-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, J+RTqDunUYUxP5exMjZqYu4AOKVv/1qy73M8xotl7BJZoi/uB0gAZotlhXPtxz6a 9JfUU1nzV7gOXx3yXFYiMg== 0000950131-95-003356.txt : 19951130 0000950131-95-003356.hdr.sgml : 19951130 ACCESSION NUMBER: 0000950131-95-003356 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 19951127 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARTISAN FUNDS INC CENTRAL INDEX KEY: 0000935015 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 391811840 STATE OF INCORPORATION: WI FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-88316 FILM NUMBER: 95596498 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-08932 FILM NUMBER: 95596548 BUSINESS ADDRESS: STREET 1: 1000 NORTH WATER ST STREET 2: STE 1770 CITY: MILWAUKEE STATE: WI ZIP: 53202 BUSINESS PHONE: 4143906100 MAIL ADDRESS: STREET 1: 1000 NORTH WATER ST STREET 2: SUITE 1770 CITY: MILWAUKEE STATE: WI ZIP: 53202 FORMER COMPANY: FORMER CONFORMED NAME: ZIEGLER FUNDS INC DATE OF NAME CHANGE: 19950109 485APOS 1 ARTISAN FUND INCORPORATED As filed with the Securities and Exchange Commission on November 27, 1995 1933 Act Reg. No. 33-88316 1940 Act File No. 811-8932 ________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A __________________________________ REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] POST-EFFECTIVE AMENDMENT NO. 3 [X] and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ] AMENDMENT NO. 5 [X] _________________________________ Artisan Funds, Inc. (Registrant) 1000 North Water Street, Suite 1770 Milwaukee, Wisconsin 53202 Telephone Number: (414) 390-6100 Andrew A. Ziegler Janet D. Olsen Artisan Funds, Inc. Bell, Boyd & Lloyd 1000 North Water Street, #1770 Three First National Plaza, #3300 Milwaukee, Wisconsin 53202 Chicago, Illinois 60602 (Agents for Service) ____________________________ Amending Parts A, B, and C and filing Exhibits. It is proposed that this filing will become effective: ____ immediately upon filing pursuant to rule 485(b) ____ on __________ pursuant to rule 485(b) ____ 60 days after filing pursuant to rule 485(a)(1) ____ on _________________ pursuant to rule 485(a)(1) ____ 75 days after filing pursuant to rule 485(a)(2) _X__ on December 27, 1995 pursuant to rule 485(a)(2)/*/ Registrant has previously elected to register an indefinite number of its shares of common stock of the series Artisan Small Cap Fund and Artisan International Fund pursuant to Rule 24f-2. Registrant filed its Rule 24f-2 Notice for the fiscal year ended June 30, 1995 on November 14, 1995. Page 1 of ___ pages (including exhibits). The index of exhibits is on sequential page ___. - -------------------- /*/ Pursuant to a request for acceleration. Artisan Funds, Inc. Cross-reference sheet pursuant to rule 495(a) of Regulation C Item Location or caption* - ---- ------------------------------------------ Part A ------ 1(a)-(b) Front cover 2(a) Expenses and Performance - Expenses (b)-(c) Contents; The Fund at a Glance 3(a) Not applicable (b) Not applicable (c)-(d) Expenses and Performance - Performance 4(a)(i) Organization (ii) The Fund at a Glance; The Fund's Investment Philosophy; Securities, Investment Practices, and Risks (b) Securities, Investment Practices and Risks (c) The Fund at a Glance - Who May Want to Invest; The Fund's Investment Philosophy; Securities, Investment Practices and Risks 5(a) Organization (b) Organization; Management; The Fund in Detail - Expenses; Expenses and Performance - Expenses; How to Contact Us (c) Organization; Management (d) Not applicable (e) How to Buy Shares; How to Sell Shares; How to Contact Us (f) Expenses and Performance - Expenses; The Fund in Detail - Expenses (g) Not applicable 5A Not applicable 6(a) Organization; How to Buy Shares; How to Sell Shares (b)-(d) Not applicable (e) Doing Business with the Fund; How to Buy Shares; How to Sell Shares; Shareholder and Account Policies - Statements and Reports; How to Contact Us (f)-(g) Dividends, Capital Gains, and Taxes i 7 Doing Business with the Fund; How to Buy Shares; Shareholder and Account Policies - Purchases (a) Not applicable (b) How to Buy Shares; Shareholder and Account Policies - Share Price (c) Not applicable (d) How to Buy Shares (e)-(f) Not applicable 8(a) Doing Business with the Fund; How to Sell Shares; Shareholder and Account Policies - Redemptions (b) Shareholder and Account Policies - Purchases (c)-(d) Shareholder and Account Policies - Redemptions 9 Not applicable ii Item Location or caption* --------- ------------------------------------------ Part B (Statement of Additional Information) -------------------------------------------- 10 Front cover 11 Front cover 12 Part A - Organization 13(a)-(c) Investment Objectives and Policies; Investment Techniques and Risks; Investment Restrictions (d) Investment Techniques and Risks 14(a)-(b) Directors and Officers (c) Not applicable 15(a)-(b) Not applicable (c) Directors and Officers 16(a)(i) Investment Adviser (ii) Directors and Officers (iii) Investment Adviser (b) Investment Adviser (c)-(g) Not applicable (h) Custodian; Independent Accountants (i) Not applicable 17(a) Portfolio Transactions (b) Not applicable (c)-(d) Portfolio Transactions (e) Not applicable 18(a) The Fund (b) Not applicable 19(a)-(c) Purchasing and Redeeming Shares 20 Additional Tax Information 21 Not applicable 22(a) Not applicable (b) Performance Information 23 Financial Statements iii THE PROSPECTUS AND STATEMENT OF ADDITIONAL INFORMATION RELATING TO ARTISAN SMALL CAP FUND, A SERIES OF ARTISAN FUNDS, INC., IS NOT AFFECTED BY THE FILING OF THIS POST-EFFECTIVE AMENDMENT NO. 3. iv ARTISAN INTERNATIONAL FUND No Load Fund Please read this prospectus before investing and keep it on file for ARTISAN INTERNATIONAL FUND invests future reference. It contains for maximum long-term capital growth. important information, including how The Fund seeks to achieve its the Fund invests and the services objective by investing primarily in available to shareholders. the stocks of foreign companies. A Statement of Additional Information dated the date of this prospectus has been filed with the Securities and Exchange Commission and is incorporated herein by reference (is legally considered a part of this prospectus). The Statement of Additional Information is available free upon request by calling 1-800-344-1770. LIKE ALL MUTUAL FUNDS, THESE PROSPECTUS SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND DECEMBER 28, 1995 EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION ARTISAN FUNDS, INC. PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY 1000 NORTH WATER STREET, SUITE 1770 REPRESENTATION TO THE CONTRARY IS A MILWAUKEE, WISCONSIN 53202 CRIMINAL OFFENSE. CONTENTS THE FUND AT A GLANCE 3 GOAL, STRATEGY, MANAGEMENT, WHO MAY WANT TO INVEST AND RISKS AND RETURNS EXPENSES AND PERFORMANCE 5 EXPENSES AND PERFORMANCE YOUR ACCOUNT 6 WAYS TO SET UP YOUR ACCOUNT 7 DOING BUSINESS WITH THE FUND 7 HOW TO BUY SHARES AND MINIMUM INVESTMENTS 9 HOW TO SELL SHARES SHAREHOLDER AND ACCOUNT 11 STATEMENTS AND REPORTS, SHARE PRICE AND POLICIES PURCHASES 12 REDEMPTIONS, ACCOUNT REGISTRATION AND TELEPHONE TRANSACTIONS DIVIDENDS, CAPITAL GAINS, 14 DISTRIBUTION OPTIONS AND TAXES AND TAXES 15 FOREIGN INCOME TAXES AND UNDERSTANDING DISTRIBUTIONS THE FUND IN DETAIL 16 ORGANIZATION AND MANAGEMENT 17 EXPENSES AND THE FUND'S INVESTMENT PHILOSOPHY 18 SECURITIES, INVESTMENT PRACTICES AND RISKS 19 EQUITY SECURITIES AND FOREIGN SECURITIES 20 DEBT SECURITIES; CONVERTIBLE SECURITIES AND MANAGING INVESTMENT EXPOSURE 22 ILLIQUID AND RESTRICTED SECURITIES AND DIVERSIFICATION; LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES; BORROWING; OTHER INVESTMENT COMPANIES 23 PORTFOLIO TURNOVER 2 Prospectus THE FUND AT A GLANCE GOAL ARTISAN INTERNATIONAL FUND (THE "FUND"), ONE OF THE SERIES OF FUNDS OF ARTISAN FUNDS, INVESTS FOR MAXIMUM LONG-TERM CAPITAL GROWTH. STRATEGY The Fund generally invests in the stocks of foreign companies and uses its own detailed research process to identify investment opportunities. The Fund's research method is both "top-down" and "bottom-up." That means that country selection and stock selection are equally important parts of the investment process. Country selection involves identifying the regions and countries of the world which are enjoying improving or rapid economic growth. The Fund avoids countries that, while showing favorable economic growth, appear to have overvalued markets. Economic growth is determined principally from the standpoint of gross domestic product growth, corporate profitability, current account and currency issues, interest rates, and social changes. Having identified favorable areas of the world for growth, the Fund seeks out the stocks of companies best positioned to capitalize on that growth. In this process, the Fund emphasizes well-managed companies with dominant or increasing market share in strong industries. It focuses on companies with above-average financial characteristics and accelerating earnings per share. The Fund also analyzes relative valuations using a variety of criteria such as price-to- earnings ratios and avoids stocks that are trading at unsustainable or unusually high valuations. MANAGEMENT: Artisan Partners Limited Partnership ("Artisan Partners"), located in Milwaukee, Wisconsin, selects investments for the Fund. Mark Yockey, vice president of Artisan Funds, is the portfolio manager and is primarily responsible for the day-to-day management of the Fund. He makes all investment decisions with the assistance of a team of Artisan Partners investment research and trading professionals. Immediately prior to joining Artisan Partners, Mr. Yockey was the portfolio manager of the United International Growth Fund from January 1990 through December 1995, and throughout that time period had full discretionary authority over the selection of investments for that fund. Average annual returns for that fund, through September 30, 1995 were: UNITED INTERNATIONAL GROWTH FUND(a) One Year 6.66% Three Years 19.67% Five Years 15.82% (a) Assuming reinvestment of dividends Of course, historical performance may not be indicative of future performance even though Mr. Yockey intends to utilize a similar approach to achieve capital growth in the Fund. The above-stated average annual returns for United International Growth Fund have been adjusted to take into account certain expenses of that fund. The expenses of the Fund may differ from the expenses of United International Growth Fund. This means that varying management, accounting, transfer agent, custodian and other fees as well as different asset size will affect results. WHO MAY WANT TO INVEST Artisan International Fund is designed for investors who want maximum long-term capital growth rather than income and who have the long-term investment outlook needed for investing in the stocks of foreign companies. RISKS AND RETURNS Historically, stocks have shown greater growth than other types of securities. In the short term, however, stock prices may fluctuate widely in response to company, market or economic news. Investing in foreign securities involves certain risks not typically associated with investing in U.S. securities, including fluctuation of exchange rates of foreign currencies, differences in accounting and financial reporting standards, differences in settlement and trading 3 Prospectus practices, less liquidity in some markets, and generally higher transaction costs. The Fund does not pursue income and is not by itself a balanced investment plan. The Fund seeks to limit risk by selecting companies with experienced management, positive cash flows and sustainable growth prospects and diversifying its holdings, to avoid concentration in any one country, industry or stock. The value of the Fund's investments and the return it generates vary from day to day. Performance depends on Artisan Partners' skill in selecting individual stocks, as well as general market and economic conditions in the countries in which the Fund is invested. When you sell your shares, they may be worth more or less than you paid for them. See "Securities, Investment Practices and Risks" on page 18 for the types of investments the Fund may make, and "Your Account" on page 7 for how to buy and redeem shares. 4 Prospectus EXPENSES AND PERFORMANCE EXPENSES SHAREHOLDER TRANSACTION EXPENSES are charges you pay when you buy or sell shares of the Fund. TRANSACTION EXPENSES Maximum sales charge on purchases and reinvested dividends................... NONE Deferred sales charge on redemptions....... NONE Redemption fee............................. NONE ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS). The Fund pays its own operating expenses, including a management fee to Artisan Partners. The Fund also incurs other expenses for services such as maintaining shareholder records and furnishing shareholder statements and reports. The Fund's expenses are factored into its share price or dividends, are subtracted from the share price daily, and are not charged directly to shareholder accounts. The Fund expects to incur the following expenses: Management fee............................. 1.00% 12b-1 fee.................................. None Other expenses (a)......................... 1.10% Total operating expenses................... 2.10% _______ (a) A shareholder requesting payment of redemption proceeds by wire must pay the cost of the wire (currently $5.00). Artisan Partners has undertaken to reimburse the Fund for any ordinary operating expenses in excess of 2.50% of average net assets annually. The purpose of the expense table is to help an investor understand the costs and expenses associated with investing in the Fund. The estimate of "Other expenses" is based on the estimated expenses the Fund expects to incur during its initial full fiscal year. EXAMPLE: Let's say, hypothetically, that the Fund's annual return is 5% and that its operating expenses are exactly as shown in the column to the left. For every $1,000 you invested, here's how much you would have paid in total expenses if you closed your account after the number of years indicated: After 1 year....................... $22.05 After 3 years...................... $64.77 This example illustrates the effect of expenses, but is not meant to suggest actual or expected costs or returns, all of which may be more or less than those shown in the example. Because the Fund is new, the above amounts are estimates. UNDERSTANDING EXPENSES Operating a mutual fund requires paying for portfolio management, shareholder statements, tax reporting, and other services. These costs are paid from the Fund's assets; any quoted share price or return is after expenses. PERFORMANCE Mutual fund performance is commonly measured as TOTAL RETURN. Total return is the change in value of an investment over a given period, assuming reinvestment of any dividends and capital gains. Total return reflects the Fund's performance over a stated period of time. An AVERAGE ANNUAL TOTAL RETURN is a hypothetical rate of return that, if achieved annually, would have produced the same total return if performance had been constant over the entire period. Average annual total return smoothes out variations in performance; it is not the same as actual year-by-year results. Total return and average annual total return are based on past results and are not a prediction of future performance. They do not include the effect of income taxes paid by shareholders. The Fund may sometimes show its performance compared to certain performance rankings, averages or stock indexes (described more fully in the Statement of Additional Information). 5 Prospectus WAYS TO SET UP YOUR ACCOUNT INDIVIDUAL OR JOINT OWNERSHIP For your general investment needs Individual accounts are owned by one person. Joint accounts can have two or more owners. - -------------------------------------------------------------------------------- RETIREMENT To defer taxes on your retirement savings Retirement plans allow individuals to defer taxes on investment income and capital gains. Contributions to these accounts may be tax deductible. RETIREMENT ACCOUNTS REQUIRE SPECIAL APPLICATIONS. . INDIVIDUAL RETIREMENT ACCOUNTS (IRAS) allow anyone of legal age and under 70 1/2 with earned income to invest up to $2,000 per tax year. If your spouse has (or elects to be treated as having) earned income of less than $250 per year, you can invest up to a total of $2,250 in a "spousal IRA," split between you and your spouse so that neither of you has invested more than $2,000. . ROLLOVER IRAS retain special tax advantages for certain distributions from employer-sponsored retirement plans. . SIMPLIFIED EMPLOYEE PENSION PLANS (SEP-IRAS) allow small business owners or those with self-employment income to make tax-deductible contributions of up to $22,500 per year for themselves and any eligible employees. . OTHER RETIREMENT PLANS - The funds may be used as investments in other kinds of retirement plans, including Keogh or corporate profit sharing and money purchase plans, 403(b) plans and 401(k) plans. All of these accounts need to be established by the trustee of the plan. The Fund does not offer prototypes of these plans. An IRA disclosure statement is delivered in advance of opening any IRA account and contains information unique to retirement accounts. It also contains a summary of the custodian fees which may be incurred for set-up and maintenance of an IRA account. - -------------------------------------------------------------------------------- GIFT OR TRANSFER TO A MINOR (UGMA, UTMA) To invest for a minor's education or other future needs These custodial accounts provide a way to give money to a minor. The account application should include the child's social security number. - -------------------------------------------------------------------------------- TRUST OR ESTABLISHED EMPLOYEE BENEFIT OR PROFIT-SHARING PLAN For money being invested by a trust, employee benefit plan, or profit-sharing plan The trust or plan must be established before an account can be opened. The date of the trust or plan should be included on the new account application. - -------------------------------------------------------------------------------- BUSINESS OR ORGANIZATION For investment needs of corporations, associations, partnerships, institutions, or other groups You will need to send a certified corporate resolution (indicating which officers are authorized to act) with your application. 6 Prospectus YOUR ACCOUNT - CONTINUED YOUR ACCOUNT DOING BUSINESS WITH THE FUND The Fund provides shareholders with service 7 days a week, 24 hours a day. To reach the Fund, call 1-800-344-1770. HOW TO BUY SHARES YOU CAN OPEN A NEW ACCOUNT BY . mailing in an application with a check for $1,000 or more. . exchanging $1,000 or more from your existing account with Artisan Small Cap Fund, another series of Artisan Funds. For more details, see "Telephone Exchange Plan" on page 13. AFTER YOUR ACCOUNT IS OPEN, YOU MAY ADD TO IT BY: . mailing a check or money order along with the form at the bottom of your account statement, or a letter; . moving money from your bank account by telephone provided you have elected this privilege on your new account application; . moving an investment from Artisan Small Cap Fund to the Fund by telephone provided you have elected this privilege; . wiring money from your bank; or . making automatic investments. The Fund is a NO-LOAD FUND, which means you pay no sales commissions of any kind. The price you pay for shares is the net asset value per share next calculated after your investment is received and accepted. An order is considered received when the application (for a new account) or information identifying the account and the money are received. See "Shareholder and Account Policies" for information about share price. The Fund does not issue share certificates. MINIMUM INVESTMENTS TO OPEN AN ACCOUNT $1,000 TO ADD TO AN ACCOUNT $ 50 MINIMUM BALANCE $ 500 The initial minimum investment will be waived if you participate in the Automatic Investment Plan. Because it is very expensive for the Fund to maintain small accounts (and that cost is borne by all shareholders), the Fund reserves the right to close your account if the value is less than $500 (or $1,000 if you discontinued the Automatic Investment Plan before your account reached $1,000). Before closing a small account, the Fund will notify you and allow you at least 30 days to bring the value of the account up to the minimum. 7 Prospectus HOW TO BUY SHARES MAIL - -------------------------------------------------------------------------------- TO OPEN AN ACCOUNT: . Complete and sign the new account application. Make your check or money order payable to "Artisan Funds" or "Artisan International Fund." Mail to the address on the new account application OR FOR OVERNIGHT DELIVERY: Artisan Funds c/o Boston Financial Data Services 2 Heritage Drive Quincy, MA 02171 TO ADD TO AN ACCOUNT: . Make your check or money order payable to "Artisan Funds" or "Artisan International Fund." Put your account number on your check. Mail check and form at the bottom of your account statement (or a letter) to the address on your account statement or for OVERNIGHT DELIVERY: Artisan Funds c/o Boston Financial Data Services 2 Heritage Drive Quincy, MA 02171 - -------------------------------------------------------------------------------- PHONE 1-800-344-1770 - -------------------------------------------------------------------------------- TO OPEN AN ACCOUNT: . You may establish the telephone transaction option when you open an account by electing the option on your new account application. . You may not open a new account by phone. However, if you elected the telephone transaction option when you opened your account with Artisan Small Cap Fund, you may exchange an investment of at least $1,000 from that fund into the Fund. TO ADD TO AN ACCOUNT: . If you did not elect the telephone transaction option on your new account application for the Fund or for Artisan Small Cap Fund, complete the shareholder options form to make investments by phone from $50 to $25,000 into your account, and to participate in the telephone exchange plan. - -------------------------------------------------------------------------------- WIRE - -------------------------------------------------------------------------------- TO OPEN AN ACCOUNT: . Call 1-800-344-1770 for instructions on opening an account by wire. TO ADD TO AN ACCOUNT: . Call 1-800-344-1770 for instructions on adding to an account by wire. - -------------------------------------------------------------------------------- AUTOMATIC INVESTMENT PLAN - -------------------------------------------------------------------------------- TO OPEN AN ACCOUNT: . If you sign up for the Automatic Investment Plan when you open your account, the minimum initial investment will be waived. . Complete and sign the Automatic Investment Plan section of the new account application. TO ADD TO AN ACCOUNT: . Sign up for the Automatic Investment Plan on the shareholder options form or call 1-800-344-1770 for instructions on how to add to your existing account. - -------------------------------------------------------------------------------- 8 Prospectus YOUR ACCOUNT - CONTINUED HOW TO SELL SHARES You can arrange to take money out of your account at any time by selling (redeeming) some or all of your shares. Your shares will be sold at the next net asset value per share (share price) calculated after your order is received and accepted. See "Shareholder and Account Policies" for more information about share price. To sell shares in a regular (non-IRA) account, you may use any of the methods described here. To sell shares in an IRA account, your request must be made in writing. If you need an IRA distribution form, call us at 1-800-344-1770. SELLING SHARES IN WRITING Write a "letter of instruction" with: . each owner's name and address, . the fund's name, . your account number, . the dollar amount or number of shares to be redeemed, and . the signature of each owner as it appears on the account. Mail your letter to: Artisan Funds c/o Boston Financial Data Services P.O. Box 8412 Boston, MA 02266-8412 If you are using overnight mail: Artisan Funds c/o Boston Financial Data Services 2 Heritage Drive Quincy, MA 02171 CERTAIN REDEMPTION REQUESTS MUST INCLUDE A SIGNATURE GUARANTEE, designed to protect you and the Fund from fraud. Your request must be made in writing and include a signature guarantee if any of the following situations applies: . you wish to redeem more than $25,000 worth of shares; . if you add/change your name or add/remove an owner on your account; . if you add/change the beneficiary on your account; . the check is being mailed to an address different than one on your account (record address); . the check is being made payable to someone other than the account owner; . when you add the telephone redemption option to your existing account; . if you transfer the ownership of your account; or . if you have changed the address on the account by phone within the last 60 days. You should be able to obtain a signature guarantee from a bank, broker, dealer, credit union (if authorized under state law), securities exchange or association, clearing agency, or savings association. A NOTARY PUBLIC CANNOT PROVIDE A SIGNATURE GUARANTEE. 9 Prospectus HOW TO SELL SHARES SPECIAL REQUIREMENTS NOTE: Some redemptions require signature guarantees. See page 12. - ------------------------------------------------------------------------------- MAIL - ------------------------------------------------------------------------------- Individual, Joint . The letter of instruction must be signed by Owners, Sole all persons required to sign for transactions, Proprietorships, (usually, all owners of the account) exactly as UGMA, UTMA their names appear on the account. Trust . The letter of instruction must include the signatures of all trustees. All Others . Call 1-800-344-1770 for instructions. - ------------------------------------------------------------------------------- PHONE 1-800-344-1770 - ------------------------------------------------------------------------------- All accounts except IRAs . You automatically have the telephone redemption option (which allows you to redeem at least $500 and up to $25,000 worth of shares per day by phone) unless you declined it on your new account application. If you declined the telephone redemption option, call 1-800-344-1770 for instructions on how to add it. . All trades must be placed between 8:00 a.m. and 4:00 p.m. est. - ------------------------------------------------------------------------------- WIRE - ------------------------------------------------------------------------------- All account types . We will transmit payment by wire for a fee except IRAs (currently $5.00) to a pre-authorized bank account. Usually, the funds will arrive at your bank the next business day. - ------------------------------------------------------------------------------- SYSTEMATIC WITHDRAWALS - ------------------------------------------------------------------------------- All account types . Sign up for systematic withdrawals except IRAs (distributions from your account at regular intervals in specified dollar amounts of at least $50) by calling 1-800-344-1770 for instructions on how to add this option. . You must have $5,000 in your account before you are eligible to sign up for this option. If the amount in your account is not sufficient to meet a withdrawal, the remaining amount in the account will be redeemed. 10 Prospectus SHAREHOLDER AND ACCOUNT POLICIES STATEMENTS AND REPORTS Statements and reports that the Fund sends to you include: . Confirmation statements (after every transaction in your account or change in your account registration); . Account statements (quarterly); . Annual and semi-annual reports with financial statements; and . Year-end tax statements. We recommend that you keep each quarterly account statement and, especially, each calendar year-end statement with your other important financial papers since you may need to refer to them at a later date for tax purposes. If you need copies of current or preceding year statements call 1-800-344-1770. Copies of statements for earlier years are available and are subject to a $10 processing fee. SHARE PRICE THE FUND IS OPEN FOR BUSINESS each day the New York Stock Exchange ("NYSE") is open. THE OFFERING PRICE (price to buy one share) and REDEMPTION PRICE (price to sell one share) are the same, and represent the Fund's net asset value per share calculated at the next Closing Time after receipt of your purchase or redemption order. Closing Time is the time of the close of regular session trading on the NYSE, which is usually 3:00 p.m., Central time but is sometimes earlier. THE FUND'S NET ASSET VALUE PER SHARE is the value of a single share, and is computed by adding up the value of the Fund's investments, cash, and other assets, subtracting its liabilities, and then dividing the result by the number of shares outstanding. Fund securities and assets are valued primarily on the basis of market quotations from the primary market in which they are traded or, if quotations are not readily available, by a method that the board of directors believes accurately reflects a fair value. Values of foreign securities are translated from the local currency into U.S. dollars using current exchange rates. Trading in securities on European and Far Eastern securities exchanges and over- the-counter markets is normally completed at various times before the close of business on each day on which the NYSE is open. Trading of these securities may not take place on every NYSE business day. In addition, trading may take place in various foreign markets on Saturdays or on other days when the NYSE is not open and on which the Fund's net asset value is not calculated. Therefore, such calculation does not take place contemporaneously with the determination of the prices of many of the portfolio securities used in such calculation and the value of the Fund's portfolio may be significantly affected on days when shares of the Fund may not be purchased or redeemed. PURCHASES . All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks. . The Fund does not accept cash, credit cards or third-party checks. . If your check or telephone purchase order does not clear, your purchase will be cancelled and you will be liable for any losses or fees the Fund or its transfer agent incurs. . Your ability to make automatic investments and telephone purchases may 11 Prospectus be immediately terminated if any item is unpaid by your financial institution. . THE FUND RESERVES THE RIGHT TO reject any purchase order. For example, a purchase order may be refused if, in Artisan Partners' opinion, it is so large that it would disrupt management of the Fund. CERTAIN FINANCIAL INSTITUTIONS that have entered into sales agreements with the Fund may enter confirmed purchase orders or redemption requests on behalf of customers on an expedited basis, including orders by phone, with payment to follow no later than the time when the Fund is priced on the following business day. If payment is not received by that time, the financial institution could be held liable for resulting fees or losses. These institutions may impose charges for their services, and those charges could constitute a significant portion of a smaller account. REDEMPTIONS . Normally, redemption proceeds will be mailed within seven business days after receipt of the request for redemption. . The Fund may hold payment on redemptions until it is reasonably satisfied that it has received payment for a recent purchase made by check or by an automatic investment or telephone purchase, which can take up to fifteen days. . If you make a telephone redemption, the Fund will send payment for your redemption one of three ways: (i) by mail; (ii) by Electronic Funds Transfer (EFT) to a pre-authorized bank account; or (iii) to your bank account by wire transfer. The cost of the wire (currently $5.00) will be deducted from the payment. Your bank also may impose a fee for the incoming wire. Payment by EFT will arrive usually at your bank two banking days after your call. Payment by wire is credited usually to your bank account on the next business day after your call. . Redemptions may be suspended or payment dates postponed on days when the NYSE is closed (other than weekends or holidays), when trading on the NYSE is restricted, or as permitted by the SEC. If the Fund sends you a check (paying for a redemption, systematic withdrawal payment, or a dividend or capital gain distribution you elected to receive in cash) and the check is returned "undeliverable" or remains uncashed for six months, the check will be cancelled and the proceeds will be reinvested in the Fund at the net asset value per share on the date of cancellation. In addition, after that six-month period, your systematic withdrawal payments will be cancelled and future withdrawals will occur only when requested, or your cash election will automatically be changed and future dividends and distributions will be reinvested in your account. ACCOUNT REGISTRATION ADDRESS CHANGES for your account may be made by writing us a letter or by phoning us at 1-800-344-1770. The Fund will send a written confirmation of the change to both your old and new addresses. No telephone redemptions may be made for 60 days after a change of address by phone. During those 60 days, a signature guarantee will be required for any written redemption request unless your change of address was made in writing with a signature guarantee. TELEPHONE TRANSACTIONS GENERAL YOU MAY INITIATE MANY TRANSACTIONS, INCLUDING EXCHANGES, PURCHASES AND REDEMPTIONS, BY TELEPHONE. The Fund will not be responsible for any losses resulting from unauthorized transactions if it follows reasonable procedures designed to verify the identity of the caller. Those procedures may include recording the call, requesting additional information, and sending written confirmation of telephone transactions. If the Fund fails to follow such reasonable 12 Prospectus procedures, the Fund may be responsible for resulting losses. You should verify the accuracy of telephone transactions immediately upon receipt of your confirmation statement. If you are unable to reach the Fund by phone (for example, during periods of unusual market activity), consider placing your order by mail. TELEPHONE EXCHANGE PLAN The telephone exchange plan permits you to transfer investments between your Artisan Small Cap Fund account and your Artisan International Fund account between the hours of 7:00 a.m. and 3:00 p.m., Central time on days the NYSE is open for trading. Artisan Small Cap Fund is another series of Artisan Funds. Each exchange between accounts must be at least $1,000. The price of shares exchanged between Artisan Small Cap Fund and the Fund is determined at the end of that day's trading session. Telephone exchange plan restrictions: . To exchange between funds, you must have an account with Artisan Small Cap Fund and Artisan International Fund. Your accounts must be registered in the same name, address, and taxpayer identification number. . To OPEN a Fund account by telephone by exchanging an investment from Artisan Small Cap Fund, you must have previously elected the telephone transaction option for that fund. . If the Artisan Small Cap Fund is still open to new investors (its prospectus discloses that it will be closed to new investors when it reaches $300 million in total assets) you may open an account in that fund by transferring an investment from your Artisan International Fund. After the Artisan Small Cap Fund closes, you will not be able to open an account with that fund unless you meet the post-closing requirements identified in the Artisan Small Cap Fund prospectus. . Before exchanging into Artisan Small Cap Fund, you should carefully read its prospectus which may be obtained by calling 1-800-344-1770. . The exchange of shares may have tax consequences to you. . If your account is subject to backup withholding, you may not use the telephone exchange plan. . Because excessive trading can hurt performance and shareholders, Artisan Funds reserves the right to temporarily or permanently terminate the telephone exchange plan of any investor who makes excessive use of the plan. Artisan Funds may limit the number of transfers per calendar year. . Artisan Funds reserves the right to terminate or modify the telephone exchange plan at any time, but will try to give you prior notice whenever it is able to do so. 13 Prospectus DIVIDENDS, CAPITAL GAINS, AND TAXES The Fund intends to distribute substantially all of its net income and capital gains to shareholders at least annually. DISTRIBUTION OPTIONS When you open an account, specify on your new account application how you want to receive your distributions. If you later want to change your distribution option, you may do so either by a written request or by calling us at 1-800-344- 1770. The Fund offers three options: . REINVESTMENT OPTION. Your dividends and capital gain distributions will be automatically reinvested in additional shares of the Fund. If you do not indicate a choice on your new account application, your distributions will be reinvested automatically. . INCOME-ONLY OPTION. Your capital gain distributions will be automatically reinvested, but you will be sent a check for each dividend. . CASH OPTION. You will be sent a check for all distributions. FOR IRA ACCOUNTS, all distributions are automatically reinvested because payment of distributions in cash would be a taxable distribution from your IRA, and might be subject to income tax and penalties if you are under 59 1/2 years old. After you are 59 1/2, you may request payment of distributions in cash which might be subject to income tax. When you reinvest, the reinvestment price is the Fund's net asset value per share at the close of business on the reinvestment date. The mailing of distribution checks will usually begin on the payment date, which is usually one week after the ex-dividend date. TAXES As with any investment, you should consider how the return on your investment in the Fund will be taxed. If your account is a tax-deferred account (for example, an IRA or an employee benefit plan account), the following tax discussion does not apply. If your account is not a tax-deferred account, however, you should be aware of the following tax rules: TAXES ON DISTRIBUTIONS. Distributions are subject to federal income tax, and also may be subject to state or local taxes. If you live outside the United States, your distributions also could be taxed by the country in which you reside. Your distributions are taxable when they are paid, whether you take them in cash or reinvest them in additional shares. However, distributions declared in October, November or December and paid in January are taxable as if they were received by you on December 31. For federal tax purposes, the Fund's income and short-term capital gain distributions are taxed as dividends; long-term capital gain distributions are taxed as long-term capital gains. Every January, the Fund will send you and the IRS a statement, called a Form 1099, showing the amount of each taxable distribution you received in the previous calendar year. TAXES ON TRANSACTIONS. When you redeem shares you will recognize a capital gain or loss if there is a difference between the cost of your shares and the price you receive when you sell them. Whenever you sell shares of the Fund, you will receive a confirmation statement showing how many shares you sold and at what price. You also will receive a year-end statement every January reporting, among other things, your average cost basis in the shares you sold. This will allow you or your tax preparer to determine whether a redemption resulted in a capital gain or loss and the tax consequences of that gain or loss. However, be sure to keep your regular account statements; the information they 14 Prospectus contain will be essential in verifying the amount of your capital gains or losses. FOREIGN INCOME TAXES Investment income received by the Fund from sources within foreign countries may be subject to foreign income taxes withheld at the source. If the Fund pays non-refundable taxes to foreign governments during the year, the taxes will reduce the Fund's dividend but will be included in your taxable income. You may be able to claim an offsetting credit or deduction on your tax return for your share of foreign taxes paid by the Fund. You will receive this information as part of your Form 1099. WHEN YOU SIGN YOUR ACCOUNT APPLICATION, you will be asked to certify that your Social Security or taxpayer identification number is correct and that you are not subject to backup withholding for failing to report income to the IRS. If you fail to comply with applicable IRS regulations including the certification procedures described above, the IRS can require the Fund to withhold 31% of your taxable distributions and redemptions. - -------------------------------------------------------------------------------- UNDERSTANDING DISTRIBUTIONS - -------------------------------------------------------------------------------- As a shareholder, you are entitled to your share of the Fund's net income and any gains realized on its investments. The Fund's income from dividends and interest, and any net realized short-term gain, are paid to you as DIVIDENDS. The Fund realizes long-term capital gains whenever it sells securities held for more than one year for a higher price than it paid for them. Net realized long- term gains are paid to you as CAPITAL GAIN DISTRIBUTIONS. - -------------------------------------------------------------------------------- 15 Prospectus THE FUND IN DETAIL ORGANIZATION Artisan International Fund is a series of Artisan Funds, Inc., an open-end, management investment company which was incorporated under Wisconsin law in 1995. Each share of the Fund has one vote. All shares participate equally in dividends and other distributions declared by the board of directors, and all shares of the Fund have equal rights in the event of liquidation of the Fund. Shares of the Fund have no preemptive, conversion, or subscription rights. ARTISAN FUNDS IS GOVERNED BY A BOARD OF DIRECTORS which is responsible for protecting the interests of the shareholders of the Fund. The directors are experienced executives and professionals who meet at regular intervals to oversee the activities of the Fund, review contractual arrangements with companies that provide services to the Fund, and review performance. A majority of directors are not otherwise affiliated with the Fund or Artisan Partners. The Wisconsin Business Corporation Law permits registered investment companies to operate without an annual meeting of shareholders under specified circumstances if an annual meeting is not required by the Investment Company Act of 1940 (the federal securities law that governs the regulation of investment companies). The Fund has adopted the appropriate provisions in its bylaws and does not expect to hold an annual meeting in any year in which the election of directors is not required to be acted on by shareholders. The Fund believes that not holding shareholder meetings except as otherwise required reduces the Fund's expenses and enhances shareholder return. THE FUND MAY HOLD SPECIAL MEETINGS OF SHAREHOLDERS. These meetings may be called to elect or remove directors, change fundamental policies, approve a management contract, or for other purposes. The Fund will mail proxy materials in advance, including a voting card and information about the proposals to be voted on. You are entitled to one vote for each share of the Fund that you own. Shareholders not attending these meetings are encouraged to vote by proxy. MANAGEMENT The Fund is managed by Artisan Partners Limited Partnership, 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202, which selects the Fund's investments and handles its business affairs, under the direction of the board of directors. Artisan Partners is a limited partnership managed by its general partner, Artisan Investment Corporation, controlled by Andrew A. Ziegler and Carlene Murphy Ziegler. Andrew A. Ziegler is a director and chief executive officer of Artisan Funds. Immediately prior to founding Artisan Partners, Mr. Ziegler was president and chief operating officer of Strong/Corneliuson Capital Management, and president of the Strong Funds; prior thereto, Mr. Ziegler was Executive Vice President and General Counsel of Strong. From 1986 to 1990, Mr. Ziegler was an attorney with the law firm of Godfrey & Kahn, S.C., Milwaukee, WI. Mr. Ziegler holds a B.S. from the University of Wisconsin - Madison and a J.D. from the University of Wisconsin Law School. Carlene Murphy Ziegler is a director and president of Artisan Funds and the portfolio manager of Artisan Small Cap Fund, another series of Artisan Funds. Prior to founding Artisan Partners, Ms. Ziegler was a co-portfolio manager of the Strong Common Stock Fund and Strong Opportunity Fund. From 1986 to 1991, Ms. Ziegler was a co-portfolio manager of the SteinRoe Special Fund. Ms. Ziegler holds B.A. and M.A. degrees from the University of Illinois and an M.B.A. from the University of Chicago 16 Prospectus Graduate School of Business. She also is a Chartered Financial Analyst. Mark L. Yockey is a vice president of Artisan Funds and the portfolio manager of Artisan International Fund. Prior to joining Artisan Funds, Mr. Yockey was portfolio manager of the United International Growth Fund and vice president of Waddell & Reed since January 1990. Prior thereto, Mr. Yockey was an equity analyst for Waddell & Reed. Mr. Yockey holds a B.A. degree and an M.B.A. from Michigan State University. He is also a Chartered Financial Analyst. From January 1990 through December 1995, and throughout that time period, Mr. Yockey had full discretionary authority over the selection of investments for United International Growth Fund. Average annual returns for that fund, through September 30, 1995 were: UNITED INTERNATIONAL GROWTH FUND(a) One Year 6.66 Three Years 19.67 Five Years 15.82 (a) Assuming reinvestment of dividends Of course, historical performance may not be indicative of future performance even though Mr. Yockey intends to utilize a similar approach to achieve capital growth in the Fund. The above-stated average annual returns for United International Growth Fund have been adjusted to take into account certain expenses of that fund. The expenses of the Fund may differ from the expenses of United International Growth Fund. This means that varying management, accounting, transfer agent, custodian and other fees as well as different asset size will affect results. John M. Blaser is chief financial officer of Artisan Funds and acts as the principal administrative and financial officer. Prior to joining Artisan Partners, Mr. Blaser was Senior Vice President of Kemper Securities, Inc. since 1993. Prior thereto, Mr. Blaser was with Price Waterhouse. Mr. Blaser holds a B.B.A. from the University of Wisconsin - Madison. State Street Bank and Trust Company ("State Street"), 1776 Heritage Drive, North Quincy, MA 02171, is the Fund's transfer and dividend disbursing agent. State Street also serves as the Fund's custodian and accounting agent. EXPENSES Like all mutual funds, the Fund pays expenses related to its daily operations. Expenses paid out of the Fund's assets are reflected in its share price or dividends. The Fund pays a MANAGEMENT FEE to Artisan Partners for managing its investments and business affairs. For services furnished by Artisan Partners, the Fund has agreed to pay an annual fee of (i) 1% of its average daily net assets up to $500 million; (ii) .975 of 1% of its average daily net assets from $500 to $750 million; (iii) .950 of 1% of its average daily net assets from $750 million to $1 billion and (iv) .925 of 1% of its average daily net assets over $1 billion. The rate of fee paid by the Fund is higher than that paid by many mutual funds, reflecting the higher costs involved in actively managing a foreign stock portfolio. While the management fee is a significant component of the Fund's annual operating costs, the Fund has other expenses as well. The Fund pays the fees of its custodian, transfer agent, fund accountants, independent accountants, and lawyers. It also pays other expenses such as the cost of compliance with federal and state laws, proxy solicitations, shareholder reports, taxes, insurance premiums, and the fees of directors who are not otherwise affiliated with the Fund or Artisan Partners. THE FUND'S INVESTMENT PHILOSOPHY THE FUND INVESTS FOR MAXIMUM LONG-TERM CAPITAL GROWTH. THE FUND GENERALLY INVESTS IN THE STOCKS OF FOREIGN COMPANIES AND USES ITS OWN DETAILED RESEARCH PROCESS TO IDENTIFY INVESTMENT OPPORTUNITIES. The Fund's research method is both "top-down" and "bottom-up." That means that country selection and stock selection are equally important parts of the investment process. 17 Prospectus Country selection involves an evaluation of the regions and countries of the world in an effort to determine which are enjoying improving or rapid economic growth. The Fund avoids countries that, while showing favorable economic growth, appear to have overvalued markets. Economic growth is determined principally from the standpoint of gross domestic product growth, corporate profitability, current account and currency issues, interest rates and social changes. Having identified favorable areas of the world for growth, the Fund seeks out the stocks of companies best positioned to capitalize on that growth. In this process, the Fund emphasizes well-managed companies with dominant or increasing market share in strong industries. It focuses on companies with above-average financial characteristics and increasing earnings per share. The Fund also analyzes relative valuations using a variety of criteria such as price-to- earnings ratios and avoids stocks that are trading at unsustainable or unusually high valuations. International investing allows you to achieve greater diversification and to take advantage of changes in foreign economies and market conditions. From time to time, many foreign economies have grown faster than the U.S. economy, and the returns on investments in these countries have exceeded those of similar U.S. investments, although there can be no assurance that these conditions will continue. The Fund also may invest in types of equity securities other than common stocks, and in debt securities, and may engage in certain investment practices such as short sales "against the box;" however, the Fund does not currently intend to commit more than 5% of its total assets to investment practices such as short sales against the box. The Fund intends to be substantially fully invested in foreign equity securities in ordinary circumstances, although the Fund may invest without limit in short- term corporate obligations or government obligations (U.S. or foreign) or hold cash or cash equivalents if Artisan Partners determines that a temporary defensive position is advisable. See the discussion of debt securities on page 20. The Fund uses various techniques to increase or decrease its exposure to the effects of possible changes in security prices, currency exchange rates, or other factors that affect the value of its portfolio. These techniques include buying and selling options, futures contracts, and options on futures contracts, or entering into currency exchange contracts. Although the Fund does not generally purchase securities with a view to rapid turnover, there are no limitations on the length of time portfolio securities must be held. Occasionally, securities purchased on a long-term basis may be sold within a short period of time after purchase in light of a change in the circumstances of a particular company or industry or in general market of economic conditions. The investment objective of the Fund may be changed by the board of directors without shareholder approval. If there were such a change, you should consider whether the Fund would remain an appropriate investment in light of your then current financial position and needs. The Fund is not intended to present a balanced investment program. SECURITIES, INVESTMENT PRACTICES AND RISKS The following pages contain more detailed information about types of investments the Fund may make and strategies Artisan Partners may employ in pursuit of the Fund's investment objective, including information about the risks and restrictions associated with these instrument types and investment practices. All investment policies stated throughout this prospectus, other than those identified as fundamental, can be changed without shareholder approval. A complete statement of the Fund's investment restrictions is included in the Statement of Additional Information. Compliance with policies and limitations is 18 Prospectus determined at the time of purchase of a security; the Fund is not required to sell an investment because of a later change in circumstances. The Fund may not buy all of these instruments or use all of these techniques to the full extent permitted unless Artisan Partners believes that doing so will help the Fund achieve its goal. As a shareholder, you will receive semi-annual and annual reports detailing the Fund's holdings and describing recent investment practices. EQUITY SECURITIES Common stocks represent an equity (ownership) interest in a corporation. This ownership interest often gives the holder the right to vote on measures affecting the company's organization and operations. The equity securities in which the Fund invests may include preferred stocks, including preferred stocks convertible into common stocks. Although common stocks and other equity securities have a history of long-term growth in value, their prices tend to fluctuate in the short term. The Fund invests mostly in the common stock (or the equivalent of common stock under the applicable foreign law) of foreign companies. Restrictions: The Fund may not acquire more than 10% of the outstanding voting securities of any one issuer.* FOREIGN SECURITIES Investments in foreign securities, including American Depository Receipts ("ADRs"), provide opportunities different from those available in the U.S., and risks which may be greater in some ways than in U.S. investments. ADRs are receipts typically issued by an American bank or trust company evidencing ownership of the underlying securities. See the Fund's Statement of Additional Information for more information. You should understand and consider carefully the greater risks involved in foreign investing. Investing in foreign securities, positions in which are generally denominated in foreign currencies, and utilization of forward foreign currency exchange contracts involve certain risks and opportunities not typically associated with investing in U.S. securities. These include: fluctuations in exchange rates of foreign currencies; imposition of exchange control regulation or currency restrictions that would prevent cash from being brought back to the United States; less public information with respect to issuers of securities; less governmental supervision of stock exchanges, securities brokers, and issuers of securities; different accounting, auditing, and financial reporting standards; different settlement periods and trading practices; less liquidity and frequently greater price volatility in foreign markets than in the United States; imposition of foreign taxes; and sometimes less advantageous legal, operational, and financial protections applicable to foreign sub-custodial arrangements. In addition, the costs of investing in foreign securities is higher than the cost of investing in U.S. securities. Investing in countries outside the U.S. also involves political risk. A foreign government might restrict investments by foreigners, expropriate assets, seize or nationalize foreign bank deposits or other assets, establish exchange controls, or enact other policies that could affect investment in these nations. Economies in individual markets may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross domestic product, rates of inflation, currency depreciation, capital reinvestment, resource self- sufficiency and balance of payments positions. Many emerging market countries have experienced extremely high rates of inflation for many years. That has had and may continue to have very negative effects on the economies and securities markets of those countries. - -------------------- * The restriction is "fundamental" which means it cannot be changed without shareholder approval. 19 Prospectus The securities markets of emerging countries are substantially smaller, less developed, less liquid, and more volatile than the securities markets of the United States and other more developed countries. Disclosure and regulatory standards in many respects are less stringent than in the U.S. There also may be a lower level in emerging markets of monitoring and regulation of traders, insiders, and investors. Enforcement of existing regulations has been extremely limited. Restrictions: Under normal circumstances, the Fund will invest at least 65% of its total assets in securities of foreign issuers.* In addition, under normal market conditions, the Fund will invest in at least three countries outside the U.S. DEBT SECURITIES Bonds and other debt instruments are methods for an issuer to borrow money from investors. The issuer pays the investor a fixed or variable rate of interest, and must repay the amount borrowed at maturity. Debt securities have varying degrees of quality and varying levels of sensitivity to changes in interest rates. In general, an increase in interest rates will decrease the value of debt securities. "Investment grade" debt securities are those rated within the four highest ratings categories of Standard & Poor's Corporation ("S&P") or Moody's Investors Services, Inc. ("Moody's") or, if unrated, determined by Artisan Partners to be of comparable quality. Securities rated BBB or Baa are considered to be medium grade and to have speculative characteristics. Investment in non-investment grade debt securities is speculative and involves a high degree of risk. Lower-rated debt securities (commonly called "junk bonds") are considered speculative and involve greater risk of default or price changes due to changes in the issuer's credit-worthiness. The market prices of these securities may fluctuate more than higher-rated securities and may decline significantly in periods of general economic difficulty. For more information, see the discussion of debt securities in the statement of additional information. Restrictions: The Fund intends to be substantially fully invested in equity securities in ordinary circumstances. Except when a defensive posture is considered advisable, the Fund's investments in debt securities will not exceed 35% of the Fund's assets, without regard to their ratings. Investments in debt securities in excess of 35% of the Fund's assets will be restricted to investment grade debt securities. The Fund does not intend to invest more than 5% of its net assets in securities rated below investment grade. CONVERTIBLE SECURITIES The Fund may invest in convertible securities (securities convertible into underlying equity securities). In determining whether to purchase a convertible security, Artisan Partners will consider the same criteria that would be considered in purchasing the underlying stock. Although convertible securities purchased by the Fund are frequently rated investment grade, the Fund also may purchase unrated securities or securities rated below investment grade if the securities meet Artisan Partners' other investment criteria. Restrictions: The Fund does not intend to invest more than 5% of its net assets in convertible securities. MANAGING INVESTMENT EXPOSURE The Fund uses various techniques to increase or decrease its exposure to the effects of possible changes in security prices, currency exchange rates or other factors that affect the value of its portfolio. These techniques include buying and selling derivative securities such as options, futures contracts, or options on futures contracts, or - -------------------- * The restriction is "fundamental" which means it cannot be changed without shareholder approval. 20 Prospectus entering into currency exchange contracts. INVESTMENTS IN DERIVATIVE SECURITIES INVOLVE SIGNIFICANT RISKS AND MAY INCREASE THE VOLATILITY OF THE FUND. These techniques are used by Artisan Partners to adjust the risk and return characteristics of the Fund's portfolio. If Artisan Partners judges market conditions incorrectly or employs a strategy that does not correlate well with the Fund's investments, or if the counterparty to the transaction does not perform as promised, the transaction could result in a loss. Use of these techniques may increase the volatility of the Fund and may involve a small investment of cash relative to the magnitude of the risk assumed. These techniques are used by the Fund for hedging, risk management, or portfolio management purposes and not for speculation. There is no limitation on the percentage of assets that can be committed to derivative securities. However, derivative securities will be used only for hedging purposes. In addition, particular types of derivative securities are subject to certain limitations and restrictions described in the Statement of Additional Information under the heading "Investment Techniques -- Managing Investment Exposure." CURRENCY EXCHANGE TRANSACTIONS. A currency exchange transaction may be conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or selling currency prevailing in the foreign exchange market or through a forward currency exchange contract ("forward contract"). A forward contract is an agreement to purchase or sell a specified currency at a specified future date (or within a specified time period) and price set at the time of the contract. Forward contracts are usually entered into with banks and broker-dealers, are not exchange-traded and are usually for less than one year, but may be renewed. Currency exchange transactions may involve currencies of the different countries in which the Fund may invest and serve as hedges against possible variations in the exchange rate between these currencies. The Fund's currency transactions are limited to TRANSACTION HEDGING and PORTFOLIO HEDGING involving either specific transactions or actual or anticipated positions. Transaction hedging is the purchase or sale of a forward contract with respect to a specific receivable or payable of the Fund accruing in connection with the purchase or sale of portfolio securities. Portfolio hedging is the use of a forward contract with respect to an actual or anticipated portfolio security position denominated or quoted in a particular currency. The Fund may engage in portfolio hedging with respect to the currency of a particular country in amounts approximating actual or anticipated positions in securities denominated in such currency. When the Fund owns or anticipates owning securities in countries whose currencies are linked, Artisan Partners may aggregate such positions as to the currency hedged. Although forward contracts may be used to protect the Fund from adverse currency movements, the use of such hedges may reduce or eliminate the potentially positive effect of currency revaluations on the Fund's total return. OPTIONS AND FUTURES. The Fund may enter into stock index or currency futures contracts (or options thereon) to hedge a portion of its portfolio, to provide an efficient means of regulating its exposure to the equity markets, or as a hedge against changes in prevailing levels of currency exchange rates. The Fund may write covered call options and purchase put and call options on foreign currencies, securities, and stock indices. Futures contracts and options can be highly volatile and are subject to price movements in underlying securities. The Fund's attempt to use such investments for hedging purposes may not be successful and could result in a loss. In addition, the loss from investing in futures transactions is potentially unlimited and the Fund may be unable to control losses by closing its position where a liquid secondary market does not exist. 21 Prospectus ILLIQUID AND RESTRICTED SECURITIES Some investments may be determined by Artisan Partners to be illiquid, which means that they may be difficult to sell promptly at an acceptable price. Other securities, such as securities acquired in private placements, may be sold only in compliance with certain legal restrictions. These securities are often referred to as Rule 144A securities. Difficulty in selling securities may result in delays or a loss, or may be costly to the Fund. A Rule 144A security may be treated as liquid if the board of directors of the Fund so determines based on an analysis of relevant information including trading activity and availability of reliable price information. Restrictions: The Fund may not invest more than 10% of its net assets in illiquid or restricted securities other than Rule 144A securities. DIVERSIFICATION Diversifying the investment portfolio can reduce the risks of investing. This may include limiting the amount of money invested in any one company, or on a broader scale, limiting the amount invested in any one industry or country. Restrictions: With respect to 75% of its total assets, the Fund may not invest more than 5% of its total assets in the securities of any one issuer. The Fund may not invest more than 25% of its total assets in any one industry. These limitations do not apply to U.S. government securities.* LENDING PORTFOLIO SECURITIES; WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES The Fund may make loans of its portfolio securities to broker-dealers and banks. In addition, the Fund may invest in securities purchased on a when-issued or delayed-delivery basis. Although the payment terms of these securities are established at the time the Fund enters into the commitment, the securities may be delivered and paid for a month or more after the date of purchase, when their value may have changed. The Fund will make such commitments only with the intention of actually acquiring the securities, but may sell the securities before settlement date if it is deemed advisable for investment reasons. Restrictions: The Fund may not lend securities if, as a result, the aggregate value of all securities loaned would exceed one-third of its total assets./* / The Fund does not currently intend to loan more than 5% of its net assets or to have commitments to purchase when-issued securities in excess of 5% of its net assets. BORROWING The Fund may establish and maintain a line of credit with a major bank in order to permit borrowing on a temporary basis. The Fund will not purchase securities when total borrowings by the Fund are greater than 5% of its net asset value. Restrictions: The Fund may not borrow money, except as a temporary measure for extraordinary or emergency purposes, and then the aggregate borrowings at any one time may not exceed 33 1/3% of its total assets (at market).** OTHER INVESTMENT COMPANIES Certain markets are closed in whole or in part to equity investments by foreigners. The Fund may be able to invest in such markets solely or primarily through governmentally-authorized investment companies. Investment in another investment company may involve the payment of a premium above the value of the issuer's portfolio securities and is subject to market availability. In the case of a purchase of - -------------------- * The restriction is "fundamental" which means it cannot be changed without shareholder approval. ** The restriction is "fundamental" which means it cannot be changed without shareholder approval. 22 Prospectus shares of such a company in a public offering, the purchase price may include an underwriting spread. The Fund does not intend to invest in other investment companies unless, in the judgment of Artisan Partners, the potential benefits of such investment justify the payment of any applicable premium or sales charge. As a shareholder in an investment company, the Fund would bear its ratable share of that investment company's expenses, including its advisory and administration fees. At the same time the Fund would continue to pay its own management fees and other expenses. Restrictions. The Fund generally may invest up to 10% of its assets in shares of other investment companies and up to 5% of its assets in any one investment company (in each case measured at the time of investment). No investment in another investment company may represent more than 3% of the outstanding voting stock of the acquired investment company at the time of investment. PORTFOLIO TURNOVER During normal market conditions, it is anticipated that the Fund's portfolio turnover rate generally will be between 75% and 100%, but may vary significantly from year to year. Flexibility of investment and emphasis on long-term capital appreciation may involve greater portfolio turnover than that of mutual funds that have the objectives of income or maintenance of a balanced investment position. A higher rate of portfolio turnover may result in increased transaction expenses and the realization of capital gains and losses. Portfolio turnover in excess of 100% is considered to be high. 23 Prospectus Artisan Funds, Inc. 1000 North Water Street, Suite 1770 Milwaukee, Wisconsin 53202 (414) 390-6100 (800) 344-1770 STATEMENT OF ADDITIONAL INFORMATION December 28, 1995 Artisan International Fund ________________________________________________________________________________ Artisan International Fund (the "Fund") is a series of Artisan Funds, Inc. ("Artisan Funds"). This statement of additional information is not a prospectus. It should be read in conjunction with the prospectus of the Fund dated December 28, 1995 and any supplement to the prospectus. That prospectus can be obtained without charge by calling or writing to the Fund. TABLE OF CONTENTS Page ---- Information about the Fund......................................... 2 Investment Objective and Policies.................................. 2 Investment Techniques and Risks.................................... 2 Investment Restrictions............................................ 13 Performance Information............................................ 16 Directors and Officers............................................. 19 Investment Advisory Services....................................... 22 Portfolio Transactions............................................. 23 Purchasing and Redeeming Shares.................................... 24 Additional Tax Information......................................... 24 Custodian.......................................................... 25 Independent Accountants............................................ 25 INFORMATION ABOUT THE FUND The Fund is a series of Artisan Funds, Inc. ("Artisan Funds"). Artisan Partners Limited Partnership ("Artisan Partners") provides investment advisory services to the Fund. The discussion below supplements the description in the prospectus of the Fund's investment objective, policies and restrictions. INVESTMENT OBJECTIVE AND POLICIES Artisan International Fund invests for maximum long-term capital growth. The Fund seeks to achieve its objective by investing primarily in the stocks of foreign companies. The investment objective of the Fund may be changed by the board of directors without the approval of a "majority of the outstanding voting securities" (as defined in the Investment Company Act of 1940) of the Fund. The Fund invests primarily in equity securities, including common and preferred stocks, warrants or other similar rights, and convertible securities, of foreign issuers. The Fund also may invest in any other type of security, including debt securities. INVESTMENT TECHNIQUES AND RISKS Foreign Securities Under normal market conditions, the Fund invests at least 65% of its total assets in foreign securities (including American Depository Receipts ("ADRs")), which may entail a greater degree of risk (including risks relating to exchange rate fluctuations, tax provisions, or expropriation of assets) than does investment in securities of domestic issuers. ADRs are receipts typically issued by an American bank or trust company evidencing ownership of the underlying securities. The Fund may invest in sponsored or unsponsored ADRs. In the case of an unsponsored ADR, the Fund is likely to bear its proportionate share of the expenses of the depository and it may have greater difficulty in receiving shareholder communications than it would have with a sponsored ADR. The Fund does not intend to invest more than 5% of its net assets in unsponsored ADRs. With respect to portfolio securities that are issued by foreign issuers or denominated in foreign currencies, the Fund's investment performance is affected by the strength or weakness of the U.S. dollar against these currencies. For example, if the dollar falls in value relative to the Japanese yen, the dollar value of a yen-denominated stock held in the portfolio will rise even though the price of the stock remains unchanged. Conversely, if the dollar rises in value relative to the yen, the dollar value of the yen-denominated stock will fall. (See discussion of transaction hedging and portfolio hedging under "Managing Investment Exposure.") Investors should understand and consider carefully the risks involved in foreign investing. Investing in foreign securities, positions in which are generally denominated in foreign currencies, and utilization of forward foreign currency exchange contracts involve certain considerations comprising both risks and opportunities not typically associated with investing in U.S. securities. These considerations include: fluctuations in exchange rates of foreign currencies; possible imposition of exchange control regulation or currency restrictions that would prevent cash from being brought back to the United States; less public information with respect to issuers of securities; less governmental supervision of stock exchanges, securities brokers, and issuers of securities; lack of uniform accounting, auditing, and financial reporting standards; lack of uniform settlement periods and trading practices; less liquidity and frequently greater price volatility in foreign markets than in the United States; possible B-2 imposition of foreign taxes; possible investment in securities of companies in developing as well as developed countries; and sometimes less advantageous legal, operational, and financial protections applicable to foreign sub- custodial arrangements. Although the Fund will try to invest in companies and governments of countries having stable political environments, there is the possibility of expropriation or confiscatory taxation, seizure or nationalization of foreign bank deposits or other assets, establishment of exchange controls, the adoption of foreign government restrictions, or other adverse political, social or diplomatic developments that could affect investment in these nations. Debt Securities In pursuing its investment objective, the Fund may invest in debt securities of corporate and governmental issuers. The risks inherent in debt securities depend primarily on the term and quality of the obligations in the Fund's portfolio as well as on market conditions. A decline in the prevailing levels of interest rates generally increases the value of debt securities, while an increase in rates usually reduces the value of those securities. Investments in debt securities by the Fund may be in those that are within the four highest ratings categories of Standard & Poor's Corporation ("S&P") or Moody's Investors Services, Inc. ("Moody's") (generally referred to as "investment grade") or, if unrated, deemed to be of comparable quality by Artisan Partners. However, the Fund may invest up to 35% of its net assets in debt securities that are rated below investment grade. The Fund does not currently intend to invest more than 5% of its net assets in securities rated below investment grade. Debt securities in the fourth highest grade may possess speculative characteristics, and changes in economic conditions are more likely to affect the issuer's capacity to pay interest and repay principal. If the rating of a security held by the Fund is lost or reduced below investment grade, the Fund is not required to dispose of the security, but Artisan Partners will consider that fact in determining whether the Fund should continue to hold the security. Securities that are rated below investment grade are considered predominantly speculative with respect to the issuer's capacity to pay interest and repay principal according to the terms of the obligation and therefore carry greater investment risk, including the possibility of issuer default and bankruptcy. Defensive Investments The Fund intends to be substantially fully invested in equity securities of non-U.S. issuers in ordinary circumstances, although the Fund may invest without limit in corporate or government obligations (U.S. or non-U.S.) or hold cash or cash equivalents if Artisan Partners determines that a temporary defensive position is advisable. Convertible Securities Convertible securities include any corporate debt security or preferred stock that may be converted into underlying shares of common stock. The common stock underlying convertible securities may be issued by a different entity than the issuer of the convertible securities. Convertible securities entitle the holder to receive interest payments paid on corporate debt securities or the dividend preference on a preferred stock until such time as the convertible security matures or is redeemed or until the holder elects to exercise the conversion privilege. B-3 The value of convertible securities is influenced by both the yield of non-convertible securities of comparable issuers and by the value of a convertible security viewed without regard to its conversion feature (i.e., strictly on the basis of its yield) is sometimes referred to as its 'investment value.' The investment value of the convertible security will typically fluctuate inversely with changes in prevailing interest rates. However, at the same time, the convertible security will be influenced by its `conversion value,' which is the market value of the underlying common stock that would be obtained if the convertible security were converted. Conversion value fluctuates directly with the price of the underlying common stock. By investing in convertible securities, the Fund obtains the right to benefit from the capital appreciation potential in the underlying stock upon exercise of the conversion right, while earning higher current income than would be available if the stock were purchased directly. In determining whether to purchase a convertible security, Artisan Partners will consider the same criteria that would be considered in purchasing the underlying stock. Although convertible securities purchased by the Fund are frequently rated investment grade, the Fund also may purchase unrated securities or securities rated below investment grade if the securities meet Artisan Partners' other investment criteria. Convertible securities rated below investment grade (a) tend to be more sensitive to interest rate and economic changes, (b) may be obligations of issuers who are less creditworthy than issuers of higher quality convertible securities, and (c) may be more thinly traded due to such securities being less well known to investors than either common stock or conventional debt securities. As a result, Artisan Partners' own investment research and analysis tends to be more important in the purchase of such securities than other factors. Managing Investment Exposure The Fund uses various techniques to increase or decrease its exposure to the effects of possible changes in security prices, currency exchange rates or other factors that affect the value of its portfolio. These techniques include buying and selling options, futures contracts, or options on futures contracts, or entering into currency exchange contracts. These techniques are used by Artisan Partners to adjust the risk and return characteristics of the Fund's portfolio. If Artisan Partners judges market conditions incorrectly or employs a strategy that does not correlate well with the Fund's investments, or if the counterparty to the transaction does not perform as promised, the transaction could result in a loss. Use of these techniques may increase the volatility of the Fund and may involve a small investment of cash relative to the magnitude of the risk assumed. These techniques are used by the Fund for hedging, risk management or portfolio management purposes and not for speculation. Currency Exchange Transactions. Currency exchange transactions may be conducted either on a spot (i.e., cash) basis at the spot rate for purchasing or selling currency prevailing in the foreign exchange market or through forward currency exchange contracts ("forward contracts"). Forward contracts are contractual agreements to purchase or sell a specified currency at a specified future date (or within a specified time period) and price set at the time of the contract. Forward contracts are usually entered into with banks and broker- dealers, are not exchange traded, and are usually for less than one year, but may be renewed. Forward currency transactions may involve currencies of the different countries in which the Fund may invest, and serve as hedges against possible variations in the exchange rate between these currencies. Currency transactions are limited to transaction hedging and portfolio hedging involving either specific transactions or portfolio positions. Transaction hedging is the purchase or sale of forward contracts with respect to specific receivables or payables of the Fund accruing in connection with the purchase and sale of its portfolio securities. Portfolio hedging is the use of forward contracts with respect to portfolio security positions denominated or quoted in a particular currency. Portfolio hedging B-4 allows the Fund to limit or reduce exposure in a foreign currency by entering into a forward contract to sell or buy such foreign currency (or another foreign currency that acts as a proxy for that currency) so that the U.S. dollar value of certain underlying foreign portfolio securities can be approximately matched by an equivalent U.S. dollar liability. The Fund may not engage in portfolio hedging with respect to the currency of a particular country to an extent greater than the aggregate market value (at the time of making such sale) of the securities held in its portfolio denominated or quoted in that particular currency, except that the Fund may hedge all or part of its foreign currency exposure through the use of a basket of currencies or a proxy currency where such currencies or currency act as an effective proxy for other currencies. In such a case, the Fund may enter into a forward contract where the amount of the foreign currency to be sold exceeds the value of the securities denominated in such currency. The use of this basket hedging technique may be more efficient and economical than entering into separate forward contracts for each currency held in the Fund. The Fund may not engage in "speculative" currency exchange transactions. At the maturity of a forward contract to deliver a particular currency, the Fund may either sell the portfolio security related to such contract and make delivery of the currency, or it may retain the security and either acquire the currency on the spot market or terminate its contractual obligation to deliver the currency by purchasing an offsetting contract with the same currency trader obligating it to purchase on the same maturity date the same amount of the currency. It is impossible to forecast with absolute precision the market value of portfolio securities at the expiration of a forward contract. Accordingly, it may be necessary for the Fund to purchase additional currency on the spot market (and bear the expense of such purchase) if the market value of the security is less than the amount of currency the Fund is obligated to deliver and if a decision is made to sell the security and make delivery of the currency. Conversely, it may be necessary to sell on the spot market some of the currency received upon the sale of the portfolio security if its market value exceeds the amount of currency the Fund is obligated to deliver. If the Fund retains the portfolio security and engages in an offsetting transaction, the Fund will incur a gain or a loss to the extent that there has been movement in forward contract prices. If the Fund engages in an offsetting transaction, it may subsequently enter into a new forward contract to sell the currency. Should forward prices decline during the period between the Fund's entering into a forward contract for the sale of a currency and the date it enters into an offsetting contract for the purchase of the currency, the Fund will realize a gain to the extent the price of the currency it has agreed to sell exceeds the price of the currency it has agreed to purchase. Should forward prices increase, the Fund will suffer a loss to the extent the price of the currency it has agreed to purchase exceeds the price of the currency it has agreed to sell. A default on the contract would deprive the Fund of unrealized profits or force the Fund to cover its commitments for purchase or sale of currency, if any, at the current market price. Hedging against a decline in the value of a currency does not eliminate fluctuations in the prices of portfolio securities or prevent losses if the prices of such securities decline. Such transactions also preclude the opportunity for gain if the value of the hedged currency should rise. Moreover, it may not be possible for the Fund to hedge against a devaluation that is so generally anticipated that the Fund is not able to contract to sell the currency at a price above the devaluation level it anticipates. The cost to the Fund of engaging in currency exchange transactions varies with such factors as the currency involved, the length of the contract period, and prevailing market conditions. Because currency exchange transactions are usually conducted on a principal basis, no fees or commissions are involved. B-5 Options on Securities and Indexes. The Fund may purchase and sell put options and call options on securities, indexes or foreign currencies in standardized contracts traded on recognized securities exchanges, boards of trade, or similar entities, or quoted on NASDAQ. The Fund may purchase agreements, sometimes called cash puts, that may accompany the purchase of a new issue of bonds from a dealer. An option on a security (or index) is a contract that gives the purchaser (holder) of the option, in return for a premium, the right to buy from (call) or sell to (put) the seller (writer) of the option the security underlying the option (or the cash value of the index) at a specified exercise price at any time during the term of the option (normally not exceeding nine months). The writer of an option on an individual security or on a foreign currency has the obligation upon exercise of the option to deliver the underlying security or foreign currency upon payment of the exercise price or to pay the exercise price upon delivery of the underlying security or foreign currency. Upon exercise, the writer of an option on an index is obligated to pay the difference between the cash value of the index and the exercise price multiplied by the specified multiplier for the index option. (An index is designed to reflect specified facets of a particular financial or securities market, a specific group of financial instruments or securities, or certain economic indicators.) The Fund will write call options and put options only if they are "covered." For example, in the case of a call option on a security, the option is "covered" if the Fund owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration (or, if additional cash consideration is required, cash or cash equivalents in such amount are held in a segregated account by its custodian) upon conversion or exchange of other securities held in its portfolio. A put option is "covered" if the Fund maintains cash, Treasury bills, or other higher-grade short-term obligations with a value equal to the exercise price in a segregated account with its custodians, or owns on a share-for-share or equal principal amount basis a put on the same security as the put written where the exercise price of the put held is equal to or greater than the exercise price of the put written. If an option written by the Fund expires, the Fund realizes a capital gain equal to the premium received at the time the option was written. If an option purchased by the Fund expires, the Fund realizes a capital loss equal to the premium paid. Prior to the earlier of exercise or expiration, an option may be closed out by an offsetting purchase or sale of an option of the same series (type, exchange, underlying security or index, exercise price, and expiration). There can be no assurance, however, that a closing purchase or sale transaction can be effected when the Fund desires. The Fund will realize a capital gain from a closing purchase transaction if the cost of the closing option is less than the premium received from writing the option, or, if it is more, the Fund will realize a capital loss. If the premium received from a closing sale transaction is more than the premium paid to purchase the option, the Fund will realize a capital gain or, if it is less, the Fund will realize a capital loss. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security or index in relation to the exercise price of the option, the volatility of the underlying security or index, and the time remaining until the expiration date. A put or call option purchased by the Fund is an asset of the Fund, valued initially at the premium paid for the option. The premium received for an option written by the Fund is recorded as a deferred credit. The value of an option purchased or written is marked-to-market daily and is valued at the closing price on the exchange on which it is traded or, if not traded on an exchange or no closing price is available, at the mean between the last bid and asked prices. B-6 Risks Associated with Options on Securities and Indexes. There are several risks associated with transactions in options. For example, there are significant differences between the securities markets, the currency markets, and the options markets that could result in an imperfect correlation between these markets, causing a given transaction not to achieve its objectives. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or expected events. There can be no assurance that a liquid market will exist when the Fund seeks to close out an option position. If the Fund were unable to close out an option that it had purchased on a security, it would have to exercise the option in order to realize any profit or the option would expire and become worthless. If the Fund were unable to close out a covered call option that it had written on a security, it would not be able to sell the underlying security until the option expired. As the writer of a covered call option on a security, the Fund foregoes, during the option's life, the opportunity to profit from increases in the market value of the security covering the call option above the sum of the premium and the exercise price of the call. If trading were suspended in an option purchased or written by the Fund, the Fund would not be able to close out the option. If restrictions on exercise were imposed, the Fund might be unable to exercise an option it has purchased. Futures Contracts and Options on Futures Contracts. The Fund may use interest rate futures contracts, index futures contracts, and foreign currency futures contracts. An interest rate, index or foreign currency futures contract provides for the future sale by one party and purchase by another party of a specified quantity of a financial instrument or the cash value of an index/1/ at a specified price and time. A public market exists in futures contracts covering a number of indexes (including, but not limited to: the Standard & Poor's 500 Index, the Value Line Composite Index, and the New York Stock Exchange Composite Index) as well as financial instruments (including, but not limited to: U.S. Treasury bonds, U.S. Treasury notes, Eurodollar certificates of deposit, and foreign currencies). Other index and financial instrument futures contracts are available and it is expected that additional futures contracts will be developed and traded. The Fund may purchase and write call and put futures options. Futures options possess many of the same characteristics as options on securities, indexes and foreign currencies (discussed above). A futures option gives the holder the right, in return for the premium paid, to assume a long position (call) or short position (put) in a futures contract at a specified exercise price at any time during the period of the option. Upon exercise of a call option, the holder acquires a long position in the futures contract and the writer is assigned the opposite short position. In the case of a put option, the opposite is true. The Fund might, for example, use futures contracts to hedge against or gain exposure to fluctuations in the general level of stock prices, anticipated changes in interest rates or currency fluctuations that might adversely affect either the value of the Fund's securities or the price of the securities that the Fund intends to purchase. Although other techniques could be used to reduce or increase the Fund's exposure to stock price, interest rate and currency fluctuations, the Fund may be able to achieve its exposure more effectively and perhaps at a lower cost by using futures contracts and futures options. - -------------------- /1/ A futures contract on an index is an agreement pursuant to which two parties agree to take or make delivery of an amount of cash equal to the difference between the value of the index at the close of the last trading day of the contract and the price at which the index contract was originally written. Although the value of a securities index is a function of the value of certain specified securities, no physical delivery of those securities is made. B-7 The Fund will only enter into futures contracts and futures options that are standardized and traded on an exchange, board of trade, or similar entity, or quoted on an automated quotation system. The success of any futures transaction depends on Artisan Partners correctly predicting changes in the level and direction of stock prices, interest rates, currency exchange rates and other factors. Should those predictions be incorrect, the Fund's return might have been better had the transaction not been attempted; however, in the absence of the ability to use futures contracts, Artisan Partners might have taken portfolio actions in anticipation of the same market movements with similar investment results but, presumably, at greater transaction costs. When a purchase or sale of a futures contract is made by the Fund, the Fund is required to deposit with its custodian (or broker, if legally permitted) a specified amount of cash or U.S. Government securities or other securities acceptable to the broker ("initial margin"). The margin required for a futures contract is set by the exchange on which the contract is traded and may be modified during the term of the contract. The initial margin is in the nature of a performance bond or good faith deposit on the futures contract, which is returned to the Fund upon termination of the contract, assuming all contractual obligations have been satisfied. The Fund expects to earn interest income on its initial margin deposits. A futures contract held by the Fund is valued daily at the official settlement price of the exchange on which it is traded. Each day the Fund pays or receives cash, called "variation margin," equal to the daily change in value of the futures contract. This process is known as "marking-to-market." Variation margin paid or received by the Fund does not represent a borrowing or loan by the Fund but is instead settlement between the Fund and the broker of the amount one would owe the other if the futures contract had expired at the close of the previous day. In computing daily net asset value, the Fund will mark-to-market its open futures positions. The Fund is also required to deposit and maintain margin with respect to put and call options on futures contracts written by it. Such margin deposits will vary depending on the nature of the underlying futures contract (and the related initial margin requirements), the current market value of the option, and other futures positions held by the Fund. Although some futures contracts call for making or taking delivery of the underlying securities, usually these obligations are closed out prior to delivery by offsetting purchases or sales of matching futures contracts (same exchange, underlying security or index, and delivery month). If an offsetting purchase price is less than the original sale price, the Fund engaging in the transaction realizes a capital gain, or if it is more, the Fund realizes a capital loss. Conversely, if an offsetting sale price is more than the original purchase price, the Fund engaging in the transaction realizes a capital gain, or if it is less, the Fund realizes a capital loss. The transaction costs must also be included in these calculations. Risks Associated with Futures. There are several risks associated with the use of futures contracts and futures options. A purchase or sale of a futures contract may result in losses in excess of the amount invested in the futures contract. In trying to increase or reduce market exposure, there can be no guarantee that there will be a correlation between price movements in the futures contract and in the portfolio exposure sought. In addition, there are significant differences between the securities and futures markets that could result in an imperfect correlation between the markets, causing a given transaction not to achieve its objectives. The degree of imperfection of correlation depends on circumstances such as: variations in speculative market demand for futures, futures options and the related securities, including technical influences in futures and futures options trading and differences between the securities market and the securities underlying the standard contracts available for trading. For example, in the case of index futures contracts, the composition of the index, including the issuers and the weighting of each issue, may differ from the composition of the Fund's portfolio, and, in the case of interest rate futures contracts, the interest rate levels, maturities, and creditworthiness of the issues underlying the futures contract may differ from the financial instruments held in the Fund's portfolio. A B-8 decision as to whether, when and how to use futures contracts involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected stock price or interest rate trends. Futures exchanges may limit the amount of fluctuation permitted in certain futures contract prices during a single trading day. The daily limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day's settlement price at the end of the current trading session. Once the daily limit has been reached in a futures contract subject to the limit, no more trades may be made on that day at a price beyond that limit. The daily limit governs only price movements during a particular trading day and therefore does not limit potential losses because the limit may work to prevent the liquidation of unfavorable positions. For example, futures prices have occasionally moved to the daily limit for several consecutive trading days with little or no trading, thereby preventing prompt liquidation of positions and subjecting some holders of futures contracts to substantial losses. Stock index futures contracts are not normally subject to such daily price change limitations. There can be no assurance that a liquid market will exist at a time when the Fund seeks to close out a futures or futures option position. The Fund would be exposed to possible loss on the position during the interval of inability to close, and would continue to be required to meet margin requirements until the position is closed. In addition, many of the contracts discussed above are relatively new instruments without a significant trading history. As a result, there can be no assurance that an active secondary market will develop or continue to exist. Limitations on Options and Futures. If other options, futures contracts, or futures options of types other than those described herein are traded in the future, the Fund also may use those investment vehicles, provided the board of directors determines that their use is consistent with the Fund's investment objective. The Fund will not enter into a futures contract or purchase an option thereon if, immediately thereafter, the initial margin deposits for futures contracts held by the Fund plus premiums paid by it for open futures option positions, less the amount by which any such positions are "in-the-money,"/2/ would exceed 5% of the Fund's total assets. When purchasing or selling a futures contract or writing a put option on a futures contract, the Fund must maintain with its custodian (or broker, if legally permitted) cash or cash equivalents (including any margin) equal to the market value of such contract. When writing a call option on a futures contract, the Fund similarly will maintain with its custodian cash or cash equivalents (including any margin) equal to the amount by which such option is in-the-money until the option expires or is closed out by the Fund. The Fund may not maintain open short positions in futures contracts, call options written on futures contracts or call options written on indexes if, in the aggregate, the market value of all such open positions exceeds the current value of the securities in its portfolio, plus or minus unrealized gains and losses on the open positions, adjusted for the historical relative volatility of the relationship between the portfolio and the positions. For this purpose, to the extent the Fund has written call options on specific securities in its portfolio, the value of those securities will be deducted from the current market value of the securities portfolio. - -------------------- /2/ A call option is "in-the-money" if the value of the futures contract that is the subject of the option exceeds the exercise price. A put option is "in-the-money" if the exercise price exceeds the value of the futures contract that is the subject of the option. B-9 In order to comply with Commodity Futures Trading Commission Regulation 4.5 and thereby avoid being deemed a "commodity pool operator," the Fund will use commodity futures or commodity options contracts solely for bona fide hedging purposes within the meaning and intent of Regulation 1.3(z), or, with respect to positions in commodity futures and commodity options contracts that do not come within the meaning and intent of Regulation 1.3(z), the aggregate initial margin and premiums required to establish such positions will not exceed 5% of the fair market value of the assets of the Fund, after taking into account unrealized profits and unrealized losses on any such contracts it has entered into (in the case of an option that is in-the-money at the time of purchase, the in the-money amount (as defined in Section 190.01(x) of the Commission Regulations) may be excluded in computing such 5%). As long as the Fund continues to sell its shares in certain states, the Fund's options and futures transactions also will be subject to certain non- fundamental investment restrictions set forth under "Investment Restrictions" in this statement of additional information. Taxation of Options and Futures. If the Fund exercises a call or put option that it holds, the premium paid for the option is added to the cost basis of the security purchased (call) or deducted from the proceeds of the security sold (put). For cash settlement options and futures options exercised by the Fund, the difference between the cash received at exercise and the premium paid is a capital gain or loss. If a call or put option written by the Fund is exercised, the premium is included in the proceeds of the sale of the underlying security (call) or reduces the cost basis of the security purchased (put). For cash settlement options and futures options written by the Fund, the difference between the cash paid at exercise and the premium received is a capital gain or loss. Entry into a closing purchase transaction will result in capital gain or loss. If an option written by the Fund is in-the-money at the time it was written and the security covering the option was held for more than the long- term holding period prior to the writing of the option, any loss realized as a result of a closing purchase transaction will be long-term. The holding period of the securities covering an in-the-money option will not include the period of time the option is outstanding. If the Fund writes an equity call option/3/ other than a "qualified covered call option," as defined in the Internal Revenue Code, any loss on such option transaction, to the extent it does not exceed the unrealized gains on the securities covering the option, may be subject to deferral until the securities covering the option have been sold. A futures contract held until delivery results in capital gain or loss equal to the difference between the price at which the futures contract was entered into and the settlement price on the earlier of delivery notice date or expiration date. If the Fund delivers securities under a futures contract, the Fund also realizes a capital gain or loss on those securities. For Federal income tax purposes, the Fund generally is required to recognize for each taxable year its net unrealized gains and losses as of the end of the year on futures, futures options and non-equity options positions ("year-end mark-to-market"). Generally, any gain or loss recognized with - -------------------- /3/ An equity option is defined to mean any option to buy or sell stock, and any other option the value of which is determined by reference to an index of stocks of the type that is ineligible to be traded on a commodity futures exchange (e.g., an option contract on a sub-index based on the price of nine hotel-casino stocks). The definition of equity option excludes options on broad-based stock indexes (such as the Standard & Poor's 500 index). B-10 respect to such positions (either by year-end mark-to-market or by actual closing of the positions) is considered to be 60% long-term and 40% short-term, without regard to the holding periods of the contracts. However, in the case of positions classified as part of a "mixed straddle," the recognition of losses on certain positions (including options, futures and futures options positions, the related securities and certain successor positions thereto) may be deferred to a later taxable year. Sale of futures contracts or writing of call options (or futures call options) or buying put options (or futures put options) that are intended to hedge against a change in the value of securities held by the Fund may affect the holding period of the hedged securities. If the Fund were to enter into a short index future, short index futures option or short index option position and the Fund's portfolio were deemed to "mimic" the performance of the index underlying such contract, the option or futures contract position and the Fund's stock positions may be deemed to be positions in a mixed straddle, subject to the above-mentioned loss deferral rules. In order for the Fund to continue to qualify for Federal income tax treatment as a regulated investment company, at least 90% of its gross income for a taxable year must be derived from qualifying income; i.e., dividends, interest, income derived from loans of securities, and gains from the sale of securities or foreign currencies, or other income (including but not limited to gains from options, futures, or forward contracts). In addition, gains realized on the sale or other disposition of securities held for less than three months must be limited to less than 30% of the Fund's annual gross income. Any net gain realized from futures (or futures options) contracts will be considered gain from the sale of securities and therefore be qualifying income for purposes of the 90% requirement. In order to avoid realizing excessive gains on securities held less than three months, the Fund may be required to defer the closing out of certain positions beyond the time when it would otherwise be advantageous to do so. The Fund intends to distribute to shareholders annually any capital gains that have been recognized for Federal income tax purposes (including year- end mark-to-market gains) on options and futures transactions, together with gains on other Fund investments, to the extent such gains exceed recognized capital losses and any net capital loss carryovers of the Fund. Shareholders will be advised of the nature of such capital gain distributions. Rule 144A Securities The Fund may purchase securities that have been privately placed but that are eligible for purchase and sale under Rule 144A under the 1933 Act. (Such securities are hereinafter referred to as "Rule 144A securities.") That Rule permits certain qualified institutional buyers, including investment companies that own and invest at least $100 million in securities, to trade in privately placed securities that have not been registered for sale under the 1933 Act. Artisan Partners, under the supervision of the board of directors, will consider whether Rule 144A securities are illiquid and thus subject to the Fund's restriction of investing no more than 10% of its net assets in illiquid securities. A determination of whether a Rule 144A security is liquid or not is a question of fact. In making this determination, Artisan Partners will consider the trading markets for the specific security, taking into account the unregistered nature of a Rule 144A security. In addition, Artisan Partners could consider the (1) frequency of trades and quotes, (2) number of dealers and potential purchasers, (3) dealer undertakings to make a market, and (4) nature of the security and of marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers, and the mechanics of transfer). The liquidity of Rule 144A securities would be monitored and, if as a result of changed conditions, Artisan Partners determined that a Rule 144A security is no longer liquid, the Fund's holdings of illiquid securities would be reviewed to determine what, if any, steps are required to assure that the Fund does not invest more than 10% of its assets in illiquid securities. Investing in Rule 144A securities could have the effect of increasing the amount of the Fund's assets invested in illiquid securities if qualified institutional buyers are unwilling to purchase such securities. B-11 Lending of Portfolio Securities Subject to restriction (3) under "Investment Restrictions" in this statement of additional information, the Fund may lend its portfolio securities to broker-dealers and banks. Any such loan must be continuously secured by collateral in cash or cash equivalents maintained on a current basis in an amount at least equal to the market value of the securities loaned by the Fund. The Fund would continue to receive the equivalent of the interest or dividends paid by the issuer on the securities loaned, and also would receive an additional return that may be in the form of a fixed fee or a percentage of the collateral. The Fund would have the right to call the loan and obtain the securities loaned at any time on notice of not more than five business days. The Fund would not have the right to vote the securities during the existence of the loan but would call the loan to permit voting of the securities if, in Artisan Partners' judgment, a material event requiring a shareholder vote would otherwise occur before the loan was repaid. In the event of bankruptcy or other default of the borrower, the Fund could experience both delays in liquidating the loan collateral or recovering the loaned securities and losses, including (a) possible decline in the value of the collateral or in the value of the securities loaned during the period while the Fund seeks to enforce its rights thereto, (b) possible subnormal levels of income and lack of access to income during this period, and (c) expenses of enforcing its rights. The Fund does not currently intend to loan more than 5% of its net assets. When-Issued and Delayed-Delivery Securities; Reverse Repurchase Agreements The Fund may purchase securities on a when-issued or delayed-delivery basis. Although the payment and interest terms of these securities are established at the time the Fund enters into the commitment, the securities may be delivered and paid for a month or more after the date of purchase, when their value may have changed. The Fund makes such commitments only with the intention of actually acquiring the securities, but may sell the securities before settlement date if Artisan Partners deems it advisable for investment reasons. The Fund does not currently intend to have commitments to purchase when-issued securities in excess of 5% of its net assets. The Fund may enter into reverse repurchase agreements with banks and securities dealers. A reverse repurchase agreement is a repurchase agreement in which the Fund is the seller of, rather than the investor in, securities and agrees to repurchase them at an agreed-upon time and price. Use of a reverse repurchase agreement may be preferable to a regular sale and later repurchase of securities because it avoids certain market risks and transaction costs. However, reverse repurchase agreements will be treated as borrowing and subject to the Artisan Funds' fundamental limitation on borrowing. At the time the Fund enters into a binding obligation to purchase securities on a when-issued or delayed-delivery basis or enters into a reverse repurchase agreement, liquid assets (cash, U.S. Government securities or other "high-grade" debt obligations) of the Fund having a value at least as great as the purchase price of the securities to be purchased will be segregated on the books of the Fund and held by the custodian throughout the period of the obligation. The use of these investment strategies, as well as borrowing under a line of credit as described below, may increase net asset value fluctuation. Short Sales The Fund may make short sales "against the box." In a short sale, the Fund sells a borrowed security and is required to return the identical security to the lender. A short sale "against the box" involves the sale of a security with respect to which the Fund already owns an equivalent security in kind and amount. A short sale "against the box" enables the Fund to obtain the current market price of a security which it desires to sell but is unavailable for settlement. The Fund does not currently intend to have commitments to make short sales "against the box" in excess of 5% of its net assets. B-12 Line of Credit Subject to restriction (4) under "Investment Restrictions" in this statement of additional information, the Fund may establish and maintain a line of credit with a bank in order to permit borrowing on a temporary basis to meet share redemption requests in circumstances in which temporary borrowing may be preferable to liquidation of portfolio securities. Portfolio Turnover Although the Fund does not purchase securities with a view to rapid turnover, there are no limitations on the length of time that portfolio securities must be held. At times, the Fund may invest for short-term capital appreciation. Portfolio turnover can occur for a number of reasons such as general conditions in the securities markets, more favorable investment opportunities in other securities, or other factors relating to the desirability of holding or changing a portfolio investment. Because of the Fund's flexibility of investment and emphasis on growth of capital, it may have greater portfolio turnover than that of mutual funds that have primary objectives of income or maintenance of a balanced investment position. The future turnover rate may vary greatly from year to year. A high rate of portfolio turnover in the Fund, if it should occur, would result in increased transaction expense, which must be borne by the Fund. High portfolio turnover also may result in the realization of capital gains or losses and, to the extent net short-term capital gains are realized, any distributions resulting from such gains will be considered ordinary income for Federal income tax purposes. (See "Dividend, Capital Gains, and Taxes" in the prospectus, and "Additional Tax Information" in this statement of additional information.) INVESTMENT RESTRICTIONS Fundamental Restrictions Artisan Funds has adopted the following investment restrictions for Artisan International Fund, which may not be changed without the approval of the Fund's shareholders, under which the Fund may not: (1) act as an underwriter of securities, except insofar as it may be deemed an underwriter for purposes of the Securities Act of 1933 on disposition of securities acquired subject to legal or contractual restrictions on resale; (2) purchase or sell real estate (although it may purchase securities secured by real estate or interests therein, or securities issued by companies which invest in real estate or interests therein), commodities, or commodity contracts, except that it may enter into (a) futures and options on futures and (b) forward contracts; (3) make loans, but this restriction shall not prevent the Fund from (a) buying a part of an issue of bonds, debentures, or other obligations which are publicly distributed, or from investing up to an aggregate of 15% of its total assets (taken at market value at the time of each purchase) in parts of issues of bonds, debentures or other obligations of a type privately placed with financial institutions, (b) B-13 investing in repurchase agreements,/4/ or (c) lending portfolio securities, provided that it may not lend securities if, as a result, the aggregate value of all securities loaned would exceed 33% of its total assets (taken at market value at the time of such loan); (4) borrow (including entering into reverse repurchase agreements), except that it may (a) borrow up to 33 1/3% of its total assets, taken at market value at the time of such borrowing, as a temporary measure for extraordinary or emergency purposes, but not to increase portfolio income and (b) enter into transactions in options, futures, and options on futures;/5/ (5) invest in a security if more than 25% of its total assets (taken at market value at the time of a particular purchase) would be invested in the securities of issuers in any particular industry, except that this restriction does not apply to securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities; (6) issue any senior security except to the extent permitted under the Investment Company Act of 1940; (7) with respect to 75% of its total assets, invest more than 5% of its total assets, taken at market value at the time of a particular purchase, in the securities of a single issuer, except for securities issued or guaranteed by the Government of the U.S. or any of its agencies or instrumentalities or repurchase agreements for such securities; (8) acquire more than 10%, taken at the time of a particular purchase, of the outstanding voting securities of any one issuer. The Fund's investment objective is not a fundamental restriction and, therefore, a change in the objective is not subject to shareholder approval. However, investors in the Fund will receive written notification at least 30 days' prior to any change in the Fund's investment objective. Non-Fundamental Restrictions The Fund also is subject to the following non-fundamental restrictions and policies, which may be changed by the board of directors. The Fund may not: - -------------------- /4/ A repurchase agreement involves the sale of securities to the Fund, with the concurrent agreement of the seller to repurchase the securities at the same price plus an amount representing interest at an agreed-upon interest rate, within a specified time, usually less than one week, but, on occasion, at a later time. Repurchase agreements entered into by the Fund will be fully collateralized and will be marked-to-market daily. In the event of a bankruptcy or other default of a seller of a repurchase agreement, the Fund could experience both delays in liquidating the underlying securities and losses, including: (a) possible decline in the value of the collateral during the period while the Fund seeks to enforce its rights thereto; (b) possible subnormal levels of income and lack of access to income during this period; and (c) expenses of enforcing its rights. /5/ The Fund will not purchase securities when total borrowings by the Fund are greater than 5% of its net asset value. B-14 (a) invest in any of the following: (i) interests in oil, gas, or other mineral leases or exploration or development programs (except readily marketable securities, including but not limited to master limited partnership interests, that may represent indirect interests in oil, gas, or other mineral exploration or development programs); (ii) puts, calls, straddles, spreads, or any combination thereof if by reason thereof the value of the Fund's aggregate investment in such securities exceed 5% of its total assets (except that the Fund may enter into transactions in options, futures, and options on futures); and (iii) limited partnerships in real estate unless they are readily marketable; (b) invest in companies for the purpose of exercising control or management; (c) purchase more than 3% of the stock of another investment company or purchase stock of other investment companies equal to more than 5% of the Fund's total assets (valued at time of purchase) in the case of any one other investment company and 10% of such assets (valued at time of purchase) in the case of all other investment companies in the aggregate; any such purchases are to be made in the open market where no profit to a sponsor or dealer results from the purchase, other than the customary broker's commission, except for securities acquired as part of a merger, consolidation, acquisition or reorganization;/6/ (d) purchase or hold securities of an issuer if 5% of the securities of such issuer are owned by those officers, directors or partners of the Fund or of its investment adviser, who each own beneficially more than 1/2 of 1% of the securities of that issuer; (e) purchase securities of issuers (other than issuers of Federal agency obligations or securities issued or guaranteed by any foreign country or asset-backed securities) that, including their predecessors or unconditional guarantors, have been in operation for less than three years, if by reason of such purchase the value of the Fund's investment in all such securities will exceed 5% of its total assets (valued at time of purchase); (f) mortgage, pledge, or hypothecate its assets, except as may be necessary in connection with permitted borrowings or in connection with options, futures, and options on futures; (g) invest more than 5% of its net assets (valued at time of purchase) in warrants, nor more than 2% of its net assets in warrants that are not listed on the New York or American stock exchange; (h) buy or sell an option on a security, a futures contract, or an option on a futures contract unless the option, the futures contract, or the option on the futures contract is offered through the facilities of a recognized securities association or listed on a recognized exchange or similar entity; (i) purchase a put or call option if the aggregate premiums paid for all put and call options exceed 5% of its net assets (less the amount by which any such positions are in-the-money), excluding put and call options purchased as closing transactions; (j) invest more than 10% of its net assets in restricted securities, other than securities eligible for resale pursuant to Rule 144A of the Securities Act of 1933; (k) purchase securities on margin (except for use of short-term credits as are necessary for the clearance of transactions), or sell securities short unless (i) the Fund owns or has the right to obtain securities equivalent in kind and amount to those sold short at no added cost or (ii) the - -------------------- /6/ As long as Fund shares are offered for sale in California, the Fund will not acquire or retain the shares of other open-end investment companies. B-15 securities sold are "when issued" or "when distributed" securities which the Fund expects to receive in recapitalization, reorganization, or other exchange for securities the Fund contemporaneously owns or has the right to obtain and provided that transactions in options, futures, and options on futures are not treated as short sales; or (l) invest more than 10% of its net assets (taken at market value at the time of each purchase) in illiquid securities, including repurchase agreements maturing in more than seven days. PERFORMANCE INFORMATION From time to time the Fund may quote total return figures. "Total Return" for a period is the percentage change in value during the period of an investment in shares of a fund, including the value of shares acquired through reinvestment of all dividends and capital gains distributions. "Average Annual Total Return" is the average annual compounded rate of change in value represented by the Total Return for the period. Average Annual Total Return is computed as follows: n ERV = P(l+T) Where: P = a hypothetical initial investment of $1,000 T = average annual total return n = number of years ERV = ending redeemable value of a hypothetical $1,000 investment made at the beginning of the period, at the end of the period (or fractional portion thereof) The Fund imposes no sales charges and pays no distribution expenses. Income taxes are not taken into account. Performance figures quoted by the Fund are not necessarily indicative of future results. The Fund's performance is a function of conditions in the securities markets, portfolio management, and operating expenses. Although information about past performance is useful in reviewing the Fund's performance and in providing some basis for comparison with other investment alternatives, it should not be used for comparison with other investments using different reinvestment assumptions or time periods. In advertising and sales literature, the performance of the Fund may be compared with that of other mutual funds, indexes or averages of other mutual funds, indexes of related financial assets or data, other accounts or partnerships managed by Artisan Partners, and other competing investment and deposit products available from or through other financial institutions. The composition of these indexes, averages or accounts differs from that of the Fund. Comparison of the Fund to an alternative investment should consider differences in features and expected performance. All of the indexes and averages noted below will be obtained from the indicated sources or reporting services, which the Fund generally believes to be accurate. The Fund also may note its mention (including performance or other comparative rankings) in newspapers, magazines, or other media from time to time. However, the Fund assumes no responsibility for the accuracy of such data. Newspapers and magazines and other media which might mention the Fund include, but are not limited to, the following: B-16 Atlanta Constitution Mutual Fund Letter Barron's Mutual Fund News Service Boston Herald Mutual Fund Values Business Week Morningstar Publications Chicago Tribune Newsweek Chicago Sun-Times The New York Times Cleveland Plain Dealer No-Load Fund Investor CNBC Outstanding Investor Digest CNN Pension World Crain's Chicago Pensions and Investments Business Personal Investor Consumer Reports Jane Bryant Quinn (syndicated Consumer Digest column) Financial World Louis Rukeyser's Mutual Fund Forbes The San Francisco Chronicle Fortune Smart Money Fund Action Stranger's Investment Adviser Investor's Business Daily 13D Opportunities Report Kiplinger's Personal Time Finance Magazine United Mutual Fund Selector Knight-Ridder USA Today Los Angeles Times U.S. News and World Report Milwaukee Business Journal The Wall Street Journal Milwaukee Journal Sentinel Working Woman Money Worth Your Money When a newspaper, magazine or other publication mentions the Fund, such mention may include: (i) listings of some or all of the Fund's holdings, (ii) descriptions of characteristics of some or all of the securities held by the Fund, including price-earnings ratios, earnings, growth rates and other statistical information, and comparisons of that information to similar statistics for the securities comprising any of the indexes or averages listed above; and (iii) descriptions of the Fund's or a portfolio manager's economic and market outlook, generally and for the Fund. The Fund may compare its performance to the Consumer Price Index (All Urban), a widely recognized measure of inflation. The performance of the Fund may be compared to the following indexes or averages: Dow-Jones Industrial Average New York Stock Exchange Composite Standard & Poor's 500 Stock Index Index Standard & Poor's 400 Industrials American Stock Exchange Composite Standard & Poor's Mid-Cap 400 Index Index Wilshire 5000 NASDAQ Composite (These indexes are widely recognized NASDAQ Industrials indicators of general U.S. stock market (These indexes generally reflect results.) the performance of stocks traded in the indicated markets.) B-17 EAFE Index Financial Times-Actuaries World Index (Ex-U.S.) Morgan Stanley Capital International World Index (These indexes are widely recognized indicators of the international markets) The performance of the Fund also may be compared to the following mutual fund industry indexes or averages: Lipper International & Global Funds Average; Lipper General Equity Funds Average; Lipper Equity Funds Average; Lipper International Index; ICD International Equity Funds Average; ICD All Equity Funds Average; ICD General Equity Average; ICD Global Equity Funds Average; ICD International Equity and Global Equity Funds Average; ICD Foreign Securities Index; Morningstar International Stock Average; Morningstar U.S. Diversified Average; Morningstar Equity Fund Average; Morningstar Hybrid Fund Average; Morningstar All Equity Funds Average; and Morningstar General Equity Average. The ICD Indexes reflect the unweighted average total return of the largest twenty four funds within their respective category as calculated and published by ICD. The Lipper International Fund index reflects the net asset value weighted return of the ten largest international funds. The Lipper, ICD and Morningstar averages are unweighted averages of total return performance of mutual funds as classified, calculated and published by these independent services that monitor the performance of mutual funds. The Fund also may use comparative performance as computed in a ranking by Lipper or category averages and rankings provided by another independent service. Should Lipper or another service reclassify the Fund to a different category or develop (and place the Fund into) a new category, the Fund may compare its performance or ranking against other funds in the newly assigned category, as published by the service. The Fund may compare its performance or ranking against all funds tracked by Lipper or another independent service. The Fund may cite its rating, recognition or other mention by Morningstar, Inc. ("Morningstar") or any other entity. Morningstar's rating system is based on risk-adjusted total return performance and is expressed in a star-rating format. The risk-adjusted number is computed by subtracting a Fund's risk score (which is a function of the Fund's monthly returns less the 3- month Treasury bill return) from the Fund's load-adjusted total return score. This numerical score is then translated into rating categories, with the top 10% labeled five star, the next 22.5% labeled four star, the next 35% labeled three star, the next 22.5% labeled two star and the bottom 10% one star. A high rating reflects either above-average returns or below-average risk, or both. To illustrate the historical returns on various types of financial assets, the Fund may use historical data provided by Ibbotson Associates, Inc. ("Ibbotson"), a Chicago-based investment firm. Ibbotson constructs (or obtains) very long-term (since 1926) total return data (including, for example, total return indexes, total return percentages, average annual total returns and standard deviations of such returns) for the following asset types: common stocks, small company stocks, long-term corporate bonds, long-term government bonds, intermediate-term government bonds, U.S. Treasury bills and Consumer Price Index. The Fund also may use historical data compiled by Prudential Securities, Inc., or by other similar sources believed by the Fund to be accurate, illustrating the past performance of small-capitalization stocks, large-capitalization stocks, common stocks, equity securities, growth stocks (small-capitalization, large-capitalization, or both) and value stocks (small- capitalization, large-capitalization, or both). B-18 DIRECTORS AND OFFICERS Directors and officers of the Fund, and their principal business occupations during at least the last five (5) years, are shown below. Directors deemed to be "interested persons" of the Fund for purposes of the 1940 Act are indicated with an asterisk. Positions Held Principal Occupations Name and Age with Registrant during Past 5 Years - ------------ --------------- --------------------- Andrew A. Ziegler* Director, Chairman of the Managing Partner of (37) Board and Chief Executive Artisan Partners; prior to Officer founding Artisan Partners, president and chief operating officer of Strong/Corneliuson Capital Management ("Strong") and president of the Strong Funds from 1990 to 1994; prior thereto, attorney with the law firm of Godfrey & Kahn, S.C., Milwaukee, WI. Carlene Murphy Director and President Managing Partner of Ziegler* Artisan Partners; prior to (39) founding Artisan Partners, a co-portfolio manager of the Strong Common Stock Fund, Strong Opportunity Fund and numerous institutional small-capitalization equity portfolios at Strong since March 1991; prior thereto, a co-portfolio manager of the SteinRoe Special Fund. David A. Erne Director Partner of the law firm (52) Reinhart, Boerner, Van Deuren, Norris & Rieselbach, S.C., Milwaukee, WI. B-19 Thomas R. Hefty Director President of United (48) Wisconsin Services, Inc. (a provider of managed care and specialty business services) since 1986 and chairman of the board and chief executive officer since 1991; and chairman of the board of Blue Cross & Blue Shield United of Wisconsin (parent company of United Wisconsin Services, Inc.) since 1988 and president since 1982. Howard B. Witt Director President and chief (55) executive officer of Littelfuse, Inc. (a manufacturer of advanced circuit protection devices) since 1990 and chairman of the board of Littelfuse since 1993; prior thereto executive vice president of Littelfuse; and director of Franklin Electric Co., Inc. (a manufacturer of electronic motors) since 1994. John M. Blaser Chief Financial Officer, Chief financial officer of (38) Treasurer and Secretary Artisan Partners; prior to joining Artisan Partners, senior vice president with Kemper Securities, Inc. since 1993; prior thereto, with Price Waterhouse. Mark L. Yockey Vice President Partner of Artisan (39) Partners; prior to joining Artisan Partners, portfolio manager of the United International Growth Fund and vice president of Waddell & Reed (investment management firm) since January 1990; prior thereto, equity analyst for Waddell & Reed. B-20 Sandra Jean Vice President Equity trader for Artisan Voss-Reinhardt Partners; prior to joining (31) Artisan Partners, equity trader with Northwestern Mutual since January 1989, prior thereto, sales associate with Dean Witter Reynolds. The address of Mr. Ziegler, Ms. Ziegler, Mr. Blaser, Mr. Yockey and Ms. Voss-Reinhardt is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202. The addresses of the other directors are: Mr. Erne - 1000 N. Water Street, Milwaukee, Wisconsin 53202; Mr. Hefty - 401 W. Michigan Street, Milwaukee, Wisconsin 53203; and Mr. Witt - 800 E. Northwest Highway, Des Plaines, Illinois 60016. Mr. Ziegler and Ms. Ziegler are married to each other. Mr. Ziegler and Ms. Ziegler serve as members of the Executive Committee of the Board of Directors. The Executive Committee, which meets between regular meetings of the Board, is authorized to exercise all of the powers of the Board of Directors. The Executive Committee held one meeting during the fiscal year ended June 30, 1995. The only compensation paid to directors and officers of Artisan Funds for their services as such consists of an annual $5,000 retainer fee (per series of Artisan Funds) paid to directors who are not interested persons of Artisan Funds or Artisan Partners. Artisan Funds has no retirement or pension plans. The following table sets forth compensation expected to be paid by Artisan Funds during the fiscal year ending June 30, 1996 to each of the directors of Artisan Funds.
TOTAL PENSION OR COMPENSATION AGGREGATE RETIREMENT FROM ARTISAN COMPENSATION BENEFITS ACCRUED ESTIMATED ANNUAL INTERNATIONAL FUND FROM ARTISAN AS PART OF FUND BENEFITS UPON AND FUND COMPLEX NAME OF DIRECTOR INTERNATIONAL FUND EXPENSES RETIREMENT PAID TO DIRECTORS ---------------- ------------------ ---------------- ---------------- ------------------ Andrew A. Ziegler $ 0 $0 $0 $ 0 Carlene Murphy Ziegler 0 0 0 0 David A. Erne 2,500 0 0 7,500 Thomas R. Hefty 2,500 0 0 7,500 Howard B. Witt 2,500 0 0 7,500
No shares of the Fund were outstanding on the date of this Statement of Additional Information. However, prior to the commencement of public offering of shares of the Fund, Artisan Partners or one or more of its principals, will purchase shares of the Fund at an initial price of $10.00 per share. B-21 INVESTMENT ADVISORY SERVICES Artisan Partners Limited Partnership ("Artisan Partners") provides investment advisory services to the Fund pursuant to an Investment Advisory Agreement dated December __ , 1995 (the "Advisory Agreement"). Artisan Partners is a Delaware limited partnership. Artisan Investment Corporation was incorporated on December 7, 1994 for the sole purpose of acting as general partner of Artisan Partners. Mr. Ziegler and Ms. Ziegler, as officers of Artisan Investment Corporation, manage Artisan Partners. The principal address of Artisan Partners is 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202. In return for its services, the Fund pays Artisan Partners a monthly fee at the annual rate of 1% of the Fund's average daily net assets up to $500 million; .975 of 1% of average daily net assets from $500 million up to $750 million; .950 of 1% of average daily net assets from $750 million to $1 billion; and .925 of 1% of average daily net assets over $1 billion. The rate of fees paid to Artisan Partners is higher than that paid by other mutual funds reflecting the higher costs involved in actively managing an "overseas" portfolio. Artisan Partners has undertaken to reimburse the Fund for certain expenses, as described in the prospectus. The Advisory Agreement provides that Artisan Partners shall not be liable for any loss suffered by the Fund or its shareholders as a consequence of any act of omission in connection with investment advisory or portfolio services under the agreement, except by reason of willful misfeasance, bad faith or gross negligence on the part of Artisan Partners in the performance of its duties or from reckless disregard by Artisan Partners of its obligations and duties under the Advisory Agreement. The Advisory Agreement may be continued from year to year only so long as the continuance is approved annually (a) by the vote of a majority of the directors of the Fund who are not "interested persons" of the Fund or Artisan Partners cast in person at a meeting called for the purpose of voting on such approval, and (b) by the board of directors or by the vote of a majority (as defined in the 1940 Act) of the outstanding shares of the portfolio. The Agreement will terminate automatically in the event of its assignment (as defined in the 1940 Act). Carlene Murphy Ziegler is a director and president of Artisan Funds, and the portfolio manager of Artisan Small Cap, another series of Artisan Funds. Andrew A. Ziegler is a director and chief executive officer of Artisan Funds. John M. Blaser is the chief financial officer of Artisan Funds and acts as the principal administrative and financial officer. Mark L. Yockey is vice president of Artisan Funds. Sandra J. Voss-Reinhardt is also a vice president of Artisan Funds. Prior to founding Artisan Partners, Ms. Ziegler was a co-portfolio manager of the Strong Common Stock Fund and Strong Opportunity Fund. From 1986 to 1991, Ms. Ziegler was a co-portfolio manager of the SteinRoe Special Fund. Ms. Ziegler holds B.A. and M.A. degrees from the University of Illinois and an M.B.A. from the University of Chicago Graduate School of Business. She also is a Chartered Financial Analyst. Immediately prior to founding Artisan Partners, Mr. Ziegler was president and chief operating officer of Strong, and president of the Strong Funds; prior thereto, he was Executive Vice President and General Counsel of Strong. From 1986 to 1990, Mr. Ziegler was an attorney with the law firm of Godfrey & Kahn, S.C., Milwaukee, WI. Mr. Ziegler holds a B.S. from the University of Wisconsin - Madison and a J.D. from the University of Wisconsin Law School. Prior to joining Artisan Partners, Mr. Blaser was Senior Vice President of Kemper Securities, Inc. since 1993; prior thereto, Mr. Blaser was with Price Waterhouse LLP. Mr. Blaser holds a B.B.A. from the University of Wisconsin - Madison with majors in accounting and finance. He is a Certified Public Accountant with a Personal Financial Specialist designation. B-22 Prior to joining Artisan Partners, Mr. Yockey was portfolio manager of the United International Growth Fund and vice president of Waddell & Reed since January 1990. Prior thereto, Mr. Yockey was an equity analyst for Waddell & Reed. Mr. Yockey holds a B.A. degree and an M.B.A. from Michigan State University. He is also a Chartered Financial Analyst. Prior to joining Artisan Partners, Ms. Voss-Reinhardt was an equity trader with Northwestern Mutual since January 1989; prior thereto, Ms. Voss- Reinhardt was a sales associate with Dean Witter Reynolds. Ms. Voss-Reinhardt holds a B.A. from the University of Wisconsin - Eau Claire. PORTFOLIO TRANSACTIONS Artisan Partners places the orders for the purchase and sale of the Fund's portfolio securities and options and futures contracts. Artisan Partners' overriding objective in effecting portfolio transactions is to seek to obtain the best combination of price and execution. The best net price, giving effect to brokerage commissions, if any, and other transaction costs, normally is an important factor in this decision, but a number of other judgmental factors also may enter into the decision. These include: Artisan Partners' knowledge of negotiated commission rates currently available and other current transaction costs; the nature of the security being traded; the size of the transaction; the desired timing of the trade; the activity existing and expected in the market for the particular security; confidentiality; the execution, clearance and settlement capabilities of the broker or dealer selected and others which are considered; Artisan Partners' knowledge of the financial stability of the broker or dealer selected and such other problems of any broker or dealer. Recognizing the value of these factors, the Fund may pay a brokerage commission in excess of that which another broker or dealer may have charged for effecting the same transaction. Evaluations of the reasonableness of brokerage commissions, based on the foregoing factors, are made on an ongoing basis by Artisan Partners' staff while effecting portfolio transactions. The general level of brokerage commissions paid is reviewed by Artisan Partners, and reports are made annually to the board of directors. With respect to issues of securities involving brokerage commissions, when more than one broker or dealer is believed to be capable of providing the best combination of price and execution with respect to a particular portfolio transaction for the Fund, Artisan Partners often selects a broker or dealer that has furnished it with research products or services such as research reports, subscriptions to financial publications and research compilations, compilations of securities prices, earnings, dividends, and similar data, and computer data bases, quotation equipment and services, research-oriented computer software and services, and services of economic and other consultants. Selection of brokers or dealers is not made pursuant to an agreement or understanding with any of the brokers or dealers; however, Artisan Partners uses internal allocation procedures to identify those brokers or dealers who provide it with research products or services and the amount of research products or services they provide, and endeavors to direct sufficient commissions generated by its clients' accounts in the aggregate, including the Fund, to such brokers or dealers to ensure the continued receipt of research products or services Artisan Partners feels are useful. In certain instances, Artisan Partners receives from brokers and dealers products or services that are used both as investment research and for administrative, marketing, or other non-research purposes. In such instances, Artisan Partners makes a good faith effort to determine the relative proportions of such products or services which may be considered as investment research. The portion of the costs of such products or services attributable to research usage may be defrayed by Artisan Partners (without prior agreement or understanding, as noted above) through brokerage commissions generated by transactions by clients (including the Fund), while the portions of the costs attributable to non-research usage of such products or services is paid by Artisan Partners in cash. No person acting on behalf of the Fund is authorized, in recognition of the value of research products or services, to pay a commission in excess of that which another broker or dealer might have charged for effecting the same transaction. Research products or services furnished by brokers and dealers may be used in servicing any or all of the clients of Artisan Partners and not all such research products or services are used in connection with the management of the Fund. B-23 With respect to the Fund's purchases and sales of portfolio securities transacted with a broker or dealer on a net basis, Artisan Partners also may consider the part, if any, played by the broker or dealer in bringing the security involved to Artisan Partners' attention, including investment research related to the security and provided to the Fund. PURCHASING AND REDEEMING SHARES Purchases and redemptions are discussed in the prospectus under the headings "How to Buy Shares," and "How to Sell Shares." All of that information is incorporated herein by reference. Shares of the Fund may be purchased through certain financial service companies without incurring any transaction fee. For accounting and shareholder servicing services provided by such a company with respect to Fund shares held by that company for its customers, the company may charge a fee of up to 0.35% of the annual average value of those accounts. The Fund pays a portion of those fees not to exceed the estimated fees and expenses that the Fund would pay to its own transfer agent if the shares of the Fund held by such customers of the company were registered directly in their names on the books of the Fund's transfer agent. The balance of those fees is paid by Artisan Partners. Net Asset Value. The net asset value of the shares of the Fund is determined as of the close of regular session trading on the New York Stock Exchange ("NYSE") (currently 3:00 p.m., Central time) each day the NYSE is open for trading. The NYSE is regularly closed on Saturdays and Sundays and on New Year's Day, the third Monday in February, Good Friday, the last Monday in May, Independence Day, Labor Day, Thanksgiving, and Christmas. If one of these holidays falls on a Saturday or Sunday, the NYSE will be closed on the preceding Friday or the following Monday, respectively. Net asset value will not be determined on days when the NYSE is closed unless, in the judgment of the board of directors, net asset value of the Fund should be determined on any such day, in which case the determination will be made at 3:00 p.m., Central time. The net asset value per share of the Fund is determined by dividing the value of all its securities and other assets, less its liabilities, by the number of shares of the Fund outstanding. The Fund intends to pay all redemptions in cash and is obligated to redeem shares solely in cash up to the lesser of $250,000 or one percent of the net assets of the Fund during any 90-day period for any one shareholder. However, redemptions in excess of such limit may be paid wholly or partly by a distribution in kind of readily marketable securities. If redemptions were made in kind, the redeeming shareholders might incur transaction costs in selling the securities received in the redemptions. The Fund reserves the right to suspend or postpone redemptions of its shares during any period when: (a) trading on the NYSE is restricted, as determined by the Commission, if the NYSE is closed for other than customary weekend and holiday closings; (b) the Commission has by order permitted such suspension; or (c) an emergency, as determined by the Commission, exists, making disposal of portfolio securities or valuation of net assets of the Fund not reasonably practicable. The Fund and Artisan Partners each have adopted a code of ethics that, among other things, regulates the personal security transactions of certain officers, directors, partners and employees of the Fund and Artisan Partners. ADDITIONAL TAX INFORMATION The Artisan Funds intends for the Fund to qualify and continue to qualify as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code") and thus not be subject to federal income taxes on amounts which it distributes to shareholders. B-24 To the extent the Fund invests in foreign securities, it may be subject to withholding and other taxes imposed by foreign countries. Tax treaties between certain countries and the United States may reduce or eliminate such taxes. Investors may be entitled to claim U.S. foreign tax credits with respect to such taxed, subject to certain provisions and limitations contained in the Code. Specifically, if more than 50% of the Fund's total assets at the close of any fiscal year consist of stock or securities of foreign corporations, the Fund may file an election with the Internal Revenue Service pursuant to which shareholders of the Fund will be required to (i) include in ordinary gross income (in addition to taxable dividends actually received) their pro rata shares of foreign income taxes paid by the Fund even though not actually received, (ii) treat such respective pro rata shares as foreign income taxes paid by them, and (iii) deduct such pro rata shares in computing their taxable incomes, or, alternatively, use them as foreign tax credits, subject to applicable limitations, against their United States income taxes. Shareholders who do not itemize deductions for Federal income tax purposes will not, however, be able to deduct their pro rata portion of foreign taxes paid by the Fund, although such shareholders will be required to include their share of such taxes in gross income. Shareholders who claim a foreign tax credit may be required to treat a portion of dividends received from the Fund as separate category income for purposes of computing the limitations on the foreign tax credit available to such shareholders. Tax-exempt shareholders will not ordinarily benefit from this election relating to foreign taxes. Each year, the Fund will notify shareholders of the amount of (i) each shareholder's pro rata share of foreign income taxes paid by the Fund, and (ii) the portion of Fund dividends which represent income from each foreign country if the Fund qualifies to pass along such credit. The Fund may purchase the securities of certain foreign investment funds or trusts called passive foreign investment companies ("PFICs"). In addition to bearing their proportionate share of the Fund's expenses (management fees and operating expenses), shareholders will also indirectly bear similar expenses of PFICs. Capital gains on the sale of PFIC holdings will be deemed to be ordinary income regardless of how long the Fund holds its investment. In addition, the Fund may be subject to corporate income tax and an interest charge on certain dividends and capital gains earned from PFICs, regardless of whether such income and gains are distributed to shareholders. In accordance with tax regulations, the Fund intends to treat PFICs as sold on the last day of the Fund's fiscal year and recognize any gains for tax purposes at that time; losses will not be recognized. Such gains will be considered ordinary income which the Fund will be required to distribute even though it has not sold the security and received cash to pay such distributions. CUSTODIAN State Street Bank & Trust Company ("State Street"), 1776 Heritage Drive, North Quincy, MA 02171, acts as custodian of the securities and other assets of the Fund. State Street is responsible for, among other things, safeguarding and controlling the Fund's cash and securities, handling the receipt and delivery of securities, and collecting interest and dividends on the Fund's investments. State Street also performs portfolio accounting services for the Fund. State Street is not an affiliate of Artisan Partners or its affiliates. State Street is authorized to deposit securities in securities depositories for the use of services of sub-custodians. INDEPENDENT ACCOUNTANTS Price Waterhouse LLP, 100 East Wisconsin Avenue, Milwaukee, Wisconsin 53202 serves as the Fund's independent accountants, providing services including (i) audit of the annual financial statements; (ii) assistance and consultation in connection with Securities and Exchange Commission filings; and (iii) review of the annual income tax returns filed on behalf of the Fund. B-25 [LOGO OF ARTISAN FUNDS] ARTISAN SMALL CAP FUND ANNUAL REPORT JUNE 30, 1995 INVESTMENT MANAGEMENT PRACTICED WITH INTELLIGENCE AND DISCIPLINE IS AN ART. ARTISAN SMALL CAP FUND (A Series of Artisan Funds, Inc.) Schedule of Investments June 30, 1995
- -------------------------------------------------------------------------------- Shares Quoted Held Market Value - -------------------------------------------------------------------------------- COMMON STOCKS - 91.3% BANKS/SAVINGS AND LOANS - 3.5% 61,450 *Brooklyn Bancorp, Inc. - New York based thrift........ $ 2,073,938 20,000 U.S. Trust Corporation - Asset management and trust banking.................. 1,440,000 ------------ 3,513,938 BASIC INDUSTRY - 3.5% 111,850 Material Sciences Corporation - Specialty coated and laminated materials............ 2,278,944 100,000 *Steel of West Virginia, Inc. - Specially engineered steel products................. 1,150,000 ------------ 3,428,944 BUSINESS SERVICES - 6.9% 96,900 *Bell & Howell Holdings Company - Systems and services for information access and dissemination... 1,962,225 49,100 *CommNet Cellular Inc. - Rural cellular phone systems in the Rockies......... 1,374,800 93,800 *Intercel, Inc. - Rural cellular telephone and PCS systems......................................... 1,418,725 107,600 New England Business Service, Inc. - Business forms and office products.................. 2,125,100 ------------ 6,880,850 CAPITAL SPENDING - 7.9% 78,150 Belden Inc. - Wire and cable products for electrical and electronics markets............................. 2,110,050 84,900 Hardinge Inc. - Machine tool manufacturer............. 1,623,713 82,700 *Holophane Corporation - Highly engineered lighting fixtures................. 1,819,400 66,100 *Insilco Corporation - Multi-industry: office products, electronics and auto parts................ 2,338,287 ------------ 7,891,450 COMPUTER RELATED - 3.1% 51,500 *BDM International, Inc. - Information systems and software consulting......... 1,049,313 50,700 *DH Technology Incorporated - Specialty printers....... 1,394,250 21,300 *UUNET Technologies, Inc. - Internet access software... 585,750 2,000 *VideoServer, Inc. - Multimedia networking equipment... 78,000 ------------ 3,107,313
Annual Report Schedule of Investments (continued)
- -------------------------------------------------------------------------------- Shares Quoted Held Market Value - -------------------------------------------------------------------------------- CONSUMER CYCLICALS - 2.9% 120,050 *Strattec Security Corporation - Automotive locks and keys........................... $ 1,470,612 46,500 Superior Industries International, Inc. - Stainless steel automotive wheels................... 1,447,313 ------------ 2,917,925 CONSUMER SERVICES- 5.4% 11,800 Catalina Marketing Corporation - Electronic grocery point-of-sale coupons............ 632,775 77,000 *International Family Entertainment, Inc. - Family oriented entertainment programming........... 1,212,750 100,600 *Jones Intercable, Inc. - Cable TV system operator..... 1,534,150 27,350 The Marcus Corporation - Lodging and movie theater operator.................. 827,338 61,400 True North Communications, Inc. - Advertising agency.. 1,158,925 ------------ 5,365,938 CONSUMER STAPLES - 8.9% 65,600 AptarGroup, Inc. - Pumps, valves and closures for consumer packaging.............................. 2,107,400 53,300 *Celestial Seasonings, Inc. - Herbal teas.............. 959,400 101,700 *Fossil, Inc. - Fashion watches and accessories........ 1,957,725 94,500 *Libbey Inc. - Consumer and commercial glassware....... 1,960,875 96,900 *Syratech Corporation - Silver flatware and giftware... 1,817,288 ------------ 8,802,688 ELECTRONICS - 9.4% 5,000 *Anadigics, Inc. - Gallium arsenide integrated circuits 97,500 91,800 Dallas Semiconductor Corporation - Electronic components and subsystems................ 1,881,900 39,150 Kent Electronics Corporation - Electronic component distributor.................... 1,482,806 59,600 *Littelfuse, Inc. - Circuit protection devices......... 1,866,225 53,800 Marshall Industries - Electronic component distributor 1,802,300 112,500 Methode Electronics, Inc. - Electronic interconnect devices..................... 2,193,750 ------------ 9,324,481 ENERGY SERVICES - 1.8% 65,800 *Tech-Sym Corporation - Electronic systems for seismic exploration and communications.............. 1,801,275
Annual Report 2 Schedule of Investments (continued)
- -------------------------------------------------------------------------------- Shares Quoted Held Market Value - -------------------------------------------------------------------------------- EXPLORATION/PRODUCTION - 4.9% 153,600 *Cairn Energy USA, Inc. - Oil and gas exploration...... $ 1,689,600 205,800 *Lomak Petroleum, Inc. - Oil and gas exploration....... 1,569,225 77,300 *Nuevo Energy Company - Oil and gas exploration........ 1,555,662 ------------ 4,814,487 HEALTHCARE SERVICES - 1.6% 43,800 *Community Health Systems, Inc. - Rural hospitals mainly in the southeast............. 1,483,725 5,000 *OccuSystems, Inc. - Occupational healthcare centers... 85,625 ------------ 1,569,350 INSURANCE - 1.6% 37,900 PMI Group, Inc. - Private mortgage insurance.......... 1,643,912 MEDICAL DEVICES/SUPPLIES - 3.8% 7,000 *Bird Medical Technologies, Inc. - Respiratory care and infection control products..... 58,625 44,800 Puritan Bennett Corporation - Respiratory products.... 1,730,400 49,200 *Sybron International Corporation - Laboratory and dental supplies...................... 1,961,850 ------------ 3,750,875 REAL ESTATE INVESTMENT TRUSTS - 1.8% 119,100 RFS Hotel Investors, Inc. - Hotel real estate investment trust.................. 1,816,275 RESTAURANTS - 5.9% 93,250 *Daka International, Inc. - Fuddruckers restaurants and food service management......................... 2,156,406 63,300 *IHOP Corp. - Casual family restaurants................ 1,629,975 125,500 *Quality Dining, Inc. - Franchisee of Burger King's, Chili's and Bruegger's Bagels....................... 2,039,375 ------------ 5,825,756 RETAILING - 8.0% 162,200 *Cole National Corporation - Retailer of eyeware and gift items.................. 1,682,825 59,100 *Proffitt's, Inc. - Regional department stores in the southeast......... 1,758,225 90,000 ShopKo Stores, Inc. - General merchandise discount retailer............... 967,500 58,700 *The Men's Wearhouse, Inc. - Discount men's clothing stores...................... 1,614,250 142,800 *Zale Corporation - Fine jewelry retailer.............. 1,927,800 ------------ 7,950,600
3 Annual Report Schedule of Investments (continued)
- -------------------------------------------------------------------------------- Shares Quoted Held Market Value - -------------------------------------------------------------------------------- SOFTWARE/TELECOMMUNICATIONS - 3.4% 2,000 *Inference Corporation - Customer service interaction software............... $ 28,250 60,200 *Plantronics, Inc. - Telephone headsets................ 1,610,350 2,000 *Premisys Communications, Inc. - Telecommunications access equipment................. 129,125 74,600 *Wholesale Cellular USA, Inc. - Distributor of cellular telephones.................. 1,603,900 ------------ 3,371,625 TRANSPORTATION RELATED - 1.4% 86,500 *Truck Components Inc. - Heavy-duty truck parts........ 1,362,375 FOREIGN SECURITIES - 5.6% BERMUDA - 1.9% INSURANCE 70,900 Partner Re Holdings Ltd. (USD/NASDAQ) - Bermuda based catastrophe insurance................. 1,852,262 NORWAY - 1.8% ENERGY SERVICES 61,700 *Petroleum Geo-Services AS (USD/ADR) - Seismic data collection............................. 1,773,875 THE NETHERLANDS - 1.9% CAPITAL SPENDING 67,600 *Elsag Bailey Process Automation N.V. (USD/NYSE) - Process control systems............................. 1,859,000 ------------ TOTAL FOREIGN SECURITIES.............................. 5,485,137 ------------ TOTAL COMMON STOCKS (Cost $84,257,251).................................... $ 90,625,194
Annual Report 4 Schedule of Investments (continued)
- -------------------------------------------------------------------------------- Par Amount Coupon Maturity Market Value - -------------------------------------------------------------------------------- SHORT TERM INVESTMENTS - 13.7% U.S. TREASURIES - 13.7% $13,670,000 United States Treasury Bills 5.00% 07/20/95 $ 13,633,926 ------------ TOTAL SHORT TERM INVESTMENTS (Cost $13,633,926)................................... 13,633,926 TOTAL INVESTMENTS - 105.0% (Cost $97,891,177)................................... 104,259,120 Other assets less liabilities - (5.0)%............... (4,990,269) ------------ TOTAL NET ASSETS (**)................................ $ 99,268,851 ============
* Non-income producing securities ** Percentage for the various classifications relate to total net assets The accompanying notes to financial statements are an integral part of this schedule. 5 Annual Report ARTISAN SMALL CAP FUND (A SERIES OF ARTISAN FUNDS, INC.) STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 1995 ASSETS: Investments in securities, at value (cost $97,891,177)......... $104,259,120 Cash........................................................... 38,403 Receivable from fund shares sold............................... 6,533,436 Accrued dividends.............................................. 11,942 Organizational costs........................................... 66,237 Prepaid registration expenses.................................. 79,775 ------------ Total assets................................................ 110,988,913 LIABILITIES: Payable for investments purchased.............................. 11,574,050 Payable for organizational costs............................... 66,237 Payable for registration expenses.............................. 79,775 ------------ Total liabilities........................................... 11,720,062 ------------ Total net assets............................................ $ 99,268,851 ============ NET ASSETS CONSIST OF THE FOLLOWING: Fund shares issued and outstanding............................. $ 93,383,139 Net unrealized appreciation on investments..................... 6,367,943 Accumulated undistributed net realized losses on investments... (425,957) Accumulated undistributed net investment loss.................. (56,274) ------------ $ 99,268,851 ============ NET ASSET VALUE PER SHARE Net asset value, offering price and redemption price per share ($.01 par value, 5,000,000,000 shares authorized, [$ 99,268,851/8,614,744 shares outstanding]).................. $11.52 ======
The accompanying notes to financial statements are an integral part of these statements. Annual Report 6 ARTISAN SMALL CAP FUND (A SERIES OF ARTISAN FUNDS, INC.) STATEMENT OF OPERATIONS FOR THE PERIOD FROM COMMENCEMENT OF OPERATIONS (MARCH 28, 1995) THROUGH JUNE 30, 1995 INVESTMENT INCOME: Interest....................................................... $ 104,648 Dividends...................................................... 28,293 ---------- Total investment income..................................... 132,941 EXPENSES: Advisory fees.................................................. 66,510 Transfer agent fees............................................ 47,078 Professional fees.............................................. 18,108 Registration fees.............................................. 17,418 Shareholder communications..................................... 16,187 Custodian fees................................................. 10,241 Accounting fees................................................ 6,170 Directors' fees................................................ 3,994 Organizational costs........................................... 2,256 Other operating expenses....................................... 1,253 ---------- Total expenses.............................................. 189,215 ---------- Net investment loss......................................... (56,274) REALIZED AND UNREALIZED GAINS ON INVESTMENTS - NET: Net realized loss on investments............................... (425,957) Net increase in unrealized appreciation on investments......... 6,367,943 ---------- Net gain on investments........................................ 5,941,986 ---------- Net increase in net assets resulting from operations........ $5,885,712 ==========
The accompanying notes to financial statements are an integral part of these statements. 7 Annual Report ARTISAN SMALL CAP FUND (A SERIES OF ARTISAN FUNDS, INC.) STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD FROM COMMENCEMENT OF OPERATIONS (MARCH 28, 1995) THROUGH JUNE 30, 1995 OPERATIONS: Net investment loss............................................ $ (56,274) Net realized loss on investments............................... (425,957) Net increase in unrealized appreciation on investments......... 6,367,943 ----------- Net increase in net assets resulting from operations........ 5,885,712 FUND SHARE ACTIVITIES: Proceeds from shares issued (8,717,000 shares)................. 94,523,183 Cost of shares redeemed (112,256 shares)....................... (1,240,044) ----------- Net increase in net assets resulting from Fund share activities.......................................... 93,283,139 Total increase.............................................. 99,168,851 Net assets at the beginning of the period...................... 100,000 ----------- Net assets at the end of the period............................ $99,268,851 ===========
The accompanying notes to financial statements are an integral part of these statements. Annual Report 8 ARTISAN SMALL CAP FUND (A SERIES OF ARTISAN FUNDS, INC.) FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)
PERIOD ENDED JUNE 30, 1995*** ---------------- Net asset value, commencement of operations (March 28, 1995) $10.00 Income from investment operations: Net investment loss (0.01) Net realized and unrealized gains (losses) on securities 1.53 ------ Total from investment operations 1.52 ------ Net asset value, end of period $11.52 ====== Total Return 15.2%** Ratios/supplemental data: Net assets, end of period (millions) $99.3 Ratio of expenses to average net assets 2.00%* Ratio of net investment income to average net assets (0.59)%* Portfolio turnover rate 9.28%
*Annualized **Not annualized ***For the period from commencement of operations (March 28, 1995) through June 30, 1995 The accompanying notes to financial statements are an integral part of these statements. 9 Annual Report ARTISAN SMALL CAP FUND (A Series of Artisan Funds, Inc.) Notes to Financial Statements June 30, 1995 (1) Summary of significant accounting policies: The Artisan Small Cap Fund (the "Fund") is a series of Artisan Funds, Inc. which was incorporated on January 5, 1995 as a Wisconsin corporation and is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end management investment company. The following is a summary of significant accounting policies of the Fund: (a) Security valuation - Each security is valued at the latest sales price reported by the principal security exchange on which the issue is traded, or if no sale is reported, the latest sales price reported from previous days trading activities. Securities for which prices are not readily available or which management believes that the last sales price is not reflective of the fair value of the security are valued at fair value as determined in good faith under consistently applied procedures established by and under the general supervision of the Board of Directors. Short-term investments maturing within sixty days of their purchase date are valued at amortized cost which approximates market. (b) Income taxes - No provision has been made for federal income taxes since the Fund intends to 1) distribute substantially all of its taxable income as well as realized gains from the sale of investment securities to its shareholders and 2) comply with all provisions of the Internal Revenue Code applicable to regulated investment companies. (c) Portfolio transactions - Security and shareholder transactions are recorded no later than the first business day after the trade date. Net realized gains and losses on common stocks are computed on the specific identification basis. (d) Other - Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is reported on the accrual basis. (2) Transactions with affiliates: Artisan Partners Limited Partnership (the "Adviser"), with which certain officers and directors of the Fund are affiliated, provides investment advisory and administrative services to the Fund. In exchange for these services, the Fund pays a monthly management fee to the Adviser as follows: Average Daily Net Asset Value Annual Rate ----------------------------- ----------- Less than $500 million 1.000% $500 million to $750 million 0.975% $750 million to $1 billion 0.950% Greater than $1 billion 0.925% Annual Report 10 ARTISAN SMALL CAP FUND (A Series of Artisan Funds, Inc.) Notes to Financial Statements June 30, 1995 The Fund also incurs other expenses for services such as maintaining shareholder records and furnishing shareholder statements and reports. The Adviser has undertaken to reimburse the Fund for any ordinary operating expenses in excess of 2.00% of average daily net assets annually. (3) Organization costs and prepaid registration expenses: Organization costs are amortized over sixty months. These expenses were paid by the Adviser which will be reimbursed by the Fund over the same time period. The proceeds of any redemption of the initial shares by the original shareholders will be reduced by a pro-rata portion of any unamortized expenses at the time of redemption. Registration expenses of the Fund are amortized over twelve months. (4) Investment transactions: For the period from commencement of operations (March 28, 1995) to June 30, 1995, the cost of purchases and the proceeds from the sales of investment securities (excluding short-term securities) were $88,488,177 and $3,804,972, respectively. (5) Income tax information: Aggregate gross unrealized appreciation (depreciation) on investments as of June 30, 1995 based on investment cost of $97,883,712 for federal tax purposes, is as follows: Aggregate gross unrealized appreciation on investments $6,765,405 Aggregate gross unrealized depreciation on investments (389,998) ---------- Net unrealized appreciation $6,375,407 ========== 11 Annual Report [LETTERHEAD OF PRICE WATERHOUSE LLP] - -------------------------------------------------------------------------------- Price Waterhouse LLP [LOGO] Report of Independent Accountants To the Board of Directors and Shareholders of Artisan Funds, Inc. In our opinion, the accompanying statement of assets and liabilities, including the schedule of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of the Artisan Small Cap Fund (constituting Artisan Funds, Inc., hereafter referred to as the "Fund") at June 30, 1995, and the results of its operations, the changes in its net assets and the financial highlights for the period March 28, 1995 (commencement of operations) through June 30, 1995, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at June 30, 1995 by correspondence with the custodian, provides a reasonable basis for the opinion expressed above. /s/ Price Waterhouse LLP July 19, 1995 -------------------------------------------------------------------- This report is submitted for the information of shareholders of the Fund. It is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. -------------------------------------------------------------------- PART C OTHER INFORMATION ITEM 24. Financial Statements and Exhibits (a) Financial Statements: (1) Financial Statements included in Part A of this registration statement: None. (2) Financial Statements included in Part B of this amendment: Artisan Small Cap Fund ---------------------- The following financial statements, but no other part of the report, are incorporated by reference to the following portions of Registrant's annual report to shareholders for the fiscal year ended June 30, 1995: - Schedule of Investments at June 30, 1995 - Statement of Assets and Liabilities at June 30, 1995 - Statement of Operations for the Period Ended June 30, 1995 - Statement of Changes in Net Assets for the Period Ended June 30, 1995 - Notes to Financial Statements - Report of Independent Accountants Note: the following schedules have been omitted for the following reasons: Schedule I - The required information is presented in the Schedule of Investments at June 30, 1995. Schedules II, III, IV, V, VI and VII - the required information is not present. (b) Exhibits: 1.1 Amended and Restated Articles of Incorporation of the Registrant. 1.2 Articles of Amendment dated October 12, 1995. 2 Bylaws, as amended. 3 None C-1 4 None (Registrant does not issue share certificates.) 5.1 Investment Advisory Agreement between the Registrant and Artisan Partners Limited Partnership relating to Artisan Small Cap Fund. 5.2 Form of Investment Advisory Agreement between the Registrant and Artisan Partners Limited Partnership relating to Artisan International Fund. 6 None 7 None 8 Custodian Agreement and Accounting Services Agreement between the Registrant and State Street Bank and Trust Company. 9 Transfer Agency Agreement between the Registrant and State Street Bank and Trust Company. 10.1 Opinion and Consent of Counsel dated March 8, 1995 with respect to Artisan Small Cap Fund. 10.2 Opinion and Consent of Counsel dated October 13, 1995 with respect to Artisan International Fund. 11 Consent of Independent Accountants. 12 None 13 Subscription Agreement between the Registrant and Andrew A. Ziegler and Carlene Murphy Ziegler relating to Artisan Small Cap Fund. 14 IRA plan booklet dated March 1995. 15 None 16 Schedule of computation of performance quotations. 17 Financial Data Schedule. 18 Form of account application. ITEM 25. Persons Controlled by or Under Common Control With Registrant. The Registrant does not consider that there are any persons directly or indirectly controlling, controlled by, or under common control with, the Registrant within the meaning of this item. The information in the prospectus under the caption "The Fund in Detail - Organization - Management" and in the statement of additional information under the caption "Investment Advisory Services" is incorporated herein by reference. ITEM 26. Number of Holders of Securities. C-2 Number of Record Holders Title of Series as of October 2, 1995 --------------- --------------------- Artisan Small Cap Fund 13,170 Artisan International Fund 0 ITEM 27. Indemnification. Article VIII of Registrant's Amended Articles of Incorporation (Exhibit 1.1 and 1.2, which are incorporated herein by reference) provides that the Registrant shall indemnify and advance expenses to its currently acting and its former directors and officers to the fullest extent that indemnification of directors and officers is permitted by the Wisconsin Statutes, and the Board of Directors may by bylaw, resolution or agreement make further provision for indemnification of directors, officers, employees and agents to the fullest extent permitted by the Wisconsin Statutes; provided however, that nothing therein shall be construed to protect any director or officer of the Registrant against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The Registrant will not advance attorneys' fees or other expenses incurred by the person to be indemnified unless the Registrant shall have received an undertaking by or on behalf of such person to repay the advance unless it is ultimately determined that such person is entitled to indemnification and one of the following conditions shall have occurred: (i) such person shall provide security for his undertaking, (ii) the Registrant shall be insured against losses arising by reason of any lawful advances, or (iii) a majority of the disinterested, non-party directors of the Registrant, or an independent legal counsel in a written opinion, shall have determined that based on a review of readily available facts there is reason to believe that such person ultimately will be found entitled to indemnification. Registrant and its directors and officers are insured under a policy of insurance maintained by Registrant, within the limits and subject to the limitations of the policy, against certain expenses in connection with the defense of actions, suits or proceedings, and certain liabilities that might be imposed as a result of such actions, suits or proceedings, to which they are parties by reason of being or having been such directors or officers. The policy expressly excludes coverage for any director or officer whose personal dishonesty, fraudulent breach of trust, lack of good faith, or intention to deceive or defraud has been finally adjudicated or may be established or who willfully fails to act prudently. ITEM 28. Business and Other Connections of Investment Adviser. C-3 The information in the prospectus in the second through seventh paragraphs under the caption "The Fund in Detail - Organization - Management" is incorporated herein by reference. For a description of other business, profession, vocation or employment of a substantial nature in which any general partner, managing general partner, director or officer of Artisan Partners Limited Partnership has engaged during the last two years for his account or in the capacity of director, officer, employee, partner or trustee, see the information under the caption "Directors and Officers" in the statement of additional information. ITEM 29. Principal Underwriters. None ITEM 30. Location of Accounts and Records. John M. Blaser Artisan Partners Limited Partnership 1000 North Water Street, Suite 1770 Milwaukee, Wisconsin 53202 ITEM 31. Management Services. Not applicable. ITEM 32. Undertakings. (a) Not applicable. (b) Registrant undertakes to file a post-effective amendment, using financial statements of the series designated Artisan International Fund, that need not be certified, no later than 60 days after the end of the four to six month period after effectiveness of this Registration Statement. (c) Registrant undertakes to furnish to each person to whom a prospectus is delivered with a copy of the Registrant's latest annual report to shareholders, upon request and without charge. (d) Registrant undertakes, if requested to do so by the holders of at least 10% of the Registrant's outstanding shares, to call a meeting of shareholders for the purpose of voting upon the question of removal of a director or directors and to assist in communications with other shareholders as required by Section 16(c) of the Investment Company Act of 1940. C-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it has duly caused this amendment to the registration statement be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Milwaukee and state of Wisconsin on November 27, 1995. ARTISAN FUNDS, INC. /s/ Andrew A. Ziegler By __________________________________________ Andrew A. Ziegler, Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this amendment to the registration statement has been signed below by the following person in the capacities and on the date indicated.
Name Title Date /s/ Andrew A. Ziegler __________________________ Director, Chief Executive ) Andrew A. Ziegler Officer (principal executive ) officer) ) ) /s/ Carlene Murphy Ziegler ) __________________________ Director and President ) Carlene Murphy Ziegler ) ) /s/ David A. Erne ) __________________________ Director ) David A. Erne ) November 27, 1995 ) /s/ Thomas R. Hefty ) __________________________ Director ) Thomas R. Hefty ) ) /s/ Howard B. Witt ) __________________________ Director ) Howard B. Witt ) ) /s/ John M. Blaser ) __________________________ Chief Financial Officer, ) John M. Blaser Treasurer and Secretary ) (principal financial and ) accounting officer) )
Index of Exhibits Filed with this Registration Statement --------------------------------------------------------
Exhibit Sequential number Exhibit page - ------- ------------------------------------------------------------- ---------- 1.1 Amended and Restated Articles of Incorporation of the Registrant. 1.2 Articles of Amendment dated October 12, 1995. 2 Bylaws, as amended. 5.1 Investment Advisory Agreement between the Registrant and Artisan Partners Limited Partnership relating to Artisan Small Cap Fund. 5.2 Form of Investment Advisory Agreement between the Registrant and Artisan Partners Limited Partnership relating to Artisan International Fund. 8 Custodian Agreement and Accounting Services Agreement between the Registrant and State Street Bank and Trust Company. 9 Transfer Agency Agreement between the Registrant and State Street Bank and Trust Company. 10.1 Opinion and Consent of Counsel dated March 8, 1995 with respect to Artisan Small Cap Fund. 10.2 Opinion and Consent of Counsel dated October 13, 1995 with respect to Artisan International Fund. 11 Consent of Independent Accountants. 13 Subscription Agreement between the Registrant and Andrew A. Ziegler and Carlene Murphy Ziegler relating to Artisan Small Cap Fund. 14 IRA plan booklet dated March 1995. 16 Schedule of computation of performance quotations. 17 Financial Data Schedule. 18 Form of account application.
EX-99.1.1 2 AMEND AND RESTATED ARTICLES IN INCOR EXHIBIT 1.1 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF ARTISAN FUNDS, INC. The following Amended and Restated Articles of Incorporation of Artisan Funds, Inc. duly adopted pursuant to the authority and provisions of Chapter 180 of the Wisconsin Statutes, supersede and take the place of the existing articles of incorporation and any amendments thereto: ARTICLE I --------- The name of the corporation (hereinafter called the "Corporation") is: Artisan Funds, Inc. ARTICLE II ---------- The period of existence shall be perpetual. ARTICLE III ----------- The purpose for which the Corporation is organized is to act as an open-end management investment company registered with the Securities and Exchange Commission (the "SEC") pursuant to the Investment Company Act of 1940, as amended from time to time (the "Investment Company Act"), and for any other purposes for which corporations may be organized under Chapter 180 of the Wisconsin Statutes, as amended from time to time (the "WBCL"). ARTICLE IV --------- A. The Corporation is authorized to issue 50,000,000,000 shares of common stock, par value $.01 per share. Initially, 5,000,000,000 shares shall be classified as Artisan Small Cap Fund. The remaining 45,000,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph. B. The Board of Directors is authorized to classify or to reclassify (i.e., into classes and series of classes), from time to time, any unissued shares of stock of the Corporation, whether now or hereafter authorized, by setting, changing or eliminating the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of the stock to the fullest extent permissible under the WBCL. C. Unless otherwise provided by the Board of Directors prior to the issuance of the stock, the shares of any and all classes and series of stock shall be subject to the following: (1) The Board of Directors may redesignate a class or series of stock whether or not shares of such class or series are issued and outstanding; provided that such redesignation does not affect the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications or terms or conditions of redemption of such class or series of stock. (2) The assets and liabilities and the income and expenses for each class shall be attributable to that class. The assets and liabilities and the income and expenses of each series within a class of the Corporation's stock shall be determined separately and, accordingly, the net asset value of shares of the Corporation's stock may vary from series to series within a class. The income or gain and the expenses or liabilities of the Corporation shall be allocated to each class or series of stock as determined by or under the direction of the Board of Directors. (3) Shares of each class or series of stock shall be entitled to such dividends or distributions, in stock or in cash or both, as may be declared from time to time by the Board of Directors with respect to such class or series. Dividends or distributions shall be paid on shares of a class or series of stock only out of the assets belonging to that class or series. (4) Any shares of stock of the Corporation redeemed by the Corporation shall be deemed to be cancelled and restored to the status of authorized but unissued shares of the particular class or series. (5) In the event of the liquidation or dissolution of the Corporation, the stockholders of a class or series of the Corporation's stock shall be entitled to receive, as a class or series, out of the assets of the Corporation available for distribution to stockholders, the assets belonging to that class or series less the liabilities allocated to that class or series. The assets so distributable to the stockholders of a class or series shall be distributed among such stockholders in proportion to the number of shares of that class or series held by them and recorded on the books of the Corporation. In the event that there are any assets available for distribution that are not attributable to any particular class or series of stock, such assets shall be allocated to all classes or series in proportion to the net asset value of the respective class or series, (6) All holders of shares of stock shall vote as a single series or class except with respect to any matter which affects only one or more series or class of stock, in which case only the holders of shares of the series or class affected shall be entitled to vote. 2 (7) For purposes of the Corporation's Registration Statement filed with the SEC under the Securities Act of 1933 and the Investment Company Act, including all prospectuses and statements of additional information, reference therein to "classes" of the Corporation's common stock shall mean "series," as used in these Articles of Incorporation and the WBCL, and reference therein to "series" shall mean "class," as used in these Articles of Incorporation and the WBCL. C. The Corporation may issue fractional shares. Any fractional share shall carry proportionately all the rights of a whole share, excepting any right to receive a certificate evidencing such fractional share, but including, without limitation, the right to vote and the right to receive dividends. ARTICLE V --------- A. The number of directors of the Corporation shall initially be one (1). The number may be changed by the By-Laws of the Corporation or by the Board of Directors pursuant to the By-Laws. B. The name of the Director who shall act until the initial meeting of shareholders and until his successors are elected and qualified is Andrew A. Ziegler. ARTICLE VI ---------- A. To the extent the Corporation has funds or property legally available therefor, each shareholder shall have the right at such times as may be permitted by the Corporation, but no less frequently than as required under the Investment Company Act, to require the Corporation to redeem all or any part of its shares owned by the shareholders at a redemption price equal to the net asset value per share next determined after the shares are tendered for redemption, less any applicable redemption charges as determined by the Board of Directors, which payment may be made in funds or in assets of the class or series. The Board of Directors may adopt requirements and procedures for redemption of shares. Notwithstanding the foregoing, the Corporation may postpone payment or deposit of the redemption price and may suspend the right of the shareholders to require the Corporation to redeem shares of any series or class pursuant to the applicable rules and regulations, or any order, of the SEC. B. The Corporation shall have the right, exercisable at the discretion of the Board of Directors, to redeem any shareholder's shares of any class or series for their then current net asset value per share if at such time the shareholder owns shares having an aggregate net asset value of less than an amount described in the relevant prospectus for such class or series set forth in the current Registration Statement of the Corporation filed with the SEC. C. The Corporation shall have the right, exercisable at the discretion of the Board of Directors, to redeem any shareholder's shares of any class or series for their then current net asset value per share if the Board of Directors 3 determines, in its sole discretion, that failure to so redeem may have materially adverse consequences to the holders of shares of any class or series. ARTICLE VII ----------- The following provisions are hereby adopted for the purpose of defining, limiting, and regulating the powers of the Corporation and of the Directors and shareholders: A. The presence in person or by proxy of the holders of one-third of the shares of stock of the Corporation entitled to vote without regard to class or series shall constitute a quorum at any meeting of the shareholders, except with respect to any matter which by law requires the approval of one or more classes or series of stock, in which case the presence in person or by proxy of the holders of one-third of the shares of stock of each class or series entitled to vote on the matter shall constitute a quorum. B. In addition to its other powers explicitly or implicitly granted under these Articles of Incorporation, by law or otherwise, the Board of Directors of the Corporation (1) is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation, (2) may from time to time determine whether, to what extent, at what times and places, and under what conditions and regulations the accounts and books of the Corporation, or any of them, shall be open to the inspection of the shareholders, and no shareholder shall have any right to inspect any account, book or document of the Corporation except as conferred by statute or as authorized by the Board of Directors of the Corporation and (3) is empowered to authorize, without shareholder approval, the issuance and sale from time to time of shares of stock of the Corporation whether now or hereafter authorized. C. The Corporation reserves the right from time to make any amendment to its Articles of Incorporation now or hereafter authorized by law, including any amendment which alters the contract rights, as expressly set forth in its Articles of Incorporation, of any outstanding shares of any class or series. D. The Board of Directors is expressly authorized to declare and pay dividends and distributions in cash, securities or other property from any funds legally available therefor, at such intervals or on such other periodic basis it shall determine, for any class or series of the Corporation; to declare such dividends or distributions for any class or series of the Corporation by means of a formula or other method of determination, at meetings held less frequently than the frequency of the effectiveness of such declarations; to establish payment dates for dividends or any other distributions for any class or series of the Corporation on any basis, including dates occurring less frequently than the effectiveness of declarations thereof; and to provide for the payment of declared dividends on a date earlier or later than the specified payment date in the case of shareholders of such class or series redeeming their entire ownership of shares. E. Any determination made in good faith by or pursuant to the direction of the Board of Directors as to the amount of the assets, debts, obligations or liabilities of the Corporation, as to the amount of any reserves or charges set up and the propriety thereof, as to the time of or purpose for creating such reserves or charges, as to the use, alteration or cancellation of any reserves or 4 charges (whether or not any debt, obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged or shall be then or thereafter required to be paid or discharged), as to the value of or the method of valuing any investment or other asset owned or held by the Corporation, as to the number of shares of any class or series of stock outstanding, as to the income of the Corporation or as to any other matter relating to the determination of net asset value, the declaration of dividends or the issue, sale, redemption or other acquisition of shares of the Corporation, shall be final and conclusive and shall be binding upon the Corporation and all holders of its shares, past, present and future, and shares of the Corporation are issued and sold on the condition and understanding that any and all such determinations shall be binding as foresaid. ARTICLE VIII ------------ A. To the fullest extent that limitations on the liability of directors and officers are permitted by the WBCL, no director or officer of the Corporation shall have any liability to the Corporation or its shareholders for damages; provided however, that nothing herein shall be construed to protect any director or officer of the Corporation against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted. B. The Corporation shall indemnify and advance expenses to its currently acting and its former directors and officers to the fullest extent that indemnification of directors and officers is permitted by the WBCL, and the Board of Directors may by bylaw, resolution or agreement make further provision for indemnification of directors, officers, employees and agents to the fullest extent permitted by the WBCL; provided however, that nothing herein shall be construed to protect any director or officer of the Corporation against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. C. No amendment to the Articles of Incorporation of the Corporation shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment. ARTICLE IX ---------- The address of the initial registered office is 1000 North Water Street, Milwaukee, WI 53202. The resident agent at such address is John M. Blaser. 5 EX-99.1.2 3 ARTICLES OF AMENDMENT DTD 10/12/95 EXHIBIT 1.2 Form 4 Secretary of State WISCONSIN 10/93 ARTICLES OF AMENDMENT STOCK (FOR PROFIT) A. Name of Corporation: Artisan Funds, Inc. ------------------------------------------------------ (prior to any change effected by this amendment) -------- Text of Amendment (Refer to the existing articles of incorporation and ----------------- instruction A. Determine those items to be changed and set forth below the number identifying the paragraph being changed and how the amended paragraph is to read.) RESOLVED, THAT, the articles of incorporation be amended as follows: See Rider A B. Amendment(s) adopted on October , 1995 --------------------------------------------------- (date) Indicate the method of adoption by checking the appropriate choice below: (x) In accordance with sec. 180.1002, Wis. Stats. (By the Board of Directors) OR ( ) In accordance with sec. 180.1003, Wis. Stats. (By the Board of Directors and Shareholders) OR ( ) In accordance with sec. 180.1005, Wis. Stats. (By Incorporators or Board of Directors, before issuance of shares) C. Executed on behalf of the corporation on October , 1995 ---------------------------------- (date) /s/ Andrew A. Ziegler ------------------------------------ (signature) Andrew A. Ziegler ------------------------------------ (printed name) Chief Executive Officer ------------------------------------ (officer's title) D. This document was drafted by Stacy H. Winick Chicago, Illinois ---------------------------------------------- (name of individual required by law) FILING FEE - $40.00 OR MORE SEE REVERSE for Instructions, Suggestions, Filing Fees and Procedures ----------- Printed on Recycled Paper (WISC. 47 - 7/25/94) RIDER A RESOLVED that the Articles of Incorporation of Artisan Funds shall be amended as follows: Delete Section A. of Article IV and substitute in its place the following: "A. The Corporation is authorized to issue 50,000,000,000 shares of common stock, $.01 par value per share. Subject to the following paragraph, the authorized shares are classified as follows:
Authorized Number Class of Shares ----- --------- Artisan Small Cap Fund 5,000,000,000 Artisan International Fund 5,000,000,000
The remaining 40,000,000,000 shares shall remain unclassified until action is taken by the Board of Directors pursuant to the following paragraph." EX-99.2 4 BYLAWS, AS AMENDED Exhibit 2 ARTISAN FUNDS, INC. BYLAWS As Adopted on January 5, 1995 and As Amended and Restated on January 24, 1995 ARTICLE I MEETINGS OF SHAREHOLDERS Section 1. ANNUAL MEETINGS. The Artisan Funds, Inc. (The "Corporation") is not required to hold an Annual Meeting of Shareholders in any year in which the election of Directors, the approval of the investment advisory agreement, the ratification of the selection of independent public accountants or the approval or disapproval of a distribution agreement are not required to be acted upon under the Investment Company Act of 1940. If the Corporation is required to hold a meeting of Shareholders, the meeting shall be designated the Annual Meeting of Shareholders for that year. If an Annual Meeting of Shareholders is held, it shall be held at a date and time determined by the Board of Directors. Any other business may be considered at the Annual Meeting. Section 2. SPECIAL MEETINGS. Special Meetings of Shareholders of the Corporation or of a particular Series or Class may be called by the Chairman or by the Board of Directors; and shall be called by the Secretary whenever ordered by the Chairman, any Director, or as requested in writing by Shareholders entitled to cast at least 10% of the voting shares entitled to be cast on any issue at the proposed Special Meeting. Such request shall state the purpose of such Special Meeting and the matters proposed to be acted on thereat, and no other business shall be transacted at any such Special Meeting. The Secretary shall inform such Shareholders of the reasonably estimated costs of preparing and mailing the notice of the meeting, and upon payment to the Corporation of such costs, the Secretary shall give not less than ten nor more than 60 days' notice of the Special Meeting. Unless required by Shareholders entitled to cast a majority of all the votes entitled to be cast at the meeting, a Special Meeting need not be called to consider any matter which is substantially the same as a matter voted on at a Special Meeting of the Shareholders held during the preceding 12 months. Section 3. PLACE OF MEETINGS. All meetings of the Shareholders of the Corporation or a particular Series or Class, shall be held at the office of the Corporation in Milwaukee, Wisconsin, or at such other place within or without the State of Wisconsin as may be fixed by the Board of Directors. Section 4. NOTICE. Not less than ten nor more than 60 days before the date of every Annual or Special Meeting of Shareholders, the Secretary or an Assistant Secretary shall give to each Shareholder of record of the Corporation or of the relevant Series or Class written notice of such Meeting. Such notice shall be deemed to have been given when mailed to the Shareholder at his address appearing on the books of the Corporation, which shall be maintained separately for the shares of each Series or Class. It shall not be necessary to set forth the business proposed to be transacted in the notice of any Annual Meeting. Notice of a Special Meeting shall include a description of the purpose or purposes for which it is called. Section 5. QUORUM. The presence in person or by proxy of holders of one- third of the shares of capital stock of the Corporation entitled to vote without regard to Series or Class shall constitute a quorum at any meeting of the Shareholders, except with respect to any matter which by law requires the approval of one or more Series or Classes of stock, in which case the presence in person or by proxy of the holders of one-third of the shares of stock of each Series or Class entitled to vote on the matter shall constitute a quorum. In the absence of a quorum at any meeting, a majority of those Shareholders present in person or by proxy may adjourn the meeting from time to time to a date not later than 120 days after the original meeting date without further notice than by announcement to be given at the meeting until a quorum, as above defined, shall be present. Any business may be transacted at the adjourned meeting which might have been transacted at the meeting originally called had the same been held at the time so called. Section 6. VOTING. At all meetings of Shareholders each Shareholder shall be entitled to one vote or fraction thereof for each share or fraction thereof standing in his name on the books of the Corporation on the date for the determination of Shareholders entitled to vote at such meeting. Section 7. PROXIES. Any Shareholder entitled to vote at any meeting of Shareholders may vote either in person or by proxy, but no proxy which is dated more than eleven months before the meeting named therein shall be accepted. Every proxy shall be in writing and signed by the Shareholder or his duly authorized attorney-in-fact and dated, but need not be sealed, witnessed or acknowledged. Section 8. INFORMAL ACTION BY SHAREHOLDERS. Any action required or permitted to be taken at any meeting of Shareholders may be taken without a meeting, if a consent in writing, setting forth such action, is signed by all the Shareholders entitled to vote on the subject matter thereof, and such consent is filed with the records of the Corporation. ARTICLE II BOARD OF DIRECTORS Section 1. POWERS. The business and affairs of the Corporation shall be managed under the direction of its Board of Directors. All powers of the Corporation may be exercised by or under the authority of the Board of Directors except as conferred on or reserved to the Shareholders by law, by the Articles of Incorporation or by these Bylaws. Section 2. NUMBER, QUALIFICATIONS, MANNER OF ELECTION AND TERM OF OFFICE. The number of Directors of the Corporation can be changed from time to time to not less than one nor more than ten. Directors need not be Shareholders. The term of office of a Director shall not be affected by any decrease in the number of Directors made by the Board pursuant to the foregoing authorization. Each Director shall hold office until the Annual Meeting next held after he becomes a Director and until the election and qualification of his successor. Section 3. PLACE OF MEETING. The Board of Directors may hold its meetings at such place or places within or without the State of Wisconsin as the Board. Section 4. ANNUAL MEETINGS. The Board of Directors shall meet annually for the election of Officers and any other business. 2 Section 5. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held at such intervals and on such dates as the Board may from time to time designate, provided that any Director who is absent when such designation is made shall be given notice of the designation. Section 6. SPECIAL MEETINGS. Special Meetings of the Board of Directors may be held at such times and at such places as may be designated in the call of such meeting. Special Meetings shall be called by the Secretary or Assistant Secretary at the request of the Chairman or any Director. If the Secretary when so requested refuses or fails for more than twenty-four hours to call such meeting, the Chairman or such Director may in the name of the Secretary call such meeting by giving due notice in the manner required when notice is given by the Secretary. Section 7. NOTICE. The Secretary or Assistant Secretary shall give, at least two days before the meeting, notice of each meeting of the Board of Directors, whether Annual, Regular or Special, to each member of the Board by mail, telegram or telephone to his last known address. It shall not be necessary to state the purpose or business to be transacted in the notice of any meeting. Personal attendance at any meeting by a Director other than to protest the validity of said meeting shall constitute a waiver of the foregoing requirement of notice. In addition, notice of a meeting need not be given if a written waiver of notice executed by such Director before or after the meeting is filed with the records of the meeting. Section 8. CONDUCT OF MEETINGS AND BUSINESS. The Board of Directors may adopt such rules and regulations for the conduct of their meetings and the management of the affairs of the Corporation as they may deem proper and not inconsistent with applicable law, the Articles of Incorporation of the Corporation or these Bylaws. Section 9. QUORUM. At any time when the number of Directors constituting the whole Board of Directors is greater than one, one-third of the entire Board of Directors but not less than two Directors shall constitute a quorum at any meeting of the Board of Directors. The action of a majority of Directors present at any meeting at which a quorum is present shall be the action of the Board of Directors unless the concurrence of a greater proportion is required for such action by statute, the Articles of Incorporation of the Corporation, or these Bylaws. In the absence of a quorum at any meeting a majority of Directors present may adjourn the meeting from day to day or for such longer periods as they may designate until a quorum shall be present. Notice of any adjourned meeting need not be given other than by announcement at the meeting. Section 10. RESIGNATIONS. Any Director of the Corporation may resign at any time by written notice to the Corporation. The resignation of any Director shall take effect at the time specified therein or, if no time is specified, when received by the Corporation. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 11. REMOVAL. At any meeting of Shareholders duly called for the purpose, any Director may by the vote of a majority of all of the shares entitled to vote be removed from office. At the same meeting, the vacancy in the Board of Directors may be filled by the election of a Director to serve until the next Annual Meeting of Shareholders and the election and qualification of his successor. Section 12. VACANCIES. Except as otherwise provided by law, any vacancy occurring in the Board of Directors including a vacancy resulting from an increase in the number of Directors, may be filled by a majority of the remaining members of the Board of Directors although such majority is less than a quorum, a majority of the entire Board of Directors, or by action of the Shareholders. A Director elected by the Board to fill a vacancy shall be elected to 3 hold office until the next Annual Meeting of Shareholders and until his successor is duly elected and qualified. Section 13. COMPENSATION OF DIRECTORS. The Directors may receive compensation for their services as Directors as determined by the Board of Directors and expenses of attendance at each meeting. Nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity, as an Officer, agent or otherwise, and receiving compensation therefor. Section 14. INFORMAL ACTION BY DIRECTORS. Any action required or permitted to be taken at any Annual, Regular or Special Meeting of the Board of Directors may be taken without a meeting if a written consent to such action is signed by all members of the Board and such written consent is filed with the minutes of proceedings of the Board. Section 15. TELEPHONE CONFERENCE. Members of the Board of Directors or any committee thereof may participate in a regular or special meeting of the Board or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time and participation by such means shall constitute presence in person at the meeting. ARTICLE III EXECUTIVE AND OTHER COMMITTEES Section 1. APPOINTMENT AND TERM OF OFFICE OF EXECUTIVE COMMITTEE. The Board of Directors may appoint an Executive Committee, which shall consist of two (2) or more Directors. Section 2. VACANCIES IN EXECUTIVE COMMITTEE. Vacancies occurring in the Executive Committee from any cause may be filled by the Board of Directors. Section 3. EXECUTIVE COMMITTEE TO REPORT TO BOARD. All action by the Executive Committee shall be reported to the Board of Directors at its meeting next succeeding such action. Section 4. PROCEDURE OF EXECUTIVE COMMITTEE. The Executive Committee shall fix its own rules of procedure not inconsistent with these Bylaws or with any directions of the Board of Directors. It shall meet at such times and places and upon such notice as shall be provided by such rules or by resolution of the Board of Directors. The presence of a majority shall constitute a quorum for the transaction of business, and in every case the affirmative vote of a majority of the members of the Executive Committee present shall be necessary for the taking of any action. Section 5. POWERS OF EXECUTIVE COMMITTEE. During the intervals between the meetings of the Board of Directors the Executive Committee, except as limited by law or by specific directions of the Board of Directors, shall possess and may exercise all the powers of the Board of Directors in the management and direction of the business and conduct of the affairs of the Corporation. Section 6. OTHER COMMITTEES. From time to time the Board of Directors may create any other committee or committees which shall have powers as shall be specified in the resolution creating the committee and as may be delegated by law. 4 Section 7. COMPENSATION. The members of any duly appointed committee shall receive such compensation as from time to time may be fixed by the Board of Directors and reimbursement of expenses. Section 8. INFORMAL ACTION BY EXECUTIVE COMMITTEE OR OTHER COMMITTEES. Any action required or permitted to be taken at any meeting of the Executive Committee or any other duly appointed committee may be taken without a meeting if written consent to such action is signed by all members of such committee and such written consent is filed with the minutes of the proceedings of such committee. ARTICLE IV OFFICERS Section 1. GENERAL PROVISIONS. The Officers of the Corporation shall be a Chairman, a President, one or more Vice Presidents, a Treasurer, and a Secretary. The Board of Directors may elect or appoint other Officers or agents, including one or more Assistant Vice Presidents, one or more Assistant Secretaries and one or more Assistant Treasurers. The same person may hold any number of offices. Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The Officers shall be elected annually by the Board of Directors. Each Officer shall hold office for one year and until the election and qualification of his successor. Any vacancy in any of the offices may be filled for the unexpired portion of the term by the Board of Directors at any Regular or Special Meeting of the Board. The Board of Directors may elect or appoint additional Officers or agents at any Regular or Special Meeting of the Board. Section 3. REMOVAL. The Board of Directors may remove any Officer with or without cause at any time. Any other employee of the Corporation may be removed or dismissed at any time by the President. Section 4. RESIGNATIONS. Any Officer may resign at any time by giving written notice to the Corporation. Any such resignation shall take effect at the time specified therein or, if no time is specified, at the time of receipt. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 5. VACANCIES. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled for the unexpired portion of the term in the manner prescribed in these Bylaws for regular election or appointment to such office. Section 6. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors, if there be a Chairman, shall preside at the meetings of Shareholders and of the Board of Directors. The Chairman shall be the chief executive officer of the Corporation. Unless other provisions are made therefor by the Board or Executive Committee, the Chairman shall employ and define the duties of all employees of the Corporation, shall have the power to discharge any such employees, shall exercise general supervision over the affairs of the Corporation and shall perform such other duties as may be assigned to him from time to time by the Board of Directors. Section 7. PRESIDENT. The President in the absence of the Chairman shall perform all duties and may exercise any of the powers of the Chairman subject to the control of the Board. In the absence of the Chairman of the Board of Directors, the President or an Officer or Director appointed by the President, shall preside at all meetings of Shareholders. The President 5 shall perform such other duties as may be assigned to him from time to time by the Board of Directors, the Executive Committee, or the Chairman. Section 8. VICE PRESIDENT. The Vice President (or if more than one, the senior Vice President) in the absence of the President shall perform all duties and may exercise any of the powers of the President subject to the control of the Board. Each Vice President shall perform such other duties as may be assigned to him from time to time by the Board of Directors, the Executive Committee, the Chairman or the President. Section 9. SECRETARY. The Secretary shall keep or cause to be kept in books provided for the purpose the minutes of the meetings of the Shareholders, and of the Board of Directors; shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; shall be custodian of the records and of the Seal of the Corporation and shall see that the Seal is affixed to all documents the execution of which on behalf of the Corporation under its Seal is duly authorized; shall keep directly or through a transfer agent a register of the post office address of each Shareholder, and make all proper changes in such register, retaining and filing his authority for such entries; shall see that the books, reports, statements, certificates and all other documents and records required by law are properly kept and filed; and in general shall perform all duties incident to the Office of Secretary and such other duties as may, from time to time, be assigned to him by the Board of Directors, the Executive Committee, the Chairman or the President. Section 10. TREASURER. The Treasurer shall have supervision of the custody of all funds and securities of the Corporation, subject to applicable law. He shall perform such other duties as may be from time to time assigned to him by the Board of Directors, the Executive Committee, the Chairman or the President. Section 11. ASSISTANT VICE PRESIDENT. The Assistant Vice President or Assistant Vice Presidents of the Corporation shall have such authority and perform such duties as may be assigned to them by the Board of Directors, the Executive Committee, the Chairman or the President of the Corporation. Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant Secretary or Secretaries and the Assistant Treasurer or Treasurers shall perform the duties of the Secretary and of the Treasurer respectively, in the absence of those Officers and shall have such further powers and perform such other duties as may be assigned to them respectively by the Board of Directors, the Executive Committee, the Chairman or the President. Section 13. SALARIES. The salaries of the Officers shall be fixed from time to time by the Board of Directors. No Officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the Corporation. ARTICLE V SHARES AND THEIR TRANSFER Section 1. CERTIFICATES. No certificates certifying the ownership of shares shall be issued except as the Board of Directors may otherwise authorize. In the event that the Directors authorize the issuance of share certificates, subject to the provisions of Section 4 of this Article V, each Shareholder shall be entitled to a certificate stating, among other things, the number and class of shares and the designation of the series, if any, owned by him or her, in such form as shall be prescribed from time to time by the Directors. All share certificates shall be signed by the Chairman, the President, or any Vice President and by the Treasurer or Secretary or 6 any Assistant Treasurer or Assistant Secretary and may be sealed with the Seal of the Corporation. The signatures may be either manual or facsimile signatures and the Seal may be either facsimile or any other form of seal. Certificates for shares for which the Corporation has appointed an independent Transfer Agent and Registrar shall not be valid unless countersigned by such Transfer Agent and registered by such Registrar. In case any Officer who has signed any certificate ceases to be an Officer of the Corporation before the certificate is issued, the certificate may nevertheless be issued by the Corporation with the same effect as if the Officer had not ceased to be such Officer as of the date of its issuance. In lieu of issuing certificates for shares, the Directors or the Transfer Agent shall issue receipts thereof in accordance with the Wisconsin Business Corporation Law to the record holders of such shares, who shall be deemed, for all purposes hereunder, to be the holders of certificates for such shares as if they had accepted such certificates and shall be held to have expressly assented and agreed to the terms hereof. Section 2. TRANSFER OF SHARES. Shares of each Series and Class shall be transferable on the books of the Corporation by the holder thereof in person or by duly authorized attorney upon surrender of the certificate representing the shares to be transferred properly endorsed. Section 3. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. The Board of Directors may fix in advance a date as the record date for the purpose of determining Shareholders of a Series or Class entitled to notice of or to vote at any meeting of Shareholders or to receive payment of any dividend or right. Such date shall in any case not be more than 70 days prior to the date on which the particular action requiring such determination of Shareholders is to be taken. Only Shareholders of record on the record date shall be entitled to notice of and to vote at such meeting or to receive such dividends or rights, as the case may be. Section 4. LOST, DESTROYED OR MUTILATED CERTIFICATES. In case any share certificate is lost, mutilated or destroyed the Board of Directors may issue a new certificate in place thereof upon indemnity to the relevant Series or Class against loss and upon such other terms and conditions as the Board may deem advisable. Section 5. DISCONTINUANCE OF ISSUANCE OF CERTIFICATES. The Directors may at any time discontinue the issuance of share certificates and may, by written notice to each shareholder, require the surrender of share certificates to the Corporation for cancellation. Such surrender and cancellation shall not affect the ownership of shares in the Corporation. ARTICLE VI AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC. Section 1. AGREEMENTS, ETC. The Board of Directors or the Executive Committee may authorize any Officer or Officers, or agent or agents of the Corporation to enter into any Agreement or execute and deliver any instrument in the name of the Corporation and such authority may be general or confined to specific instances; and, unless so authorized by the Board of Directors or by the Executive Committee or by these Bylaws, no Officer, agent or employee shall have any power or authority to bind the Corporation by any agreement or engagement or to pledge its credit or to render it liable pecuniarily for any purpose or to any amount. 7 Section 2. CHECKS, DRAFTS, ETC. All checks, drafts, or orders for the payment of money, notes and other evidences of indebtedness shall be signed by such Officer or Officers, employee or employees, or agent or agents as shall be from time to time designated by the Board of Directors or the Executive Committee, or as may be specified in or pursuant to the agreement between the Corporation on behalf of any Series or Class and a bank or trust company appointed as custodian of the Corporation's assets. Section 3. ENDORSEMENTS, ASSIGNMENTS AND TRANSFER OF SECURITIES. All endorsements, assignments, stock powers or other instruments of transfer of securities standing in the name of the Corporation or its nominee or directions for the transfer of securities belonging to the Corporation shall be made by such Officer or Officers, employee or employees, or agent or agents as may be authorized by the Board of Directors or the Executive Committee. ARTICLE VII BOOKS AND RECORDS Section 1. LOCATION. The books and records of the Corporation, including the stock ledger or ledgers, may be kept in or outside the State of Wisconsin at such office or agency of the Corporation as may be from time to time determined by the Board of Directors. ARTICLE VIII MISCELLANEOUS Section 1. SEAL. The Seal of the Corporation shall be a disk inscribed with the words "Artisan Funds, Inc. 1995 - Incorporated Wisconsin". Section 2. FISCAL YEAR. The Fiscal Year of the Corporation shall be designated from time to time by the Board of Directors. ARTICLE IX INDEMNIFICATION Section 1. MANDATORY INDEMNIFICATION. The Corporation shall indemnify, to the fullest extent permitted by the Wisconsin Business Corporation Law, as in effect from time to time, the persons described in Sections 180.0850 through 180.0859 (or any successor provisions) of the Wisconsin Business Corporation Law or other provisions of the law of the State of Wisconsin relating to indemnification of directors and officers, as in effect from time to time. The indemnification afforded such persons by this section shall not be exclusive of other rights to which they may be entitled as a matter of law. Section 2. INDEMNIFICATION OF AGENTS. An agent of the Corporation shall only be entitled to indemnification upon a determination by the Board of Directors or a committee appointed thereby, as evidenced by a resolution of the Board of Directors, that such Agent shall be entitled to indemnification. Section 3. PERMISSIVE SUPPLEMENTARY BENEFITS. The Corporation may, but shall not be required to, supplement the right of indemnification under Section 1 hereof by (i) 8 the purchase of insurance of behalf of any one or more of such persons, whether or not the Corporation would be obligated to indemnify such person under Section 1 hereof; (ii) individual or group indemnification agreements with any one or more of such persons; and (iii) advances for related expenses of such persons. Section 4. INVESTMENT COMPANY ACT. This Article shall not protect any such person against any liability to the Corporation or any Shareholder thereof to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. Section 5. AMENDMENTS. References in this Article are to the Wisconsin Business Corporation Law and to the Investment Company Act of 1940, as from to time to time amended. No amendment of these Bylaws shall affect any right of any person under this Article based on any event, omission or proceeding prior to the amendment. ARTICLE X AMENDMENTS Section 1. The Board of Directors shall have the power to alter, amend or repeal any Bylaws of the Corporation and to make new Bylaws. 9 EX-99.5.1 5 INVEST ADVIS AGREEMENT BETWEEN REG AND SMALL CAP Exhibit 5.1 ARTISAN FUNDS, INC. INVESTMENT ADVISORY AGREEMENT Artisan Funds, Inc., a Wisconsin corporation registered under the Investment Company Act of 1940 ("1940 Act") as an open-end diversified management investment company ("Artisan Funds"), and Artisan Partners Limited Partnership, a Delaware limited partnership registered under the Investment Advisers Act of 1940 as an investment adviser ("Artisan Partners"), agree that: 1. ENGAGEMENT OF ARTISAN PARTNERS. Artisan Partners shall manage the investment and reinvestment of the assets of Artisan Small Cap Fund, a series of Artisan Funds ("the Fund"), subject to the supervision of the board of directors of Artisan Funds, for the period and on the terms set forth in this agreement. Artisan Partners shall give due consideration to the investment policies and restrictions and the other statements concerning Fund in Artisan Fund's articles of incorporation, bylaws, and registration statements under the 1940 Act and the Securities Act of 1933 ("1933 Act"), and to the provisions of the Internal Revenue Code applicable to Fund as a regulated investment company. Artisan Partners shall be deemed for all purposes to be an independent contractor and not an agent of Artisan Fund or the Fund, and unless otherwise expressly provided or authorized, shall have no authority to act or represent Artisan Fund or the Fund in any way. Artisan Partners is authorized to make the decisions to buy and sell securities, options and futures contracts for the Fund, to place the Fund's portfolio transactions with broker-dealers, and to negotiate the terms of such transactions including brokerage commissions on brokerage transactions, on behalf of the Fund. Artisan Partners is authorized to exercise discretion within the Fund's policy concerning allocation of its portfolio brokerage, as permitted by law, including but not limited to section 28(e) of the Securities Exchange Act of 1934, and in so doing shall not be required to make any reduction in its investment advisory fees. Artisan Partners represents that it will notify Artisan Funds of any change in the membership of Artisan Partners within a reasonable time after any such change. 2. EXPENSES TO BE PAID BY ARTISAN PARTNERS. Artisan Partners shall furnish to Artisan Funds, at its own expense, office space and all necessary office facilities, equipment and personnel for managing that portion of Artisan Funds' business relating to the Fund. Artisan Partners shall also assume and pay all other expenses incurred by it in connection with managing the assets of the Fund, all expenses of marketing shares of the Fund, all expenses of maintaining the registration of shares of the Fund under the 1933 Act (not including typesetting and printing expenses referred to in section 3), all expenses in determination of daily price computations, placement of securities orders and related bookkeeping and one-half of all fees, dues and other expenses related to membership of Artisan Funds in any trade association or other investment company organization. 3. EXPENSES TO BE PAID BY ARTISAN FUNDS. Artisan Funds shall pay all charges of depositories, custodians and other agencies for the safekeeping and servicing of its cash, securities and other property and of its transfer agents and registrars and its dividend disbursing and redemption agents, if any; all charges of legal counsel and of independent accountants; all compensation of directors other than those affiliated with Artisan Partners and all expenses incurred in connection with their services to Artisan Funds; all costs of borrowing money; all expenses of publication of notices and reports to its shareholders and to governmental bodies or regulatory agencies; all expenses of proxy solicitations of the Fund or of the board of directors of the Artisan Funds; all expenses of shareholder meetings; all expenses of typesetting of the Fund's prospectus and of printing and mailing copies of the prospectus furnished to each then-existing shareholder or beneficial owner; all taxes and fees payable to federal, state or other governmental agencies, domestic or foreign, all stamp or other taxes; all expenses of printing and mailing certificates for shares of the Fund; all expenses of bond and insurance coverage required by law or deemed advisable by Artisan Funds' board of directors; all expenses of qualifying and maintaining qualification of shares of the Fund under the securities laws of such United States jurisdictions as the Artisan Funds may from time to time reasonably designate and all expenses of maintaining the registration of Artisan Funds under the 1940 Act and one-half of all fees, dues and other expenses related to membership of Artisan Funds in any trade association or other investment company organization. In addition to the payment of expenses, the Fund also shall pay all brokers' commissions and other charges relative to the purchase and sale of portfolio securities for the Fund. Any expenses borne by Artisan Funds that are attributable solely to the organization, operation or business of the Fund shall be paid solely out of the Fund's assets. Any expense borne by Artisan Funds that is not solely attributable to the Fund, nor solely to any other series of shares of Artisan Funds, if applicable, shall be apportioned in such manner as Artisan Partners determines is fair and appropriate, or as otherwise specified by the board of directors of Artisan Funds. 4. COMPENSATION OF ARTISAN PARTNERS. For the services to be rendered and the charges and expenses to be assumed and to be paid by Artisan Partners hereunder, the Fund shall pay to Artisan Partners a monthly fee at the annual rate of 1% of the Fund's average daily net assets up to $500 million; .975 of 1% of average daily net assets from $500 million to $750 million; .950 of 1% of average daily net assets from $750 million to $1 billion and .925 of 1% of average daily net assets over $1 billion. 5. LIMITATION OF EXPENSES OF THE FUND. The total expenses of the Fund, exclusive of taxes, of interest and of extraordinary litigation expenses, but including fees paid to Artisan Partners, shall not in any fiscal year of the Fund exceed the most restrictive limits prescribed by any state in which the Fund's shares are then being offered for sale, and Artisan Partners agrees that Artisan Partners' compensation under paragraph 4 of this agreement shall be reduced by the amount of any such expenses in excess of that limit. If Artisan Partners' expenses would still exceed that limit after Artisan Partners' compensation has been reduced to zero, Artisan Partners shall reimburse the Fund for sums expended for such expenses to the extent necessary to cause the Fund's expenses to be within the limit. Brokers' commissions and other charges relating to the purchase and sale of portfolio securities shall not be regarded as expenses. 6. SERVICES OF ARTISAN PARTNERS NOT EXCLUSIVE. The services of Artisan Partners to the Fund hereunder are not to be deemed exclusive, and Artisan Partners shall be free to render 2 similar services to others so long as its services under this agreement are not impaired by such other activities. 7. SERVICES OTHER THAN AS INVESTMENT ADVISER. Artisan Partners (or an affiliate of Artisan Partners) may act as broker for the Fund in connection with the purchase or sale of securities by or to the Fund if and to the extent permitted by procedures adopted from time to time by the board of directors of Artisan Funds. Such brokerage services are not within the scope of the duties of Artisan Partners under this agreement, and, within the limits permitted by law and the board of directors of Artisan Funds, Artisan Partners (or an affiliate of Artisan Partners) may receive brokerage commissions, fees or other remuneration from the Fund for such services in addition to its fee for services as Artisan Partners. Within the limits permitted by law, Artisan Partners may receive compensation from the Fund for other services performed by it for the Fund which are not within the scope of the duties of Artisan Partners under this agreement. 8. LIMITATION OF LIABILITY OF ARTISAN PARTNERS. Artisan Partners shall not be liable to Artisan Funds or its shareholders for any loss suffered by Artisan Funds or its shareholders from or as a consequence of any act or omission of Artisan Partners, or of any of the partners, employees or agents of Artisan Partners, in connection with or pursuant to this agreement, except by reason of willful misfeasance, bad faith or gross negligence on the part of Artisan Partners in the performance of its duties or by reason of reckless disregard by Artisan Partners of its obligations and duties under this agreement. 9. DURATION AND RENEWAL. Unless terminated as provided in Section 10, this agreement shall continue in effect until March 26, 1997, and thereafter from year to year only so long as such continuance is specifically approved at least annually (a) by a majority of those directors who are not interested persons of Artisan Funds or of Artisan Partners, voting in person at a meeting called for the purpose of voting on such approval, and (b) by either the board of directors of Artisan Fund or vote of the holders of a "majority of the outstanding shares of the Fund" (which term as used throughout this agreement shall be construed in accordance with the definition of "vote of a majority of the outstanding voting securities of a company" in section 2(a)(42) of the 1940 Act). 10. TERMINATION. This agreement may be terminated at any time, without payment of any penalty, by the board of directors of Artisan Funds, or by a vote of the holders of a majority of the outstanding shares of the Fund, upon 60 days' written notice to Artisan Partners. This agreement may be terminated by Artisan Partners at any time upon 60 days' written notice to Artisan Fund. This agreement shall terminate automatically in the event of its assignment (as defined in Section 2(a)(4) of the 1940 Act). 11. NON-LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any obligation of Artisan Funds hereunder shall be binding only upon the assets of Artisan Funds (or applicable series thereof) and shall not be binding upon any director, officer, employee, agent or shareholder of Artisan Funds. Neither the authorization of any action by the directors or shareholders of Artisan Funds nor the execution of this agreement on behalf of Artisan Funds shall impose any liability upon any director, officer or shareholder of Artisan Partners. 3 12. AMENDMENT. This agreement may not be amended without the affirmative vote (a) of a majority of those directors who are not "interested persons" (as defined in section 2(a)(19) of the 1940 Act) of Artisan Fund or of Artisan Partners, voting in person at a meeting called for the purpose of voting on such approval, and (b) of the holders of a majority of the outstanding shares of the Fund. Dated: March 27, 1995 ARTISAN FUNDS, INC. By /s/ Andrew A. Ziegler ------------------------------------ ARTISAN PARTNERS LIMITED PARTNERSHIP By: Artisan Investment Corporation Its general partner By: /s/ Andrew A. Ziegler ------------------------------------ Andrew A. Ziegler President 4 EX-99.5.2 6 FORM OF INVEST ADVISORY AGREEMENT Exhibit 5.2 ARTISAN FUNDS, INC. INVESTMENT ADVISORY AGREEMENT Artisan Funds, Inc., a Wisconsin corporation registered under the Investment Company Act of 1940 ("1940 Act") as an open-end diversified management investment company ("Artisan Funds"), and Artisan Partners Limited Partnership, a Delaware limited partnership registered under the Investment Advisers Act of 1940 as an investment adviser ("Artisan Partners"), agree that: 1. ENGAGEMENT OF ARTISAN PARTNERS. Artisan Partners shall manage the investment and reinvestment of the assets of Artisan International Fund, a series of Artisan Funds ("the Fund"), subject to the supervision of the board of directors of Artisan Funds, for the period and on the terms set forth in this agreement. Artisan Partners shall give due consideration to the investment policies and restrictions and the other statements concerning Fund in Artisan Fund's articles of incorporation, bylaws, and registration statements under the 1940 Act and the Securities Act of 1933 ("1933 Act"), and to the provisions of the Internal Revenue Code applicable to Fund as a regulated investment company. Artisan Partners shall be deemed for all purposes to be an independent contractor and not an agent of Artisan Fund or the Fund, and unless otherwise expressly provided or authorized, shall have no authority to act or represent Artisan Fund or the Fund in any way. Artisan Partners is authorized to make the decisions to buy and sell securities, options and futures contracts for the Fund, to place the Fund's portfolio transactions with broker-dealers, and to negotiate the terms of such transactions including brokerage commissions on brokerage transactions, on behalf of the Fund. Artisan Partners is authorized to exercise discretion within the Fund's policy concerning allocation of its portfolio brokerage, as permitted by law, including but not limited to section 28(e) of the Securities Exchange Act of 1934, and in so doing shall not be required to make any reduction in its investment advisory fees. Artisan Partners represents that it will notify Artisan Funds of any change in the membership of Artisan Partners within a reasonable time after any such change. 2. EXPENSES TO BE PAID BY ARTISAN PARTNERS. Artisan Partners shall furnish to Artisan Funds, at its own expense, office space and all necessary office facilities, equipment and personnel for managing that portion of Artisan Funds' business relating to the Fund. Artisan Partners shall also assume and pay all other expenses incurred by it in connection with managing the assets of the Fund, all expenses of marketing shares of the Fund, all expenses of maintaining the registration of shares of the Fund under the 1933 Act (not including typesetting and printing expenses referred to in section 3), all expenses in determination of daily price computations, placement of securities orders and related bookkeeping and one-half of all fees, dues and other expenses related to membership of Artisan Funds in any trade association or other investment company organization. 3. EXPENSES TO BE PAID BY ARTISAN FUNDS. Artisan Funds shall pay all charges of depositories, custodians and other agencies for the safekeeping and servicing of its cash, securities and other property and of its transfer agents and registrars and its dividend disbursing and redemption agents, if any; all charges of legal counsel and of independent accountants; all compensation of directors other than those affiliated with Artisan Partners and all expenses incurred in connection with their services to Artisan Funds; all costs of borrowing money; all expenses of publication of notices and reports to its shareholders and to governmental bodies or regulatory agencies; all expenses of proxy solicitations of the Fund or of the board of directors of the Artisan Funds; all expenses of shareholder meetings; all expenses of typesetting of the Fund's prospectus and of printing and mailing copies of the prospectus furnished to each then-existing shareholder or beneficial owner; all taxes and fees payable to federal, state or other governmental agencies, domestic or foreign, all stamp or other taxes; all expenses of printing and mailing certificates for shares of the Fund; all expenses of bond and insurance coverage required by law or deemed advisable by Artisan Funds' board of directors; all expenses of qualifying and maintaining qualification of shares of the Fund under the securities laws of such United States jurisdictions as the Artisan Funds may from time to time reasonably designate and all expenses of maintaining the registration of Artisan Funds under the 1940 Act and one-half of all fees, dues and other expenses related to membership of Artisan Funds in any trade association or other investment company organization. In addition to the payment of expenses, the Fund also shall pay all brokers' commissions and other charges relative to the purchase and sale of portfolio securities for the Fund. Any expenses borne by Artisan Funds that are attributable solely to the organization, operation or business of the Fund shall be paid solely out of the Fund's assets. Any expense borne by Artisan Funds that is not solely attributable to the Fund, nor solely to any other series of shares of Artisan Funds, if applicable, shall be apportioned in such manner as Artisan Partners determines is fair and appropriate, or as otherwise specified by the board of directors of Artisan Funds. 4. COMPENSATION OF ARTISAN PARTNERS. For the services to be rendered and the charges and expenses to be assumed and to be paid by Artisan Partners hereunder, the Fund shall pay to Artisan Partners a monthly fee at the annual rate of 1% of the Fund's average daily net assets up to $500 million; .975 of 1% of average daily net assets from $500 million to $750 million; .950 of 1% of average daily net assets from $750 million to $1 billion and .925 of 1% of average daily net assets over $1 billion. 5. LIMITATION OF EXPENSES OF THE FUND. The total expenses of the Fund, exclusive of taxes, of interest and of extraordinary litigation expenses, but including fees paid to Artisan Partners, shall not in any fiscal year of the Fund exceed the most restrictive limits prescribed by any state in which the Fund's shares are then being offered for sale, and Artisan Partners agrees that Artisan Partners' compensation under paragraph 4 of this agreement shall be reduced by the amount of any such expenses in excess of that limit. If Artisan Partners' expenses would still exceed that limit after Artisan Partners' compensation has been reduced to zero, Artisan Partners shall reimburse the Fund for sums expended for such expenses to the extent necessary to cause the Fund's expenses to be within the limit. Brokers' commissions and other charges relating to the purchase and sale of portfolio securities shall not be regarded as expenses. 6. SERVICES OF ARTISAN PARTNERS NOT EXCLUSIVE. The services of Artisan Partners to the Fund hereunder are not to be deemed exclusive, and Artisan Partners shall be free to render 2 similar services to others so long as its services under this agreement are not impaired by such other activities. 7. SERVICES OTHER THAN AS INVESTMENT ADVISER. Artisan Partners (or an affiliate of Artisan Partners) may act as broker for the Fund in connection with the purchase or sale of securities by or to the Fund if and to the extent permitted by procedures adopted from time to time by the board of directors of Artisan Funds. Such brokerage services are not within the scope of the duties of Artisan Partners under this agreement, and, within the limits permitted by law and the board of directors of Artisan Funds, Artisan Partners (or an affiliate of Artisan Partners) may receive brokerage commissions, fees or other remuneration from the Fund for such services in addition to its fee for services as Artisan Partners. Within the limits permitted by law, Artisan Partners may receive compensation from the Fund for other services performed by it for the Fund which are not within the scope of the duties of Artisan Partners under this agreement. 8. LIMITATION OF LIABILITY OF ARTISAN PARTNERS. Artisan Partners shall not be liable to Artisan Funds or its shareholders for any loss suffered by Artisan Funds or its shareholders from or as a consequence of any act or omission of Artisan Partners, or of any of the partners, employees or agents of Artisan Partners, in connection with or pursuant to this agreement, except by reason of willful misfeasance, bad faith or gross negligence on the part of Artisan Partners in the performance of its duties or by reason of reckless disregard by Artisan Partners of its obligations and duties under this agreement. 9. DURATION AND RENEWAL. Unless terminated as provided in Section 10, this agreement shall continue in effect until December 26, 1997, and thereafter from year to year only so long as such continuance is specifically approved at least annually (a) by a majority of those directors who are not interested persons of Artisan Funds or of Artisan Partners, voting in person at a meeting called for the purpose of voting on such approval, and (b) by either the board of directors of Artisan Fund or vote of the holders of a "majority of the outstanding shares of the Fund" (which term as used throughout this agreement shall be construed in accordance with the definition of "vote of a majority of the outstanding voting securities of a company" in section 2(a)(42) of the 1940 Act). 10. TERMINATION. This agreement may be terminated at any time, without payment of any penalty, by the board of directors of Artisan Funds, or by a vote of the holders of a majority of the outstanding shares of the Fund, upon 60 days' written notice to Artisan Partners. This agreement may be terminated by Artisan Partners at any time upon 60 days' written notice to Artisan Fund. This agreement shall terminate automatically in the event of its assignment (as defined in Section 2(a)(4) of the 1940 Act). 11. NON-LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any obligation of Artisan Funds hereunder shall be binding only upon the assets of Artisan Funds (or applicable series thereof) and shall not be binding upon any director, officer, employee, agent or shareholder of Artisan Funds. Neither the authorization of any action by the directors or shareholders of Artisan Funds nor the execution of this agreement on behalf of Artisan Funds shall impose any liability upon any director, officer or shareholder of Artisan Partners. 3 12. AMENDMENT. This agreement may not be amended without the affirmative vote (a) of a majority of those directors who are not "interested persons" (as defined in section 2(a)(19) of the 1940 Act) of Artisan Funds or of Artisan Partners, voting in person at a meeting called for the purpose of voting on such approval, and (b) of the holders of a majority of the outstanding shares of the Fund. Dated: December , 1995 ARTISAN FUNDS, INC. By --------------------------------------- ARTISAN PARTNERS LIMITED PARTNERSHIP By: Artisan Investment Corporation Its general partner By: --------------------------------------- Andrew A. Ziegler President 4 EX-99.8 7 CUSTODIAN AGREE AND ACCOUNTING SERVICES EXHIBIT 8 CUSTODIAN CONTRACT Between ARTISAN FUNDS, INC. and STATE STREET BANK AND TRUST COMPANY TABLE OF CONTENTS -----------------
Page ---- 1. Employment of Custodian and Property to be Held By It 1 2. Duties of the Custodian with Respect to Property of the Fund Held by the Custodian in the United States 2 2.1 Holding Securities 2 2.2 Delivery of Securities 2 2.3 Registration of Securities 4 2.4 Bank Accounts 4 2.5 Availability of Federal Funds 5 2.6 Collection of Income 5 2.7 Payment of Fund Monies 5 2.8 Liability for Payment in Advance of Receipt of Securities Purchased 7 2.9 Appointment of Agents 7 2.10 Deposit of Fund Assets in Securities System 7 2.11 Fund Assets Held in the Custodian's Direct Paper System 8 2.12 Segregated Account 9 2.13 Ownership Certificates for Tax Purposes 10 2.14 Proxies 10 2.15 Communications Relating to Portfolio Securities 10 2.16 Reports to Fund by Independent Public Accountants 10 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States 11 3.1 Appointment of Foreign Sub-Custodians 11 3.2 Assets to be Held 11 3.3 Foreign Securities Systems 11 3.4 Agreements with Foreign Banking Institutions 11 3.5 Access of Independent Accountants of the Fund 12 3.6 Reports by Custodian 12 3.7 Transactions in Foreign Custody Account 12 3.8 Liability of Foreign Sub-Custodians 12 3.9 Liability of Custodian 13 3.10 Reimbursement for Advances 13 3.11 Monitoring Responsibilities 13 3.12 Branches of U.S. Banks 14 3.13 Tax Law 14
TABLE OF CONTENTS -----------------
Page ---- 4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund 14 5. Proper Instructions 15 6. Actions Permitted Without Express Authority 15 7. Evidence of Authority 16 8. Duties of the Custodian with Respect to the Books of Account and Calculations of Net Asset value and Net Income 16 9. Records 16 10. Opinion of Fund's Independent Accountants 17 11. Reports to Fund by Independent Public Accountants 17 12. Compensation of Custodian 17 13. Responsibility of Custodian 17 14. Effective Period, Termination and Amendment 19 15. Successor Custodian 20 16. Interpretive and Additional Provisions 20 17. Additional Funds 21 18. Computerized Reporting Services 21 18.1 Protection of Equipment, Confidential or Proprietary Programs and Information 21 18.2 Fund Acknowledgement 22 19. Massachusetts Law to Apply 22 20. Prior Contracts 22 21. Shareholder Communications Election 22
CUSTODIAN CONTRACT ------------------ This Contract between Artisan Funds, Inc., an open-end, management investment company organized and existing under the laws of Wisconsin, having its principal place of business at 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202 (the "Fund"), and State Street Bank and Trust Company, a Massachusetts trust company, having its principal place of business at 225 Franklin Street, Boston, Massachusetts, 02110 (the "Custodian"). WITNESSETH: WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends to initially offer shares in one series, the Artisan Small Cap Fund (such series together with all other series subsequently established by the Fund and made subject to this Contract in accordance with Article 17, being herein referred to as the "Portfolio(s)"); NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the parties hereto agree as follows: 1. Employment of Custodian and Property to be Held by It The Fund hereby employs the Custodian as the custodian of the assets of the Portfolios of the Fund, including securities which the Fund, on behalf of the applicable Portfolio desires to be held in places within the United States ("domestic securities") and securities it desires to be held outside the United States ("foreign securities") pursuant to the provisions of the Articles of Incorporation, as amended and restated (the "Articles of Incorporation"). The Fund on behalf of the Portfolio(s) agrees to deliver to the Custodian all securities and cash of the Portfolios, and all payments of income, payments of principal or capital distributions received by it with respect to all securities owned by the Portfolio(s) from time to time, and the cash consideration received by it for such new or treasury shares of beneficial interest of the Fund representing interests in the Portfolios ("Shares") as may be issued or sold from time to time. The Custodian shall not be responsible for any property of a Portfolio held or received by the Portfolio and not delivered to the Custodian. Upon receipt of "Proper Instructions" (within the meaning of Article 5), the Custodian shall on behalf of the applicable Portfolio(s) from time to time employ one or more sub-custodians, located in the United States but only in accordance with an applicable vote by the Board of Directors of the Fund on behalf of the applicable Portfolio(s), and provided that the Custodian shall have no more or less responsibility or liability to the Fund on account of any actions or omissions of any sub-custodian to employ than any such sub-custodian has to the Custodian. The Custodian may employ as sub-custodian for the Fund's foreign securities on behalf of the applicable Portfolio(s) the foreign banking institutions and foreign securities depositories designated in Schedule A hereto but only in accordance with the provisions of Article 3. 2. Duties of the Custodian with Respect to Property of the Fund Held By the Custodian in the United States 2.1 Holding Securities. The Custodian shall hold and physically segregate for the account of each Portfolio all non-cash property, to be held by it in the United States including all domestic securities owned by such Portfolio, other than (a) securities which are maintained pursuant to Section 2.10 in a clearing agency which acts as a securities depository or in a book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies (each a "U.S. Securities System") and (b) commercial paper of an issuer for which State Street Bank and Trust Company acts as issuing and paying agent ("Direct Paper") which is deposited and/or maintained in the Direct Paper System of the Custodian pursuant to Section 2.11. 2.2 Delivery of Securities. The Custodian shall release and deliver domestic securities owned by a Portfolio held by the Custodian or in a U.S. Securities System account of the Custodian or in the Custodian's Direct Paper book entry system account ("Direct Paper System Account") only upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, and only in the following cases: 1) Upon sale of such securities for the account of the Portfolio and receipt of payment therefor; 2) Upon the receipt of payment in connection with any repurchase agreement related to such securities entered into by the Portfolio; 3) In the case of a sale effected through a U.S. Securities System, in accordance with the provisions of Section 2.10 hereof; 4) To the depository agent in connection with tender or other similar offers for securities of the Portfolio; 5) To the issuer thereof or its agent when such securities are called, redeemed, retired or otherwise become payable; provided that, in any such case, the cash or other consideration is to be delivered to the Custodian; 6) To the issuer thereof, or its agent, for transfer into the name of the Portfolio or into the name of any nominee or nominees of the Custodian or into the name or 2 nominee name of any agent appointed pursuant to Section 2.9 or into the name or nominee name of any sub-custodian appointed pursuant to Article 1; or for exchange for a different number of bonds, certificates or other evidence representing the same aggregate face amount or number of units; provided that, in any such case, the new securities are to be delivered to the Custodian; 7) Upon the sale of such securities for the account of the Portfolio, to the broker or its clearing agent, against a receipt, for examination in accordance with "street delivery" custom; provided that in any such case, the Custodian shall have no responsibility or liability for any loss arising from the delivery of such securities prior to receiving payment for such securities except as may arise from the Custodian's own negligence or willful misconduct; 8) For exchange or conversion pursuant to any plan of merger, consolidation, recapitalization, reorganization or readjustment of the securities of the issuer of such securities, or pursuant to provisions for conversion contained in such securities, or pursuant to any deposit agreement; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 9) In the case of warrants, rights or similar securities, the surrender thereof in the exercise of such warrants, rights or similar securities or the surrender of interim receipts or temporary securities for definitive securities; provided that, in any such case, the new securities and cash, if any, are to be delivered to the Custodian; 10) For delivery in connection with any loans of securities made by the Portfolio, but only against receipt of adequate collateral as agreed upon from time to time by the Custodian and the Fund on behalf of the Portfolio, which may be in the form of cash or obligations issued by the United States government, its agencies or instrumentalities, except that in connection with any loans for which collateral is to be credited to the Custodian's account in the book-entry system authorized by the U.S. Department of the Treasury, the Custodian will not be held liable or responsible for the delivery of securities owned by the Portfolio prior to the receipt of such collateral; 11) For delivery as security in connection with any borrowings by the Fund on behalf of the Portfolio requiring a pledge of assets by the Fund on behalf of the Portfolio, but only against receipt of amounts borrowed; 12) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Securities Exchange Act of 1934 (the "Exchange Act") and a member of The National Association of Securities Dealers, Inc. ("NASD"), relating to compliance with the rules of The Options Clearing Corporation and of any registered national 3 securities exchange, or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio of the Fund; 13) For delivery in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian, and a Futures Commission Merchant registered under the Commodity Exchange Act, relating to compliance with the rules of the Commodity Futures Trading Commission and/or any Contract Market, or any similar organization or organizations, regarding account deposits in connection with transactions by the Portfolio of the Fund; 14) Upon receipt of instructions from the transfer agent ("Transfer Agent") for the Fund, for delivery to such Transfer Agent or to the holders of shares in connection with distributions in kind, as may be described from time to time in the currently effective prospectus and statement of additional information of the Fund, related to the Portfolio ("Prospectus"), in satisfaction of requests by holders of Shares for repurchase or redemption; and 15) For any other proper corporate purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the applicable Portfolio, a certified copy of a resolution of the Board of Directors or of the Executive Committee signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, specifying the securities of the Portfolio to be delivered, setting forth the purpose for which such delivery is to be made, declaring such purpose to be a proper corporate purpose, and naming the person or persons to whom delivery of such securities shall be made. 2.3 Registration of Securities. Domestic securities held by the Custodian (other than bearer securities) shall be registered in the name of the Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio or of any nominee of the Custodian which nominee shall be assigned exclusively to the Portfolio, unless the Fund has authorized in writing the appointment of a nominee to be used in common with other registered investment companies having the same investment adviser as the Portfolio, or in the name or nominee name of any agent appointed pursuant to Section 2.9 or in the name or nominee name of any sub-custodian appointed pursuant to Article 1. All securities accepted by the Custodian on behalf of the Portfolio under the terms of this Contract shall be in "street name" or other good delivery form. If, however, the Fund directs the Custodian to maintain securities in "street name", the Custodian shall utilize its best efforts only to timely collect income due the Fund on such securities and to notify the Fund on a best efforts basis only of relevant corporate actions including, without limitation, pendency of calls, maturities, tender or exchange offers. 2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account or accounts in the United States in the name of each Portfolio of the Fund, subject only to 4 draft or order by the Custodian acting pursuant to the terms of this Contract, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the Portfolio, other than cash maintained by the Portfolio in a bank account established and used in accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds held by the Custodian for a Portfolio may be deposited by it to its credit as Custodian in the Banking Department of the Custodian or in such other banks or trust companies as it may in its discretion deem necessary or desirable; provided, however, that every such bank or trust company shall be qualified to act as a custodian under the Investment Company Act of 1940 and that each such bank or trust company and the funds to be deposited with each such bank or trust company shall on behalf of each applicable Portfolio be approved by vote of a majority of the Board of Directors of the Fund. Such funds shall be deposited by the Custodian in its capacity as Custodian and shall be withdrawable by the Custodian only in that capacity. 2.5 Availability of Federal Funds. Upon mutual agreement between the Fund on behalf of each applicable Portfolio and the Custodian, the Custodian shall, upon the receipt of Proper Instructions from the Fund on behalf of a Portfolio, make federal funds available to such Portfolio as of specified times agreed upon from time to time by the Fund and the Custodian in the amount of checks received in payment for Shares of such Portfolio which are deposited into the Portfolio's account. 2.6 Collection of Income. Subject to the provisions of Section 2.3, the Custodian shall collect on a timely basis all income and other payments with respect to registered domestic securities held hereunder to which each Portfolio shall be entitled either by law or pursuant to custom in the securities business, and shall collect on a timely basis all income and other payments with respect to bearer domestic securities if, on the date of payment by the issuer, such securities are held by the Custodian or its agent thereof and shall credit such income, as collected, to such Portfolio's custodian account. Without limiting the generality of the foregoing, the Custodian shall detach and present for payment all coupons and other income items requiring presentation as and when they become due and shall collect interest when due on securities held hereunder. Income due each Portfolio on securities loaned pursuant to the provisions of Section 2.2(10) shall be the responsibility of the Fund. The Custodian will have no duty or responsibility in connection therewith, other than to provide the Fund with such information or data as may be necessary to assist the Fund in arranging for the timely delivery to the Custodian of the income to which the Portfolio is properly entitled. 2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund on behalf of the applicable Portfolio, which may be continuing instructions when deemed appropriate by the parties, the Custodian shall pay out monies of a Portfolio in the following cases only: 1) Upon the purchase of domestic securities, options, futures contracts or options on futures contracts for the account of the Portfolio but only (a) against the delivery 5 of such securities or evidence of title to such options, futures contracts or options on futures contracts to the Custodian (or any bank, banking firm or trust company doing business in the United States or abroad which is qualified under the Investment Company Act of 1940, as amended, to act as a custodian and has been designated by the Custodian as its agent for this purpose) registered in the name of the Portfolio or in the name of a nominee of the Custodian referred to in Section 2.3 hereof or in proper form for transfer; (b) in the case of a purchase effected through a U.S. Securities System, in accordance with the conditions set forth in Section 2.10 hereof; (c) in the case of a purchase involving the Direct Paper System, in accordance with the conditions set forth in Section 2.11; (d) in the case of repurchase agreements entered into between the Fund on behalf of the Portfolio and the Custodian, or another bank, or a broker-dealer which is a member or NASD, (i) against delivery of the securities either in certificate form or through an entry crediting the Custodian's account at the Federal Reserve Bank with such securities or (ii) against delivery of the receipt evidencing purchase by the Portfolio of securities owned by the Custodian along with written evidence of the agreement by the Custodian to repurchase such securities from the Portfolio or (e) for transfer to a time deposit account of the Fund in any bank, whether domestic or foreign; such transfer may be effected prior to receipt of a confirmation from a broker and/or the applicable bank pursuant to Proper Instructions from the Fund as defined in Article 5; 2) In connection with conversion, exchange or surrender of securities owned by the Portfolio as set forth in Section 2.2 hereof; 3) For the redemption or repurchase of Shares issued by the Portfolio as set forth in Article 4 hereof; 4) For the payment of any expense or liability incurred by the Portfolio, including but not limited to the following payments for the account of the Portfolio: interest, taxes, management, accounting, transfer agent and legal fees, and operating expenses of the Fund whether or not such expenses are to be in whole or part capitalized or treated as deferred expenses; 5) For the payment of any dividends on Shares of the Portfolio declared pursuant to the governing documents of the Fund; 6) For payment of the amount of dividends received in respect of securities sold short; 7) For any other proper purpose, but only upon receipt of, in addition to Proper Instructions from the Fund on behalf of the Portfolio, a certified copy of a resolution of the Board of Directors or of the Executive Committee of the Fund signed by an officer of the Fund and certified by its Secretary or an Assistant 6 Secretary, specifying the amount of such payment, setting forth the purpose for which such payment is to be made, declaring such purpose to be a proper purpose, and naming the person or persons to whom such payment is to be made. 2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except as specifically stated otherwise in this Contract, in any and every case where payment for purchase of domestic securities for the account of a Portfolio is made by the Custodian in advance of receipt of the securities purchased in the absence of specific written instructions from the Fund on behalf of such Portfolio to so pay in advance, the Custodian shall be absolutely liable to the Fund for such securities to the same extent as if the securities had been received by the Custodian. 2.9 Appointment of Agents. The Custodian may at any time or times in its discretion appoint (and may at any time remove) any other bank or trust company which is itself qualified under the Investment Company Act of 1940, as amended, to act as a custodian, as its agent to carry out such of the provisions of this Article 2 as the Custodian may from time to time direct; provided, however, that the appointment of any agent shall not relieve the Custodian of its responsibilities or liabilities hereunder. 2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may deposit and/or maintain securities owned by a Portfolio in a clearing agency registered with the Securities and Exchange Commission under Section 17A of the Securities Exchange Act of 1934, which acts as a securities depository, or in the book-entry system authorized by the U.S. Department of the Treasury and certain federal agencies (collectively referred to herein as "U.S. Securities System") in accordance with applicable Federal Reserve Board and Securities and Exchange Commission rules and regulations, if any, and subject to the following provisions: 1) The Custodian may keep securities of the Portfolio in a U.S. Securities System provided that such securities are represented in an account ("Account") of the Custodian in the U.S. Securities System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 2) The records of the Custodian with respect to securities of the Portfolio which are maintained in a U.S. Securities System shall identify by book-entry those securities belonging to the Portfolio; 3) The Custodian shall pay for securities purchased for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that such securities have been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such payment and transfer for the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon (i) receipt of advice from the U.S. Securities System that payment 7 for such securities has been transferred to the Account, and (ii) the making of an entry on the records of the Custodian to reflect such transfer and payment for the account of the Portfolio. Copies of all advices from the U.S. Securities System of transfers of securities for the account of the Portfolio shall identify the Portfolio, be maintained for the Portfolio by the Custodian and be provided to the Fund at its request. Upon request, the Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio in the form of a written advice or notice and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transactions in the U.S. Securities System for the account of the Portfolio; 4) The Custodian shall provide the Fund for the Portfolio with any report obtained by the Custodian on the U.S. Securities System's accounting system, internal accounting control and procedures for safeguarding securities deposited in the U.S. Securities System; 5) The Custodian shall have received from the Fund on behalf of the Portfolio the initial or annual certificate, as the case may be, required by Article 14 hereof; 6) Anything to the contrary in this Contract notwithstanding, the Custodian shall be liable to the Fund for the benefit of the Portfolio for any loss or damage to the Portfolio resulting from use of the U.S. Securities System by reason of any negligence, misfeasance or misconduct of the Custodian or any of its agents or of any of its or their employees or from failure of the Custodian or any such agent to enforce effectively such rights as it may have against the U.S. Securities System; at the election of the Fund, it shall be entitled to be subrogated to the rights of the Custodian with respect to any claim against the U.S. Securities System or any other person which the Custodian may have as a consequence of any such loss or damage if and to the extent that the Portfolio has not been made whole for any such loss or damage. 2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may deposit and/or maintain securities owned by a Portfolio in the Direct Paper System of the Custodian subject to the following provisions: 1) No transaction relating to securities in the Direct Paper System will be effected in the absence of Proper Instructions from the Fund on behalf of the Portfolio; 2) The Custodian may keep securities of the Portfolio in the Direct Paper System only if such securities are represented in an account ("Account") of the Custodian in the Direct Paper System which shall not include any assets of the Custodian other than assets held as a fiduciary, custodian or otherwise for customers; 8 3) The records of the Custodian with respect to securities of the Portfolio which are maintained in the Direct Paper System shall identify by book-entry those securities belonging to the Portfolio; 4) The Custodian shall pay for securities purchased for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such payment and transfer of securities to the account of the Portfolio. The Custodian shall transfer securities sold for the account of the Portfolio upon the making of an entry on the records of the Custodian to reflect such transfer and receipt of payment for the account of the Portfolio; 5) The Custodian shall furnish the Fund on behalf of the Portfolio confirmation of each transfer to or from the account of the Portfolio, in the form of a written advice or notice, of Direct Paper on the next business day following such transfer and shall furnish to the Fund on behalf of the Portfolio copies of daily transaction sheets reflecting each day's transaction in the U.S. Securities System for the account of the Portfolio; 6) The Custodian shall provide the Fund on behalf of the Portfolio with any report on its system of internal accounting control as the Fund may reasonably request from time to time. 2.12 Segregated Account. The Custodian shall upon receipt of Proper Instructions from the Fund on behalf of each applicable Portfolio establish and maintain a segregated account or accounts for and on behalf of each such Portfolio, into which account or accounts may be transferred cash and/or securities, including securities maintained in an account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the provisions of any agreement among the Fund on behalf of the Portfolio, the Custodian and a broker-dealer registered under the Exchange Act and a member of the NASD (or any futures commission merchant registered under the Commodity Exchange Act), relating to compliance with the rules of The Options Clearing Corporation and of any registered national securities exchange (or the Commodity Futures Trading Commission or any registered contract market), or of any similar organization or organizations, regarding escrow or other arrangements in connection with transactions by the Portfolio, (ii) for purposes of segregating cash or government securities in connection with options purchased, sold or written by the Portfolio or commodity futures contracts or options thereon purchased or sold by the Portfolio, (iii) for the purposes of compliance by the Portfolio with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases of the Securities and Exchange Commission relating to the maintenance of segregated accounts by registered investment companies and (iv) for other proper corporate purposes, but only, in the case of clause (iv), upon receipt of, in addition to Proper Instructions from the Fund on behalf of the applicable Portfolio, a certified copy of a resolution of the Board of Directors or of the Executive Committee signed by an officer of the Fund and certified by the Secretary or an Assistant Secretary, 9 setting forth the purpose or purposes of such segregated account and declaring such purposes to be proper corporate purposes. 2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute ownership and other certificates and affidavits for all federal and state tax purposes in connection with receipt of income or other payments with respect to domestic securities of each Portfolio held by it and in connection with transfers of securities. 2.14 Proxies. The Custodian shall, with respect to the domestic securities held hereunder, cause to be promptly executed by the registered holder of such securities, if the securities are registered otherwise than in the name of the Portfolio or a nominee of the Portfolio, all proxies, without indication of the manner in which such proxies are to be voted, and shall promptly deliver to the Portfolio such proxies, all proxy soliciting materials and all notices relating to such securities. 2.15 Communications Relating to Portfolio Securities. Subject to the provisions of Section 2.3, the Custodian shall transmit promptly to the Fund for each Portfolio all written information (including, without limitation, pendency of calls and maturities of domestic securities and expirations of rights in connection therewith and notices of exercise of call and put options written by the Fund on behalf of the Portfolio and the maturity of futures contracts purchased or sold by the Portfolio) received by the Custodian from issuers of the securities being held for the Portfolio. With respect to tender or exchange offers, the Custodian shall transmit promptly to the Portfolio all written information received by the Custodian from issuers of the securities whose tender or exchange is sought and from the party (or his agents) making the tender or exchange offer. If the Portfolio desires to take action with respect to any tender offer, exchange offer or any other similar transaction, the Portfolio shall notify the Custodian at least three business days prior to the date on which the Custodian is to take such action. 2.16 Reports to Fund by Independent Public Accountants. The Custodian shall provide the Fund, at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including domestic securities deposited and/or maintained in a U.S. Securities System, relating to the services provided by the Custodian under this Contract; such reports shall be of sufficient scope and in sufficient detail, as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state. 10 3. Duties of the Custodian with Respect to Property of the Fund Held Outside of the United States 3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and instructs the Custodian to employ as sub-custodians for the Portfolio's securities and other assets maintained outside the United States the foreign banking institutions and foreign securities depositories designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper Instructions", as defined in Section 5 of this Contract, together with a certified resolution of the Fund's Board of Directors, the Custodian and the Fund may agree to amend Schedule A hereto from time to time to designate additional foreign banking institutions and foreign securities depositories to act as sub-custodian. Upon receipt of Proper Instructions, the Fund may instruct the Custodian to cease the employment of any one or more such sub-custodians for maintaining custody of the Portfolio's assets. 3.2 Assets to be Held. The Custodian shall limit the securities and other assets maintained in the custody of the foreign sub-custodians to: (a) "foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of 1940, and (b) cash and cash equivalents in such amounts as the Custodian or the Fund may determine to be reasonably necessary to effect the Portfolio's foreign securities transactions. The Custodian shall identify on its books as belonging to the Fund, the foreign securities of the Fund held by each foreign sub-custodian. 3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in writing by the Custodian and the Fund, assets of the Portfolios shall be maintained in a clearing agency which acts as a securities depository or in a book-entry system for the central handling of securities located outside the United States (each a "Foreign Securities System") only through arrangements implemented by the foreign banking institutions serving as sub-custodians pursuant to the terms hereof (Foreign Securities Systems and U.S. Securities Systems are referred to collectively herein as "Securities Systems"). Where possible, such arrangements shall include entry into agreements containing the provisions set forth in Section 3.4 hereof. 3.4 Agreements with Foreign Banking Institutions. Each agreement with a foreign banking institution shall be substantially in the form set forth in Exhibit 1 hereto and shall provide that: (a) the assets of each Portfolio will not be subject to any right, charge, security interest, lien or claim of any kind in favor of the foreign banking institution or its creditors or agent, except a claim of payment for their safe custody or administration; (b) beneficial ownership for the assets of each Portfolio will be freely transferable without the payment of money or value other than for custody or administration; (c) adequate records will be maintained identifying the assets as belonging to each applicable Portfolio; (d) officers of or auditors employed by, or other representatives of the Custodian, including to the extent permitted under applicable law the independent public accountants for the Fund, will be given access to the books and records of the foreign 11 banking institution relating to its actions under its agreement with the Custodian; and (e) assets of the Portfolios held by the foreign sub- custodian will be subject only to the instructions of the Custodian or its agents. 3.5 Access of Independent Accountants of the Fund. Upon request of the Fund, the Custodian will use its best efforts to arrange for the independent accountants for the Fund to be afforded access to the books and records of any foreign banking institution employed as a foreign sub-custodian insofar as such books and records relate to the performance of such foreign banking institution under its agreement with the Custodian. 3.6 Reports by Custodian. The Custodian will supply to the Fund from time to time, as mutually agreed upon, statements in respect of the securities and other assets of the Portfolio(s) held by foreign sub-custodians, including but not limited to an identification of entities having possession of the Portfolio(s) securities and other assets and advices or notifications of any transfers of securities to or from each custodial account maintained by a foreign banking institution for the Custodian on behalf of each applicable Portfolio indicating, as to securities acquired for a Portfolio, the identity of the entity having physical possession of such securities. 3.7 Transactions in Foreign Custody Account. (a) Except as otherwise provided in paragraph (b) of this Section 3.7, the provision of Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to the foreign securities of the Fund held outside the United States by foreign sub- custodians. (b) Notwithstanding any provision of this Contract to the contrary, settlement and payment for securities received for the account of each applicable Portfolio and delivery of securities maintained for the account of each applicable Portfolio may be effected in accordance with the customary established securities trading or securities processing practices and procedures in the jurisdiction or market in which the transaction occurs, including, without limitation, delivering securities to the purchaser thereof or to a dealer therefor (or an agent for such purchaser or dealer) against a receipt with the expectation of receiving later payment for such securities from such purchaser or dealer. (c) Securities maintained in the custody of a foreign sub-custodian may be maintained in the name of such entity's nominee to the same extent as set forth in Section 2.3 of this Contract, and the Fund agrees to hold any such nominee harmless from any liability as a holder of record of such securities. 3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the Custodian employs a foreign banking institution as a foreign sub- custodian shall require the institution to exercise reasonable care in the performance of its duties and to indemnify, and hold harmless, the Custodian and the Fund from and against any loss, damage, cost, expense, liability or claim arising out of or in connection with the institution's performance of such obligations. At the election of the Fund, it shall be entitled to be 12 subrogated to the rights of the Custodian with respect to any claims against a foreign banking institution as a consequence of any such loss, damage, cost, expense, liability or claim if and to the extent that the Fund has not been made whole for any such loss, damage, cost, expense, liability or claim. 3.9 Liability of Custodian. The Custodian shall be liable for the acts or omissions of a foreign banking institution to the same extent as set forth with respect to sub-custodians generally in this Contract and, regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism or any loss where the sub- custodian has otherwise exercised reasonable care. Notwithstanding the foregoing provisions of this paragraph 3.9, in delegating custody duties to State Street London Ltd., the Custodian shall not be relieved of any responsibility to the Fund for any loss due to such delegation, except such loss as may result from (a) political risk (including, but not limited to, exchange control restrictions, confiscation, expropriation, nationalization, insurrection, civil strife or armed hostilities) or (b) other losses (excluding a bankruptcy or insolvency of State Street London Ltd. not caused by political risk) due to Acts of God, nuclear incident or other losses under circumstances where the Custodian and State Street London Ltd. have exercised reasonable care. 3.10 Reimbursement for Advances. If the Fund requires the Custodian to advance cash or securities for any purpose for the benefit of a Portfolio including the purchase or sale of foreign exchange or of contracts for foreign exchange, or in the event that the Custodian to its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolio's assets to the extent necessary to obtain reimbursement. 3.11 Monitoring Responsibilities. The Custodian shall furnish annually to the Fund, during the month of June, information concerning the foreign sub- custodians employed by the Custodian. Such information shall be similar in kind and scope to that furnished to the Fund in connection with the initial approval of this Contract. In addition, the Custodian will promptly inform the Fund in the event that the Custodian learns of a material adverse change in the financial condition of a foreign sub- custodian or any material loss of the assets of the Fund or in the case of any foreign sub-custodian not the subject of an exemptive order from the Securities and Exchange Commission is notified by such foreign sub- custodian that there appears to be a substantial likelihood that its shareholders' equity will decline below $200 million (U.S. dollars or the equivalent 13 thereof) or that its shareholders' equity has declined below $200 million (in each case computed in accordance with generally accepted U.S. accounting principles). 3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract, the provisions hereof shall not apply where the custody of the Portfolios assets are maintained in a foreign branch of a banking institution which is a "bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940 meeting the qualification set forth in Section 26(a) of said Act. The appointment of any such branch as a sub- custodian shall be governed by paragraph 1 of this Contract. (b) Cash held for each Portfolio of the Fund in the United Kingdom shall be maintained in an interest bearing account established for the Fund with the Custodian's London branch, which account shall be subject to the direction of the Custodian, State Street London Ltd. or both. 3.13 Tax Law. The Custodian shall have no responsibility or liability for any obligations now or hereafter imposed on the Fund or the Custodian as custodian of the Fund by the tax law of the United States of America or any state or political subdivision thereof. It shall be the responsibility of the Fund to notify the Custodian of the obligations imposed on the Fund or the Custodian as custodian of the Fund by the tax law of jurisdictions other than those mentioned in the above sentence, including responsibility for withholding and other taxes, assessments or other governmental charges, certifications and governmental reporting. The sole responsibility of the Custodian with regard to such tax law shall be to use reasonable efforts to assist the Fund with respect to any claim for exemption or refund under the tax law of jurisdictions for which the Fund has provided such information. 4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund The Custodian shall receive from the distributor for the Shares or from the Transfer Agent of the Fund and deposit into the account of the appropriate Portfolio such payments as are received for Shares of that Portfolio issued or sold from time to time by the Fund. The Custodian will provide timely notification to the Fund on behalf of each such Portfolio and the Transfer Agent of any receipt by it of payments for Shares of such Portfolio. From such funds as may be available for the purpose but subject to the limitations of the Articles of Incorporation and any applicable votes of the Board of Directors of the Fund pursuant thereto, the Custodian shall, upon receipt of instructions from the Transfer Agent, make funds available for payment to holders of Shares who have delivered to the Transfer Agent a request for redemption or repurchase of their Shares. In connection with the redemption or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt of instructions from the Transfer Agent to wire funds to or through a commercial bank designated by the redeeming shareholders. In connection with the redemption or repurchase of Shares of the Fund, the 14 Custodian shall honor checks drawn on the Custodian by a holder of Shares, which checks have been furnished by the Fund to the holder of Shares, when presented to the Custodian in accordance with such procedures and controls as are mutually agreed upon from time to time between the Fund and the Custodian. 5. Proper Insructions Proper Instructions as used throughout this Contract means a writing signed or initialled by one or more person or persons as the Board of Directors shall have from time to time authorized. Each such writing shall set forth the specific transaction or type of transaction involved, including a specific statement of the purpose for which such action is requested. Oral instructions will be considered Proper Instructions if the Custodian reasonably believes them to have been given by a person authorized to give such instructions with respect to the transaction involved. The Fund shall cause all oral instructions to be confirmed in writing. Upon receipt of a certificate of the Secretary or an Assistant Secretary as to the authorization by the Board of Directors of the Fund accompanied by a detailed description of procedures approved by the Board of Directors, Proper Instructions may include communications effected directly between electro-mechanical or electronic devices provided that the Board of Directors and the Custodian are satisfied that such procedures afford adequate safeguards for the Portfolios' assets. For purposes of this Section, Proper Instructions shall include instructions received by the Custodian pursuant to any three - party agreement which requires a segregated asset account in accordance with Section 2.12. 6. Actions Permitted without Express Authority The Custodian may in its discretion, without express authority from the Fund on behalf of each applicable Portfolio: 1) make payments to itself or others for minor expenses of handling securities or other similar items relating to its duties under this Contract, provided that all such payments shall be accounted for to the Fund on behalf of the Portfolio; 2) surrender securities in temporary form for securities in definitive form; 3) endorse for collection, in the name of the Portfolio, checks, drafts and other negotiable instruments; and 4) in general, attend to all non-discretionary details in connection with the sale, exchange, substitution, purchase, transfer and other dealings with the securities and property of the Portfolio except as other directed by the Board of Directors of the Fund. 15 7. Evidence of Authority The Custodian shall be protected in acting upon any instructions, notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed by or on behalf of the Fund. The Custodian may receive and accept a certified copy of a vote of the Board of Directors of the Fund as conclusive evidence (a) of the authority of any person to act in accordance with such vote or (b) of any determination or of any action by the Board of Directors pursuant to the Articles of Incorporation as described in such vote, and such vote may be considered as in full force and effect until receipt by the Custodian of written notice to the contrary. 8. Duties of Custodian with Respect to the Books of Account and Calculation of Net Asset Value and Net Income The Custodian shall cooperate with and supply necessary information to the entity or entities appointed by the Board of Directors of the Fund to keep the books of account of the Fund and/or compute the net asset value per share of the outstanding shares of the Fund or, if directed in writing to do so by the Fund, shall itself keep such books of account and/or compute such net asset value per share. If so directed, the Custodian shall also calculate daily the net income of the Fund as described in the Fund's currently effective prospectus and shall advise the Fund and the Transfer Agent daily of the total amounts of such net income and, if instructed in writing by an officer of the Fund to do so, shall advise the Transfer Agent periodically of the division of such net income among its various components. The calculations of the net asset value per share and the daily income of the Fund shall be made at the time or times described from time to time in the Fund's currently effective prospectus. 9. Records The Custodian shall create and maintain all records relating to its activities and obligations under this Contract in such manner as will meet the obligations of the Fund under the Investment Company Act of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund and shall at all times during the regular business hours of the Custodian be open for inspection by duly authorized officers, employees or agents of the Fund and employees and agents of the Securities and Exchange Commission. The Custodian shall, at the Fund's request, supply the Fund with a tabulation of securities owned by the Fund and held by the Custodian and shall, when requested to do so by the Fund and for such compensation as shall be agreed upon between the Fund and the Custodian, include certificate numbers in such tabulations. 16 10. Opinion of Fund's Independent Accountant The Custodian shall take all reasonable action, as the Fund on behalf of each applicable Portfolio may from time to time request, to obtain from year to year favorable opinions from the Fund's independent accountants with respect to its activities hereunder in connection with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual reports to the Securities and Exchange Commission and with respect to any other requirements of such Commission. 11. Reports to Fund by Independent Public Accountants The Custodian shall provide the Fund, on behalf of each of the Portfolios at such times as the Fund may reasonably require, with reports by independent public accountants on the accounting system, internal accounting control and procedures for safeguarding securities, futures contracts and options on futures contracts, including securities deposited and/or maintained in a Securities System, relating to the services provided by the Custodian under this Contract; such reports shall be of sufficient scope and in sufficient detail as may reasonably be required by the Fund to provide reasonable assurance that any material inadequacies would be disclosed by such examination, and, if there are no such inadequacies, the reports shall so state. 12. Compensation of Custodian The Custodian shall be entitled to reasonable compensation for its services and expenses as Custodian, as agreed upon from time to time between the Fund on behalf of each applicable Portfolio and the Custodian. 13. Responsibility of Custodian So long as and to the extent that it is in the exercise of reasonable care, the Custodian shall not be responsible for the title, validity or genuineness of any property or evidence of title thereto received by it or delivered by it pursuant to this Contract and shall be held harmless in acting upon any notice, request, consent, certificate or other instrument reasonably believed by it to be genuine and to be signed by the proper party or parties, including any futures commission merchant acting pursuant to the terms of a three-party futures or options agreement. The Custodian shall be held to the exercise of reasonable care in carrying out the provisions of this Contract, but shall be kept indemnified by and shall be without liability to the Fund for any action taken or omitted by it in good faith without negligence. It shall be entitled to rely on and may act upon advice of counsel (who may be counsel for the Fund) on all matters, and shall be without liability for any action reasonably taken or omitted pursuant to such advice. 17 Except as may arise from the Custodian's own negligence or willful misconduct or the negligence or willful misconduct of a sub-custodian or agent, the Custodian shall be without liability to the Fund for any loss, liability, claim or expense resulting from or caused by; (i) events or circumstances beyond the reasonable control of the Custodian or any sub-custodian or Securities System or any agent or nominee of any of the foregoing, including, without limitation, nationalization or expropriation, imposition of currency controls or restrictions, the interruption, suspension or restriction of trading on or the closure of any securities markets, power or other mechanical or technological failures or interruptions, computer viruses or communications disruptions, acts of war or terrorism, riots, revolutions, work stoppages, natural disasters or other similar events or acts; (ii) errors by the Fund or the Investment Advisor in their instructions to the Custodian provided such instructions have been given in accordance with this Contract; (iii) the insolvency of or acts or omissions by a Securities System; (iv) any delay or failure of any broker, agent or intermediary, central bank or other commercially prevalent payment or clearing system to deliver to the Custodian's sub-custodian or agent securities purchased or in the remittance of payment made in connection with securities sold; (v) any delay or failure of any company, corporation, or other body in charge of registering or transferring securities in the name of the Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or any consequential losses arising out of such delay or failure to transfer such securities including non-receipt of bonus, dividends and rights and other accretions or benefits; (vi) delays or inability to perform its duties due to any disorder in market infrastructure with respect to any particular security or Securities System; and (vii) any provision of any present or future law or regulation or order of the United States of America, or any state thereof, or any other country, or political subdivision thereof or of any court of competent jurisdiction. The Custodian shall be liable for the acts or omissions of a foreign banking institution appointed pursuant to the provisions of Article 3 to the same extent as set forth in Article I hereof with respect to sub-custodians located in the United States (except as specifically provided in Article 3.9) and, regardless of whether assets are maintained in the custody of a foreign banking institution, a foreign securities depository or a branch of a U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for any loss, damage, cost, expense, liability or claim resulting from, or caused by, the direction of or authorization by the Fund to maintain custody or any securities or cash of the Fund in a foreign country including, but not limited to, losses resulting from nationalization, expropriation, currency restrictions, or acts of war or terrorism. If the Fund on behalf of a Portfolio requires the Custodian to take any action with respect to securities, which action involves the payment of money or which action may, in the opinion of the Custodian, result in the Custodian or its nominee assigned to the Fund or the Portfolio being liable for the payment of money or incurring liability of some other form, the Fund on behalf of the Portfolio, as a prerequisite to requiring the Custodian to take such action, shall provide indemnity to the Custodian in an amount and form satisfactory to it. If the Fund requires the Custodian, its affiliates, subsidiaries or agents, to advance cash or securities for any purpose (including but not limited to securities settlements, foreign 18 exchange contracts and assumed settlement) for the benefit of a Portfolio including the purchase or sale of foreign exchange or of contracts for foreign exchange or in the event that the Custodian or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims or liabilities in connection with the performance of this Contract, except such as may arise from its or its nominee's own negligent action, negligent failure to act or willful misconduct, any property at any time held for the account of the applicable Portfolio shall be security therefor and should the Fund fail to repay the Custodian promptly, the Custodian shall be entitled to utilize available cash and to dispose of such Portfolio's assets to the extent necessary to obtain reimbursement. In no event shall the Custodian be liable for indirect, special or consequential damages. 14. Effective Period, Termination and Amendment This Contract shall become effective as of its execution, shall continue in full force and effect until terminated as hereinafter provided, may be amended at any time by mutual agreement of the parties thereto and may be terminated by either party by an instrument in writing delivered or mailed, postage prepaid to the other party, such termination to take effect not sooner than thirty (30) days after the date of such delivery or mailing; provided, however that the Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in the absence of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors of the Fund has approved the initial use of a particular Securities System by such Portfolio, as required by Rule 17f-4 under the Investment Company Act of 1940, as amended and the Custodian shall not with respect to a Portfolio act under Section 2.11 hereof in the absence of receipt of an initial certificate of the Secretary or an Assistant Secretary that the Board of Directors has approved the initial use of the Direct Paper System by such Portfolio; provided further, however, that the Fund shall not amend or terminate this Contract in contravention of any applicable federal or state regulations, or any provision of the Articles of Incorporation, and further provided, that the Fund on behalf of one or more of the Portfolios may at any time by action of its Board of Directors (i) substitute another bank or trust company for the Custodian by giving notice as described above to the Custodian, or (ii) immediately terminate this Contract in the event of the appointment of a conservator or receiver for the Custodian by the Comptroller of the Currency or upon the happening of a like event at the direction of an appropriate regulatory agency or court of competent jurisdiction. Upon termination of the Contract, the Fund on behalf of each applicable Portfolio shall pay to the Custodian such compensation as may be due as of the date of such termination and shall likewise reimburse the Custodian for its costs, expenses and disbursements. 19 15. Successor Custodian If a successor custodian for the Fund, of one or more of the Portfolios shall be appointed by the Board of Directors of the Fund, the Custodian shall, upon termination, deliver to such successor custodian at the office of the Custodian, duly endorsed and in the form for transfer, all securities of each applicable Portfolio then held by it hereunder and shall transfer to an account of the successor custodian all of the securities of each such Portfolio held in a Securities System. If no such successor custodian shall be appointed, the Custodian shall, in like manner, upon receipt of a certified copy of a vote of the Board of Directors of the Fund, deliver at the office of the Custodian and transfer such securities, funds and other properties in accordance with such vote. In the event that no written order designating a successor custodian or certified copy of a vote of the Board of Directors shall have been delivered to the Custodian on or before the date when such termination shall become effective, then the Custodian shall have the right to deliver to a bank or trust company, which is a "bank" as defined in the Investment Company Act of 1940, doing business in Boston, Massachusetts, of its own selection, having an aggregate capital, surplus, and undivided profits, as shown by its last published report, of not less than $25,000,000, all securities, funds and other properties held by the Custodian on behalf of each applicable Portfolio and all instruments held by the Custodian relative thereto and all other property held by it under this Contract on behalf of each applicable Portfolio and to transfer to an account of such successor custodian all of the securities of each such Portfolio held in any Securities System. Thereafter, such bank or trust company shall be the successor of the Custodian under this Contract. In the event that securities, funds and other properties remain in the possession of the Custodian after the date of termination hereof owing to failure of the Fund to procure the certified copy of the vote referred to or of the Board of Directors to appoint a successor custodian, the Custodian shall be entitled to fair compensation for its services during such period as the Custodian retains possession of such securities, funds and other properties and the provisions of this Contract relating to the duties and obligations of the Custodian shall remain in full force and effect. 16. Interpretive and Additional Provisions In connection with the operation of this Contract, the Custodian and the Fund on behalf of each of the Portfolios, may from time to time agree on such provisions interpretive of or in addition to the provisions of this Contract as may in their joint opinion be consistent with the general tenor of this Contract. Any such interpretive or additional provisions shall be in a writing signed by both parties and shall be annexed hereto, provided that no such interpretive or additional provisions shall contravene any applicable federal or state regulations or any 20 provision of the Articles of Incorporation of the Fund. No interpretive or additional provisions made as provided in the preceding sentence shall be deemed to be an amendment of this Contract. 17. Additional Funds In the event that the Fund establishes one or more series of Shares in addition to Artisan Small-Cap Fund with respect to which it desires to have the Custodian render services as custodian under the terms hereof, it shall so notify the Custodian in writing, and if the Custodian agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder. 18. Computerized Reporting Services 18.1 Protection of Equipment, Confidential or Proprietary Programs and Information. The Fund agrees to use the equipment, computer programs and other information supplied by the Custodian under this Contract solely for its own internal use and benefit and not for resale or other transfer or disposition to, or use by or for the benefit of, any other person or organization without the prior written approval of the Custodian. The Fund acknowledges that the data bases, computer programs, screen formats, screen designs, report formats, interactive design techniques, and other information furnished to the Fund by the Custodian constitute copyrighted trade secrets or proprietary information of substantial value to the Custodian. Such data bases, programs and other information are collectively referred to below as "Proprietary Information". The Fund agrees that it shall treat all Proprietary Information as proprietary to the Custodian and that it shall not divulge any Proprietary Information to any person or organization except as expressly permitted hereunder. Without limiting the foregoing, the Fund agrees for itself and its employees and agents: 1) to use such programs and data bases (i) solely on the Custodian's computers, (ii) solely from equipment at Fund locations agreed to between the Fund and the Custodian and (iii) solely in accordance with the Custodian's applicable user documentation; 2) to use equipment supplied by the Custodian solely with programs supplied by the Custodian and no other programs or software; 3) to refrain from copying or duplicating in any way (other than in the normal course of performing processing on Custodian's computers) any part of any Proprietary Information; 21 4) to refrain from obtaining unauthorized access to any programs, data or other information not owned by the Fund, and if such access is accidentally obtained, to respect and safeguard the same as Proprietary Information: 5) to refrain from causing or allowing information transmitted from the Custodian's computer to the Fund's terminals to be retransmitted to another computer, terminal or other device; 6) that the Fund shall have access to only those authorized transactions as agreed to between the Fund and the Custodian; 7) to honor reasonable written requests made by the Custodian to protect at the Custodian's expense the rights of the Custodian in Proprietary Information at common law, under the Federal copyright statutes and under other Federal and state statutes. 18.2 Fund Acknowledgement. The Fund hereby acknowledges that the data and information it will be accessing from Custodian is unaudited and may not be accurate due to inaccurate pricing of securities, delays of a day or more in updating the Account and other causes for which Custodian will not be liable to the Fund. 19. Massachusetts Law to Apply This Contract shall be construed and the provisions thereof interpreted under and in accordance with laws of The Commonwealth of Massachusetts. 20. Prior Contracts This Contract supersedes and terminates, as of the date hereof, all prior contracts between the Fund on behalf of each of the Portfolios and the Custodian relating to the custody of the Fund's assets. 21. Shareholder Communications Election Securities and Exchange Commission Rule 14b-2 requires banks which hold securities for the account of customers to respond to requests by issuers of securities for the names, addresses and holdings of beneficial owners of securities of that issuer held by the bank unless the beneficial owner has expressly objected to disclosure of this information. In order to comply with the rule, the Custodian needs the Fund to indicate whether it authorizes the Custodian to provide the Fund's name, address, and share position to requesting companies whose securities the Fund owns. If the Fund tells the Custodian "no", the Custodian will not provide this information to requesting companies. If the Fund tells the Custodian "yes" or does not check 22 either "yes" or "no" below, the Custodian is required by the rule to treat the Fund as consenting to disclosure of this information for all securities owned by the Fund or any funds or accounts established by the Fund. For the Fund's protection, the Rule prohibits the requesting company from using the Fund's name and address for any purpose other than corporate communications. Please indicate below whether the Fund consents or objects by checking one of the alternatives below. YES [ ] The Custodian is authorized to release the Fund's name, address, and share positions. NO [ ] The Custodian is not authorized to release the Fund's name, address, and share positions. THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK 23 IN WITNESS WHEREOF, each of the parties has caused this instrument to be executed in its name and behalf by its duly authorized representative and its seal to be hereunder affixed as of March 7, 1995. ARTISAN FUNDS, INC. By: /s/ John M. Blaser --------------------------------- Name: John M. Blaser --------------------------------- Title: Chief Financial Officer --------------------------------- STATE STREET BANK AND TRUST COMPANY By: /s/ Ronald E. Logue --------------------------------- Name: Ronald E. Logue --------------------------------- Title: Executive Vice President --------------------------------- 24 Schedule A ---------- The following foreign banking institutions and foreign securities depositories have been approved by the Board of Directors of Artisan Funds, Inc. (the "Fund") for use as sub-custodians for the Fund's securities and other assets: (Insert banks and securities depositories) Certified: - ------------------------- Fund's Authorized Officer Date: ------------------- EXHIBIT I SUBCUSTODIAN AGREEMENT ---------------------- AGREEMENT made on this day of , 19 , between State Street Bank and Trust Company, A Massachusetts Trust Company (hereinafter referred to as the "Custodian"), having its principal place of business at 225 Franklin Street, Boston, MA, and (hereinafter referred to as the "Subcustodian"), a organized under the laws of and having an office at . WHEREAS, Custodian has been appointed to act as Trustee, Custodian or Subcustodian of securities and monies on behalf of certain of its customers including, without limitation, collective investment undertakings, investment companies subject to the U.S. Investment Company Act of 1940, as amended, and employee benefit plans subject to the U.S. Employee Retirement Income Security Act of 1974, as amended; WHEREAS, Custodian wishes to establish Account (the "Account") with the Subcustodian to hold and maintain certain property for which Custodian is responsible as custodian; and WHEREAS, Subcustodian agrees to establish the Account and to hold and maintain all Property in the Account in accordance with the terms and conditions herein set forth. NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter contained, the Custodian and the Subcustodian agree as follows: I. The Account A. Establishment of the Account. Custodian hereby requests that Subcustodian establish for each client of the Custodian an Account which shall be composed of: 1. A Custody Account for any and all Securities (as hereinafter defined) from time to time received by Subcustodian therefor, and 2. A Deposit Account for any and all Cash (as hereinafter defined) from time to time received by Subcustodian therefor. B. Use of the Account. The Account shall be used exclusively to hold, acquire, transfer or otherwise care for, on behalf of Custodian as custodian and the customers of Custodian and not for Custodian's own interest, Securities and such Cash or cash equivalents as are transferred to Subcustodian or as are received in payment of any transfer of, or as payment on, or interest on, or dividend from, any such Securities (herein collectively called "Cash"). C. Transfer of Property in the Account. Beneficial ownership of the Securities and Cash in the Account shall be freely transferable without payment of money or value other than for safe custody and administration. D. Ownership and Segregation of Property in the Account. The ownership of the property in the Account, whether Securities, Cash or both, and whether any such property is held by Subcustodian in an Eligible Depository, shall be clearly recorded on Subcustodian's books as belonging to Custodian on behalf of Custodian's customers, and not for Custodian's own interest and, to the extent that Securities are physically held in the Account, such Securities shall also be physically segregated from the general assets of Subcustodian, the assets of Custodian in its individual capacity and the assets of Subcustodian's other 1 customers. In addition, Subcustodian shall maintain such other records as may be necessary to identify the property hereunder as belonging to each Account. E. Registration of Securities in the Account. Securities which are eligible for deposit in a depository as provided for in Paragraph III may be maintained with the depository in an account for Subcustodian's customers. Securities which are not held in a depository and that are ordinarily held in registered form will be registered in the name of Subcustodian or in the name of Subcustodian's nominee, unless alternate Instructions are furnished by Custodian. II. Services to Be Provided By the Subcustodian The services Subcustodian will provide to Custodian and the manner in which such services will be performed will be as set forth below in this Agreement. A. Services Performed Pursuant to Instructions. All transactions involving the Securities and Cash in the Account shall be executed solely in accordance with Custodian's Instructions as that term is defined in Paragraph IV hereof, except those described in paragraph B below. B. Services to Be Performed Without Instructions. Subcustodian will, unless it receives Instructions from Custodian to the contrary: 1. Collect Cash. Promptly collect and receive all dividends, income, principal, proceeds from transfer and other payments with respect to property held in the Account, and present for payment all Securities held in the Account which are called, redeemed or retired or otherwise become payable and all coupons and other income items which call for payment upon presentation, and credit Cash receipts therefrom to the Deposit Account. 2. Exchange Securities. Promptly exchange Securities where the exchange is purely ministerial including, without limitation, the exchange of temporary Securities for those in definitive form and the exchange of warrants, or other documents of entitlement to Securities, for the Securities themselves. 3. Sale of Rights and Fractional Interests. Whenever notification of a rights entitlement or a fractional interest resulting from a rights issue, stock dividend or stock split is received from the Account and such rights entitlement or fractional interest bears an expiration date, Subcustodian will promptly endeavor to obtain Custodian's Instructions, but should these not be received in time for Subcustodian to take timely action, Subcustodian is authorized to sell such rights entitlement or fractional interest and to credit the Account. 4. Execute Certificates. Execute in Custodian's name for the Account, whenever Subcustodian deems it appropriate, such ownership and other certificates as may be required to obtain the payment of income from the Securities held in the Account. 5. Pay Taxes and Receive Refunds. To pay or cause to be paid from the Account any and all taxes and levies in the nature of taxes imposed on the property in the account by any governmental authority, and to take all steps necessary to obtain all tax exemptions, privileges or other benefits, including reclaiming and recovering any foreign withholding tax, relating to the Account and to execute any declaration, affidavits, or certificates of ownership which may be necessary in connection therewith. 6. Prevent Losses. Take such steps as may be reasonably necessary to secure or otherwise prevent the loss of, entitlements attached to or otherwise relating to property held in the Account. 2 c. Additional Services. 1. Transmission of Notices of Corporate Action. By such means as will permit Custodian to take timely action with respect thereto, Subcustodian will promptly notify Custodian upon receiving notices or reports, or otherwise becoming aware, of corporate action affecting Securities held in the Account (including, but not limited to, calls for redemption, mergers, consolidations, reorganizations, recapitalizations, tender offers, rights offerings, exchanges, subscriptions and other offerings) and dividend, interest and other income payments relating to such Securities. 2. Communications Regarding the Exercise of Entitlements. Upon request by Custodian, Subcustodian will promptly deliver, or cause any Eligible Depository authorized and acting hereunder to deliver, to Custodian all notices, proxies, proxy soliciting materials and other communications that call for voting or the exercise of rights or other specific action (including material relative to legal proceedings intended to be transmitted to security holders) relating to Securities held in the Account to the extent received by Subcustodian or said Eligible Depository, such proxies or any voting instruments to be executed by the registered holder of the Securities, but without indicating the manner in which such Securities are to be voted. 3. Monitor Financial Service. In furtherance of its obligations under this Agreement, Subcustodian will monitor a leading financial service with respect to announcements and other information respecting property held in the Account, including announcements and other information with respect to corporate actions and dividend, interest and other income payments. III. Use of Securities Depository Subcustodian may, with the prior written approval of Custodian, maintain all or any part of the Securities in the Account with a securities depository or clearing agency which is incorporated or organized under the laws of a country other than the United States of America and is supervised or regulated by a government agency or regulatory authority in the foreign jurisdiction having authority over such depositories or agencies, and which operates (a) the central system for handling of designated securities or equivalent book entries in , or (b) a transnational system for the central handling of securities or equivalent book entries (herein called "Eligible Depository"), provided however, that, while so maintained, such Securities shall be subject only to the directions of Subcustodian, and that Subcustodian duties, obligations and responsibilities with regard to such Securities shall be the same as if such Securities were held by Subcustodian on its premises. IV. Claims Against Property in the Account The property in the account shall not be subject to any right, charge, security interest, lien or claim of any kind (collectively "Charges") in favor of Subcustodian or any Eligible Depository or any creditor of Subcustodian or of any Eligible Depository except a claim for payment for such property's safe custody or administration in accordance with the terms of this Agreement. Subcustodian will immediately notify Custodian of any attempt by any party to assert any Charge against the property held in the Account and shall take all lawful actions to protect such property from such Charges until Custodian has had a reasonable time to respond to such notice. V. Subcustodian's Warranty Subcustodian represents and warrants that: (A) It is a branch of a "qualified U.S. bank" or an "eligible foreign custodian" as those terms are defined in Rule 17f-5 of the Investment Company Act 3 of 1940, a copy of which is attached hereto as Attachment A (the "Rule"), and Subcustodian shall immediately notify Custodian, in writing or by other authorized means, in the event that there appears to be a substantial likelihood that Subcustodian will cease to qualify under the Rule as currently in effect or as hereafter amended, or (B) It is the subject of an exemptive order issued by the United States Securities and Exchange Commission which order permits Custodian to employ Subcustodian notwithstanding the fact that Subcustodian fails to qualify under the terms of the Rule, and Subcustodian shall immediately notify Custodian, in writing or by other authorized means, if for any reason it is no longer covered by such exemptive order. Upon receipt of any such notification required under (A) or (B) of this section, Custodian may terminate this Agreement immediately without prior notice to Subcustodian. VI. Definitions A. Instructions. The term "Instructions" means: 1. instructions in writing signed by authorized individuals designated as such by Custodian; 2. telex or tested telex instructions of Custodian; 3. other forms of instructions in computer readable form as shall customarily be used for the transmission of like information, and 4. such other forms of communication as from time to time may be agreed upon by Custodian and Subcustodian, which Subcustodian believes in good faith to have been given by Custodian or which are transmitted with proper testing or authentication pursuant to terms and conditions which Custodian may specify. Unless otherwise expressly provided, all Instructions shall continue in full force and effect until canceled or superseded. Subcustodian shall act in accordance with Instructions and shall not be liable for any act or omission in respect of any Instruction except in the case of willful default, negligence, fraud, bad faith, willful misconduct, or reckless disregard of duties on the part of Subcustodian. Subcustodian in executing all Instructions will take relevant action in accordance with accepted industry practice and local settlement practice. B. Account. The term "Account" means collectively the Custody Account and the Deposit Account. C. Securities. The term "Securities" includes, without limitation, stocks, shares, bonds, debentures, debt securities (convertible or non- convertible), notes, or other obligations or securities and any certificates, receipts, futures contracts, foreign exchange contracts, options, warrants, scrip or other instruments representing rights to receive, purchase or subscribe for the same, or evidencing or representing any other rights or interests therein, or in any property or assets. VII. Miscellaneous Provisions A. Statements Regarding the Account. Subcustodian will supply Custodian with such statements regarding the Account as Custodian may request, including the identity and location of any Eligible Depository authorized and acting hereunder. In addition, Subcustodian will supply Custodian advice or notification of any transfers of Securities to or from the Account indicating, 4 as to Securities acquired for the Account, if applicable, the Eligible Depository having physical possession of such Securities. B. Examination of Books and Records. Subcustodian agrees that its books and records relating to the Account and Subcustodian's action under this Agreement shall be open to the physical, on-premises inspection and audit at reasonable times by officers of, auditors employed by or other representatives of Custodian including (to the extent permitted under the law of ) the independent public accountants for any customer of Custodian whose property is being held hereunder and such books and records shall be retained for such period as shall be agreed upon by Custodian and Subcustodian. As Custodian may reasonably request from time to time, Subcustodian will furnish its auditor's report on its system of internal controls, and Subcustodian will use its best efforts to obtain and furnish similar reports of any Eligible Depository authorized and acting hereunder. C. Standard of Care. In holding, maintaining, servicing and disposing of Property under this Agreement, and in fulfilling any other obligations hereunder, Subcustodian shall exercise the same standard of care that it exercises over its own assets, provided that Subcustodian shall exercise at least the degree of care and maintain adequate insurance as expected of a prudent professional Subcustodian for hire and shall assume the burden of proving that it has exercised such care in its maintenance of Property held by Subcustodian in its Account. The maintenance of the Property in an Eligible Depository shall not affect Subcustodian's standard of care, and Subcustodian will remain as fully responsible for any loss or damage to such securities as if it had itself retained physical possession of them. Subcustodian shall also indemnify and hold harmless Custodian and each of Custodian's customers from and against any loss, damage, cost, expense, liability or claim (including reasonable attorney's fees) arising out of or in connection with the improper or negligent performance or the nonperformance of the duties of Subcustodian. Subcustodian shall be responsible for complying with all provisions of the law of , or any other law, applicable to Subcustodian in connection with its duties hereunder, including (but not limited to) the payment of all transfer taxes or other taxes and compliance with any currency restrictions and securities laws in connection with its duties as Subcustodian. D. Loss of Cash or Securities. Subcustodian agrees that, in the event of any loss of Securities or Cash in the Account, Subcustodian will use its best efforts to ascertain the circumstances relating to such loss and will promptly report the same to Custodian and shall use every legal means available to it to effect the quickest possible recovery. E. Compensation of Subcustodian. Custodian agrees to pay to Subcustodian from time to time such compensation for its services and such out-of-pocket or incidental expenses of Subcustodian pursuant to this Agreement as may be mutually agreed upon in writing from time to time. F. Operating Requirements. The Subcustodian agrees to follow such Operating Requirements as the Custodian may establish from time to time. A copy of the current Operating Requirements is attached as Attachment B to this Agreement. G. Termination. This Agreement may be terminated by Subcustodian or Custodian on 60 day's written notice to the other party, sent by registered mail, provided that any such notice, whether given by Subcustodian or Custodian, shall be followed within 60 days by Instructions specifying the names of the persons to whom Subcustodian shall deliver the Securities in the Account and to whom the Cash in the Account shall be paid. If within 60 days following the giving of such notice of termination, Subcustodian does not receive such Instructions, 5 Subcustodian shall continue to hold such Securities and Cash subject to this Agreement until such Instructions are given. The obligations of the parties under this Agreement shall survive the termination of this Agreement. G. Notices. Unless otherwise specified in this Agreement, all notices and communications with respect to matters contemplated by this Agreement shall be in writing, and delivered by mail, postage prepaid, telex, SWIFT, or other mutually agreed telecommunication methods to the following addresses (or to such other address as either party hereto may from time to time designate by notice duly given in accordance with this paragraph): To Subcustodian: To Custodian: State Street Bank and Trust Company Securities Operations/ Network Administration P.O. Box 1631 Boston, MA 02105 H. Confidentiality. Subcustodian and Custodian shall each use its best efforts to maintain the confidentiality of the property in the Account and the beneficial owners thereof, subject, however, to the provisions of any laws requiring disclosure. In addition, Subcustodian shall safeguard any test keys, identification codes or other security devices which Custodian shall make available to it. The Subcustodian further agrees it will not disclose the existence of this Agreement or any current business relationship unless compelled by applicable law or regulation or unless it has secured the Custodian's written consent. I. Assignment. This Agreement shall not be assignable by either party but shall bind any successor in interest of Custodian and Subcustodian respectively. J. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of . To the extent inconsistent with this Agreement or Custodian's Operating Requirements as attached hereto, Subcustodian's rules and conditions regarding accounts generally or custody accounts specifically shall not apply. CUSTODIAN: STATE STREET BANK AND TRUST COMPANY By: -------------------------- Date: ------------------------- AGREED TO BY SUBCUSTODIAN - ------------------------------- By: -------------------------- Date: ------------------------- 6 EX-99.9 8 TRANSFER AGENCY AGREEMENT Exhibit 9 TRANSFER AGENCY AND SERVICE AGREEMENT between ARTISAN FUNDS, INC. and STATE STREET BANK AND TRUST COMPANY TABLE OF CONTENTS ----------------- 1. Terms of Appointment: Duties of the Bank.............................. 1 2. Fees and Expenses..................................................... 3 3. Representations and Warranties of the Bank............................ 4 4. Representations and Warranties of the Fund............................ 4 5. Data Access and Proprietary Information............................... 5 6. Indemnification....................................................... 6 7. Standard of Care...................................................... 7 8. Covenants of the Fund and the Bank.................................... 7 9. Termination of Agreement.............................................. 8 10. Additional Funds...................................................... 8 11. Assignment............................................................ 10 12. Amendment............................................................. 10 13. Massachusetts Law to Apply............................................ 10 14. Force Majeure......................................................... 10 15. Consequential Damages................................................. 10 16. Merger of Agreement................................................... 11 17. Counterparts.......................................................... 11 TRANSFER AGENCY AND SERVICE AGREEMENT ------------------------------------- AGREEMENT made as of the _____ day of March, 1995, by and between Artisan Funds, Inc., a Wisconsin corporation, having its principal office and place of business at 1000 North Water Street, Suite 1770, Milwaukee, Wisconsin 53202 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its principal office and place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank"). WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends to initially offer shares in one series, the Artisan Small Cap Fund (such series, together with all other series subsequently established by the Fund and made subject to this Agreement in accordance with Article 10, being herein referred to as a "Portfolio", and collectively as the "Portfolios"); WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its transfer agent, dividend disbursing agent, custodian of certain retirement plans and agent in connection with certain other activities, and the Bank desires to accept such appointment; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: 1. Terms of Appointment: Duties of the Bank ---------------------------------------- 1.1 Subject to the terms and conditions set forth in this Agreement, the Fund, on behalf of the Portfolio(s), hereby employs and appoints the Bank to act as, and the Bank agrees to act as its transfer agent for the Fund's authorized and issued shares of its common stock, $.01 par value, ("Shares"), dividend disbursing agent, custodian of certain retirement plans and agent in connection with any accumulation, open-account or similar plans provided to the shareholders of each of the respective Portfolios of the Fund ("Shareholders") and set out in the currently effective prospectus and statement of additional information ("prospectus") of the Fund on behalf of the applicable Portfolio, including without limitation any periodic investment plan or periodic withdrawal program. 1.2 The Bank agrees that it will perform the following services: (a) In accordance with procedures established from time to time by agreement between the Fund on behalf of each of the Portfolios, as applicable and the Bank, the Bank shall: (i) Receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and appropriate documentation thereof to the Custodian of the Fund authorized pursuant to the Articles of Incorporation as amended and restated (the "Articles of Incorporation") of the Fund (the "Custodian"); (ii) Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account; (iii) Receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation thereof to the Custodian; (iv) In respect to the transactions in items (i), (ii) and (iii) above, the Bank shall execute transactions directly with broker-dealers authorized by the Fund who shall thereby be deemed to be acting on behalf of the Fund; (v) At the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the redeeming Shareholders; (vi) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions; (vii) Prepare and transmit payments for dividends and distributions declared by the Fund on behalf of the applicable Portfolio; (viii) Issue replacement certificates for those certificates alleged to have been lost, stolen or destroyed upon receipt by the Bank of indemnification satisfactory to the Bank and protecting the Bank and the Fund, and the Bank at its option, may issue replacement certificates in place of mutilated stock certificates upon presentation thereof and without such indemnity; (ix) Maintain records of account for and advise the Fund and its Shareholders as to the foregoing; and (x) Record the issuance of shares of the Fund and maintain pursuant to SEC Rule 17Ad-10(e) a record of the total number of shares of the Fund which are authorized, based upon data provided to it by the Fund, and issued and outstanding. The Bank shall also provide the Fund on a regular basis with the total number of Shares which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Fund. (b) In addition to and neither in lieu nor in contravention of the services set forth in the above paragraph (a), the Bank shall: (i) perform the customary services of a transfer agent, dividend disbursing agent, custodian of certain retirement plans and, as relevant, agent in connection with accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to: maintaining all Shareholder 2 accounts, preparing Shareholder meeting lists, mailing proxies, mailing Shareholder reports and prospectuses to current Shareholders, withholding taxes on U.S. resident and non-resident alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders, and providing Shareholder account information and (ii) provide a system which will enable the Fund to monitor the total number of Shares sold in each State. (c) In addition, the Fund shall (i) identify to the Bank in writing those transactions and assets to be treated as exempt from blue sky reporting for each State and (ii) verify the establishment of transactions for each State on the system prior to activation and thereafter monitor the daily activity for each State. The responsibility of the Bank for the Fund's blue sky State registration status is solely limited to the initial establishment of transactions subject to blue sky compliance by the Fund and the reporting of such transactions to the Fund as provided above. (d) Procedures as to who shall provide certain of these services in Section 1 may be established from time to time by agreement between the Fund on behalf of each Portfolio and the Bank per the attached service responsibility schedule. The Bank may at times perform only a portion of these services and the Fund or its agent may perform these services on the Fund's behalf. (e) The Bank shall provide additional services on behalf of the Fund (i.e., escheatment services) which may be agreed upon in writing between the Fund and the Bank. 2. Fees and Expenses ----------------- 2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees on behalf of each of the Portfolios to pay the Bank an annual maintenance fee for each Shareholder account as set out in the initial fee schedule attached hereto. Such fees and out-of-pocket expenses and advances identified under Section 2.2 below may be changed from time to time subject to mutual written agreement between the Fund and the Bank. 2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on behalf of each of the Portfolios to reimburse the Bank for out-of-pocket expenses, including but not limited to confirmation production, postage, forms, telephone, microfilm, microfiche, tabulating proxies, records storage, or advances incurred by the Bank for the items set out in the fee schedule attached hereto. In addition, any other expenses incurred by the Bank at the request or with the consent of the Fund, will be reimbursed by the Fund on behalf of the applicable Portfolio. 3 2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and reimbursable expenses within five days following the receipt of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all Shareholder accounts shall be advanced to the Bank by the Fund at least seven (7) days prior to the mailing date of such materials. 3. Representations and Warranties of the Bank ------------------------------------------ The Bank represents and warrants to the Fund that: 3.1 It is a trust company duly organized and existing and in good standing under the laws of the Commonwealth of Massachusetts. 3.2 It is duly qualified to carry on its business in the Commonwealth of Massachusetts. 3.3 It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform this Agreement. 3.4 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. 3.5 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. 4. Representations and Warranties of the Fund ------------------------------------------ The Fund represents and warrants to the Bank that: 4.1 It is a corporation duly organized and existing and in good standing under the laws of 4.2 It is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement. 4.3 All corporate proceedings required by said Articles of Incorporation and By-Laws have been taken to authorize it to enter into and perform this Agreement. 4.4 It is an open-end, diversified management investment company registered under the Investment Company Act of 1940, as amended. 4.5 A registration statement under the Securities Act of 1933, as amended on behalf of each of the Portfolios will be effective on the date Shares are first offered for sale to the public and will remain effective thereafter, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Fund being offered for sale. 4 5. Data Access and Proprietary Information --------------------------------------- 5.1 The Fund acknowledges that the data bases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Fund by the Bank as part of the Fund's ability to access certain Fund-related data ("Customer Data") maintained by the Bank on data bases under the control and ownership of the Bank or other third party ("Data Access Services") constitute copyrighted, trade secret, or other proprietary information (collectively, "Proprietary Information") of substantial value to the Bank or other third party. In no event shall Proprietary Information be deemed Customer Data. The Fund agrees to treat all Proprietary Information as proprietary to the Bank and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided hereunder. Without limiting the foregoing, the Fund agrees for itself and its employees and agents: (a) to access Customer Data solely from locations as may be designated in writing by the Bank and solely in accordance with the Bank's applicable user documentation; (b) to refrain from copying or duplicating in any way the Proprietary Information; (c) to refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform the Bank in a timely manner of such fact and dispose of such information in accordance with the Bank's instructions; (d) to refrain from causing or allowing third-party data acquired hereunder from being retransmitted to any other computer facility or other location, except with the prior written consent of the Bank; (e) that the Fund shall have access only to those authorized actions agreed upon by the parties; (f) to honor all reasonable written requests made by the Bank to protect at the Bank's expense the rights of the Bank in Proprietary Information at common law, under federal copyright law and under other federal or state law. Each party shall take reasonable efforts to advise its employees of their obligations pursuant to this Section 5. The obligations of this Section shall survive any earlier termination of this Agreement. 5.2 If the Fund notifies the Bank that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Bank shall endeavor in a timely manner to correct such failure. Organizations from which the Bank may obtain certain data included in the Data Access Services are solely responsible for the contents of such data and the Fund agrees to make no claim against the Bank arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER 5 PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 5.3 If the transactions available to the Fund include the ability to originate electronic instructions to the Bank in order to (i) effect the transfer or movement of cash or Shares or (ii) transmit Shareholder information or other information, then in such event the Bank shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by the Bank from time to time. 6. Indemnification --------------- 6.1 The Bank shall not be responsible for, and the Fund shall on behalf of the applicable Portfolio indemnify and hold the Bank harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a) All actions of the Bank or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct. (b) The Fund's lack of good faith, negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund hereunder. (c) The reliance on or use by the Bank or its agents or subcontractors of information, records, documents or services which (i) are received by the Bank or its agents or subcontractors, and (ii) have been prepared, maintained or performed by the Fund or any other person or firm on behalf of the Fund including but not limited to any previous transfer agent or registrar. (d) The reliance on, or the carrying out by the Bank or its agents or subcontractors of any instructions or requests of the Fund on behalf of the applicable Portfolio. (e) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such Shares in such state. 6.2 At any time the Bank may apply to any officer of the Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Bank under this Agreement, and the Bank and its agents 6 or subcontractors shall not be liable and shall be indemnified by the Fund on behalf of the applicable Portfolio for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel. The Bank, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided the Bank or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. The Bank, its agents and subcontractors shall also be protected and indemnified in recognizing stock certificates which are reasonably believed to bear the proper manual or facsimile signatures of the officers of the Fund, and the proper countersignature of any former transfer agent or former registrar, or of a co-transfer agent or co-registrar. 6.3 In order that the indemnification provisions contained in this Section 6 shall apply, upon the assertion of a claim for which the Fund may be required to indemnify the Bank, the Bank shall promptly notify the Fund of such assertion, and shall keep the Fund advised with respect to all developments concerning such claim. The Fund shall have the option to participate with the Bank in the defense of such claim or to defend against said claim in its own name or in the name of the Bank. The Bank shall in no case confess any claim or make any compromise in any case in which the Fund may be required to indemnify the Bank except with the Fund's prior written consent. 7. Standard of Care ---------------- The Bank shall at all times act in good faith and agrees to use its best efforts within reasonable limits to insure the accuracy of all services performed under this Agreement. The Bank shall be responsible for any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to any action or failure or omission to act by the Bank as a result of the Bank's negligence, bad faith, or willful misconduct or that of its employees. 8. Covenants of the Fund and the Bank ---------------------------------- 8.1 The Fund shall on behalf of each of the Portfolios promptly furnish to the Bank the following: (a) A certified copy of the resolution of the Board of Directors of the Fund authorizing the appointment of the Bank and the execution and delivery of this Agreement. (b) A copy of the Articles of Incorporation and By-Laws of the Fund and all amendments thereto. 7 8.2 The Bank hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. 8.3 The Bank shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the Investment Company Act of 1940, as amended, and the Rules thereunder, the Bank agrees that all such records prepared or maintained by the Bank relating to the services to be performed by the Bank hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Fund on and in accordance with its request. 8.4 The Bank and the Fund agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law. 8.5 In case of any requests or demands for the inspection of the Shareholder records of the Fund, the Bank will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. The Bank reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person. 9. Termination of Agreement ------------------------ 9.1 This Agreement may be terminated by either party upon one hundred twenty (120) days written notice to the other. 9.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses associated with the movement of records and material will be borne by the Fund on behalf of the applicable Portfolio(s). Additionally, the Bank reserves the right to charge for any other reasonable expenses associated with such termination. 10. Additional Funds ---------------- In the event that the Fund establishes one or more series of Shares in addition to Artisan Small Cap Fund with respect to which it desires to have the Bank render services as transfer agent under the terms hereof, it shall so notify the Bank in writing, and if the Bank agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder. 8 11. Assignment ---------- 11.1 Except as provided in Section 10.3 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party. 11.2 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 11.3 The Bank may, without further consent on the part of the Fund, subcontract for the performance hereof with (i) Boston Financial Data Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate duly registered as a transfer agent pursuant to Section 17A(c)(1); provided, however, that the Bank shall be as fully responsible to the Fund for the acts and omissions of any subcontractor as it is for its own acts and omissions. 12. Amendment --------- This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Directors of the Fund. 13. Massachusetts Law to Apply -------------------------- This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 14. Force Majeure ------------- In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 15. Consequential Damages --------------------- Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder. 9 16. Merger of Agreement ------------------- This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. 17. Counterparts ------------ This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written. ARTISAN FUNDS, INC. By:_________________________________________ John M. Blaser Name:_______________________________________ Chief Financial Officer, Treasurer and Title:______________________________________ Secretary _________ STATE STREET BANK AND TRUST COMPANY By:_________________________________________ Ronald E. Logue Name:_______________________________________ Executive Vice President Title:______________________________________ 10 STATE STREET BANK & TRUST COMPANY FUND SERVICE RESPONSIBILITIES* Service Performed Responsibility - ----------------- -------------- Bank Fund ---- ---- 1. Receives orders for the purchase of Shares. X 2. Issue Shares and hold Shares in Shareholders accounts. X 3. Receive redemption requests. X 4. Effect transactions 1-3 above directly with broker-dealers. X 5. Pay over monies to redeeming Shareholders. X 6. Effect transfers of Shares. X 7. Prepare and transmit dividends and distributions. X 8. Issue Replacement Certificates. X 9. Reporting of abandoned property. X 10. Maintain records of account. X 11. Maintain and keep a current and accurate control book for each issue of securities. X 12. Mail proxies. X 13. Mail Shareholder reports. X 14. Mail prospectuses to current Shareholders. X 15. Withhold taxes on U.S. resident and non-resident alien accounts. X 16. Prepare and file U.S. Treasury Department forms. X 17. Prepare and mail account and confirmation statements for Shareholders. X 18. Provide Shareholder account information. X 19. Blue sky reporting. X * Such services are more fully described in Section 1.2(a), (b) and (c) of the Agreement. EX-99.10.1 9 OPINION AND CONSENT OF COUNSEL DTD 3/8/95 Exhibit 10.1 [LETTERHEAD OF BELL, BOYD & LLOYD] March 8, 1995 Artisan Funds, Inc. 1000 North Water Street Suite 1770 Milwaukee, Wisconsin 53202 Ladies and Gentlemen: Shares of Common Stock Par Value $.01 -------------------- We have acted as counsel for Artisan Funds, Inc., a Wisconsin corporation ("Artisan Funds"), in connection with the registration under the Securities Act of 1933 (the "Act") of an indefinite number of shares of common stock, par value $.01, of the series of Artisan Funds designated Artisan Small Cap Fund (the "Fund") in registration statement no. 33-88316 on form N-1A (the "Registration Statement"). In this connection we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, records, certificates and other papers as we deemed it necessary to examine for the purpose of this opinion, including the amended and restated articles of incorporation and bylaws of Artisan Funds, actions of the board of directors of Artisan Funds authorizing the issuance of shares of the Fund and the Registration Statement. Based on the foregoing examination, we are of the opinion that: 1. Artisan Funds is a corporation duly and validly existing in good standing under the laws of the state of Wisconsin. 2. Upon the issuance and delivery of the shares of the Fund in accordance with the articles of incorporation and bylaws and the actions of the board of directors authorizing the issuance of such shares, and the receipt by Artisan Funds of the authorized consideration therefor, the shares so issued will be validly issued and outstanding, fully paid and nonassessable shares of common stock, par value $.01, of the Fund, except to the extent provided in Section 180.0622(2)(b) of the Wisconsin Statutes, or any successor provision, which provides that shareholders of a corporation organized under Chapter 180 of the Wisconsin Statutes may be assessed up to the par value of their shares to satisfy the obligations of such corporation to its employees for services rendered, but not exceeding six months service in the case of any individual employee; Artisan Funds, Inc. March 8, 1995 Page 2 certain Wisconsin courts have interpreted "par value" to mean the full amount paid by the purchaser of shares upon the issuance thereof. In giving this opinion we have relied upon the attached opinion of Godfrey & Kahn, S.C. to us dated March 7, 1995. We consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under section 7 of the Act. Very truly yours, EX-99.10.2 10 OPINION AND CONSENT OF COUNSEL DTD 10/13/95 Exhibit 10.2 [LETTERHEAD OF BELL, BOYD & LLOYD] October 13, 1995 Artisan Funds, Inc. 1000 North Water Street Suite 1770 Milwaukee, Wisconsin 53202 Ladies and Gentlemen: Shares of Common Stock Par Value $.01 -------------------- We have acted as counsel for Artisan Funds, Inc., a Wisconsin corporation ("Artisan Funds"), in connection with the registration under the Securities Act of 1933 (the "Act") of an indefinite number of shares of common stock, par value $.01, of the series of Artisan Funds designated Artisan International Fund (the "Fund") in post-effective amendment no. 2 to registration statement no. 33-88316 on form N-1A (the "Registration Statement"). In this connection we have examined originals, or copies certified or otherwise identified to our satisfaction, of such documents, records, certificates and other papers as we deemed it necessary to examine for the purpose of this opinion, including the amended articles of incorporation and bylaws of Artisan Funds, actions of the board of directors of Artisan Funds authorizing the issuance of shares of the Fund and the Registration Statement. Based on the foregoing examination, we are of the opinion that: 1. Artisan Funds is a corporation duly and validly existing in good standing under the laws of the state of Wisconsin. 2. Upon the issuance and delivery of the shares of the Fund in accordance with the amended articles of incorporation and bylaws and the actions of the board of directors authorizing the issuance of such shares, and the receipt by Artisan Funds of the authorized consideration therefor, the shares so issued will be validly issued and outstanding, fully paid and nonassessable shares of common stock, par value $.01, of the Fund, except to the extent provided in Section 180.0622(2)(b) of the Wisconsin Statutes, or any successor provision, which provides that shareholders of a corporation organized under Chapter 180 of the Wisconsin Statutes may be assessed up to the par value of their shares to satisfy the obligations of such corporation to its employees for services rendered, but not exceeding six months service in the case of any individual employee; Artisan Funds, Inc. October 13, 1995 Page 2 certain Wisconsin courts have interpreted "par value" to mean the full amount paid by the purchaser of shares upon the issuance thereof. In giving this opinion we have relied upon the attached opinion of Godfrey & Kahn, S.C. to us dated October 13, 1995. We consent to the filing of this opinion as an exhibit to the Registration Statement. In giving this consent, we do not admit that we are in the category of persons whose consent is required under section 7 of the Act. Very truly yours, EX-99.11 11 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 11 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in the Statement of Additional Information constituting part of this Post-Effective Amendment No. 3 to the registration statement on Form N-1A (the "Registration Statement") of our report dated July 19, 1995, relating to the financial statements and financial highlights of Artisan Small Cap Fund (constituting Artisan Funds, Inc.), which appears in such Statement of Additional Information, and to the incorporation by reference of our report into the Prospectus which constitutes part of this Registration Statement. We also consent to the reference to us under the heading "Independent Accountants" in such Statement of Additional Information. Milwaukee, Wisconsin November 22, 1995 EX-99.13 12 SUBSCRIPTION AGREEMENT Exhibit 13 ARTISAN FUNDS, INC. Subscription Agreement ---------------------- 1. Subscription for Shares. We agree to purchase from Artisan Funds, Inc. (the "Artisan Funds") 10,000 shares of the series designated Artisan Small Cap Fund (the "Fund") for a price of $10.00 per share, on the terms and conditions set forth herein and in the preliminary prospectus described below, and agree to tender $100,000 in payment therefor at such time as the board of directors or the president of Artisan Funds determines. We understand that Artisan Funds has filed a registration statement with the Securities and Exchange Commission (No. 33-88316) on Form N-1A, which contains the preliminary prospectus describing Artisan Funds, the Fund and the shares. We acknowledge receipt of a copy of the preliminary prospectus. We recognize that Artisan Funds will not be fully operational until it commences a public offering of its shares. Accordingly, a number of features of the Fund described in the preliminary prospectus, including redemption of shares upon request of shareholders, will not be available until Artisan Funds' registration statement becomes effective under the Securities Act of 1933. 1. Representations and Warranties. We represent and warrant as follows: (a) We are aware that no federal or state agency has made any finding or determination as to the fairness for investment, nor any recommendation nor endorsement, of the shares; (b) We have such knowledge and experience of financial and business matters as will enable us to utilize the information made available to us in connection with the offering of the shares to evaluate the merits and risks of the prospective investment and to make an informed investment decision; (c) We recognize that Artisan Funds has only recently been organized, that the Fund has no financial or operating history and, further, that investment in the Fund involves certain risks, and we have taken full cognizance of and understand all of the risks related to the purchase of the shares and we acknowledge that we have suitable financial resources and anticipated income to bear the economic risks of such an investment; (d) We are purchasing the shares for our own account, for investment, and not with any intention of redemption, distribution, or resale of the shares, either in whole or in part; (e) We will not sell the shares purchased by us without registration of them under the Securities Act of 1933 or exemption therefore; (f) We have been furnished with and have read this agreement, the preliminary prospectus and such other documents relating to the Fund and Artisan Funds as we have requested and as have been provided to us by Artisan Funds, and (g) We have also had the opportunity to ask questions of, and receive answers from, officers of Artisan Funds concerning Artisan Funds and the terms of the offering. 3. Rejection of Subscriptions. We recognize that Artisan Funds reserves the right to reject or limit any subscription. 4. Social Security Numbers. We certify under penalties of perjury that the numbers shown on this form are our correct taxpayer identification numbers and that we are not subject to backup withholding as a result of a failure to report all interest and dividend income to the Internal Revenue Service. ______________________________________ Taxpayer Identification Number By: _____________________________ Andrew A. Ziegler ______________________________________ Taxpayer Identification Number By: _____________________________ Carlene Murphy Ziegler Dated: March 6, 1995 2 EX-99.14 13 IRA PLAN BOOKLET DTD 03/1995 Exhibit 14 THE ARTISAN FUNDS STATE STREET BANK AND TRUST COMPANY INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT The following provisions of Articles I to VII are in the form promulgated by the Internal Revenue Service in Form 5305-A for use in establishing an individual retirement custodial account. ARTICLE I. The Custodian may accept additional cash contributions on behalf of the Depositor for a tax year of the Depositor. The total cash contributions are limited to $2,000 for the tax year unless the contribution is a rollover contribution described in section 402(c)(but only after December 31, 1992), 403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified employee pension plan as described in section 408(k). Rollover contributions before January 1, 1993 include rollovers described in section 402(a)(5), 402(a)(6), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code or an employer contribution to a simplified employee pension plan as described in section 408(k). ARTICLE II. The Depositor's interest in the balance in the custodial account is nonforfeitable. ARTICLE III. 1. No part of the custodial funds may be invested in life insurance contracts, nor may the assets of the custodial account be commingled with other property except in a common trust fund or common investment fund (within the meaning of section 408(a)(5) of the Code). 2. No part of the custodial funds may be invested in collectibles (within the meaning of section 408(m)) except as otherwise permitted by section 408(m)(3) which provides an exception for certain gold and silver coins and coins issued under the laws of any state. ARTICLE IV. 1. Notwithstanding any provisions of this agreement to the contrary, the distribution of the Depositor's interest in the custodial account shall be made in accordance with the following requirements and shall otherwise comply with section 408(a)(6) and Proposed Regulations section 1.408-8, including the incidental death benefit provisions of Proposed Regulations section 1.401(a)(9)- 2, the provisions of which are incorporated by reference. 2. Unless otherwise elected by the time distributions are required to begin to the Depositor under paragraph 3, or to the surviving spouse under paragraph 4, other than in the case of a life annuity, life expectancies shall be recalculated annually. Such election shall be irrevocable as to the Depositor and the surviving spouse and shall apply to all subsequent years. The life expectancy of a nonspouse beneficiary may not be recalculated. 3. The Depositor's entire interest in the custodial account must be, or begin to be, distributed by the Depositor's required beginning date, the April 1 following the calendar year end in which the Depositor reaches age 70 1/2. By that date, the Depositor may elect, in a manner acceptable to the Custodian, to have the balance in the custodial account distributed in: (a) A single-sum payment. (b) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the life of the Depositor. (c) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the joint and last survivor lives of the Depositor and his or her designated beneficiary. (d) Equal or substantially equal annual payments over a specified period that may not be longer than the Depositor's life expectancy. (e) Equal or substantially equal annual payments over a specified period that may not be longer than the joint life and last survivor expectancy of the Depositor and his or her designated beneficiary. 4. If the Depositor dies before his or her entire interest is distributed to him or her, the entire remaining interest will be distributed as follows: (a) If the Depositor dies on or after distribution of his or her interest has begun, distribution must continue to be made in accordance with paragraph 3. (b) If the Depositor dies before distribution of his or her interest has begun, the entire remaining interest will, at the election of the Depositor or, if the Depositor has not so elected, at the election of the beneficiary or beneficiaries, either (i) Be distributed by the December 31 of the year containing the fifth anniversary of the Depositor's death, or (ii) Be distributed in equal or substantially equal payments over the life or life expectancy of the designated beneficiary or beneficiaries starting by December 31 of the year following the year of the Depositor's death. If, however, the beneficiary is the Depositor's surviving spouse, then this distribution is not required to begin before December 31 of the year in which the Depositor would have turned age 70 1/2. (c) Except where distribution in the form of an annuity meeting the requirements of section 408(b)(3) and its related regulations has irrevocably commenced, distributions are treated as having begun on the Depositor's required beginning date, even though payments may actually have been made before that date. (d) Depositor dies before his or her entire interest has been distributed and if the beneficiary is other than the surviving spouse, no additional cash contributions or rollover contributions may be accepted in the account. 5. In the case of distribution over life expectancy in equal or substantially equal annual payments, to determine the minimum annual payment for each year, divide the Depositor's entire interest in the Custodial account as of the close of business on December 31 of the preceding year by the life expectancy of the Depositor (or the joint life and last survivor expectancy of the Depositor and the Depositor's designated beneficiary, or the life expectancy of the designated beneficiary, whichever applies.) In the case of distributions under paragraph 3, determine the initial life expectancy (or joint life and last survivor expectancy) using the attained ages of the Depositor and designated beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2. In the case of a distribution in accordance with paragraph 4(b)(ii), determine life expectancy using the attained age of the designated beneficiary as of the beneficiary's birthday in the year distributions are required to commence. 6. The owner of two or more individual retirement accounts may use the "alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy the minimum distribution requirements described above. This method permits an individual to satisfy these requirements by taking from one individual retirement account the amount required to satisfy the requirement for another. ARTICLE V. 1. The Depositor agrees to provide the Custodian with information necessary for the Custodian to prepare any reports required under section 408(i) and Regulations sections 1.408-5 and 1.408-6. 2. The Custodian agrees to submit reports to the Internal Revenue Service and the Depositor as prescribed by the Internal Revenue Service. ARTICLE VI. Notwithstanding any other articles which may be added or incorporated, the provisions of Articles I through III and this sentence will be controlling. Any additional articles that are not consistent with section 408(a) and the related regulations will be invalid. ARTICLE VII. This Agreement will be amended from time to time to comply with the provisions of the Code and related regulations. Other amendments may be made with the consent of the persons whose signatures appear on the Adoption Agreement. ARTICLE VIII. 1. As used in this Article VIII the following terms have the following meanings: "Custodian" means State Street Bank and Trust Company. "Fund" means a mutual fund or registered investment company which is specified in the Adoption Agreement, or which is designated by the Distributor named in the Adoption Agreement, as being available as an investment for the custodial account; provided, however, that such a mutual fund or registered investment company must be legally offered for sale in the state of the Depositor's residence in order to be a Fund hereunder. "Distributor" means the entity which has a contract with the Fund(s) to serve as distributor of the shares of such Fund(s). In any case where there is no Distributor, the duties assigned hereunder to the Distributor may be performed by the Fund(s) or by an entity that has a contract to perform management or investment advisory services for the Fund(s). "Service Company" means any entity employed by the Custodian or the Distributor, including the transfer agent for the Fund(s), to perform various administrative duties of either the Custodian or the Distributor. In any case where there is no Service Company, the duties assigned hereunder to the Service Company will be performed by the Distributor (if any) or by an entity specified in the second preceding paragraph. 2. The Depositor may revoke the custodial account established hereunder by mailing or delivering a written notice of revocation to the Custodian within seven days after the Depositor receives the Disclosure Statement related to the custodial account. Mailed notice is treated as given to the Custodian on date of the postmark (or on the date of Post Office certification or registration in the case of notice sent by certified or registered mail). Upon timely revocation, the Depositor's initial contribution will be returned, without adjustment for administrative expenses, commissions or sales charges, fluctuations in market value or other changes. 3. All contributions to the custodial account shall be invested and reinvested in full and fractional shares of one or more Funds. Such investments shall be made in such proportions and/or in such amounts as Depositor from time to time in the Adoption Agreement or by other written notice to the Service Company (in 2 such form as may be acceptable to the Service Company) may direct. The Service Company shall be responsible for promptly transmitting all investment directions by the Depositor for the purchase or sale of shares of one or more Funds hereunder to the Funds' transfer agent for execution. However, if investment directions with respect to the investment of any contribution hereunder are not received from the Depositor as required or, if received, are unclear or incomplete in the opinion of the Service Company, the contribution will be returned to the Depositor without liability for interest or for loss of income or appreciation. If any directions or other orders by the Depositor with respect to the sale or purchase of shares of one or more Funds for the custodial account are unclear or incomplete in the opinion of the Service Company, the Service Company will refrain from carrying out such investment directions or from executing any such sale or purchase, without liability for loss of income or for appreciation or depreciation of any asset, pending receipt of clarification or completion from the Depositor. All investment directions by Depositor will be subject to any minimum initial or additional investment or minimum balance rules applicable to a Fund as described in its prospectus. All dividends and capital gains or other distributions received on the shares of any Fund held in the Depositor's account shall be retained in the account and (unless received in additional shares) shall be reinvested in full and fractional shares of such Fund. 4. Subject to the minimum initial or additional investment, minimum balance and other exchange rules applicable to a Fund, the Depositor may at any time direct the Service Company to exchange all or a specified portion of the shares of a Fund in the Depositor's account for shares and fractional shares of one or more other Funds. The Depositor shall give such directions by written or telephonic notice acceptable to the Service Company, and the Service Company will process such directions as soon as practicable after receipt thereof (subject to the second paragraph of Section 3 of this Article VIII). 5. Any purchase or redemption of shares of a Fund for or from the Depositor's account will be effected at the public offering price or net asset value of such Fund (as described in the then effective prospectus for such Fund) next established after the Service Company has transmitted the Depositor's investment directions to the transfer agent for the Fund(s). Any purchase, exchange, transfer or redemption of shares of a Fund for or from the Depositor's account will be subject to any applicable sales, redemption or other charge as described in the then effective prospectus for such Fund. 6. The Service Company shall maintain adequate records of all purchases or sales of shares of one or more Funds for the Depositor's custodial account. Any account maintained in connection herewith shall be in the name of the Custodian for the benefit of the Depositor. All assets of the custodial account shall be registered in the name of the Custodian or of a suitable nominee. The books and records of the Custodian shall show that all such investments are part of the custodial account. The Custodian shall maintain or cause to be maintained adequate records reflecting transactions of the custodial account. In the discretion of the Custodian, records maintained by the Service Company with respect to the account hereunder will be deemed to satisfy the Custodian's recordkeeping responsibilities therefor. The Service Company agrees to furnish the Custodian with any information the Custodian requires to carry out the Custodian's recordkeeping responsibilities. 7. Neither the Custodian nor any other party providing services to the custodial account will have any responsibility for rendering advice with respect to the investment and reinvestment of Depositor's custodial account, nor shall such parties be liable for any loss or diminution in value which results from Depositor's exercise of investment control over his custodial account. Depositor shall have and exercise exclusive responsibility for and control over the investment of the assets of his custodial account, and neither Custodian nor any other such party shall have any duty to question his directions in that regard or to advise him regarding the purchase, retention or sale of shares of one or more Funds for the custodial account. 8. The Depositor may appoint an investment advisor with respect to the custodial account on a form acceptable to the Custodian and the Service Company. The investment advisor's appointment will be in effect until written notice to the contrary is received by the Custodian and the Service Company. While an investment advisor's appointment is in effect, the investment advisor may issue investment directions or may issue orders for the sale or purchase of shares of one or more Funds to the Service Company, and the Service Company will be fully protected in carrying out such investment directions or orders to the same extent as if they had been given by the Depositor. The Depositor's appointment of any investment advisor will also be deemed to be instructions to the Custodian and the Service Company to pay such investment advisor's fees to the investment advisor from the custodial account hereunder without additional authorization by the Depositor or the Custodian. 9. Distribution of the assets of the custodial account shall be made at such time and in such form as Depositor (or the Beneficiary if Depositor is deceased) shall elect by written order to the Custodian. Depositor acknowledges that any distribution (except for distribution on account of Depositor's disability or death, return of an "excess contribution" referred to in Code Section 408(d), or a "rollover" from this custodial account) made earlier than age 59 1/2 may subject Depositor to an "additional tax on early distributions" under Code Section 72(t). For that purpose, Depositor will be considered disabled if Depositor can prove, as provided in Code Section 72(m)(7), that Depositor is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or be of long-continued and indefinite duration. It is the responsibility of the Depositor (or the Beneficiary) by appropriate distribution instructions to the Custodian to insure that the distribution requirements of Code Section 401(a)(9) and Article IV above are met. If the Depositor (or Beneficiary) does not direct the Custodian to make distributions from the custodial account by the time that such distributions are required to commence in accordance with such distribution requirements, the Custodian (and Service Company) shall assume that the Depositor (or Beneficiary) is meeting the 3 minimum distribution requirements from another individual retirement arrangement maintained by the Depositor (or Beneficiary) and the Custodian and Service Company shall be fully protected in so doing. The Depositor (or the Depositor's surviving spouse) may elect to comply with the distribution requirements in Article IV using the recalculation of life expectancy method, or may elect that the life expectancy of the Depositor (and/or the Depositor's surviving spouse) will not be recalculated; any such election may be in such form as the Depositor (or surviving spouse) provides (including the calculation of minimum distribution amounts in accordance with a method that does not provide for recalculation of the life expectancy of one or both of the Depositor and surviving spouse and instructions to the Custodian in accordance with such method). Neither Custodian nor any other party providing services to the custodial account assumes any responsibility for the tax treatment of any distribution from the custodial account; such responsibility rests solely with the person ordering the distribution. 10. Custodian assumes (and shall have) no responsibility to make any distribution except upon the written order of Depositor (or Beneficiary if Depositor is deceased) containing such information as the Custodian may reasonably request. Also, before making any distribution or honoring any assignment of the custodial account, Custodian shall be furnished with any and all applications, certificates, tax waivers, signature guarantees and other documents (including proof of any legal representative's authority) deemed necessary or advisable by Custodian, but Custodian shall not be responsible for complying with an order which appears on its face to be genuine, or for refusing to comply if not satisfied it is genuine, and Custodian has no duty of further inquiry. Any distributions from the account may be mailed, first-class postage prepaid, to the last known address of the person who is to receive such distribution, as shown on the Custodian's records, and such distribution shall to the extent thereof completely discharge the Custodian's liability for such payment. 11. (a) The term "Beneficiary" means the person or persons designated as such by the "designating person" (as defined below) on a form acceptable to the Custodian for use in connection with the custodial account, signed by the designating person, and filed with the Custodian. The form may name individuals, trusts, estates, or other entities as either primary or contingent beneficiaries. However, if the designation does not effectively dispose of the entire custodial account as of the time distribution is to commence, the term "Beneficiary" shall then mean the designating person's estate with respect to the assets of the custodial account not disposed of by the designation form. The form last accepted by the Custodian before such distribution is to commence, provided it was received by the Custodian (or deposited in the U.S. Mail or with a delivery service) during the designating person's lifetime, shall be controlling and, whether or not fully dispositive of the custodial account, thereupon shall revoke all such forms previously filed by that person. The term "designating person" means Depositor during his/her lifetime; after Depositor's death, it also means Depositor's spouse if the spouse begins to receive a portion of the custodial account (pursuant to such a designation by Depositor) under a form of distribution permitted by Article IV. A designation by Depositor's spouse shall relate solely to the balance remaining in the spouse's portion of the custodial account after the death of the spouse. (b) When and after distributions from the custodial account to Depositor's Beneficiary commence, all rights and obligations assigned to Depositor hereunder shall inure to, and be enjoyed and exercised by, Beneficiary instead of Depositor. (12)(a) The Depositor agrees to provide information to the Custodian at such time and in such manner as may be necessary for the Custodian to prepare any reports required under Section 408(i) of the Code and the regulations thereunder or otherwise. (b) The Custodian or the Service Company will submit reports to the Internal Revenue Service and the Depositor at such time and manner and containing such information as is prescribed by the Internal Revenue Service. (c) The Depositor, Custodian and Service Company shall furnish to each other such information relevant to the custodial account as may be required under the Code and any regulations issued or forms adopted by the Treasury Department thereunder or as may otherwise be necessary for the administration of the custodial account. (d) The Depositor shall file any reports to the Internal Revenue Service which are required of him by law (including Form 5329), and neither the Custodian nor Service Company shall have any duty to advise Depositor concerning or monitor Depositor's compliance with such requirement. 13. (a) Depositor retains the right to amend this custodial account document in any respect at any time, effective on a stated date which shall be at least 60 days after giving written notice of the amendment (including its exact terms) to Custodian by registered or certified mail, unless Custodian waives notice as to such amendment. If the Custodian does not wish to continue serving as such under this custodial account document as so amended, it may resign in accordance with Section 17 below. (b) Depositor delegates to the Custodian the Depositor's right so to amend, provided the Custodian amends in the same manner all agreements comparable to this one, having the same Custodian, permitting comparable investments, and under which such power has been delegated to it; this includes the power to amend retroactively if necessary or appropriate in the opinion of the Custodian in order to conform this custodial account to pertinent provisions of the Code and other laws or successor provisions of law, or to obtain a governmental ruling that such requirements are met, to adopt a prototype or master form of agreement in substitution for this 4 Agreement, or as otherwise may be advisable in the opinion of the Custodian. Such an amendment by the Custodian shall be communicated in writing to Depositor, and Depositor shall be deemed to have consented thereto unless, within 30 days after such communication to Depositor is mailed, Depositor either (i) gives Custodian a written order for a complete distribution or transfer of the custodial account, or (ii) removes the Custodian and appoints a successor under Section 17 below. Pending the adoption of any amendment necessary or desirable to conform this custodial account document to the requirements of any amendment to the Internal Revenue Code or regulations or rulings thereunder, the Custodian and the Service Company may operate the Depositor's custodial account in accordance with such requirements to the extent that the Custodian and/or the Service Company deem necessary to preserve the tax benefits of the account. (c) Notwithstanding the provisions of subsections (a) and (b) above, no amendment shall increase the responsibilities or duties of Custodian without its prior written consent. (d) This Section 13 shall not be construed to restrict the Custodian's right to substitute fee schedules in the manner provided by Section 16 below, and no such substitution shall be deemed to be an amendment of this Agreement. (14)(a) Custodian shall terminate the custodial account if this Agreement is terminated or if, within 30 days (or such longer time as Custodian may agree) after resignation or removal of Custodian under Section 17, Depositor has not appointed a successor which has accepted such appointment. Termination of the custodial account shall be effected by distributing all assets thereof in a single payment in cash or in kind to Depositor, subject to Custodian's right to reserve funds as provided in Section 17. (b) Upon termination of the custodial account, this custodial account document shall have no further force and effect, and Custodian shall be relieved from all further liability hereunder or with respect to the custodial account and all assets thereof so distributed. 15. (a) In its discretion, the Custodian may appoint one or more contractors or service providers to carry out any of its functions and may compensate them from the custodial account for expenses attendant to those functions. (b) The Service Company shall be responsible for receiving all instructions, notices, forms and remittances from Depositor and for dealing with or forwarding the same to the transfer agent for the Fund(s). (c) The parties do not intend to confer any fiduciary duties on Custodian or Service Company (or any other party providing services to the custodial account), and none shall be implied. Neither shall be liable (or assumes any responsibility) for the collection of contributions, the proper amount, time or deductibility of any contribution to the custodial account or the propriety of any contributions under this Agreement, or the purpose, time, amount (including any minimum distribution amounts) or propriety of any distribution hereunder, which matters are the responsibility of Depositor and Depositor's Beneficiary. (d) As soon as is practicable after the close of each taxable year, and whenever required by the Code, or Regulations thereunder, the Custodian and Service Company shall each file with Depositor a written report or reports reflecting the transactions effected by it during such period and the assets of the custodial account at its close. Upon the expiration of 60 days after such a report is sent to Depositor (or Beneficiary), the Custodian and Service Company shall be forever released and discharged from all liability and accountability to anyone with respect to transactions shown in or reflected by such report except with respect to any such acts or transactions as to which Depositor shall have filed written objections with the Custodian or Service Company within such 60 day period. (e) The Service Company shall deliver, or cause to be delivered, to Deposit or all notices, prospectuses, financial statements and other reports to shareholders, proxies and proxy soliciting materials relating to the shares of the Funds(s) credited to the custodial account. No shares shall be voted, and no other action shall be taken pursuant to such documents, except upon receipt of adequate written instructions from Depositor. (f) Depositor shall always fully indemnify Service Company, Distributor, the Fund(s) and Custodian and save them harmless from any and all liability whatsoever which may arise either (i) in connection with this Agreement and the matters which it contemplates, except that which arises directly out of the Service Company's, Distributor's or Custodian's negligence or willful misconduct, or (ii) with respect to making or failing to make any distribution, other than for failure to make distribution in accordance with an order therefor which is in full compliance with Section 10. Neither Service Company nor Custodian shall be obligated or expected to commence or defend any legal action or proceeding in connection with this Agreement or such matters unless agreed upon by that party and Depositor, and unless fully indemnified for so doing to that party's satisfaction. (g) The Custodian and Service Company shall each be responsible solely for performance of those duties expressly assigned to it in this Agreement, and 5 neither assumes any responsibility as to duties assigned to anyone else hereunder or by operation of law. (h) Custodian and Service Company may each conclusively rely upon and shall be protected in acting upon any written order from Depositor or Beneficiary, or any investment advisor appointed under Section 8, or any other notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed, and so long as it acts in good faith, in taking or omitting to take any other action in reliance thereon. In addition, Custodian will carry out the requirements of any apparently valid court order relating to the custodial account and will incur no liability or responsibility for so doing. (16)(a) The Custodian, in consideration of its services under this Agreement, shall receive the fees specified on the applicable fee schedule. The fee schedule originally applicable shall be the one specified in the Disclosure Statement furnished to the Depositor. The Custodian may substitute a different fee schedule at any time upon 30 days' written notice to Depositor. The Custodian shall also receive reasonable fees for any services not contemplated by any applicable fee schedule and either deemed by it to be necessary or desirable or requested by Depositor. (b) Any income, gift, estate and inheritance taxes and other taxes of any kind whatsoever, including transfer taxes incurred in connection with the investment or reinvestment of the assets of the custodial account, that may be levied or assessed in respect to such assets, and all other administrative expenses incurred by the Custodian in the performance of its duties (including fees for legal services rendered to it in connection with the custodial account) shall be charged to the custodial account. (c) All such fees and taxes and other administrative expenses charged to the custodial account shall be collected either from the amount of any contribution or distribution to or from the account, or (at the option of the person entitled to collect such amounts) to the extent possible under the circumstances by the conversion into cash of sufficient shares of one or more Funds held in the custodial account (without liability for any loss incurred thereby). Notwithstanding the foregoing, the Custodian or Service Company may make demand upon the Depositor for payment of the amount of such fees, taxes and other administrative expenses. Fees which remain outstanding after 60 days may be subject to a collection charge. (17)(a) Upon 30 days' prior written notice to the Custodian, Depositor may remove it from its office hereunder. Such notice, to be effective, shall designate a successor custodian and shall be accompanied by the successor's written acceptance. The Custodian also may at any time resign upon 30 days' prior written notice to Depositor, whereupon the Depositor shall appoint a successor to the Custodian. (b) The successor custodian shall be a bank, insured credit union, or other person satisfactory to the Secretary of the Treasury under Code Section 408(a)(2). Upon receipt by Custodian of written acceptance by its successor of such successor's appointment, Custodian shall transfer and pay over to such successor the assets of the custodial account and all records (or copies thereof) of Custodian pertaining thereto, provided that the successor custodian agrees not to dispose of any such records without the Custodian's consent. Custodian is authorized, however, to reserve such sum of money or property as it may deem advisable for payment of all its fees, compensation, costs, and expenses, or for payment of any other liabilities constituting a charge on or against the assets of the custodial account or on or against the Custodian, with any balance of such reserve remaining after the payment of all such items to be paid over to the successor custodian. (c) Any Custodian shall not be liable for the acts or omissions of its predecessor or its successor. 18. References herein to the "Internal Revenue Code" or "Code" and sections thereof shall mean the same as amended from time to time, including successors to such sections. 19. Except where otherwise specifically required in this Agreement, any notice from Custodian to any person provided for in this Agreement shall be effective if sent by first-class mail to such person at that person's last address on the Custodian's records. 20. Depositor or Depositor's Beneficiary shall not have the right or power to anticipate any part of the custodial account or to sell, assign, transfer, pledge or hypothecate any part thereof. The custodial account shall not be liable for the debts of Depositor or Depositor's Beneficiary or subject to any seizure, attachment, execution or other legal process in respect thereof. At no time shall it be possible for any part of the assets of the custodial account to be used for or diverted to purposes other than for the exclusive benefit of the Depositor or his/her Beneficiary. 21. When accepted by the Custodian, this Agreement is accepted in and shall be construed and administered in accordance with the laws of the Commonwealth of Massachusetts. Any action involving the Custodian brought by any other party must be brought in a state or federal court in such Commonwealth. This Agreement is intended to qualify under Code Section 408(a) as an individual retirement custodial account and to entitle Depositor to the retirement savings deduction under Code Section 219 if available, and if any provision hereof is subject to more than one interpretation or any term used herein is subject to more than one construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with that intent. 6 However, Custodian shall not be responsible for whether or not such intentions are achieved through use of this Agreement, and Depositor is referred to Depositor's attorney for any such assurances. 22. Depositor should seek advice from Depositor's attorney regarding the legal consequences (including but not limited to federal and state tax matters) of entering into this Agreement, contributing to the custodial account, and ordering Custodian to make distributions from the account. Depositor acknowledges that Custodian and Service Company (and any company associated therewith) are prohibited by law from rendering such advice. 23. Articles I through VII of this Agreement are in the form promulgated by the Internal Revenue Service. It is anticipated that if and when the Internal Revenue Service promulgates changes to Form 5305-A, the Custodian will amend this Agreement correspondingly. 24. The Depositor acknowledges that he or she has received and read the current prospectus for each Fund in which his or her account is invested and the Individual Retirement Account Disclosure Statement related to the Account. The Depositor represents under penalties of perjury that his or her Social Security number (or other Taxpayer Identification Number) as stated in the Adoption Agreement is correct. 7 THE ARTISAN FUNDS STATE STREET BANK AND TRUST COMPANY INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT TRANSFER OF IRA ASSETS FORM _______________________________________________________________________________ 1. NAME AND ADDRESS OF DEPOSITOR Name _______________________________________________________________________ Address ____________________________________________________________________ Street City State Zip Day Telephone No. (____)____________ Social Security No. __________________ _______________________________________________________________________________ 2. INSTRUCTIONS TO PRESENT IRA CUSTODIAN OR TRUSTEE (Completed by Depositor) Name of Custodian/Trustee __________________________________________________ Attn: Mr./Ms. _____________________________________________________________ Address ____________________________________________________________________ Street City State Zip Account no. _________________________ Please transfer assets of my present Individual Retirement Account to State Street Bank and Trust Company. All assets should be transferred as cash according to the following instructions: ( ) Transfer the total amount in my account or Transfer $____________ and retain the balance. Make check payable to: State Street Bank and Trust Company, Custodian FBO [____________insert_your_name____________] P.O. Box _____________________________________ Boston, MA ________________ _______________________________________________________________________________ 3. INVESTMENT INSTRUCTIONS TO STATE STREET BANK AND TRUST COMPANY (Depositor - check one box and complete if necessary) ( ) Invest the transferred amount in accordance with the investment instructions in the Adoption Agreement for my State Street Bank and Trust Company Individual Retirement Custodial Account. ( ) Invest the transferred amount in Artisan Small Cap Fund I acknowledge that I have sole responsibility for my investment choices and that I have received a current prospectus for Artisan Small Cap Fund. Please read the prospectus before investing. _______________________________________________________________________________ 4. SIGNATURE OF DEPOSITOR _______________________________ __________________________________ Date Signature of Depositor SIGNATURE GUARANTEE (only if required by current IRA Sponsor) Signatured guaranteed by: __________________________________________________ Name of Bank or Dealer Firm __________________________________________________ Signature of Officer and Title _______________________________________________________________________________ 5. ACCEPTANCE BY NEW CUSTODIAN (To be completed by State Street Bank and Trust Company) State Street Bank and Trust Company agrees to accept transfer of the above amount for deposit to the Depositor's State Street Bank and Trust Company Individual Retirement Custodial Account, and requests the liquidation and transfer of assets as indicated above. ______________________________ By:____________________________ Date THE ARTISAN FUNDS STATE STREET BANK AND TRUST COMPANY INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT Instructions for Opening Your IRA 1. Read carefully the IRA Disclosure Statement, the Individual Retirement Custodial Account document, the Adoption Agreement, and the prospectus of Artisan Small Cap Fund. Consult your lawyer or other tax adviser if you have any questions about how opening an IRA will affect your financial and tax situation. 2. Complete the Adoption Agreement - Print the identifying information in Part 1 of the form. - In Part 2, check the box that shows the type of IRA you are opening. If this is an Accumulation IRA (an IRA to which you will make contributions each year), enclose a check in the amount of your first contribution. Be sure to indicate whether this is a contribution for last year or for the current year. - In Part 3, indicate your investment choices. - Sign and date the Adoption Agreement at the end. 3. If you are transferring assets directly from your existing IRA to this IRA, complete the Transfer of IRA Assets Form. 4. Complete and sign the Designation of Beneficiary. 5. Enclose a separate check for $________________ payable to State Street Bank and Trust Company. This is to pay the custodian fee for opening the IRA and the first year's annual maintenance fee. 6. Check to be sure you have properly completed all necessary forms and enclosed a check for the custodian's fees and a check for the first contribution to your State Street Bank IRA (if applicable). Your IRA cannot be accepted without the properly completed documents or the custodian fees. Send the completed forms and checks to: 12/92 State Street Bank and Trust Company Attention, Artisan Funds P. O. Box _______________________ Boston, Massachusetts _____________ ARTISAN FUNDS STATE STREET BANK AND TRUST COMPANY INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT ADOPTION AGREEMENT I, the person signing this Adoption Agreement (hereinafter called the "Depositor"), establish an Individual Retirement Account (the "Account") with State Street Bank and Trust Company as Custodian. I agree to the terms of my Account, which are contained in the document entitled "State Street Bank and Trust Company Individual Retirement Custodial Account" and this Adoption Agreement. I certify the accuracy of the information in this Adoption Agreement. My Account will be effective upon acceptance by State Street Bank and Trust Company. 1. DEPOSITOR INFORMATION - - _________________________________________ _ _ _ _ _ _ _ _ _ Print Full Name Social Security Number _________________________________________ _______________________ Address Date of Birth _________________________________________ (_____)________________ City State Zip Daytime Telephone No. 2. TYPE OF ACCOUNT A. [_] Accumulation IRA or [_] Spousal IRA (A separate Adoption Agreement must be submitted for each IRA account.) [_] Current Contribution for the year 19____. Check enclosed for $_________ payable to "Artisan Funds." This contribution does not exceed the maximum permitted amount as described in the IRA Disclosure Statement. [_] Transfer of existing IRA directly from current Custodian or Trustee. Check this box if the existing IRA is one to which you made contributions (as opposed to an IRA you established by rolling over a distribution from an employer plan). Complete the separate Transfer of IRA Assets Form. B. [_] Rollover IRA The requirements for a valid rollover are complex. See the IRA Disclosure Statement for additional information and consult your tax advisor for help if needed. Check enclosed for $____________ payable to "Artisan Funds." [_] Rollover of a qualifying rollover distribution to Depositor from an employer plan, or rollover from an IRA which held assets distributed to Depositor from an employer plan and to which Depositor made no direct contributions. [_] Rollover of assets distributed to Depositor from another IRA where the IRA contained amounts contributed directly by the Depositor. C. [_] Direct Rollover [_] Direct rollover of an eligible distribution from a qualified plan. [_] Direct rollover of an eligible distribution from a 403(b) account or annuity. Direct rollovers are described in the IRA Disclosure Statement. The plan administrator or 403(b) sponsor should make the check payable to "Artisan Funds." D. [_] SEP Provision - check here if the Depositor intends to use this Account in connection with a Simplified Employee Pension Plan established by the Depositor's employer. 3. INVESTMENTS Invest contributions to my Account in the Artisan Small Cap Fund: I acknowledge that I have sole responsiblity for my investment choices and that I have received a current prospectus Artisan Small Cap Fund I select. Please read the prospectus before investing. 4. CERTIFICATIONS AND SIGNATURES In the case of a Rollover IRA or Direct Rollover IRA, Depositor certifies that contribution does not include any employee contributions to any qualified plan (other than accumulated deductible employee contributions); that any assets transferred in kind by Depositor are the same assets received by the Depositor in the distribution being rolled over; if the distribution is from an IRA, that no rollover into such IRA has been made within the one-year period immediately preceding this rollover; and that such distribution was received within 60 days of making the rollover to the Account. Depositor has received and read the "IRA Disclosure Statement" relating to this Account (including the Custodian's fee schedule), the Custodial Account document, and the "Instructions" pertaining to this Adoption Agreement. Depositor acknowledges receipt of the Custodial Account document and IRA Disclosure Statement at least 7 days before the date inscribed below and acknowledges that Depositor has no further right of revocation. CUSTODIAN ACCEPTANCE. State Street Bank and Trust - --------------------------- Company will accept appointment as Custodian of Signature of Depositor the Depositor's Account. However, this Agreement is not binding upon the Custodian until the Depositor has received a statement of the Date_______________ transaction. Receipt by the Depositor of a confirmation of the purchase of the Fund shares indicated above will serve as notification of State Street Bank and Trust Company's acceptance of appointment as Custodian of the Depositor's Account. 1/93 RETAIN A PHOTOCOPY OF THE COMPLETED ADOPTION AGREEMENT FOR YOUR RECORDS THE ARTISAN FUNDS IRA DISCLOSURE STATEMENT ESTABLISHING YOUR IRA This disclosure statement contains information about your Individual Retirement Custodial Account with State Street Bank and Trust Company as Custodian. Your IRA gives you several tax benefits. Earnings on the assets held in your IRA are not subject to federal income tax until withdrawn by you. You may be able to deduct all or part of your IRA contribution on your federal income tax return. State income tax treatment of your IRA may differ from federal treatment; ask your state tax department or your personal tax advisor for details. All IRAs must meet certain requirements. Contributions generally must be made in cash. The IRA trustee or custodian must be a bank or other person who has been approved by the Secretary of the Treasury. Your contributions may not be invested in life insurance or be commingled with other property except in a common trust or investment fund. Your interest in the account must be nonforfeitable at all times. You may obtain further information on IRAs from any district office of the Internal Revenue Service. You may revoke a newly established IRA at any time within seven days after the date on which you receive this Disclosure Statement. An IRA established more than seven days after the date of your receipt of this Disclosure Statement may not be revoked. To revoke your IRA, mail or deliver a written notice of revocation to the Custodian at the address which appears at the end of this Disclosure Statement. Mailed notice will be deemed given on the date that it is postmarked (or, if sent by certified or registered mail, on the date of certification or registration). If you revoke your IRA within the seven-day period, you are entitled to a return of the entire amount you contributed into your IRA, without adjustment for such items as sales charges, administrative expenses or fluctuations in market value. FEES AND EXPENSES CUSTODIAN'S FEES The following is a list of the fees charged by the Custodian for maintaining your IRA. Account Installation Fee $ Annual Maintenance Fee per mutual fund $ Termination, Rollover, or Transfer of Account to Successor Custodian $ GENERAL FEE POLICIES . Fees may be paid by you directly or the Custodian may deduct them from your IRA. . Fees may be changed upon 30 days written notice to you. . The full annual maintenance fee will be charged for any calendar year during which you have an IRA with us. This fee is not prorated for periods of less than one full year. . Termination fees are charged when your account is closed whether the funds are distributed to you or transferred to a successor custodian or trustee. . The Custodian may charge you for its reasonable expenses for services not covered by its fee schedule. OTHER CHARGES . There may be sales or other charges associated with the purchase or redemption of shares of a Fund in which your IRA is invested. Be sure to read carefully the current prospectus of any Fund you are considering as an investment for your IRA for a description of applicable charges. ELIGIBILITY WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR AN IRA? You are eligible to establish and contribute to an IRA for a year if: . You received compensation (or earned income if you are self employed) during the year for personal services you rendered. If you received taxable alimony, this is treated like compensation for IRA purposes. . You did not reach age 70 1/2 during the year. CAN I CONTRIBUTE TO AN IRA FOR MY SPOUSE? For each year before the year when your spouse attains age 70 1/2, you can contribute to a separate IRA for your spouse, regardless of whether your spouse had any compensation or earned income in that year. This is called a "spousal IRA." To make a contribution to a spousal IRA for your spouse, you must file a joint tax return and your spouse must either have no compensation or earned income or must elect to be treated as having no compensation or earned income for that year. For a spousal IRA, your spouse must set up a different IRA, separate from yours, to which you contribute. CONTRIBUTIONS WHEN CAN I MAKE CONTRIBUTIONS TO AN IRA? You may make a contribution to your existing IRA or establish a new IRA for a taxable year by the due date (not including any extensions) for your federal income tax return for the year. Usually this is April 15 of the following year. HOW MUCH CAN I CONTRIBUTE TO MY IRA? For each year when you are eligible (see above), you can contribute up to the lesser of $2,000 or 100% of your compensation (or earned income, if you are self-employed). However, under the tax laws, all or a portion of your contribution may not be deductible. If you and your spouse have spousal IRAs, you may contribute each year up to a maximum of $2,250 from your compensation (or earned income) to both spousal IRAs. You may divide the contribution between the spousal IRAs as you wish, as long as you do not contribute more than $2,000 to either of the spousal IRAs. HOW DO I KNOW IF MY CONTRIBUTION IS TAX DEDUCTIBLE? The deductibility of your contribution depends upon whether you are (or your spouse is) an active participant in any employer-sponsored retirement plan. If neither you nor your spouse is an active participant, the entire IRA contribution is deductible. If either you or your spouse is an active participant, your IRA contribution may still be completely or partly deductible on your tax return. This depends on the amount of your income. HOW DO I DETERMINE MY OR MY SPOUSE'S "ACTIVE PARTICIPANT" STATUS? Your Form W-2 (or your spouse's W-2) should indicate if you were an active participant in an employer-sponsored retirement plan for a year. If you have a question, you should ask your employer or the plan administrator. In one situation, your spouse's "active participant" status will not affect the deductibility of your contributions to your IRA. This rule applies only if you and your spouse file separate tax returns for the taxable year and you lived apart at all times during the taxable year. WHAT ARE THE DEDUCTION RESTRICTIONS? The portion of your contribution that is deductible depends upon your filing status and the amount of your adjusted gross income ("AGI"). The following table shows the deduction rules. FOR ACTIVE PARTICIPANTS
- -------------------------------------------------------------------------------- IF YOU ARE SINGLE IF YOU ARE THEN YOUR IRA MARRIED CONTRIBUTION IS FILING JOINTLY - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Up to $25,000 Up to $40,000 Fully Deductible ----------------------------------------------------- ADJUSTED GROSS INCOME Over $25,000 Over $40,000 Partly Deductible but less than but less than $35,000 $50,000 ----------------------------------------------------- $35,000 and up $50,000 and up Not Deductible - --------------------------------------------------------------------------------
HOW DO I CALCULATE MY DEDUCTION IF I FALL IN THE "PARTLY DEDUCTIBLE" RANGE? If your AGI falls in the partly deductible range, you must calculate the portion of your contribution that is deductible. To do this, multiply your contribution by a fraction. The numerator is the amount by which your AGI exceeds the lower limit of the partly deductible range ($25,000 if single, or $40,000 if married filing jointly). The denominator is $10,000. Subtract this from your contribution and then round up to the nearest $10. The deductible amount is the greater of the amount calculated or $200 (provided you contributed at least $200). If your contribution was less than $200, then the entire contribution is deductible. For example, assume that you make a $2,000 contribution to your IRA in a year in which you are an active participant in your employer's retirement plan. Also assume that your AGI for the year is $47,555 and you are married, filing jointly. You would calculate the deductible portion of your contribution this way: 1. The amount by which your AGI exceeds the lower limit of the partly - deductible range: (47,555-40,000) = 7,555 2. Divide this by 10,000: 7,555 ----- /=0.7555/ 10,000 3. Multiply this by your contribution: 0.7555 x $2,000 = $1,511 4. Subtract this from your contributions: ($2,000 - $1,511) = $489 5. Round this up to the nearest $10: = $490 6. Your deductible contribution is the greater of this amount or $200. Even though part or all of your contribution is not deductible, you may still contribute to your IRA up to the limit on contributions ($2,000, or $2,250 for spousal IRAs). When you file your tax return for the year, you must designate the amount of non-deductible IRA contributions for the year. See IRS Form 8606. HOW DO I DETERMINE MY AGI? AGI is your gross income minus those deductions which are available to all taxpayers even if they don't itemize. Instructions to calculate your AGI are provided with your income tax Form 1040 or 1040A. WHAT HAPPENS IF I CONTRIBUTE MORE THAN ALLOWED TO MY IRA? The maximum contribution you can make to an IRA is $2,000 ($2,250 for spousal IRAs) or 100% of compensation or earned income, whichever is less. Any amount contributed to the IRA above the maximum is considered an "excess contribution." The excess is calculated using your contribution limit, not the deductible limit. An excess contribution is subject to excise tax of 6% for each year it remains in the IRA. HOW CAN I CORRECT AN EXCESS CONTRIBUTION? Excess contributions may be corrected without paying a 6% penalty. To do so, you must withdraw the excess and any earnings on the excess before the due date (including extensions) for filing your federal income tax return for the year for which you made the excess contribution. A deduction should not be taken for any excess contribution. Earnings on the amount withdrawn must also be withdrawn. The earnings must be included in your income for the tax year for which the contribution was made and may be subject to a 10% premature withdrawal tax if you have not reached age 59 1/2. WHAT HAPPENS IF I DON'T CORRECT THE EXCESS CONTRIBUTION BY THE TAX RETURN DUE DATE? Any excess contribution withdrawn after the tax return due date (including any extensions) for the year for which the contribution was made will be subject to the 6% excise tax. There will be an additional 6% excise tax for each year the excess remains in your account. Under limited circumstances, you may correct an excess contribution after tax filing time by withdrawing the excess contribution (leaving the earnings in the account). This withdrawal will not be includible in income nor will it be subject to any premature withdrawal penalty if (1) your contributions to all IRAs do not exceed $2,250 and (2) you did not take a deduction for the excess amount (or you file an amended return (Form 1040X) which removes the excess deduction). HOW ARE EXCESS CONTRIBUTIONS TREATED IF NONE OF THE PRECEDING RULES APPLY? Unless an excess contribution qualifies for the special treatment outlined above, the excess contribution and any earnings on it withdrawn after tax filing time will be includible in taxable income and may be subject to a 10% premature withdrawal penalty. No deduction will be allowed for the excess contribution for the year in which it is made. Excess contributions may be corrected in a subsequent year to the extent that you contribute less than your maximum amount. As the prior excess contribution is reduced or eliminated, the 6% excise tax will become correspondingly reduced or eliminated for subsequent tax years. Also, you may be able to take an income tax deduction for the amount of excess that was reduced or eliminated, depending on whether you would be able to take a deduction if you had instead contributed the same amount. TRANSFERS/ROLLOVERS CAN I TRANSFER OR ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S RETIREMENT PLAN INTO AN IRA? Almost all distributions from employer plans or 403(b) arrangements (for employees of tax-exempt employers) are eligible for rollover to an IRA. The main exceptions are . payments over the lifetime or life expectancy of the participant (or participant and a designated beneficiary), . installment payments for a period of 10 years or more, . required distributions starting at age 70 1/2, and . payments of employee after-tax contributions. If you are eligible to receive a distribution from a tax qualified retirement plan as a result of, for example, termination of employment, plan discontinuance, or retirement, all or part of the distribution may be transferred directly into your IRA. This is a called a "direct rollover." Or, you may receive the distribution and make a regular rollover to your IRA within 60 days. By making a direct rollover or a regular rollover, you can defer income taxes on the amount rolled over until you subsequently make withdrawals from your IRA. 2 The maximum amount you may roll over is the amount of employer contributions and earnings distributed. You may not roll over any after-tax employee contributions you made to the employer retirement plan. If you are over age 70 1/2 and are required to take minimum distributions under the tax laws, you may not roll over any amount required to be distributed to you under the minimum distribution rules. Also, if you are receiving periodic payments over your or your and your designated beneficiary's life expectancy or for a period of at least 10 years, you may not roll over these payments. A regular rollover to an IRA must be completed within 60 days after the distribution from the employer retirement plan to be valid. NOTE: A qualified plan administrator or 403(b) sponsor MUST WITHHOLD 20% OF YOUR DISTRIBUTION for federal income taxes UNLESS you elect a direct rollover. Your plan or 403(b) sponsor is required to provide you with information about direct and regular rollovers and withholding taxes before you receive your distribution and must comply with your directions to make a direct rollover. The rules governing rollovers are complicated. Be sure to consult your tax advisor or the IRS if you have a question about rollovers. ONCE I HAVE ROLLED OVER A PLAN DISTRIBUTION INTO AN IRA, CAN I SUBSEQUENTLY ROLL OVER INTO ANOTHER EMPLOYER'S QUALIFIED RETIREMENT PLAN? Yes. Part or all of an eligible distribution received from a qualified plan may be transferred to another qualified plan through the medium of an IRA. However, the IRA must have no assets other than those which were previously distributed to you from the qualified plan. Specifically, the IRA cannot contain any regular IRA contributions. Also, the new qualified plan must accept rollovers. HOW OFTEN CAN I MAKE A REGULAR ROLLOVER FROM MY IRA TO ANOTHER IRA? You may make a regular rollover from one IRA to another only once in any 365-day period. This rule applies to each individual IRA. WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY REGULAR CONTRIBUTIONS IN ONE IRA? If you wish to make both a regular annual contribution and a rollover contribution, you may wish to open two separate IRAs by completing two adoption agreements and two sets of forms. You should consult a tax advisor before making your regular contribution to the IRA you established with rollover contributions (or make a rollover contribution to the IRA to which you make your regular contributions). This is because combining your regular annual contributions and rollover contributions originating from an employer plan distribution would prohibit the future rollover of the assets of the IRA into another qualified plan. If despite this, you still wish to combine a rollover contribution and the IRA holding your regular contributions, you should establish the account as an Accumulation IRA on the Adoption Agreement and make the contributions to that account. HOW DO ROLLOVERS AFFECT MY CONTRIBUTION OR DEDUCTION LIMITS? Rollover contributions, if properly made, do not count toward the maximum contribution. Also, rollovers are not deductible and they do not affect your deduction limits as described above. INVESTMENTS HOW ARE MY IRA CONTRIBUTIONS INVESTED? You control the investment and reinvestment of contributions to your IRA. Investments must be in one or more of the Fund(s) available from time to time as listed in the Adoption Agreement for your IRA or in an investment selection form included with your IRA Adoption Agreement. You direct the investment of your IRA by giving your investment instructions to the Distributor or Service Company for the Fund(s). Since you control the investment of your IRA, you are responsible for any losses; neither the Custodian, the Distributor nor the Service Company has any responsibility for any loss or diminution in value occasioned by your exercise of investment control. Transactions for your IRA will generally be effected at the applicable public offering price or net asset value for shares of the Fund(s) involved next established after the Distributor or the Service Company (whichever may apply) receives proper investment instructions from you; consult the current prospectus for the Fund(s) involved for additional information. Before making any investment, read carefully the current prospectus for any Fund you are considering as an investment for your IRA. The prospectus will contain information about the Fund's investment objectives and policies, as well as any minimum initial investment or minimum balance requirements and any sales, redemption or other charges. Because you control the selection of investments for your IRA, the growth in value of your IRA cannot be guaranteed or projected. ARE THERE ANY RESTRICTIONS ON THE USE OF MY IRA ASSETS? The tax-exempt status of your IRA will be revoked if you engage in any of the prohibited transactions listed in Section 4975 of the tax code. The fair market value of your IRA will be includible in your taxable income in the year in which such prohibited transaction takes place. The fair market value of your IRA may also be subject to a 10% penalty tax as a premature withdrawal if you have not yet reached the age of 59 1/2. Any investment in a collectible (for example, rare stamps) by your IRA is treated as a taxable withdrawal; the only exception involves certain types of government-sponsored coins. WHAT IS A PROHIBITED TRANSACTION? Generally, a prohibited transaction is any improper use of the assets in your IRA. Some examples of prohibited transactions are: . Direct or indirect sale or exchange of property between you and your IRA. . Transfer of any property from your IRA to yourself or from yourself to your IRA. Your IRA could lose its tax exempt status if you use all or part of your interest in your IRA as security for a loan or borrow any money from your IRA. Any portion of your IRA used as security for a loan will be taxed as ordinary income in the year in which the money is borrowed. If you are under age 59 1/2, this amount will also be subject to a 10% penalty tax as a premature distribution. WITHDRAWALS WHEN CAN I MAKE WITHDRAWALS FROM MY IRA? You may withdraw from your IRA at any time. However, withdrawals before age 59 1/2 may be subject to a 10% penalty tax in addition to regular income taxes (see below). WHEN MUST I START MAKING WITHDRAWALS? If you have not withdrawn your entire IRA by the April 1 following the year in which you reach 70 1/2, you must make minimum withdrawals in order to avoid penalty taxes. The minimum withdrawal amount is determined by dividing the balance in your IRA (or IRAs) by your life expectancy or the combined life expectancy of you and your designated beneficiary. The minimum withdrawal rules are complex. Consult your tax advisor for assistance. The penalty tax is 50% of the difference between the minimum withdrawal amount and your actual withdrawals during a year. The IRS may waive or reduce the penalty tax if you can show that your failure to make the required minimum withdrawals was due to reasonable cause and you are taking reasonable steps to remedy the problem. 3 HOW ARE WITHDRAWALS FROM MY IRA TAXED? Amounts withdrawn by you are includible in your gross income in the taxable year that you receive them, and are taxable as ordinary income. Lump sum withdrawals from an IRA are not eligible for averaging treatment available to certain lump sum distributions from qualified employer retirement plans. Since the purpose of the IRA is to accumulate funds for retirement, your receipt or use of any portion of your IRA before you attain age 59 1/2 generally will be considered as an early withdrawal and subject to a 10% penalty tax. The 10% penalty tax for early withdrawal will not apply if the distribution . was a result of your death or disability, or . is one of a scheduled series of substantially equal periodic payments for your life or life expectancy (or the joint lives or life expectancies of you and your beneficiary). If there is an adjustment to the scheduled series of payments, the 10% penalty tax will apply. For example, if you begin receiving payments at age 50 under a withdrawal program providing for substantially equal payments over your life expectancy, and at age 58 you elect to receive the remaining amount in your IRA in a lump-sum, the 10% penalty tax will apply to the lump sum and to the amounts previously paid to you before age 59 1/2. HOW ARE NONDEDUCTIBLE CONTRIBUTIONS TAXED WHEN THEY ARE WITHDRAWN? A withdrawal of nondeductible contributions (not including earnings) will be tax-free. However, if you made both deductible and nondeductible IRA contributions, then each distribution will be treated as partly a return of your nondeductible contributions (not taxable) and partly a distribution of deductible contributions and earnings (taxable). The nontaxable amount is the portion of the amount withdrawn which bears the same ratio as your total nondeductible IRA contributions bear to the total balance of all your IRAs (including rollover IRAs and SEPs). For example, assume that you made the following IRA contributions:
Year Deductible Nondeductible ---- ---------- ------------- 1988 $2,000 1989 $2,000 1990 $1,000 $1,000 1991 $1,000 ------ ------ $5,000 $2,000
In addition assume that your IRA has total investment earnings through 1992 of $1,000. During 1992 you withdraw $500. Your total account balance as of 12- 31-92 is $7,500 as shown below. Deductible Contributions $5,000 Nondeductible Contributions $2,000 Earnings On IRAs $1,000 Less 1992 Withdrawal $ 500 ------ Total Account Balance as of 12/31/92 $7,500
To determine the nontaxable portion of your 1992 withdrawal, the total 1992 withdrawal ($500) must be multiplied by a fraction. The numerator of the fraction is the total of all nondeductible contributions remaining in the account before the 1992 withdrawal ($2,000). The denominator is the total account balance as of 12-31-92 ($7,500) plus the 1992 withdrawal ($500) or $8,000. The calculation is: Total Remaining Nondeductible Contributions $2,000 --------------------------- ------ x $500 = $125 Total Account Balance $8,000 Thus, $125 of the $500 withdrawal in 1992 will not be included in your taxable income. The remaining $375 will be taxable for 1992. In addition, for future calculations the remaining nondeductible contribution total will be $2,000 minus $125, or $1,875. A loss in your IRA investment may be deductible. You should consult your tax advisor for further details on the appropriate calculation for this deduction if applicable. TAX MATTERS WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE? The Custodian will report all withdrawals to the IRS and the recipient on the appropriate form. For reporting purposes, a direct transfer of assets to a successor custodian or trustee is not considered a withdrawal. The Custodian will report to the IRS the year-end value of your account and the amount of any rollover or accumulation contribution made during a calendar year, as well as the tax year for which a contribution is made. Unless the Custodian receives an indication from you to the contrary, it will treat any amount as a contribution for the tax year in which it is received. It is most important that a contribution between January and April 15th for the prior year be clearly designated as such. WHAT TAX INFORMATION MUST I REPORT TO THE IRS? You must file Form 5329 with the IRS for each taxable year for which you made an excess contribution, or you take a premature withdrawal, or you withdraw less than the required minimum amount from your IRA. You must also report each nondeductible contribution to the IRS by designating it a nondeductible contribution on your tax return. Use Form 8606. In addition, for any year in which you make a nondeductible contribution or take a withdrawal, you must include additional information on your tax return. The information required includes: (1) the amount of your nondeductible contributions for that year; (2) the amount of withdrawals from IRAs in that year; (3) the amount by which your total nondeductible contributions for all the years exceed the total amount of your distributions previously excluded from gross income; and (4) the total value of all your IRAs as of the end of the year. If you fail to report any of this information, the IRS will assume that all your contributions were deductible. This will result in the taxation of the portion of your withdrawals that should be treated as a nontaxable return of your nondeductible contributions. ARE IRA WITHDRAWALS SUBJECT TO WITHHOLDING? Federal income tax will be withheld at a flat rate of 10% from any withdrawal from your IRA, unless you elect not to have tax withheld. Withdrawals from an IRA are not subject to the mandatory 20% income tax withholding that applies to most distributions from qualified plans or 403(b) accounts that are not directly rolled over to another plan or IRA. ARE THE EARNINGS ON MY IRA FUNDS TAXED? Any earnings on investments held in your IRA are generally exempt from federal income taxes and will not be taxed until withdrawn by you, unless the tax exempt status of your IRA is revoked. 4 ACCOUNT TERMINATION You may terminate your IRA at any time after its establishment by sending a complete withdrawal form, or a transfer authorization form, to: STATE STREET BANK AND TRUST COMPANY P.O. Box Boston, MA Your IRA with State Street Bank will terminate upon the first to occur of the following: . The date your properly executed withdrawal form (as described above) is received and accepted by the Custodian or, if later, the termination date specified in the withdrawal form. . The date the IRA ceases to qualify under the tax code. This will be deemed a termination. . The transfer of the IRA to another custodian/trustee. . The rollover of the amounts in the IRA to another custodian/trustee. Any outstanding fees must be received prior to such a termination of your account. The amount you receive from your IRA will be treated as a withdrawal, and thus the rules relating to IRA withdrawals will apply. For example, if the IRA is terminated before you reach age 59 1/2, the 10% early withdrawal penalty may apply on the amount you receive. IRA DOCUMENTS The terms contained in Articles I to VII of the State Street Bank and Trust Company Individual Retirement Custodial Account document have been promulgated by the IRS in Form 5305-A for use in establishing an IRA custodial account that meets the requirements of the tax laws for a valid IRA. This IRS approval relates only to the form of Articles I to VIII and is not an approval of the merits of the IRA or of any investment permitted by the IRA. [ADDRESS] --------- 5 EX-99.16 14 SCHEDULE OF COMPUTATION OF PERFORMANCE Exhibit 16 ARTISAN SMALL CAP FUND TOTAL RETURN CALCULATION Initial Investment: $1,000.00 Period: From commencement of operations (3/28/95) Number of Days in Period: 95 Total Return: 15.2000%
Dividend Dividend Dividend Total Account Date NAV Shares Rate Dollars Shares Shares Value (a) (b) (c) (d) (e)=(c)X(d) (f)=(e)/(b) (g)=(c)+(f) (h)=(g)X(b) - ------------------------------------------------------------------------------------------------ Initial Investment $1,000.00 3/28/95 $10.00 100.000 0.000 $0.00 0.000 100.000 $1,000.00 6/30/95 $11.52 100.000 0.000 $0.00 0.000 100.000 $1,152.00
EX-27 15 FINANCIAL DATA SCHEDULE
6 This schedule contains summary financial information extracted from the Form N_SAR and the Financial Statements and is qualified in its entirety by reference to such financial statements. 1,000 YEAR JUN-30-1995 MAR-28-1995 JUN-30-1995 97,891,177 104,259,120 6,571,839 157,954 0 110,988,913 11,574,050 0 146,012 11,720,062 0 93,383,139 8,614,744 0 (56,274) 0 (425,957) 0 6,367,943 99,268,851 28,293 104,648 0 189,215 (56,274) (425,957) 6,367,943 5,885,712 0 0 0 0 8,717,000 112,256 0 99,168,851 0 0 0 0 66,510 0 189,215 36,731,268 10.00 (0.01) 1.53 0.00 0.00 0.00 11.52 2.00 0 0
EX-99.18 16 FORM OF ACCOUNT APPLICATION Exhibit 18 [LOGO OF ARTISAN FUNDS] ARTISAN SMALL CAP FUND ARTISAN INTERNATIONAL FUND ACCOUNT APPLICATION . If you need assistance, call 1-800-344-1770, 24 hours. . Do not use this application for IRA accounts. . Mail completed application to: Artisan Funds, Inc. c/o Boston Financial Data Services P.O. Box 8412 Boston, MA 02266-8412 - -------------------------------------------------------------------------------- 1 ACCOUNT REGISTRATION Please Print in CAPITAL LETTERS. [_] Individual or [_] Joint Account - -------------------------------------------------------------------- Owner's Name (first, middle initial, last) - -------------------------------------------------------------------- Joint Owner's Name (first, middle initial, last) Joint accounts are registered joint with right of survivorship unless otherwise specified. [_] Custodial Account - -------------------------------------------------------------------- Custodian's Name (first, middle initial, last) - -------------------------------------------------------------------- Minor's Name (first, middle initial, last) [_][_] [_][_]-[_][_]-[_][_] Minor's State Minor's Date of Birth [_] Trust, Corporation, or Other Entity Refer to the prospectus for required documentation. - -------------------------------------------------------------------- Trustee Name or Authorized Signee Name (first, middle initial, last) - -------------------------------------------------------------------- Name of Trust, Corporation, or Other Entity [_][_]-[_][_]-[_][_] Date of Trust Agreement 2 MAILING ADDRESS - -------------------------------------------------------------------- Street or P.O. Box - -------------------------------------------------------------------- City [_][_] [_][_][_][_][_]-[_][_][_][_] State Zip Code [_][_][_]-[_][_][_]-[_][_][_][_] [_][_][_][_] Day Time Phone Number Extension [_][_][_]-[_][_][_]-[_][_][_][_] [_][_][_][_] Evening Phone Number Extension 3 SOCIAL SECURITY/TAX ID NUMBER SS or tax ID # [_][_][_][_][_][_][_][_][_] For individual or joint accounts use owner's Social Security Number. For custodial accounts use minor's Social Security Number. For trust, corporation, or other entity use tax ID Number. [_] U.S. Citizen [_] Non-resident Alien [_] Resident Alien 4 INITIAL INVESTMENT Please be sure to read the prospectus. The minimum initial investment is $1000 per account, (no minimum if you are using the Automatic Investment Plan). $[_],[_][_][_],[_][_][_].[_][_] SMALL CAP FUND $[_],[_][_][_],[_][_][_].[_][_] INTERNATIONAL FUND Payment Method: [_] Check [_] Wire (Please call 1-800-344-1770 for wiring instructions) [_] By exchange from my identically registered Artisan Fund Account Account Number [_][_][_][_][_][_][_][_] Amount $[_],[_][_][_],[_][_][_].[_][_] 5 DISTRIBUTION OPTIONS If no option is selected, all distributions will be reinvested. [_] Reinvest dividends and capital gains. [_] Pay dividends in cash, reinvest capital gains. [_] Pay dividends and capital gains in cash. 6 AUTOMATIC INVESTMENT PLAN Date of month for investment: [_][_] (Between the 3rd and 28th only) Amount of monthly investment: $[_][_],[_][_][_].[_][_] ($50 minimum) Please complete section 9 on back. continued on back - 7 TELEPHONE REDEMPTION You may redeem shares by telephone ($500 minimum) unless you choose not to have that option by checking the box below. The proceeds will be mailed to your address of record, transferred to your bank account by Electronic Funds Transfer (EFT), or wired to your bank account. [_] I do not want telephone redemption. --- For EFT or wire transactions, please complete section 9, below. 8 TELEPHONE PURCHASE You may purchase shares by telephone, with payment by Electronic Funds Transfer (EFT) from your designated bank account, by checking the box below. [_] I want telephone purchase. For EFT purchases, please complete section 9, below. 9 BANK INFORMATION If you want the Automatic Investment Plan or telephone redemption, or if you would like to purchase shares by telephone with payment by EFT, please fill in the information below for the bank account into which funds should be deposited by EFT or wire (for telephone redemption) and from which funds should be withdrawn by EFT (for AIP or telephone purchase). Please print in CAPITAL LETTERS.
- --------------------------------------------------- -------------------------------------------------------------------- | | | | - --------------------------------------------------- -------------------------------------------------------------------- Name of Bank Branch - -------------------------- -------------------- ----- ----- ---- ---- ---- ---- ---- ---- ---- ---- ---- | | | | | | | | | | | | | | | | | | | | | | | | | | - -------------------------- -------------------- ----- ----- ---- ---- ---- ---- ---- ---- ---- ---- ---- Street City State Zip Code - --------------------------------------------------- | | - --------------------------------------------------- Name(s) on Account [_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_][_] ---- ---- ---- ---- ---- ---- ---- ---- ---- Account Number | | | | | | | | | | | | | | | | | | ---- ---- ---- ---- ---- ---- ---- ---- ---- ABA Routing Number (Please verify with your bank) ----------------------------------------------------------------------- Please attach a voided bank check -----------------------------------------------------------------------
The following authorization is required for Electronic Funds Transfer (EFT) transactions: By signing section 10, below, I/we authorize Artisan Funds to initiate (i) credit entries (deposits) (for telephone redemption with payment by EFT), (ii) debit entries (withdrawals) (for the Automatic Investment Plan or telephone purchases with payment by EFT) and (iii) debit or credit entries and adjustments for any entries made in error to my/our bank account identified above. This authorization will remain effective until I/we notify Artisan Funds in writing of its termination and until Artisan Funds has a reasonable time to act on that termination. 10 SIGNATURE(S) By signing this form, I/we certify that I/we have received, read, and agree to be bound by the terms of the prospectus and that I/we have the authority and legal capacity to purchase shares pursuant to this application. Under penalties of perjury, I/we certify that: (1) the number shown on this form is the correct Social Security number or Taxpayer Identification number, (2) I am not subject to backup withholding either because I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding, or the IRS has notified me that I am no longer subject to backup withholding. You must cross out item (2), above, if you have been notified by the IRS that you are subject to backup withholding because of under reporting interest or dividends on your tax returns, and you have not received a notice from the IRS advising you that backup withholding has terminated. - ---------------------------------------------------------------------------- / \ / \ / \ - ---------------------------------------------------------------------------- Signature as registered in Section I Date - ---------------------------------------------------------------------------- / \ / \ / \ - ---------------------------------------------------------------------------- Signature as registered in Section I Date PLEASE RETURN THIS APPLICATION WITH YOUR CHECK IN THE ENCLOSED ENVELOPE. THANK YOU FOR INVESTING IN THE ARTISAN FUNDS. A confirmation of your account set-up will be sent to you shortly. -----END PRIVACY-ENHANCED MESSAGE-----