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Ariel International Fund

Why Ariel’s global approach


Our emphasis is on generating attractive absolute and relative returns while seeking to limit downside risk in our global portfolios.

Experience matters

Rupal J. Bhansali, our chief investment officer for international equities, has more than 20 years of industry experience.

Managing risk is a top priority

We pay as much attention to risk management as to return management.

Screening out provides a stronger starting point

While others screen in, we begin our process by screening out high-risk companies.

All-cap portfolios offer larger opportunity set

Although our portfolios are relatively concentrated, we consider companies of all sizes.

Attention to business models builds more resilient portfolios

In addition to applying our financial models, we consider the long-term viability of each company’s business model.

Key Facts
Market Cap Range: All Cap
Inception:
Investor Class: 12/30/2011
Institutional Class: 12/30/2011
Number of companies: 50-150
Turnover: 30-80%
Ticker Symbol:
Investor Class: AINTX
Institutional Class: AINIX
Fund Assets (all classes):
$14.6 million as of 06/30/2014
 
Portfolio Manager
Bhansali_Rupal_Web.png Rupal J. Bhansali
Portfolio Manager
 

Our global investment philosophy


Patience

We take the long-term view.
  • Complementary objectives: Higher absolute and relative returns over a full market cycle with less risk
  • Focus research as much on what can go wrong as what can go right

Independence

We invest to our convictions, not to benchmarks.
  • Benchmark aware only to the extent that tracking error is by design and not by default
  • Significant exposure to our highest-conviction ideas, tempered with prudent risk controls

Expertise

We specialize in bottom-up fundamental research.
  • Ask questions to gain insight, not just information
  • Conduct in-country visits
  • Take business analyst approach rather than stock analyst approach
  • Research a company’s global peers to inform our competitive assessment

Teamwork

We work collaboratively with a shared commitment to excellence.
  • Debate best, base and worst case scenarios for every company considered
  • Three team members with clearly defined roles vet each stock

 
RB-Int-Global-Investing1.png
Rupal Bhansali on International and Global Investing I
 
RB-Int-Global-Investing2.png
Rupal Bhansali on International and Global Investing II

Our global process


Negative Screening

Negative screening strives for downside protection
  • Process:
    Screen on risk, not growth rate or valuation
  • Risk management:
    Eliminate approximately 60% of high-risk stocks in benchmark
  • Benefit:
    Potential downside protection

Bottom-up Research

Proprietary bottom-up research enables better stock picking
  • Process:
    Lead analysts perform research
  • Risk management:
    Assess the prospects and durability of a business franchise
  • Benefit:
    Proprietary insights enable better stock picking

Team Validation

Team validation avoids blind spots in our analysis
  • Process:
    A team of three debates and stress tests each idea
  • Risk management:
    Go beyond industry specialist, avoiding groupthink by assigning devil’s advocate and "fresh" analyst
  • Benefit:
    Ideas vetted from multiple perspectives yield more informed final decisions by portfolio manager

Portfolio Construction

Portfolios constructed to manage risks as well as long-term performance
  • Process:
    Seek to own top decile of investment opportunities uncovered
  • Risk management:
    Cap security position size at 5% at cost, typically limit sector weights at the higher of 25% or 1.5x benchmark, hedge currency if practical and cost efficient
  • Benefit:
    A diverse portfolio that balances long-term performance with risk management

Investor Class
Institutional Class
Quarter End
Month End
Ariel International Fund

Performance

As of July 31, 2014
Inception date: December 30, 2011 Annualized
  One
Month
Three
Months
Year To
Date
One
Year
Since
Inception
Ariel International Fund -2.62% 1.36% 4.12% 16.44% 12.95%
MSCI EAFE -1.96% 0.75% 3.08% 15.55% 16.93%
Ariel International Fund

Performance

As of June 30, 2014
Inception date: December 30, 2011 Annualized
  One
Month
Three
Months
Year To
Date
One
Year
Since
Inception
Ariel International Fund 1.40% 4.65% 6.93% 24.82% 14.63%
MSCI EAFE 0.99% 4.34% 5.14% 24.09% 18.48%
Expense Cap as of 2/1/14: 1.25%*
Net Expense Ratio as of the fiscal year ended 9/30/13: 1.40%*
Gross Expense Ratio as of the fiscal year ended 9/30/13: 9.36%*

*Effective February 1, 2014, Ariel Investments, LLC, the Adviser, has contractually agreed to waive fees or reimburse expenses (the “Expense Cap”) in order to limit Ariel International Fund’s total annual operating expenses to 1.25% of net assets for the Investor Class through the end of the fiscal year ending September 30, 2016. Through January 31, 2014, the Expense Cap will continue to be 1.40% for the Investor Class.

Investments in foreign securities may underperform and may be more volatile than comparable U.S. stocks because of the risks involving foreign economies and markets, foreign political systems, foreign regulatory standards, foreign currencies and taxes. The use of currency derivatives and exchange-traded funds (ETFs) may increase investment losses and expenses and create more volatility. The intrinsic value of the stocks in which the Fund invests may never be recognized by the broader market. Performance data quoted represents past performance. Past performance does not guarantee future results. All performance assumes the reinvestment of dividends and capital gains. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.

MSCI EAFE® Index is an unmanaged, market-weighted index of companies in developed markets, excluding the U.S. and Canada. The MSCI EAFE Index (gross) returns reflect the reinvestment of income and other earnings, including the maximum possible dividends. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI.

Investors should consider carefully the investment objectives, risks, and charges and expenses before investing. For a current summary prospectus or full prospectus which contains this and other information about the funds offered by Ariel Investment Trust, call us at 800-292-7435 or click here. Please read the summary prospectus or full prospectus carefully before investing. Distributed by Ariel Distributors, LLC, a wholly-owned subsidiary of Ariel Investments, LLC.

Ariel International Fund

Sector Weightings (%)

As of June 30, 2014
  Ariel International Fund MSCI EAFE
Financials 18.02 25.29
Consumer Discretionary 17.50 11.86
Information Technology 17.08 4.43
Consumer Staples 12.18 11.08
Health Care 11.25 10.54
Telecommunication Services 8.50 4.91
Energy 6.99 7.29
Utilities 3.59 3.88
Industrials 3.33 12.69
Materials 1.57 8.02
Unclassified 0.00 0.00

Represents percentage of total equity holdings in the portfolio

MSCI EAFE® Index is an unmanaged, market-weighted index of companies in developed markets, excluding the U.S. and Canada. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI.

These sectors are the Global Industry Classification Standard (“GICS”). GICS was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by Ariel Investments, LLC. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Ariel International Fund

Schedule of Holdings

As of June 30, 2014
  Units Security Description Market Value % of Total Value
AUSTRALIA     24,438 0.2
  4,890 AMP Ltd. 24,438 0.2
AUSTRIA     102,235 0.7
  1,910 Vienna Insurance Group 102,235 0.7
CANADA     91,057 0.6
  95 Fairfax Financial Holdings Ltd. 45,069 0.3
  559 Tim Hortons Inc. 30,579 0.2
  680 Canadian Oil Sands Ltd. 15,409 0.1
CHINA     670,018 4.6
  9,562 China Mobile Ltd. ADR 464,809 3.2
  887 Baidu, Inc. ADR 165,700 1.1
  4,072 China Mobile Ltd. 39,509 0.3
DENMARK     14,025 0.1
  278 Vestas Wind Systems AS 14,025 0.1
FINLAND     522,202 3.6
  62,101 Nokia Corp. ADR 469,484 3.2
  6,962 Nokia Corp. 52,718 0.4
FRANCE     1,016,079 7.0
  11,843 Eutelsat Communications 411,497 2.8
  2,697 Technip SA 295,034 2.0
  2,909 BNP Paribas SA 197,352 1.4
  831 L'Air Liquide SA 112,196 0.8
GERMANY     1,387,557 9.5
  8,960 Deutsche Boerse AG 695,403 4.8
  10,134 Dialog Semiconductor plc 351,422 2.4
  32,439 Telefonica Deutschland Holding AG 268,245 1.8
  418 MTU Aero Engines AG 38,457 0.3
  941 Deutsche Post AG 34,030 0.2
HONG KONG     139,152 1.0
  41,085 Yue Yuen Industrial 139,152 1.0
IRELAND     365,602 2.5
  6,552 Ryanair Holdings plc ADR 365,602 2.5
ITALY     655,028 4.4
  81,068 Snam SpA 488,428 3.3
  25,048 Mediaset SpA 122,102 0.8
  1,062 DiaSorin SpA 44,498 0.3
JAPAN     2,713,161 18.5
  3,900 Shimamura Co., Ltd. 383,436 2.6
  6,300 Toyota Motor Corp. 378,354 2.6
  2,800 Nintendo Co., Ltd. 335,127 2.3
  10,100 Canon Inc. 328,608 2.3
  2,500 Daito Trust Construction Co., Ltd. 293,914 2.0
  3,100 Tokyo Electron Ltd. 209,553 1.4
  4,200 Japan Tobacco Inc. 153,108 1.0
  1,600 Murata Manufacturing Co., Ltd. 149,742 1.0
  2,703 Canon Inc. ADR 88,523 0.6
  5,500 Nikon Corp. 86,595 0.6
  1,700 Denso Corp. 81,136 0.6
  2,100 OBIC Co., Ltd. 69,236 0.5
  1,800 Chugai Pharmaceutical Co., Ltd. 50,728 0.3
  415 Toyota Motor Corp. ADR 49,659 0.3
  1,300 JIN Co., Ltd. 41,449 0.3
  936 Nintendo Co., Ltd. ADR 13,993 0.1
LUXEMBOURG     92,532 0.6
  548 RTL Group 61,051 0.4
  283 RTL Group 31,481 0.2
NETHERLANDS     660,386 4.5
  34,095 Ahold N.V. 640,069 4.4
  196 Gemalto NV 20,317 0.1
NORWAY     13,199 0.1
  736 Gjensidige Forsikring ASA 13,199 0.1
SINGAPORE     36,122 0.2
  2,000 United Overseas Bank Ltd. 36,122 0.2
SPAIN     159,705 1.1
  2,244 Tecnicas Reunidas SA 138,810 1.0
  3,127 Banco Popular Espanol SA 20,895 0.1
SWEDEN     144,806 1.0
  2,216 H&M Hennes & Mauritz AB 96,845 0.7
  450 Autoliv Inc. 47,961 0.3
SWITZERLAND     1,858,461 12.7
  2,417 Roche Holding AG 720,903 4.9
  1,196 Zurich Insurance Group Ltd 360,499 2.5
  4,074 Nestle SA 315,611 2.2
  360 Swisscom AG 209,269 1.4
  10,179 UBS AG 186,753 1.3
  120 Banque Cantonale Vaudoise 65,426 0.4
UNITED KINGDOM     2,388,702 16.5
  13,154 GlaxoSmithKline plc ADR 703,476 4.8
  98,108 Tesco plc 477,178 3.3
  34,110 HSBC Holdings plc 346,110 2.4
  4,194 Royal Dutch Shell plc ADR 345,460 2.4
  21,851 British Telecom Group plc 143,936 1.0
  2,867 Royal Dutch Shell plc 118,666 0.8
  2,692 Croda Intl plc 101,402 0.7
  319 British American Tobacco plc ADR 37,986 0.3
  3,283 IG Group Holdings plc 33,009 0.2
  454 BT Group plc ADR 29,796 0.2
  568 HSBC Holdings plc ADR 28,854 0.2
  346 GlaxoSmithKline plc 9,261 0.1
  2,064 Sage Group plc 13,568 0.1
UNITED STATES     1,477,080 10.2
  712,122 Fixed Income Clearing Corporation 712,122 4.9
  2,030 Harman Intl Industries, Inc. 218,083 1.5
  2,896 Vanguard MSCI EAFE ETF 123,341 0.8
  2,781 Coach, Inc. 95,082 0.7
  5,177 Tumi Holdings Inc. 104,213 0.7
  1,636 Vanguard MSCI Pacific ETF 101,825 0.7
  4,481 Ruckus Wireless, Inc. 53,369 0.4
  219 Core Laboratories NV 36,586 0.3
  385 Philip Morris Intl, Inc. 32,459 0.2
Total Equities     14,531,547 99.6
Cash, Other Assets less Liabilities     57,317 0.4
Grand Total     14,588,864 100.0

Ariel International Fund

Commentary

 
Monthly Commentary: Perspectives on the current market
Quarterly Report: Quarterly performance update and communication to investors
Fact Sheets: Quarterly overview of fund objectives and performance summary
Past performance does not guarantee future results. © Ariel Investments, LLC. The mutual funds offered by Ariel Investment Trust are distributed by Ariel Distributors, LLC. Use of this website is subject to our Terms & Conditions of use. Each of the investment products, mutual funds or services referred to in this site may be offered only to persons in the United States. This web site should not be considered a solicitation or offering of any investment products, funds or services to investors outside the United States. Original illustrations © Omar Rayyan 2007.