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Where We Are Finding Growth ARTISAN PARTNERS The Global Transition to a Sustainable Energy Economy Insights
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Where We Are Finding Growth
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Artisan Partners Growth Team is committed to finding accelerating Modern biofuels
Other renewables
profit cycles globally and investing in reasonably valued companies that 140,000 Solar
Global direct primary Wind
are positioned for long-term growth. The team’s experience and broad 120,000 Hydropower
energy consumption
Terawatt Hour (TWh)
Nuclear
knowledge of the global economy are key attributes helping it identify Gas
100,000
growth opportunities, wherever they occur, for the four portfolios it
80,000 Oil
manages—Artisan Global Opportunities Fund, Artisan Global Discovery
60,000
Fund, Artisan Mid Cap Fund and Artisan Small Cap Fund.
40,000
Coal
Here, the team discusses compelling opportunities it is finding among
20,000
companies leading the transition to a sustainable energy economy. The
Traditional biomass
0
team believes the world is in the early stages of a meaningful mix shift
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2019
from hydrocarbon-based energy to renewables-powered energy enabled
by improving economics, social awareness and increasing regulatory Source: ourworldindata.org. Global Energy Consumption (2017).
pressures. These dynamics have enabled the team to uncover several
profit cycle opportunities globally. Before digging in, it is important to
Power-Generating Activities Have and Will Continue to
Negatively Impact the Environment
understand the historical milestones shaping and the drivers behind
The Industrial Revolution was a transformative period for humanity and
what can be a once-in-a-century transition.
shaped societies for several generations, though many of the innovations
The Industrial Revolution Laid the Foundation for Power from this period have had negative effects on the environment. In recent
Generation Today decades, scientists have observed exponential increases in heat-trapping
The Industrial Revolution, which most argue began in Great Britain in the greenhouse gas (GHG) emissions in the atmosphere. The lion’s share of
18th century, led to rapid industrialization and urbanization of previously these gases is carbon dioxide (76%, exhibit 2), primarily from burning coal,
agrarian societies as science was increasingly applied to industry. natural gas and petroleum for electricity, heat, transportation and in the
Important breakthroughs were the use of coal to power electricity production of goods from raw materials (exhibit 2). The cumulative effect
and innovations such as the steam engine—used in manufacturing of these activities over the past 200 years has driven carbon parts per
production, trains and other machines. The petroleum-powered million (PPM) in the earth’s atmosphere ~50% higher (exhibit 2)—levels
internal combustion engine (ICE), developed later, became the driving not seen for ~3 million years when the Earth was ~2-3°C warmer and sea
force behind automobiles and planes, changing the way people and levels were estimated to be 50-80 feet higher—and the global surface
goods move around the planet. These fossil fuel-burning activities temperature ~1°C above pre-industrial levels.
played an important role in developing economies for several centuries,
Exhibit 2: Global Surface Temperatures and Carbon Emissions
helping drive exponential population (exhibit 1) and economic growth.
35 Other industry
Today, fossil fuels remain a core source of power for most economies’ Flaring
CO2 emissions by fuel type, World Cement
30
transportation and power grids (exhibit 1). Gas
Tonnes (Billions)
25
Exhibit 1: World Population1 and Global Direct Primary Energy Consumption
20 Oil
12
World Population 15
10
10
8 Coal
5
Billions
6
0
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1900
1950
2000
2019
4
2
Sources: ourworldindata.org (2019).
Global greenhouse gas emissions by gas
0 F-gases 2%
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1900
1950
2000
2050
2100
Nitrous Oxidet 6% Carbon Dioxide (fossil fuel and
industrial processes) 65%
Source: ourworldindata.org. World Population Growth (2019). Forward population estimates are based on
1
Methane 16%
UN projections. Modern biofuels
Other renewables
140,000 Solar
Where
Global directWe Are Finding Growth—The
primary Wind Global Transition to a Sustainable Energy Economy
120,000 Hydropower Carbon Dioxide
energy consumption
Wh)
Nuclear (forestry and other land use) 11%
Gas5
T
10
0
Coal
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2019
5
0
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2019
Global greenhouse gas emissions by gas Exhibit 3: Meaningful Carbon Emission Reductions Are Required to Limit
the Global Surface Temperature Warming Pathway
F-gases 2%
Nitrous Oxidet 6% Metric gigations of CO2 (GtCO2 ) per year
Global greenhouse gas emissions byCarbon
gas Dioxide (fossil fuel and
industrial processes) 65%
80
Methane2%
F-gases 16%
70 Continued growth
Nitrous Oxidet 6% Carbon Dioxide (fossil fuel and 60
industrial processes) 65%
50
Methane 16%
40 McKinsey GEP
Carbon Dioxide
30 Reference Case, 2019
(forestry and other land use) 11%
20 2°C pathway
10
Carbon Dioxide
Source: IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the 0 1.5°C pathway
(forestry and other land use) 11%
Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and
2000
2010
2015
2020
2025
2030
2035
2040
2045
2050
27-Oct-2020—Ice-core
L.A. Meyer (eds.)]. data
IPCC, Geneva, Switzerland, before
151 pp. 1958. Mauna Loa data after 1958
400 Source: IPCC, 2014: Climate Change 2014: Synthesis Report. Contribution of Working Groups I, II and III to the
Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, R.K. Pachauri and
(ppm) (ppm)
27-Oct-2020—Ice-core data before 1958. Mauna Loa data after 1958
L.A. Meyer (eds.)]. IPCC, Geneva, Switzerland, 151 pp.
350
400
CO2 Concentration
Attractive Economics and Increasing Regulatory Support
300
350 Should Accelerate Wind and Solar Adoption
CO2 Concentration
De-carbonizing the power grid is critical to achieving the 1.5°C warming
250
300
scenario, and wind and solar emit significantly less carbon than their
200
fossil fuel counterparts per kilowatt hour of electricity produced (exhibit
25010 8 6 4 2 0
Thousands of Years Ago 4). These alternatives have not always been economically viable, but
200
recent breakthrough developments have enabled both technologies to
10 8 6 4 2 0
Thousands of Years Ago become more affordable than most fossil fuel alternatives.
Source: Scripps Institution of Oceanography (2020).
Exhibit 4: Renewables Powered Carbon Footprints are Significantly Lower
Many scientists believe continuing along the current path (without any than Hydrocarbon Based Energy
mitigation efforts) will cause further warming and long-lasting changes Coal 870
in all areas of our climate system, increasing the likelihood of severe and Natural Gas
(combined cycle) 464
irreversible impacts on human civilization. By the middle of this century,
Coal, carbon capture
and sequestration 156
under a worst-case scenario (defined as Representative Concentration
Pathway 8.5 by IPCC) annual GHG emissions could increase nearly Solar, residential 48
70% and the global surface temperature could be approximately 2.5°C Solar, utility 41
above pre-industrial levels. The higher the average surface temperature Wind, onshore 14
climbs, the higher the likelihood of extreme weather events (heat waves,
Nuclear 12
flooding, droughts, wildfires), decreasing crop yields, rising sea levels
400
800
600
200
0
1000
which would make certain parts of the planet uninhabitable, decreasing
Grams of CO2 per kilowatt of electricity produced
water supply, conflict over limited resources (food, water, etc.) and
ultimately, population displacement. Source: Joshua D. Rhodes, PhD, The University of Texas at Austin, 2017.
An important catalyst was the 2011 Fukushima earthquake. Accompanying
A 1.5°C Warming Pathway Could Significantly Reduce nuclear concerns, several European countries passed mandates which
Global Warming Risks
eliminated their own nuclear-power reliance. In Germany, this had the
Many scientists consider a 1.5°C warming scenario pathway (above
unintended consequence of forcing it to rely on the dirtiest burning coal,
pre-industrial levels) to be an upper limit for the change in the average
lignite. As a result, Germany (joined by other European countries) focused
earth surface temperature. This ceiling reduces the probability of the
increasingly on shifting from coal to cleaner energy sources—namely,
most extreme climate change outcomes. However, achieving a 1.5°C
wind and solar.
warming pathway by 2050 (by getting to net-zero emissions) will require
a rapid acceleration in both the development of sustainable alternatives The Europeans recognized a transition to wind and solar would require
and a reduction in GHG emissions (Exhibit 3). technological improvements to make these renewable energy sources
Where We Are Finding Growth—The Global Transition to a Sustainable Energy Economyeconomically competitive with their hydrocarbon counterparts. This we do not expect to see one from the U.S. Federal Government in the
drove an effort to reduce wind turbine material costs between 44%-78% near-term due to lack of bi-partisan support.
from their peak between 2007 and 2010. Solar costs have also declined
Gaining political support for carbon taxes can be a difficult obstacle
since 2010, namely, with Crystalline PV modules (the semiconducting
to overcome, but it doesn’t appear to be limiting progress in the US.
material used in solar panels) approximately 90% cheaper. Further wind
The U.S. Energy Information Administration’s (EIA) latest inventory of
and solar cost reductions are expected through 2025 from increasing
electricity generators shows renewables (wind, solar and battery storage)
economies of scale, more competitive supply chains and further
are expected to make up a greater share of new electricity generation
technological improvements.
capacity in 2021 (81% vs 76% in 2020).
In the next three years, on a pure economic basis, generating a megawatt
Emissions trading systems (ETS) are another mechanism that work
from a greenfield renewable power plant is expected to be more
on a cap and trade principle designed to drive adoption of renewable
economic than operating an existing nuclear, coal and some natural
alternatives and a reduction in overall emissions. The cap places a limit
gas power plants (exhibit 5). These dynamics have made it increasingly
on total GHG emissions—notably declining over time as emissions fall—
attractive for utilities to convert their power grids to renewable sources.
and companies receive or buy tradeable GHG emission allowances. For
When new-build economics can compete with the economics of the
example, a company undershooting its emission allowance can sell to a
existing power fleet, we believe the next step-change of the transition
company who has overshot and needs additional allowances to avoid
to renewables will occur.
heavy fines.
Exhibit 5: Estimated Costs of Generation Resources Post-2023 ($/MWh)
The European Union (EU) has been an early leader implementing an ETS
New Offshore Wind and the US has launched a program on the West Coast. The EU ETS was
Existing Nuclear
established over the past decade and currently covers nearly half of its
emissions. The price of carbon allowances in the EU ETS have increased
Existing Coal
to new highs in early 2021 (exhibit 6; +700% over the last 5 years), which
New Natural Gas CC
could further accelerate the transition away from carbon intensive
New Near-Firm Solar
regions. In the US, the California Air Resources Board’s cap and trade
New Near-Firm Wind
system could enable the state to make progress toward its 2045 net-zero
$0 $20 $40 $60 $80 $100 $120
emissions targets.
Storage Adder
Source: NextEra Energy Investor Day Presentation June 2019. Storage adder refers to additional costs associated Exhibit 6: Spot Contract Prices for European Emissions Allowances and
with battery storage systems. European Emission Aviation Allowances
€ 45.00
While post-pandemic inflation poses a risk to these economics in the
€ 40.00
Cost/metric tonne
near-term, particularly the raw materials of key wind and solar projects, € 35.00
€ 30.00
we remain confident renewables will be cost competitive. We believe it
€ 25.00
would take sustained inflation for utility-scale markets to require a $1-2/ € 20.00
€ 15.00
MWH increase of PPAs for these technologies.
€ 10.00
€ 5.00
In addition to economics, the Paris Climate accord has helped spur € 0.00
Oct 2012
Oct 2013
Oct 2014
Oct 2015
Oct 2016
Oct 2017
Oct 2018
Oct 2019
Oct 2020
governments to increasingly implement mechanisms to accelerate the
adoption of renewables in recent years. Two such tools are carbon taxes
and emissions trading systems. Source: Bloomberg.
Carbon taxes are a cost levied by governments on each tonne of CO2 Finally, battery technology to harness the power generated by these
emitted. The taxes are intended to increase costs and raise prices on CO2 renewable sources at mass scale will be required to pump power into
intensive industries which should promote conserving energy, switching the grid when demand exceeds supply. This should enable renewable
to lower-carbon fuels and adopting low tailpipe emitting vehicles. In the energy to capture greater share of the overall power generation market
US—the second highest carbon emitting country in the world behind and serve as a base load power source—a common pushback on the
China—researchers at MIT have estimated a $50/tonne tax on CO2 with a ultimate penetration rate of renewable capacity.
5% annual increase could drop carbon emissions 63% by 2050. However,
Where We Are Finding Growth—The Global Transition to a Sustainable Energy EconomyHydrocarbons will play a role in the energy economy until battery At a more residential level, Generac, a holding in our Mid Cap Fund, is a
storage capability is widely available. However, breakthroughs in battery provider of backup generators in the US with a dominant market position.
technology within the transportation sector (discussed further below) While our core thesis is based on the company being in the early stages of a
leave us optimistic this capability will improve over time. In fact, there are period of elevated growth as climate change leads to increased frequency
several large-scale battery energy storage systems being put into place and severity of natural disasters—hurricanes, floods and wildfires—we
in parts of the US, notably, the Moss Landing Energy project in California. believe its acquisitions and investments in the area of solar battery backup
systems represent a new profit-cycle driver. We believe Generac’s scale,
Where We Are Finding Growth in Renewable Energy distribution network and differentiated go-to-market strategy will help it
We have held utilities company NextEra Energy (NEE) in our Global gain a foothold in this industry.
Opportunities Fund since mid-2019. The company operates across two
Advance Drainage Systems, a manufacturer of water drainage structures
segments: Florida Power and Light (FPL), a regulated utility, and NextEra
and supplies across multiple construction-related end markets, is a
Energy Resources (NEER), one of the US’s largest developers and producers
holding in our Small Cap Fund. While not explicitly tied to renewable
of renewable power generation. While our thesis is underpinned by a stable
energy, we believe Advanced Drainage’s dominant market share and
and visible growth profile at FPL, the accelerating profit cycle is driven by
low-cost production within the plastic-pipe drainage market—60-70%
NEER. We believe NEER is well-positioned to be one of the leading providers
market share—enables the company to accelerate the trend away from
of sustainable power generation for the US utilities sector as it transitions
carbon-intensive concrete-based pipes (~65% of the overall market) in
toward a more environmentally friendly and sustainable power-generation
the drainage market. When compared to concrete-based pipes, plastic
fleet. NEER is one of the largest investors in US infrastructure and expects
drainage provides 3X faster installation times, 20% lower installation
to expand its renewable power-generation capacity by nearly 50% over
costs and have useful lives of ~100 years. Internally, 66% of the plastic
the next five years. The company’s growth profile is supported by a 15GW
feedstock utilized in Advanced Drainage’s products are derived from its
project backlog, long-term contracts with utilities counterparties, a solid
internal recycling operations, positioning the company as the 2nd largest
execution track record and access to low-cost capital. Approximately 88%
recycling firm in North America. We believe the company’s dominant
of NEER’s existing power generation is carbon free, and with utilities one of
market share and low-cost production, coupled with an industry-wide
the largest carbon-emitting sectors, NEER will not only provide a cheaper
material conversion story, position it well for a sustained profit cycle.
source of power to utilities, but it will also play a pivotal role in helping
customers meet their sustainability targets. Declining Battery Costs and Rising Regulatory Pressures on
Internal Combustion Engine (ICE) Vehicles Could Lead to
We have identified and invested in companies supplying the components Increasing Adoption of Battery Electric Vehicles (BEVs)
these utilities companies are purchasing to develop their wind farms and
transition their power grids. Vestas Wind Systems, a holding in our Global As numerous parts of the world have developed over the past couple
Opportunities and Global Discovery Funds, is the leading producer hundred years, automobiles—most of which are powered by internal
and servicer of onshore wind turbines globally. We believe Vestas is combustion engines—have become entrenched in how we live, work
particularly well-positioned given it is the low-cost producer and global and go about our daily lives. In the US (before the pandemic), 87% of
market share leader. daily trips took place in personal vehicles and the average driver spent
55 minutes per day behind the wheel and covered over 10,000 miles
Shoals Technologies Group is a holding in our Small Cap Fund. The per year. Unfortunately, the transportation sector is the second-largest
company is a global manufacturer of electrical balance of systems (EBOS) contributor to global CO2 emissions (exhibit 7) and approximately 75% of
products for utility-scale solar energy projects. EBOS encompasses all the these emissions come from road transportation.
necessary components to carry the electric current produced by solar
panels to an inverter, and ultimately to the power grid. Shoals’ core product, Exhibit 7: 2016 Global GHG Emissions by Sector
Bunker Fuels 2% Other Fuel Combustion 3%
Big Lead Assembly®, provides mission-critical electrification components
Waste 4%
Electricity & Heat 27%
which reduce the labor and raw materials costs to install EBOS systems Industry 4%
by ~40% and ~20% respectively. These cost reductions can drive overall Fugitive from energy
production 6%
project costs ~5% lower. We believe this franchise—~32% U.S. market share Buildings 7%
and growing, patent protection on BLA® through 2030 and the lowest cost Transport 14% Land-Use Change
and Forestry 9%
producer—is well positioned for a solid profit cycle ahead as the global Manufacturing/
Agriculture 13% Construction energy 11%
power grid transitions to renewable sources such as solar.
Source: ourworldindata.org (2016).
Where We Are Finding Growth—The Global Transition to a Sustainable Energy EconomyBattery Powertrain Vehicle ICE medium
Battery Powertrain Vehicle ICE medium
With the number of cars on the road expected to double by 2040 (to Lithium-ion battery price outlook
1,200 Lithium-ion battery price outlook
1,200
over 2 billion), there is a strong sense of urgency to find an alternative to
price
Observed prices
packprice
ICE vehicles to stay on the 1.5°C warming scenario pathway. Rather than 1,000 Observed
18% prices
learning rate
1,000
18% learning rate
$/kWh)
batterypack
dramatically alter how we get around on a daily basis, BEVs are an
2020$/kWh)
800
800
environmentally friendly alternative. BEVs do not consume gasoline and
Lithium-ionbattery
600
(real2020
have zero tailpipe emissions. Furthermore, as the power grid supplies 600 2024 implied 2030 implied
2024$92/kWh
price implied 2030$58/kWh
price implied
Lithium-ion
a higher portion of energy from renewable sources, the overall carbon price $92/kWh price $58/kWh
(real
400
400 2035 implied
footprint of BEVs will move towards zero, while ICE vehicles will continue 2035$45/kWh
price implied
200 price $45/kWh
200
to produce tailpipe emissions.
0
0
BEVs are not a recent innovation, having been around since the 1800s,
2010
2015
2020
2025
2030
2035
2010
2015
2020
2025
2030
2035
but only recently have they meaningfully closed the cost gap with ICE
Source: Bloomberg New Energy Finance. Lithium-ion Battery Price Outlook (2021).
vehicles. Lithium ion battery packs are the source of power for BEVs
and have historically made up a large portion of the cost. Luckily, as BEV U.S. annual passenger vehicle sales by drivetrain
20 Global Passenger Vehicle Fleet Outlook by Drivetrain
1.6
volumes have ramped, manufacturing scale has been a key factor in the Internal combustion
1.4 Battery
Fuel cell electric
85% decline in the cost of battery packs over the past decade. That being 15 Plug-in hybrid
1.2 Plug-in Hybrid
Millions
said, battery packs still make up ~35%-40% of the total cost of BEVs today, Fuel cellElectric
Battery
Billions
1.0
10 Hybrid
and we believe several technological and process-related improvements 0.8 Internal combustion
over the next couple of years could drive the overall cost significantly 0.6
5
0.4
lower (exhibit 8). This declining cost should enable BEVs to reach price
0.2
0
parity with ICE vehicles by 2025 (exhibit 8), at which point we believe BEV
2015
2020
2025
2030
2035
2040
0.0
2015
2020
2025
2030
2035
2040
adoption will rapidly accelerate (exhibit 8).
Exhibit 8: Declining Battery Costs Should Drive Consumers to Increasingly Source: Bloomberg New Energy Finance. Vehicle Sales by Drivetrain (2021).
Adopt BEVs
From a regulatory standpoint, governments are increasingly supporting
U.S. medium segment vehicle price estimates
50
BEVs and pressuring ICE vehicle original equipment manufacturers (OEMs),
48%
40
making it costly for them to keep up with stricter emissions standards.
42%
36%
Seventeen countries have announced 100% zero-emission vehicle targets
Thousand 2016 $
31%
27%
30 or the phase-out of ICE vehicles through 2050. In Europe, the Green Deal
24% 21% 18%
is expected to tighten emissions regulations to achieve net-zero emissions
20
by 2050. In Asia, China is targeting 5 million BEVs sold in 2025 and has
10 announced a target to achieve net-zero emissions by 2060. In the US,
President Joe Biden’s climate plan aims for all new vehicles sold by 2035
0
to be BEVs, and provides added consumer incentives via tax credits and
2016
2018
2020
2022
2024
2026
2028
2030
subsidies. California has recently passed legislation to ban the sale of ICE
Battery Powertrain Vehicle ICE medium
vehicles by 2035—the first policy of its kind in the US. As more regulators
get on board with supporting BEVs, ICE vehicle OEMs will likely experience
Source: Bloomberg New Energy Finance. Vehicle Price Estimates (2017).
Lithium-ion battery price outlook lower sales volumes and margin pressures through increased costs via
1,200
higher emissions and punitive taxes.
Lithium-ion battery pack price
Observed prices
1,000
18% learning rate A robust charging infrastructure is another important consideration
(real 2020 $/kWh)
800 for widespread BEV adoption, and several initiatives are in motion to
build this out over the next decade. The number of EV-related charging
600
2024 implied 2030 implied connections is expected to increase 10X (27% CAGR) by 2030 (exhibit 9),
price $92/kWh price $58/kWh
400
2035 implied
price $45/kWh
200
0
2010
2015
2020
2025
2030
2035
Where We Are Finding Growth—The Global Transition to a Sustainable Energy Economy
U.S. annual passenger vehicle sales by drivetrain
20which we believe will help reduce range anxiety. President Biden has set Where We Are Finding Growth in the Transportation
a goal of adding 500,000 electric charging stations over the next decade. Sector’s Transition to BEVs
Volkswagen’s Electrify America subsidiary has already committed and is Aptiv, a holding in our Global Opportunities and Mid Cap Funds, is a leading
currently building out its charging infrastructure, which is notably brand provider of safety, infotainment and electronic control components to the
agnostic. Electrify America aims to invest $2 billion in the US over the next automotive market. On the strength of its market-leading products, the
decade, adding charging stations across the country. Tesla is also ahead of company is capitalizing on accelerating uptake for its advanced driver
the game, with more than 11,000 superchargers in place around the globe. assistance systems (ADAS) and high-voltage electrification solutions to
take market share. On the strength of the secular trend toward electric
There are still meaningful charging infrastructure investments required,
and autonomous vehicles still ahead, we believe Aptiv is well-positioned
but we are encouraged by the progress and the rising interest among the
to expand margins and drive an accelerating profit cycle.
large auto OEMs to participate. Once in place, we believe the expanded
availability of charging stations will prompt more drivers to abandon
their ICE vehicles, and as the utility grid increasingly generates power
from renewable sources, these stations will help lower the transportation
sector’s overall carbon footprint.
Exhibit 9: BEV ChargePoints are Expected to Grow 10X by 2030
Public charging stations by region (fast and slow)
12
Charging Stations (Millions)
10
8
6
4
2
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
NAFTA Europe China RoW
Sources: IEA, Exane BNP Paribas estimates.
Finally, widespread BEV adoption is not possible without buy in from
the large auto OEMs. We have been encouraged by recent evidence of
a mindset shift among the auto OEMs to increasingly manufacture BEVs.
Previously, they believed the transition would be subtle—ICE vehicles to
mild hybrids, mild hybrids to hybrids, hybrids to BEVs. However, as Tesla
has demonstrated an ability to make BEVs profitable and realize it is not
cost-effective to pour capital into multiple engine types, the other auto
OEMs have concluded they need to jump the gap. A notable example
is commitments recently made by one of the world’s largest auto
manufacturers, General Motors (GM). The company plans to invest an
additional $7 billion ($27 billion total) to fund BEV development, launch 30
new models by 2025 and only sell zero-emission vehicles by 2035.
Where We Are Finding Growth—The Global Transition to a Sustainable Energy EconomyFor more information: Visit www.artisanpartners.com | Call 800.344.1770
Carefully consider the Fund’s investment objective, risks and charges and expenses. This and other important information is contained in the Fund’s prospectus and summary prospectus, which can
be obtained by calling 800.344.1770. Read carefully before investing.
Current and future portfolio holdings are subject to risk. International investments involve special risks, including currency fluctuation, lower liquidity, different accounting methods and economic and political systems, and
higher transaction costs. These risks typically are greater in emerging markets. Securities of small- and medium-sized companies tend to have a shorter history of operations, be more volatile and less liquid and may have
underperfomed securities of large companies during some periods. Growth securities may underperform other asset types during a given period.
The views and opinions expressed are based on current market conditions as of 31 Mar 2021, which will fluctuate and those views are subject to change without notice. While the information contained herein is believed to be reliable,
there is no guarantee to the accuracy or completeness of any statement in the discussion. This material is for informational purposes only and should not be considered as investment advice or a recommendation of any investment service,
product or individual security. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.
For the purpose of determining the Funds’ holdings, securities of the same issuer are aggregated to determine the weight in the Fund. Securities named in the Commentary; but not listed here are not held in the Fund(s) as of the date of
this report. The holdings mentioned above comprise the following percentages of the Funds’ total net assets as of 31 Mar 2022: Artisan Global Opportunities Fund—NextEra Energy Inc 4.2%, Vestas Wind Systems A/S 1.3%, Aptiv PLC
2.3%. Artisan Global Discovery Fund—Vestas Wind Systems A/S 1.3%. Artisan Mid Cap Fund—Generac Holdings Inc 1.8%, Aptiv PLC 1.5%, Advanced Drainage Systems Inc 1.3%. Artisan Small Cap Fund—Shoals Technologies Group
Inc 0.6%, Advanced Drainage Systems Inc 2.0%. Portfolio holdings are subject to change without notice and are not intended as recommendations of individual securities. Securities named in the commentary but not listed here are not
held in the Fund as of the date of this report.
Growth Rate (or CAGR, Compound Annual Growth Rate) is the annual rate at which a company’s earnings are expected to grow.
Our capital allocation process is designed to build position size according to our conviction. Portfolio holdings develop through three stages: GardenSM, CropSM and HarvestSM. GardenSM investments are situations where we believe we are
right, but there is not clear evidence that the profit cycle has taken hold, so positions are small. CropSM investments are holdings where we have gained conviction in the company’s profit cycle, so positions are larger. HarvestSM investments
are holdings that have exceeded our estimate of intrinsic value or holdings where there is a deceleration in the company’s profit cycle. HarvestSM investments are generally being reduced or sold from the portfolios. Private Market Value is
an estimate of the value of a company if divisions were each independent and established their own market stock prices.
This material is provided for informational purposes without regard to your particular investment needs. This material shall not be construed as investment or tax advice on which you may rely for your investment decisions. Investors should
consult their financial and tax adviser before making investments in order to determine the appropriateness of any investment product discussed herein. We expressly confirm that neither Artisan Partners nor its affiliates have made or are
making an investment recommendation, or have provided or are providing investment advice of any kind whatsoever (whether impartial or otherwise), in connection with any decision to hire Artisan Partners as an investment adviser, invest
in or remain invested in any funds to which we serve as investment adviser or otherwise engage with Artisan Partners in a business relationship.
Artisan Partners Funds offered through Artisan Partners Distributors LLC (APDLLC), member FINRA. APDLLC is a wholly owned broker/dealer subsidiary of Artisan Partners Holdings LP. Artisan Partners Limited Partnership, an investment
advisory firm and adviser to Artisan Partners Funds, is wholly owned by Artisan Partners Holdings LP.
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