MAR C H 3 1, 2017
Ariel International
Separate Account
Developed Markets
• Value • Deep value • Global
Our patient investment philosophy
Ariel Investments is headquartered in Chicago, Illinois, with offices in New York and Sydney.
We serve individual and institutional investors through our no-load mutual funds and separate
accounts. As of March 31, 2017, firm-wide assets under management are $11.7 billion. Since our
founding in 1983, we have been disciplined, long-term investors. This defining characteristic is the
cornerstone of our investment philosophy, and symbolized by our turtle logo and the firm’s motto,
“Slow and steady wins the race.”
Rupal J. Bhansali
Portfolio manager
About the portfolio
The portfolio pursues long-term capital appreciation
by investing primarily in companies outside the U.S.
in developed international markets.
Patience
Expertise
We take the long-term view.
We specialize in bottom-up, fundamental research.
Independence
Teamwork
We invest to our convictions, not to
benchmarks.
We work collaboratively with a shared
commitment to excellence.
Portfolio facts
Investment style
International all cap equity
Inception
Ariel International (DM) Composite performance
December 31, 2011
Assets
$1,186.9 million
Average market cap ($ weighted)
Number of holdings
76
Annualized
$61.03 billion
Portfolio characteristics
Ariel
International MSCI EAFE
(DM)
Index
(%) as of 03/31/17
Quarter
Gross of fees
Net of fees
1-year
3-year
5-year
Since incept.
+7.54 +6.29 +2.87 +7.22 + 8.40
+7.33 +5.45 +2.05 +6.34 + 7.50
MSCI EAFE Index (net)
1
+7.25 +11.67 +0.50 +5.83 + 7.64
Past performance does not guarantee future results. 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, ETFs and other hedges may increase investment losses and expenses and
Return on equity (5 year avg)a
21.813.5
create more volatility. The intrinsic value of the stocks in which the portfolio invests may never be
Debt/equity b
0.450.67
recognized by the broader market. Current performance may be lower or higher than the performance data
quoted. Performance results may be preliminary, are net of transaction costs and reflect the reinvestment of
Active share c
N/A
89.99
dividends and other earnings. Performance has been reduced by the amount of the highest fee charged to any
client in the Ariel International (DM) Composite during the performance period. Actual fees may vary depending
Turnover d
N/A
28.32%
on, among other things, the applicable fee schedule and portfolio size. Fee information is available upon request
and may also be found in Ariel Investments LLC’s Form ADV, Part 2. Returns are calculated in U.S. dollars.
4.30
Tracking error e
N/A
(a)
A measure of profitability of companies held in the portfolio that
reveals how much profit the companies generate with the money
shareholders have invested. Source: BNY Mellon Profile.
(b)
A measure of financial leverage of companies held in the
portfolio calculated by dividing total liabilities by stockholders’
equity. It indicates what proportion of equity and debt the
companies are using to finance assets. Source: BNY Mellon
Profile. (c) A measure of the degree of active management by a
portfolio manager. Source: FactSet. Characteristics a-c exclude
ETFs. (d) Turnover is for the trailing 1 year period. Source: Archer.
(e)
A standard deviation percentage differentiating the returns
of the stocks in the portfolio and the returns of the stocks in
the portfolio’s benchmark over the trailing 3 year period. It
is a measure of volatility of the portfolio as compared to its
benchmark. Source: Zephyr Style Advisor.
Slow and steady wins the race.
MARCH 31, 2017
Ariel International Separate Account
Developed Markets
• Value • Deep value • Global
Sector weightings^‡
Top contributors*
(%)
Ariel
International
(DM)
MSCI
EAFE
Index
% of
portfolio % return
Information technology
18.92
5.71
Dialog Semiconductor plc
1.4
+20.84
Telecommunication services
16.64
4.36
Deutsche Boerse AG
6.1
+12.35
Health care
13.19
10.70
Roche Holding AG
5.3
+14.03
Consumer staples
13.02
11.38
Nokia Corp*
5.5
+11.98
Financials
11.27
21.27
GlaxoSmithKline plc*
5.4
+10.31
Consumer discretionary
10.86
12.24
Detractors*
Energy
7.11
Utilities
3.87
3.40
Industrials
3.11
14.31
Real estate
1.96
3.70
Daito Construction Co., Ltd.
Materials
0.05
7.92
Toyota Motor Corp.
0.8
– 6.65
Gemalto N.V.
2.6
– 3.29
British Telecom Group plc
0.7
– 12.23
H&M Hennes & Mauritz AB
0.7
– 8.05
Top ten companies*
(% of net assets)
5.00
Top ten countries^ (%)
1. Deutsche Boerse AG
6.1
1. Japan
15.12
2. Nokia Corp.
5.5
2. Germany
12.40
3. GlaxoSmithKline plc
5.4
3. United Kingdom
11.01
4. Roche Holding AG
5.3
4. Switzerland
10.04
5. China Mobile Ltd.
5.0
5. China
8.14
6. Ahold N.V.
4.2
6. Netherlands
6.80
7. Telefonica Deutschland Holding
3.8
7. Finland
5.45
8. Michelin (CGDE)
3.7
8. France
5.38
9. Reckitt Benckiser Group plc
3.5
9. United States
4.30
10. Italy
4.00
3.3
10. Swisscom AG
* For the purposes of determining the portfolio’s top ten,
securitiesof the same issuer are aggregated and if held
as depositary receipts it is not so specified.
Market cap exposure
Large capitalization
* The percentage of portfolio represents the percentage that
each issuer comprised in the representative portfolio as of the
end of the period. The return for each contributor or detractor
represents the total return during the quarter of each issuer for
the period held in the portfolio. This list includes the effect on
return of companies held in the portfolio and excludes the effect
on return of other types of investments held in the portfolio. The
holdings shown do not represent all of the securities purchased,
sold, or recommended for investors. Returns for certain issuers
consist of a blended return of multiple securities of the same
issuer. In this listing, the return for Nokia Corp represents a
blended return of Nokia Corp. ADR (+12.68) and Nokia Corp.
(+11.17), and the return for GlaxoSmithKline plc represents
a blended return of GlaxoSmithKline plc ADR (+11.00) and
GlaxoSmithKline plc (+9.03).
(%)
Market cap quintiles*
Ariel
International
(DM)
MSCI EAFE
Index
Difference
>$82.97 billion
24.4
24.2
18.8
30.9
Medium/large capitalization $30.10-$82.97 billion
Medium capitalization
% of
portfolio % return
1.6
– 7.51
$12.15-$30.10 billion
Medium/small capitalization $4.48-$12.15 billion
0.2
– 12.1
32.3
24.6
7.7
11.5
17.1
5.6
–
Small capitalization
<$4.48 billion
5.8
3.0 2.8
* The market cap quintiles are broken into five categories, ranging from large to small capitalization, and are based
on methodology for the S&P BMI World Index.
SCI EAFE Index is an unmanaged, market-weighted index of companies in developed markets, excluding the U.S. and Canada. The MSCI EAFE Index net returns reflect the reinvestment of
M
income and other earnings, including the dividends net of the maximum withholding tax applicable to non-resident institutional investors that do not benefit from double taxation treaties.
MSCI uses the maximum tax rate applicable to institutional investors, as determined by the companies’ country of incorporation. 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.
^
Sector and country weightings are calculated based on equity holdings as a percentage of total net assets.
‡
These sectors are the Global Industry Classification Standard (“GICS”) sector classifications. 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 Investments, LLC is a money management firm headquartered in Chicago, Illinois, with offices in New York and Sydney. Taking a long-term view and applying independent thinking
to our investment decisions, we span the market cap spectrum from micro to large and cover the globe with our international and global offerings. The Ariel International (DM) strategy
seeks long-term capital appreciation as a primary objective. The strategy’s secondary objective is to seek long-term capital preservation, to generate attractive absolute and risk-adjusted
returns, and to attain higher relative returns compared to its benchmark over a full market cycle. The strategy invests primarily in equity securities of foreign (non-U.S.) issuers in developed
international markets. The Ariel International (DM) Composite differs from its benchmark, the MSCI EAFE Index, because: (i) the Composite has fewer holdings than the benchmark, (ii) the
Composite will invest in Canada, and (iii) the Composite will at times invest a portion of its assets in the U.S. and emerging markets. Index returns reflect the reinvestment of income and
other earnings. Indexes are unmanaged, and investors cannot invest directly in an index.
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