In the initial quarter of 2026, the global financial landscape presented a mixed bag of results, characterized by international equities generally eclipsing US market performance. Amidst these fluctuating conditions, the Artisan International Fund's portfolio demonstrated resilience, surpassing both the MSCI EAFE and MSCI All Country World ex US indices, even as these benchmarks experienced negative absolute returns. The fund's strategic approach involved bolstering positions in sectors poised for sustained demand and seizing opportunities arising from market volatility. This forward-looking stance, centered on electrification and defense, is further reinforced by increasing capital outlays and shifting governmental priorities, underscoring a belief in the longevity of these investment themes.

During the first three months of 2026, the global investment arena saw varied movements. International stocks predominantly showed stronger performance compared to their American counterparts. This early optimism was fueled by a deceleration in European inflation rates and a growing conviction that prevailing monetary policies would continue to support economic stability. The Artisan International Fund meticulously navigated this environment, actively rebalancing its holdings. Key actions included increasing exposure to sectors anticipated to benefit from enduring demand, such as technologies supporting electrification and national security. Furthermore, the fund strategically leveraged instances of market volatility to acquire assets at attractive valuations, reinforcing its commitment to its core long-term investment philosophy. This proactive management contributed significantly to its favorable performance against major international indices.

The fund's investment thesis remains anchored on several long-duration themes, particularly in electrification and defense. The increasing global focus on sustainable energy solutions, coupled with significant capital expenditure in AI infrastructure and grid modernization, provides a robust foundation for the electrification theme. Similarly, persistent global geopolitical tensions and the resultant rise in defense spending underpin the defense sector's growth trajectory. These themes are not only supported by current economic trends but also by evolving government policies that prioritize these areas, indicating a sustained period of growth. The Artisan International Fund's strategic allocation to these sectors reflects a confident outlook on their long-term potential, aiming to deliver consistent returns by aligning with powerful secular trends.

Looking ahead, the fund is well-positioned, with its investment strategy closely aligned with several enduring themes. These themes, prominently featuring electrification and defense, are increasingly bolstered by noticeable capital expenditures and changing governmental priorities worldwide. The strategic allocation reflects a conviction that these sectors will continue to be significant drivers of growth, capitalizing on macro trends and policy shifts to deliver sustainable value.