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 0000 Xxx) 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/ Xxxxxx X. Xxxxxxx
------------------------------------
ARTISAN PARTNERS LIMITED
PARTNERSHIP
By: Artisan Investment Corporation
Its general partner
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Xxxxxx X. Xxxxxxx
President
4
