John Rogers' Ariel Appreciation Fund First Quarter 2014 Commentary

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Apr 30, 2014

Investing in mid-cap stocks is more risky and more volatile than investing in large cap stocks. The intrinsic value of the stocks in which the portfolio invests may never be recognized by the broader market. Investing in equity stocks is risky and subject to the volatility of the markets. Ariel Appreciation Fund often invests a significant portion of its assets in companies within the financial services and consumer discretionary sectors and its performance may suffer if these sectors underperform the overall stock market.

Performance data quoted represents past performance. Past performance does not guarantee future results. All performance assumes the reinvestment of dividends and capital gains and represents returns of the Investor Class shares. 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. For the period ended March 31, 2014, the average annual total returns of Ariel Appreciation Fund (Investor Class) for the one-, five- and ten-year periods were +25.33%, +28.77% and +8.55%, respectively. The Fund's Investor Class shares had an annual expense ratio of 1.13% for the year ended September 30, 2013. Performance data current to the most recent month-end for Ariel Appreciation Fund may be obtained by visiting our web site, arielinvestments.com.

Quarter Ended March 31, 2014

Global equity markets both at home and abroad decelerated significantly in th e first quarter of 2014. After the supercharged 2013 campaign, such a slowdown hardly comes as a surprise. Afte r all, equities tend to gain roughly +10% annually over the long term, depending on market cap, region, and valuation. In 2013, however, the S&P 500 gained +32.39 %, and the MSCI EAFE jumped +23.29%. After such a run, therefore, it was no shock to see hot markets cool down. To that point, in the first quarter, the S&P 500 returned +1.81%, while the MSCI EAFE earned just +0.77%. Indeed, underneath those top- line returns, were areas of demonstrable weakness. For instance, the Dow Jones Indust rial Average lost –0.15%, and our domestic portfolios, which mostly performed nicely last year, fell short in the first quarter of 2014. We had subpar returns this quarter as Ariel Appreciation Fund fell –0.95%, lagging the Russell Midcap Value Index's +5.22% jump, as well as the +3.53% rise of the Russell Midcap Index.

Several of our holdings posted strong returns this quarter. Real estate specialist JLL Inc. (JLL, Financial), previously known as Jones Lang LaSalle Inc., surged +15.73% due to a strong earnings report. Specifically, in late January the company reported better-than-expecte d (adjusted) earnings per share (EPS) of $3.33; the Street expected $3.09. Revenues topped forecasts, $1.5 billion rather than $1.3 billion. In addition, the company's operating results were boosted by solid investment sales, facility management services and momentum in leasing revenues. Moreover, management signaled continued improvemen ts across its businesses. The market is still applying a cautiously cyclical set of expectations to this firm, but we believe its gradual growth is more secular in nature. In addition, scientific research specialist Thermo Fisher Scientific Inc. (TMO, Financial) returned +8.12% after a very solid earnings report. Its revenue was $3.5 billion, up 6% over the previous period, and its earnings per share was $1.43, significantly above the $1.37 cons ensus estimate. Its forecast for 2014 was even more positive : full-year revenue guidance was in the $16 billion-plus ra nge, smashing the $13 billion consensus estimate, and the low end of its EPS guidance was more than $0.40 higher than Wall Street's best guess. Our strategy with Thermo Fisher has been to look beyond the gloom and doom that has cast a dark cloud over the whole sector to see the potential for a bright future.

A few of our holdings struggled at quarter end. Specialty retailing Coach, Inc. (COH, Financial) de clined –10.91% after missing expectations. The company reported EPS of $1.06 after making $1.23 per share last year. Consensus had been $1.11. The main culprit was lower traffic in retail stores. It has been a very difficult winter for many retailers, but for Coach the more important issue is its st yle turnaround. Stuart Vevers, the new creative director, has his first complete line appearing this spring and hitting stores next fall. As long- term investors, a six-month waiting period is not difficult, but obviously, Wall Street is less patient than we are. We believe the company will emerge with its brand largely intact, new products to captivate customers and better financial results to follow. Also, gaming manufacturer International Game Technology (IGT, Financial) returned –22.00% after a subpar earnings report. Its revenue and earnings per share both slid below consensus estimates. Specifically, revenues were 2% lower than Wall Street expected, while the (adjusted) EPS of $0.25 did not meet the $0.30 forecast. The miss came from weak regional gaming trends and higher-than-expected operating expenses. We think operating issues can be corrected and believe management is focused on the issue. In the meantime, we see light business as temporary and industry-wide— beyond IGT's control. We would be more concerned if the short-term results stemming fr om lost market share, for instance. Although there have been headwinds for this company, we remain optimistic over the long term.

During the quarter we added one new position and eliminated one in Ariel Appreciation Fund. We purchased a previous holding in our mid ca p fund, Laboratory Corp. of America Holdings (LH, Financial). LabCorp maintains a leading market position in an indust ry that continues to show promising growth potential du e to technological advances, aging demographics, health care cost containment, and preventative medicine. LabCorp maintains a solid balance sheet, generates a significant amount of free cash flow and has been returning value to shareholders through share repurchases. The company operates with an experienced management team that is conservative yet willing to take slight risks in order to grow the business long-term. We exited our position in Apollo Education Group, Inc. (APOL, Financial) in order to pursue more compelling opportunities.

Although, clearly, the stock ma rket changed course during the quarter, our own long-term views have not. First and foremost, although we do not generally engage in short- term stock market prognostication, we think the past three months have been a pullback rather than the beginning of a correction or bear market. Our reasoning follows. Although aggregate valuation measurements such as the market's price- to-earnings (P/E) ratio started the year toward the high end of the typical range, they are now closer to normal. Moreover, the economy continues to slowly but surely improve based on our assessment of the economic da ta we see; the management teams we interview on a daily basis further bolster this view with their confidence and genera l optimism. So we continue to hold the same view we did at the beginning of the year: Equities are likely to rise in 2014, just not as much as in 2013.

This commentary candidly discusses a number of individual companies. These opinions are current as of the date of this commentary but are subject to change. The information provided in this commentary does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security.

As of 3/31/14, Jones Lang LaSalle Inc. comprised 3.0% of Ariel Appreciation Fund; Thermo Fisher Scientific Inc. 2.3%; Coach, Inc. 2.5%; International Game Technology 3.2%; Laboratory Corp. of America Holdings 1.9% and Apollo Education Group, Inc. 0.0%. Portfolio holdings are subject to change. The performance of any single portfo lio holding is no indication of the performance of other portfolio holdings of Ariel Appreciation Fund.

The Russell Midcap® Value Index measures the performance of the mid-cap value segment of th e U.S. equity universe. It includes those Russell Midcap Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell Midcap® Index measures the performance of the mid- cap segment of the U.S. equity universe. The Russell Midcap Index is a subset of the Russell 1000® Index. It includes approximately 800 of the sma llest securities based on a combination of their market cap and current index membership. The Russell Midcap Index represents approximately 27% of the total market capitalization of the Russell 1000 companies. The S&P 500® Index is the most widely accepted barometer of the market. It includes 500 blue chip, large cap stocks, which together represent about 75% of the total U.S. equities market. MSCI EAFE® Index is an unmanaged, market weighted index of companies in developed mark ets, 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 fina ncial products. This report is not approved or produced by MSCI. The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

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