not misleading;
(3) To engage in any act, practice or course of business that
operates or would operate as a fraud or deceit on the Fund; or
(4) To engage in any manipulative practice with respect to the Fund.
(c) Code of Ethics.
(1) Adoption and Approval of Code of Ethics.
(i) Every Fund (other than a money market fund or a Fund that does
not invest in Covered Securities) and each investment adviser of
and principal underwriter for the Fund, must adopt a written code
of ethics containing provisions reasonably necessary to prevent
its Access Persons from engaging in any conduct prohibited by
paragraph (b) of this section.
(ii) The board of directors of a Fund, including a majority of
directors who are not interested persons, must approve the code
of ethics of the Fund, the code of ethics of each investment
adviser and principal underwriter of the Fund, and any material
changes to these codes. The board must base its approval of a
code and any material changes to the code on a determination that
the code contains provisions reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by
paragraph (b) of this section. Before approving a code of a Fund,
investment adviser or principal underwriter or any amendment to
the code, the board of directors must receive a certification
from the Fund, investment adviser or principal underwriter that
it has adopted procedures reasonably necessary to prevent Access
Persons from violating the investment adviser's or principal
underwriter's code of ethics. The Fund's board must approve the
code of an investment adviser or principal underwriter
before initially retaining the services of the investment adviser
or principal underwriter. The Fund's board must approve a
material change to a code no later than six months after adoption
of the material change.
(iii) If a Fund is a unit investment trust, the Fund's principal
underwriter or depositor must approve the Fund's code of ethics,
as required by paragraph (c)(1)(ii) of this section. If the Fund
has more than one principal underwriter or depositor, the
principal underwriters and depositors may designate, in writing,
which principal underwriter or depositor must conduct the
approval required by paragraph (c)(1)(ii) of this section, if
they obtain written consent from the designated principal
underwriter or depositor.
(2) Administration of Code of Ethics.
(i) The Fund, investment adviser and principal underwriter must use
reasonable diligence and institute procedures reasonably
necessary to prevent violations of its code of ethics.
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APPENDIX B
(ii) No less frequently than annually, every Fund (other than a unit
investment trust) and its investment advisers and principal
underwriters must furnish to the Fund's board of directors, and
the board of directors must consider, a written report that:
(A) Describes any issues arising under the code of
ethics or procedures since the last report to the board of
directors, including, but not limited to, information about
material violations of the code or procedures and sanctions
imposed in response to the material violations; and
(B) Certifies that the Fund, investment adviser or principal
underwriter, as applicable, has adopted procedures
reasonably necessary to prevent Access Persons from
violating the code.
(3) Exception for Principal Underwriters. The requirements of paragraphs
(c)(1) and (c)(2) of this section do not apply to any principal
underwriter unless:
(i) The principal underwriter is an affiliated person of the Fund or
of the Fund's investment adviser; or
(ii) An officer, director or general partner of the principal
underwriter serves as an officer, director or general partner of
the Fund or of the Fund's investment adviser.
(d) Reporting Requirements of Access Persons.
(1) Reports Required. Unless excepted by paragraph (d)(2) of this section,
every Access Person of a Fund (other than a money market fund or a
Fund that does not invest in Covered Securities) and every Access
Person of an investment adviser of or principal underwriter for the
Fund, must report to that Fund, investment adviser or principal
underwriter:
(i) Initial Holdings Reports. No later than 10 days after
the person becomes an Access Person, the following information:
(A) The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct
or indirect beneficial ownership when the person became an
Access Person;
(B) The name of any broker, dealer or bank with whom the Access
Person maintained an account in which any securities were
held for the direct or indirect benefit of the Access Person
as of the date the person became an Access Person; and
(C) The date that the report is submitted by the Access Person.
(ii) Quarterly Transaction Reports. No later than 10 days after the
end of a calendar quarter, the following information:
(A) With respect to any transaction during the quarter in a
Covered Security in which the Access Person had any direct
or indirect beneficial ownership:
B-4
<PAGE>
APPENDIX B
(1) The date of the transaction, the title, the interest
rate and maturity date (if applicable), the number of
shares and the principal amount of each Covered
Security involved;
(2) The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
(3) The price of the Covered Security at which the
transaction was effected;
(4) The name of the broker, dealer or bank with or through
which the transaction was effected; and
(5) The date that the report is submitted by the Access
Person.
(B) With respect to any account established by the Access Person
in which any securities were held during the quarter for the
direct or indirect benefit of the Access Person:
(1) The name of the broker, dealer or bank with whom the
Access Person established the account;
(2) The date the account was established; and
(3) The date that the report is submitted by the Access
Person.
(iii) Annual Holdings Reports. Annually, the following information
(which information must be current as of a date no more than 30
days before the report is submitted):
(A) The title, number of shares and principal amount of each
Covered Security in which the Access Person had any direct
or indirect beneficial ownership;
(B) The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held
for the direct or indirect benefit of the Access Person; and
(C) The date that the report is submitted by the Access Person.
(2) Exceptions from Reporting Requirements.
(i) A person need not make a report under paragraph (d)(1) of this
section with respect to transactions effected for, and Covered
Securities held in, any account over which the person has no
direct or indirect influence or control.
(ii) A director of a Fund who is not an "interested person" of the
Fund within the meaning of section 2(a)(19) of the Act [15 U.S.C.
80a-2(a)(19)], and who would be required to make a report solely
by reason of being a Fund director, need not make:
(A) An initial holdings report under paragraph (d)(1)(i) of this
section and an annual holdings report under paragraph
(d)(1)(iii) of this section; and
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<PAGE>
APPENDIX B
(B) A quarterly transaction report under paragraph (d)(1)(ii) of
this section, unless the director knew or, in the ordinary
course of fulfilling his or her official duties as a Fund
director, should have known that during the 15-day period
immediately before or after the director's transaction in
a Covered Security, the Fund purchased or sold the Covered
Security, or the Fund or its investment adviser considered
purchasing or selling the Covered Security.
(iii) An Access Person to a Fund's principal underwriter need not make
a report to the principal underwriter under paragraph (d)(1) of
this section if:
(A) The principal underwriter is not an affiliated person of the
Fund (unless the Fund is a unit investment trust) or any
investment adviser of the Fund; and
(B) The principal underwriter has no officer, director or
general partner who serves as an officer, director or
general partner of the Fund or of any investment adviser of
the Fund.
(iv) An Access Person to an investment adviser need not make a
quarterly transaction report to the investment adviser under
paragraph (d)(1)(ii) of this section if all the information in
the report would duplicate information required to be recorded
under S. 275.204-2(a)(12) or 275.204-2(a)(13) of this chapter.
(v) An Access Person need not make a quarterly transaction report
under paragraph (d)(1)(ii) of this section if the report would
duplicate information contained in broker trade confirmations or
account statements received by the Fund, investment adviser or
principal underwriter with respect to the Access Person in the
time period required by paragraph (d)(1)(ii), if all of the
information required by that paragraph is contained in the broker
trade confirmations or account statements, or in the records
of the Fund, investment adviser or principal underwriter.
(3) Review of Reports. Each Fund, investment adviser and principal
underwriter to which reports are required to be made by paragraph
(d)(1) of this section must institute procedures by which appropriate
management or compliance personnel review these reports.
(4) Notification of Reporting Obligation. Each Fund, investment adviser
and principal underwriter to which reports are required to be made by
paragraph (d)(1) of this section must identify all Access Persons who
are required to make these reports and must inform those Access
Persons of their reporting obligation.
(5) Beneficial Ownership. For purposes of this section, beneficial
ownership is interpreted in the same manner as it would be under S.
240.16a-1(a)(2) of this chapter in determining whether a person is the
beneficial owner of a security for purposes of section 16 of the
Securities Exchange Act of 1934 [15 U.S.C. 78p] and the rules and
regulations thereunder. Any report required by paragraph (d) of this
section may contain a statement that the report will not be construed
as an admission that the person making the report has any direct or
indirect beneficial ownership in the Covered Security to which the
report relates.
(e) Pre-approval of Investments in IPOs and Limited Offerings. Investment
Personnel of a Fund or its investment adviser must obtain approval from the
Fund or the Fund's investment adviser before
B-6
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APPENDIX B
directly or indirectly acquiring beneficial ownership in any securities in
an Initial Public Offering or in a Limited Offering.
(f) Recordkeeping Requirements.
(1) Each Fund, investment adviser and principal underwriter that is
required to adopt a code of ethics or to which reports are required to
be made by Access Persons must, at its principal place of business,
maintain records in the manner and to the extent set out in this
paragraph (f), and must make these records available to the Commission
or any representative of the Commission at any time and from time to
time for reasonable periodic, special or other examination:
(A) A copy of each code of ethics for the organization that is in
effect, or at any time within the past five years was in effect,
must be maintained in an easily accessible place;
(B) A record of any violation of the code of ethics, and of any
action taken as a result of the violation, must be maintained in
an easily accessible place for at least five years after the end
of the fiscal year in which the violation occurs;
(C) A copy of each report made by an Access Person as required by
this section, including any information provided in lieu of the
reports under paragraph (d)(2)(v) of this section, must be
maintained for at least five years after the end of the fiscal
year in which the report is made or the information is provided,
the first two years in an easily accessible place;
(D) A record of all persons, currently or within the past
five years, who are or were required to make reports under
paragraph (d) of this section, or who are or were responsible for
reviewing these reports, must be maintained in an easily
accessible place; and
(E) A copy of each report required by paragraph (c)(2)(ii) of this
section must be maintained for at least five years after the end
of the fiscal year in which it is made, the first two years in an
easily accessible place.
(2) A Fund or investment adviser must maintain a record of any decision,
and the reasons supporting the decision, to approve the acquisition by
investment personnel of securities under paragraph (e), for at least
five years after the end of the fiscal year in which the approval is
granted.
B-7
<PAGE>
ATTACHMENT A
ACKNOWLEDGMENT OF RECEIPT OF CODE OF ETHICS
CODE OF ETHICS. Artisan Funds, Inc. ("Artisan Funds"), Artisan Partners
Limited Partnership ("Artisan Partners") and Artisan Distributors ("Artisan
Distributors") and have adopted a written Code of Ethics and Policy and
Procedures to Prevent Misuse of Inside Information (the "Code") to avoid
potential conflicts of interest by Artisan Partners and Artisan Distributors
personnel and to govern the use and handling of material non-public information.
A copy of the Code is attached to this acknowledgement. As a condition of your
continued employment with Artisan Partners or Artisan Distributors, and the
retention of your position, if any, as an officer of Artisan Funds, you are
required to read, understand and abide by the Code.
COMPLIANCE PROGRAM. The Code requires that all personnel furnish to
Artisan Partners' Compliance Officer the names and addresses of any firm with
which you have any investment account. You are also required to furnish to
Artisan Partners' Compliance Officer copies of your monthly or quarterly account
statements, or other documents, showing all purchases or sales of securities in
any such account, or which are effected by you or for your benefit, or the
benefit of any member of your household. Additionally, you are required to
furnish a report of your personal securities holdings within ten days of
commencement of your employment with Artisan Partners and annually thereafter.
These requirements apply to any investment account, such as an account at a
brokerage house, trust account at a bank, custodial account or similar types of
accounts.
Artisan Partners' compliance program also requires that you report any
contact with any securities issuer, government or its personnel, or others,
that, in the usual course of business, might involve material non-public
financial information. Only investment personnel are permitted to make such
contacts. The Code requires that you bring to the attention of the Compliance
Officer any information you receive from any source which might be material non-
public information.
Any questions concerning the Code should be directed to Artisan Partners'
Compliance Officer.
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I affirm that I have read and understand the Code of Ethics and Policy and
Procedures to Prevent Misuse of Inside Information ("Code"). I agree to the
terms and conditions set forth in the Code.
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Signature Date
<PAGE>
ATTACHMENT B
ANNUAL AFFIRMATION OF COMPLIANCE
I affirm that:
1. I have again read and, during the past year to the best of my
knowledge, have complied with the Code of Ethics and Policy and
Procedures to Prevent Misuse of Inside Information ("Code").
2. I have provided to Artisan Partners' Compliance Officer the names and
addresses of each investment account that I have with any firm,
including, but not limited to, broker-dealers, banks and others.
(List of known accounts attached.)
3. I have provided to Artisan Partners' Compliance Officer copies of
account statements or other reports showing each and every transaction
in any security in which I have a beneficial interest, as defined in
the Code, during the most recently ended calendar year
or
During the most recent calendar year there were no transactions in any
security in which I had a beneficial interest required to be reported
pursuant to the Code.
4. I have provided to the Compliance Officer a report of my personal
securities holdings as of the end of the most recent calendar year,
including all required information for each security in which I have
any direct or indirect beneficial ownership.
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Signature Date
<PAGE>
