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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT
OF 1934 (AMENDMENT NO.___)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
Ariel Investment Trust
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(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
_________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
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(5) Total fee paid:
_________________________________________________________________________
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_________________________________________________________________________
(3) Filing Party:
_________________________________________________________________________
(4) Date Filed:
_________________________________________________________________________
CONTENTS
1. Shareholder Message
2. Questions and Answers
3. Notice of Special Meeting
4. Proxy Statement
5. Appendices
A. Large Shareholders
B. Officers and Directors of Lincoln Capital Fixed Income Management
Company, LLC
C. New Sub-Advisory Agreement
6. Form of Proxy Card
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ARIEL PREMIER BOND FUND
April __, 2003
DEAR FELLOW SHAREHOLDER:
A special meeting of shareholders of both classes of the Ariel Premier Bond Fund
(the "Fund") will take place on May 20, 2003, and we are asking for your
participation. You do not need to attend the meeting to participate. However, it
is important that you take a few minutes to read the enclosed material and then
vote your shares. You can vote by Internet, by telephone, or by mailing the
enclosed proxy voting card(s) in the postage-paid envelope.
THE FUND HAS ONE PROPOSAL UP FOR A VOTE. SHAREHOLDERS OF BOTH CLASSES OF THE
ARIEL PREMIER BOND FUND ARE BEING ASKED TO TAKE ACTION ON THE FOLLOWING ITEM:
1. Approval of a new sub-advisory agreement with Lincoln Capital Fixed Income
Management Company, LLC.
THIS PROPOSAL WILL NOT CHANGE THE PORTFOLIO MANAGERS FOR YOUR INVESTMENTS NOR
WILL IT INCREASE THE FEES THAT YOU PAY.
THE TRUSTEES UNANIMOUSLY RECOMMEND APPROVING THE PROPOSAL.
NO MATTER HOW MANY SHARES YOU OWN, YOUR VOTE IS IMPORTANT. A proxy solicitor,
D.F. King & Co., Inc., 77 Water Street, New York, NY 10005, has been retained to
make follow-up phone calls to shareholders as may be necessary on behalf of the
funds. Your prompt response will help reduce proxy costs and will also mean that
you can avoid receiving follow-up phone calls or mailings. Voting by Internet or
phone lowers proxy costs even further.
Please join me in exercising your rights as a shareholder by reviewing the
attached materials and casting your vote.
We thank you for your time and attention to this important matter.
Sincerely,
Merrillyn J. Kosier
Executive Vice President
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QUESTIONS AND ANSWERS ABOUT THE PROPOSAL
WHAT ARE SHAREHOLDERS VOTING ON?
The Ariel Premier Bond Fund (the "Fund") is asking all of its shareholders to
vote on one proposal.
1. TO APPROVE A NEW SUB-ADVISORY AGREEMENT. Shareholders of the Fund are
being asked to approve a new sub-advisory agreement with Lincoln Fixed
Income Management Company, LLC. The agreement is not being materially
changed, fees are not being increased, and the same portfolio managers
will continue managing the Fund.
MORE INFORMATION ABOUT THE PROPOSAL
THE FOLLOWING TELLS YOU MORE ABOUT THE PROPOSAL AND EXPLAINS THE MAIN REASONS
THAT THE TRUSTEES BELIEVE THE PROPOSAL IS IN THE BEST INTERESTS OF SHAREHOLDERS.
WHY ARE BOND FUND SHAREHOLDERS BEING ASKED TO APPROVE THE NEW SUB-ADVISORY
AGREEMENT?
Lincoln Capital Management Company ("Lincoln Capital"), the former investment
sub-adviser to the Fund under a 1995 Subadvisory Agreement between Lincoln
Capital and Ariel Capital Management, Inc. (the "Adviser"), recently went
through a change of control. As part of this change of control, Lincoln
Capital's fixed income group was acquired by Lehman Brothers Holdings Inc.
("Lehman"), and now operates as Lincoln Capital Fixed Income Management Company,
LLC, a wholly-owned subsidiary of Lehman (the "Sub-Adviser"). As required under
the Investment Company Act of 1940 (the "1940 Act"), the 1995 Sub-Advisory
Agreement provided for automatic termination upon its assignment, including a
change of control at Lincoln Capital. Because the 1995 Sub-Advisory Agreement
terminated automatically upon the change of control of Lincoln Capital, the
Board of Trustees of the Trust approved at a special meeting on January 16, 2003
an Interim Sub-Advisory Agreement between the Sub-Adviser and the Adviser, as
permitted by the 1940 Act rules. Because the Interim Sub-Advisory Agreement will
terminate automatically no later than June 30, 2003, the Trustees, including the
Independent Trustees, recommended that shareholders approve a new Sub-Advisory
Agreement between the Sub-Adviser and the Adviser to take effect immediately
after the special meeting of shareholders (the "New Sub-Advisory Agreement").
The New Sub-Advisory Agreement is similar in all material respects to the 1995
Sub-Advisory Agreement and the Interim Sub-Advisory Agreement. THE FEES ARE NOT
BEING INCREASED, AND THE SAME PORTFOLIO MANAGERS WILL CONTINUE MANAGING THE
FUND.
HAVE THE TRUSTEES APPROVED THE PROPOSAL?
Yes. The Trustees, including a majority of the Independent Trustees, unanimously
approved the proposal on March 3, 2003 and recommend that you vote to approve
it.
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HOW MANY VOTES AM I ENTITLED TO CAST?
As a shareholder, you are entitled to one vote for each share you own of each
class of the Fund on the record date, and each fractional share is entitled to a
proportionate share of one vote. The record date is April __, 2003.
DOES THIS PROPOSAL AFFECT THE OTHER ARIEL FUNDS?
The Ariel Fund and Ariel Appreciation Fund are not affected by this proxy.
However, the Ariel Premier Growth Fund is also sub-advised by Lincoln Capital.
As a result of the change in control, the Growth Fund shareholders will
separately vote on approving a new sub-advisory agreement with a new
sub-adviser, Lincoln Equity Management, LLC.
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HOW TO VOTE YOUR SHARES
Voting your shares is easy and will only take a few minutes. You may use any of
the following options, and remember that VOTING BY INTERNET OR PHONE WILL HELP
LOWER PROXY EXPENSES. For Internet and touch-tone telephone voting, you will
need the 12-digit number(s) on your enclosed proxy voting card(s).
- - BY INTERNET: Log on to www.________.com and follow the simple instructions.
- - BY TOUCH-TONE PHONE: Call toll-free 1-888-221-0697 and follow the recorded
instructions.
- - BY FAX: Sign and date the proxy card. Fax both sides of the proxy card to
1-877-226-7171.
- - BY MAIL: Mark your votes on the enclosed proxy card, sign your name exactly
as it appears on your latest account statement. Be sure to date, and mail
your vote using the postage-paid envelope provided.
REMEMBER: If you vote by Internet, fax or phone, you should not mail in your
proxy card. If you received more than one card due to multiple accounts, please
make sure you vote all the enclosed proxy card(s).
If you have questions on any part of this document, please call our proxy
solicitor, D.F. King & Co., Inc., toll-free at 1-800-207-3156. A specially
trained customer service representative will be pleased to assist you with any
questions or instructions on how to vote your shares.
The information on these pages is only a summary. Before you vote, please read
the following proxy statement. It's important to participate and vote as soon as
you can.
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NOTICE OF SPECIAL MEETING
TO ALL SHAREHOLDERS OF THE ARIEL PREMIER BOND FUND:
Notice is hereby given that a special meeting of shareholders of both classes of
the Ariel Premier Bond Fund (the "Fund") will be held at 200 East Randolph
Drive, Suite 2900, Chicago, Illinois 60601, on May 20, 2003, beginning at
9:00 a.m. Central Time for the following purposes:
1. To approve a new sub-advisory agreement for the Fund.
The close of business on April __, 2003, was fixed as the record date for
determining which shareholders are entitled to notice of the meeting and any
adjournments thereof and are entitled to vote.
By order of the Board of Trustees,
Roxanne Ward
Secretary
April __, 2003
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PROXY STATEMENT
PROXY STATEMENT FOR A SPECIAL MEETING OF SHAREHOLDERS
OF THE ARIEL PREMIER BOND FUND TO BE HELD ON MAY 20, 2003
ARIEL INVESTMENT TRUST
200 EAST RANDOLPH DRIVE, SUITE 2900
CHICAGO, ILLINOIS 60601
INTRODUCTION
PURPOSE OF THIS DOCUMENT
This proxy statement is being furnished to shareholders of both the Investor
Class and the Institutional Class of the Ariel Premier Bond Fund (the "Fund"),
an authorized series of the Ariel Investment Trust (the "Trust"), in connection
with the solicitation of proxies by and on behalf of the Board of Trustees of
the Trust (the "Board of Trustees") for use at the Trust's meeting. The meeting
will be held at 200 East Randolph Drive, Suite 2900, Chicago, Illinois 60601, on
May 20, 2003, beginning at 9:00 a.m. Central Time (the "Special Meeting of
Shareholders"). This proxy statement is first being mailed to shareholders on or
about April __, 2003.
For convenience, Ariel Premier Bond Fund is referred to in this proxy statement
as the "Fund." Ariel Investment Trust is referred to as the "Trust." Ariel
Capital Management, Inc. is referred to as the "Adviser." Lincoln Capital Fixed
Income Management Company, LLC is referred to as the "Sub-Adviser." Lincoln
Equity Management, LLC is referred to as "Lincoln Equity." Lincoln Capital
Management Company is referred to as "Lincoln Capital." Lehman Brothers Holdings
Inc. is referred to as "Lehman." The prior Subadvisory Agreement dated May 16,
1995 between Ariel Capital Management, Inc. and Lincoln Capital Management
Company is referred to as the "Prior Sub-Advisory Agreement." The Interim
Subadvisory Agreement dated January 31, 2003 between Ariel Capital Management,
Inc. and Lincoln Capital Fixed Income Management Company, LLC is referred to as
the "Interim Sub-Advisory Agreement." The new Subadvisory Agreement between
Ariel Capital Management, Inc. and Lincoln Capital Fixed Income Management
Company, LLC that the shareholders of the Fund are being asked to consider in
this Proxy Statement is referred to as the "New Sub-Advisory Agreement." The
Investment Company Act of 1940 is referred to as the "1940 Act."
WHO MAY VOTE
The Board of Trustees has fixed the record date as of the close of business on
April __, 2003. Only holders of shares of the Fund at the close of business on
the record date are entitled to notice of, and to vote at, the meeting. As of
the record date, there were a total of:
________ eligible votes for the Ariel Premier Bond Fund - Investor Class; and
________ eligible votes for the Ariel Premier Bond Fund - Institutional Class
for a total of ________ eligible votes for both classes of the Ariel Premier
Bond Fund.
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Shareholders as of the record date are entitled to one vote for each share, and
each fractional share is entitled to a proportionate share of one vote, upon
each matter properly submitted to the meeting. Shareholders may vote on such
other business as may properly come before the meeting as required by law.
HOW TO VOTE
Shareholders are requested to vote by Internet, phone or by returning the
enclosed proxy cards. Voting by Internet costs the Fund less than if you vote by
telephone or mail.
If you vote by mail, complete, date, sign and promptly return the enclosed proxy
card in the accompanying envelope. If you properly execute and return your proxy
card prior to the meeting, your shares will be voted in accordance with the
instructions marked on the proxy card. If no instructions are marked on the
proxy card, the proxies will be voted FOR the proposals described in this proxy
statement.
______________, _____________ and ______________ intend to be present at the
meeting. No Trustees intend to present any other business at the Meeting. If,
however, any other matters are properly brought before the Meeting, the persons
named in the accompanying form of proxy will vote thereon in accordance with
their judgment. If you object to our voting other matters on your behalf, please
tell us so in writing before the meeting. You may revoke your proxy at any time
prior to its exercise by voting in person at the meeting or by submitting,
before the meeting, written notice of revocation or a later-dated proxy.
QUORUM AND VOTING REQUIREMENTS
In order to take action on the proposal, a "quorum" or 25 percent of the votes
entitled to be cast on the proposal must be represented in person or by proxy.
Any lesser number, however, shall be sufficient for adjournments.
The New Sub-Advisory Agreement with Lincoln Capital Fixed Income Management
Company, LLC requires the favorable vote of a majority of the eligible votes of
both classes of the Fund as defined by the 1940 Act. A majority of eligible
votes of both classes of the Fund is the affirmative vote of the lesser of (i)
67% of such votes if the holders of more than 50% of the total eligible votes of
both classes of the Fund are represented at the meeting, or (ii) more than 50%
of the total eligible votes of both classes of the Fund.
If a quorum is not present at a meeting, or if sufficient votes to approve a
proposal are not received, the persons named as proxies may propose one or more
adjournments of such meeting to permit further solicitation of proxies.
A shareholder vote may be taken on any other matter to come properly before the
meeting prior to such adjournment(s) if sufficient votes to approve such matters
have been received and such vote is otherwise appropriate. The Board of Trustees
does not presently know of any matter to be considered at the meeting other than
the matters described in the Notice of Special Meeting accompanying this proxy
statement.
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Abstentions and broker "non-votes" (I.E., proxies received from brokers or
nominees indicating that they have not received instructions from the beneficial
owner or other person entitled to vote) will be counted as present for purposes
of determining the presence of a quorum, but will not be counted as votes FOR
Proposal 1. Accordingly, abstentions and broker non-votes will have the effect
of a vote AGAINST Proposal 1.
IMPORTANT SERVICE PROVIDERS
ARIEL MUTUAL FUNDS (ARIEL INVESTMENT TRUST).
200 East Randolph Drive, Suite 2900, Chicago, Illinois 60601.
The Ariel Mutual Funds include four funds which are offered to the public: Ariel
Fund, Ariel Appreciation Fund, Ariel Premier Bond Fund, and Ariel Premier Growth
Fund.
ADVISER. Ariel Capital Management, Inc.
200 East Randolph Drive, Suite 2900, Chicago, Illinois 60601.
SUB-ADVISER. Lincoln Capital Fixed Income Management Company, LLC
200 South Wacker Drive, Suite 2100, Chicago, Illinois 60606.
PRINCIPAL UNDERWRITER. Ariel Distributors, Inc.
200 East Randolph Drive, Suite 2900, Chicago, Illinois 60601.
INDEPENDENT ACCOUNTANTS. Ernst & Young LLP
COUNSEL. D'Ancona & Pflaum LLC
TRANSFER AGENT AND CUSTODIAN. State Street Bank and Trust Company
SOLICITATION OF PROXIES
The Trust has retained D.F. King & Co., Inc., 77 Water Street, New York, NY
10005, a proxy solicitation firm, to assist in the solicitation of proxies. D.F.
King may be paid on a per-call basis to solicit shareholders on behalf of the
Fund at an anticipated cost of approximately $______. The Sub-Adviser, Lincoln
Equity and Lincoln Holdings, Inc. have agreed to pay the expenses of holding the
special meeting of shareholders, including the preparation of this proxy
statement, the solicitation of proxies and the costs of retaining a proxy
solicitation firm. The Sub-Adviser, Lincoln Equity and Lincoln Holdings, Inc.
also will reimburse certain unaffiliated parties for their expenses in
forwarding proxy materials to beneficial owners of Fund shares. The Fund will
not pay any expenses of the special shareholders meeting or the solicitation of
proxies.
In addition to the solicitation of proxies by mail, officers of the Trust, the
Adviser and the Sub-Adviser may also solicit proxies electronically, by
telephone, by fax, in person or by other means.
Additional information about the Trust and the Fund and their operations may be
found throughout the proxy statement.
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SHAREHOLDER REPORTS
The Trust will furnish, without charge, a copy of its most recent Annual Report
and Semi-Annual Report, to any shareholder upon request. Shareholders desiring a
copy of such reports should direct all written requests to the Ariel Mutual
Funds, P.O. Box 219121, Kansas City, Missouri 64121-9121, or should call Ariel
Mutual Funds at 1-800-292-7435.
SUBMISSION OF SHAREHOLDER PROPOSALS
The Trust is not required to hold annual shareholders' meetings, and it does not
intend to do so.
The Trust may hold special meetings as required or as deemed desirable by its
Board of Trustees for other purposes, such as changing fundamental policies,
electing or removing directors, or approving or amending an investment advisory
agreement. In addition, special shareholder meetings may be called by the
secretary upon the written request of shareholders having at least 10% of all
the votes entitled to be cast at such meeting.
Shareholders wishing to submit proposals for inclusion in a proxy statement for
a future shareholder meeting should send their written submissions to Ariel
Mutual Funds at 200 East Randolph Drive, Suite 2900, Chicago, Illinois 60601.
Proposals must be received a reasonable time in advance of a proxy solicitation
to be included. Submission of a proposal does not guarantee inclusion in a proxy
statement because the proposal must comply with certain federal securities
regulations.
NOTICE TO BANKS, BROKERS-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Trust in writing whether other persons are the beneficial
owners of the shares for which proxies are being solicited and, if so, the
number of copies of the proxy statements, other soliciting material and Annual
Reports (or Semi-Annual Reports) you wish to receive in order to supply copies
to the beneficial owners of shares. Write in care of the Ariel Mutual Funds,
P.O. Box 219121, Kansas City, Missouri 64121-9121.
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PROPOSAL 1
TO APPROVE A NEW SUB-ADVISORY AGREEMENT WITH LINCOLN CAPITAL FIXED INCOME
MANAGEMENT COMPANY, LLC.
THE BOARD OF TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, HAS APPROVED AND
RECOMMENDS THAT SHAREHOLDERS OF THE FUND APPROVE THE NEW SUB-ADVISORY AGREEMENT
WITH LINCOLN CAPITAL FIXED INCOME MANAGEMENT COMPANY, LLC. This action is being
taken as a result of a change in control of the prior sub-adviser to the Fund,
Lincoln Capital, which is described in more detail below. As described in more
detail under the heading "Matters Considered by the Trustees," this
recommendation is the result of evaluation by the full Board of Trustees of a
substantial amount of information, including information prepared by independent
sources, the Adviser and the Sub-Adviser.
The New Sub-Advisory Agreement is identical in all material respects to, and
essentially a continuation of, the Interim Sub-Advisory Agreement, which was
approved by the Board of Trustees of the Trust as a result of the change in
control of Lincoln Capital. The Interim Sub-Advisory Agreement is similar in all
material respects to, and a continuation of, the Prior Sub-Advisory Agreement.
PRIOR SUB-ADVISORY AGREEMENT. On May 16, 1995, the Adviser and Lincoln Capital
entered into the Prior Sub-Advisory Agreement pursuant to which Lincoln Capital
acted as the investment sub-adviser for the Fund. The initial shareholder of the
Fund approved the Prior Sub-Advisory Agreement on October 1, 1995.
Under the terms of the Prior Sub-Advisory Agreement, Lincoln Capital acted as
the investment sub-adviser for the Fund and managed the investment and
reinvestment of the assets of the Fund subject to the supervision of the Board
of Trustees and the Adviser. Lincoln Capital was responsible for complying with
stated policies and applicable laws. As payment for its services, the Adviser
paid Lincoln Capital a fee based upon a percentage of net assets: 0.30% of the
first $50 million, 0.20% of the next $50 million, 0.15% of the next $150 million
and 0.10% of the amount in excess of $250 million. For the fiscal year ended
September 30, 2002, Lincoln Capital earned $375,528.12 for the Institutional
Class of the Fund and $23,256.86 for the Investor Class of the Fund. The Adviser
and not the Fund paid all fees paid to Lincoln Capital under the Prior
Sub-Advisory Agreement.
In the absence of willful misfeasance, bad faith or gross negligence or reckless
disregard of its obligations and duties, Lincoln Capital was not subject to
liability to the Fund or any shareholder for any act or omission in the course
of, or in connection with, rendering services thereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
The Prior Sub-Advisory Agreement became effective February 1, 1996. It initially
remained in effect until January 31, 1997 and thereafter, the agreement
continued in force from year to year, and was annually continued by the Board in
the manner required by the 1940 Act.
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CHANGE IN CONTROL. As required by the 1940 Act, the Prior Sub-Advisory Agreement
provided for automatic termination upon its assignment. In December 2002,
Lincoln Capital announced that its fixed income group was being acquired by
Lehman Brothers Holdings Inc., a Delaware corporation ("Lehman"). As part of
this transaction, the fixed income group would operate as Lincoln Capital Fixed
Income Management Company, LLC, a Delaware limited liability company and a
wholly-owned subsidiary of Lehman. Lincoln Capital's equity group would continue
to manage growth equity portfolios as an independent company, Lincoln Equity
Management, LLC, a Delaware limited liability company. The Sub-Adviser is not
affiliated with Lincoln Equity. The transactions closed on or after January 31,
2003.
For purposes of the 1940 Act, the creation of the Sub-Adviser and acquisition by
Lehman and the creation of Lincoln Equity constituted changes of control of
Lincoln Capital and, therefore, resulted in the assignment of both the Prior
Sub-Advisory Agreement for the Bond Fund and the previous Subadvisory Agreement
dated October 15, 2001 between the Trust and Lincoln Capital for Lincoln
Capital's investment sub-advisory services to the Ariel Premier Growth Fund. The
assignment of both agreements resulted in their automatic termination.
INTERIM SUB-ADVISORY AGREEMENT. Because the Prior Sub-Advisory Agreement would
terminate automatically upon the creation of the Sub-Adviser, new interim
sub-advisory contract arrangements were necessary. To ensure the continuity of
sub-advisory services provided to the Fund, the Trustees approved on January 16,
2003 an Interim Sub-Advisory Agreement between the Sub-Adviser and the Adviser
(the "Interim Sub-Advisory Agreement") that contains substantially the same
terms and conditions as the Prior Sub-Advisory Agreement, but also contains
findings and additional terms required under the rules of the 1940 Act and
provides for fees to be held in escrow pending shareholder approval.
The Interim Sub-Advisory Agreement became effective as of January 31, 2003 (the
"Effective Date"), and shall automatically terminate upon the first of the
following to occur: approval of a final sub-advisory agreement by a majority of
the outstanding voting securities of the Fund, or the 151st day following the
Effective Date. In addition, the agreement also shall automatically terminate in
the event of an assignment (except as otherwise permitted by the 1940 Act or
rules thereunder) and may be terminated by either the Adviser or the Trust,
without payment of any penalty at any time, upon 10 days written notice to the
Sub-Adviser.
The compensation earned by the Sub-Adviser under the Interim Sub-Advisory
Agreement is being held in an interest-bearing escrow account with the Trust's
custodian. In the event the holders of a majority of the Fund's outstanding
voting securities approve a new sub-advisory agreement by the end of the 150-day
period, then the amount in the escrow account (including interest earned) will
be paid to the Sub-Adviser. However, in the event the shareholders do not
approve a new sub-advisory agreement with the Sub-Adviser within the 150-day
period, then the Sub-Adviser will be paid, out of the escrow account, the lesser
of any costs incurred by the Sub-Adviser in performing the Interim Sub-Advisory
Agreement (plus interest earned on that amount while in escrow) or the total
amount in the escrow account (plus interest earned).
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NEW SUB-ADVISORY AGREEMENT. Because the Interim Sub-Advisory Agreement will
terminate automatically no later than 150 days after January 31, 2003, the Board
of Trustees of the Trust was asked to consider new sub-advisory contract
arrangements with the Sub-Adviser. The New Sub-Advisory Agreement would begin
after approval of the shareholders of the Fund. The New Sub-Advisory Agreement
contains substantially the same terms and conditions as both the Prior
Sub-Advisory Agreement and the Interim Sub-Advisory Agreement. The Sub-Adviser
has advised the Trustees and the Fund that the changes caused by the change of
control are not expected to affect the day-to-day operations or portfolio
management of the Fund. Accordingly, to ensure the continuity of sub-advisory
services provided to Fund, the Trustees, including the Independent Trustees,
approved and recommended at a regular meeting of the Board of Trustees of the
Trust on March 3, 2003 that shareholders approve the New Sub-Advisory Agreement
to take effect immediately after the Special Meeting of Shareholders.
INFORMATION CONCERNING LINCOLN CAPITAL FIXED INCOME MANAGEMENT COMPANY, LLC. All
information in this Information Statement concerning Lincoln Capital Fixed
Income Management Company, LLC, has been provided by Lincoln Capital Fixed
Income Management Company, LLC. Lincoln Capital Fixed Income Management Company,
LLC, 200 South Wacker Drive, Suite 2100, Chicago, Illinois, 60606, is a Delaware
limited liability company and a federally-registered investment adviser. The
Sub-Adviser is comprised of the former fixed income group of Lincoln Capital, is
managed by the current members of Lincoln Capital's former fixed income group
and is a wholly-owned subsidiary of Lehman Brothers Holdings Inc. Lincoln
Capital served as sub-adviser to the Fund from May 16, 1995 through January 31,
2003 and conducted investment research and made investment decisions for the
Fund pursuant to the Prior Sub-Advisory Agreement. The Sub-Adviser has assumed
this role pursuant to the Interim Sub-Advisory Agreement. The officers and
directors of the Sub-Adviser are listed in Appendix B.
For the fiscal year ended September 30, 2002, the Fund paid no brokerage
commissions to Lehman or any of its affiliated entities.
TERMS OF THE NEW SUB-ADVISORY AGREEMENT WITH LINCOLN CAPITAL FIXED INCOME
MANAGEMENT COMPANY, LLC
Shareholders are being asked to approve the New Sub-Advisory Agreement with
Lincoln Capital Fixed Income Management Company, LLC, without material change
from either the Prior Sub-Advisory Agreement or the Interim Sub-Advisory
Agreement. The following discussion of the New Sub-Advisory Agreement is
qualified in its entirety by reference to the form of the New Sub-Advisory
Agreement set forth in Appendix C. The Adviser, not the Fund, pays for the
Sub-Adviser's services.
As under both the Prior Sub-Advisory Agreement and the Interim Sub-Advisory
Agreement, the Sub-Adviser agrees to act as the investment sub-adviser for the
Fund and manage the investment and reinvestment of the assets of the Fund
subject to the supervision of the Board of Trustees and the Adviser. The
Sub-Adviser is responsible for complying with stated policies and applicable
laws. As payment for its services, the Adviser paid Lincoln Capital a fee based
upon a percentage of net assets: 0.30% of the first $50 million, 0.20% of the
next $50 million, 0.15% of
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the next $150 million and 0.10% of the amount in excess of $250 million. The
Adviser and not the Fund pays all the fees paid to the Sub-Adviser. The New
Sub-Advisory Agreement will not affect the fees paid by the Fund.
In the absence of willful misfeasance, bad faith or gross negligence or reckless
disregard of its obligations and duties, the Sub-Adviser will not be subject to
liability to the Fund or any shareholder for any act or omission in the course
of, or in connection with, rendering services thereunder or for any losses that
may be sustained in the purchase, holding or sale of any security.
The New Sub-Advisory Agreement shall become effective upon approval after the
Special Meeting of Shareholders in accordance with the 1940 Act. Unless sooner
terminated as provided, it shall remain in effect for an initial period of two
years. Thereafter, subject to the termination provisions, the New Sub-Advisory
Agreement shall continue in force from year to year, but only as long as such
continuance is specifically approved, at least annually, in the manner required
by the 1940 Act; provided, however, that if the continuation of the New
Sub-Advisory Agreement is not approved, the Sub-Adviser may continue to serve in
the manner and to the extent permitted by the 1940 Act and the rules and
regulations thereunder. In addition, the agreement also shall automatically
terminate in the event of an assignment (except as otherwise permitted by the
1940 Act or rules thereunder) and may be terminated by either the Adviser or the
Trust, without payment of any penalty at any time, upon 30 days written notice
to the Sub-Adviser. The 30-day notice provision is shorter than the notice
provision in the Prior Sub-Advisory Agreement, which allowed termination by the
Trust or Adviser upon 60 days' written notice to Lincoln Capital.
Unlike the Prior Sub-Advisory Agreement, the New Sub-Advisory Agreement also
requires the Sub-Adviser to give the Adviser prompt written notice (within 5
business days of the event) of the occurrence of certain events. These events
include: (a) any pending or threatened suit or claim in which the Sub-Adviser is
named as a defendant and the amount of alleged damages are not specifically
stated, or if alleged damages are specifically stated, they are stated at
$250,000 or more; (b) any investigation instituted against the Sub-Adviser,
whether formal or informal, by any state or the federal government, any agency
thereof or any self regulatory agency; (c) any administrative proceeding
instituted against the Sub-Adviser by any state or federal governmental,
self-regulatory or administrative agency; (d) any administrative order or action
issued against the Sub-Adviser by any state or federal governmental,
self-regulatory or administrative agency; (e) any judgment or order entered
against the Sub-Adviser by a court of law in any suit, claim or proceeding; (f)
the Sub-Adviser's authorization to do business or its qualification to serve as
an investment adviser pursuant to section 9 (a) of the 1940 Act or otherwise, is
denied, suspended, revoked, or restricted by any state or federal governmental,
self-regulatory or administrative agency; or (g) any change in the Sub-Adviser's
senior officers, directors or portfolio managers who manage the Fund. In
addition, the Sub-Adviser shall provide the Adviser any amendments to Parts I
and II of the Sub-Adviser's Form ADV within a reasonable time after such
amendments are made.
If for some unforeseen reason the New Sub-Advisory Agreement is not approved at
the meeting of shareholders, the Interim Sub-Advisory Agreement with the
Sub-Adviser will continue in
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<Page>
effect for the remainder of its 150 day period (unless terminated sooner), while
the Trustees consider other courses of action.
MATTERS CONSIDERED BY THE TRUSTEES. At a special meeting on January 16, 2003 and
a regular meeting on March 3, 2003, the Trustees, including all of the
Independent Trustees, discussed the proposed changes in control, the
transactions between Lincoln Capital and Lehman and the creation of Lincoln
Equity and the Sub-Adviser, the Interim Sub-Advisory Agreement and the New
Sub-Advisory Agreement. At the March 3rd meeting, the Trustees, including all of
the Independent Trustees, approved the New Sub-Advisory Agreement to take effect
following approval by shareholders, and also called for a meeting of
shareholders to approve the New Sub-Advisory Agreement.
In its consideration of the New Sub-Advisory Agreement, the Trustees, including
the Independent Trustees, received information about the Sub-Adviser and the
change in control. The Trustees, including the Independent Trustees, did not
identify any single factor as all-important or controlling, but among other
factors considered the following: (i) that the change in control would not
result in a material change in the terms of the sub-advisory agreement, the
sub-advisory fees, or any of the Fund's investment objectives or policies; (ii)
the Trustees received assurances from the Sub-Adviser that there would be no
material change in the personnel providing services to the Fund and no reduction
in the nature or quality of those services; (iii) the Trustees were informed by
the Sub-Adviser that it did not foresee any changes in its day-to-day operations
as a result of the change in control; and (iv) the Trustees reviewed information
concerning the Sub-Adviser's personnel, organization structure, financial
information and condition, and investment capabilities. Based on their
evaluation of all material factors and assisted by the advice of independent
counsel for the Independent Trustees, the Trustees and Independent Trustees
concluded that the New Sub-Advisory Agreement is fair and reasonable, and voted
to approve it. The Trustees, including the Independent Trustees, also voted to
approve the submission of the New Sub-Advisory Agreement to shareholders.
The Board of Trustees, including the Independent Trustees, recommends that the
shareholders of the Fund vote FOR the Proposal.
LIST OF APPENDICES
APPENDIX A: Large Shareholders
APPENDIX B: Officers and Directors of Lincoln Capital Fixed Income Management
Company, LLC
APPENDIX C: New Sub-Advisory Agreement
14
<Page>
APPENDIX A
LARGE SHAREHOLDERS
The following table sets forth the name and holdings of any persons known by the
Trust to be a record owner of more than 5% of the outstanding shares of any fund
in the series of the Trust as of April __, 2003. Other than as indicated below,
the Trust is not aware of any shareholder that beneficially owns in excess of
25% of any series of the Trust's total outstanding shares.
ARIEL PREMIER BOND FUND, INVESTOR CLASS
<Table>
<Caption>
NAME AND ADDRESS NUMBER OF SHARES OWNED % OF OUTSTANDING SHARES
Fidelity Investments Institutional xx xx%
Operations Co., Inc.
100 Magellan Way
Covington, KY 41015-1999
Merrill Lynch Pierce Fenner & Smith xx xx%
Attn: Fund Administration
4800 Deer Lake Drive East
Third Floor
Jacksonville, FL 32246-6484
Charles Schwab & Co. Inc. xx xx%
Reinvest Account
Attn: Mutual Fund Dept.
101 Montgomery St.
San Francisco, CA 94104-4122
</Table>
ARIEL PREMIER BOND FUND, INSTITUTIONAL CLASS
<Table>
<Caption>
NAME AND ADDRESS NUMBER OF SHARES OWNED % OF OUTSTANDING SHARES
Bank One Trust Co Cust xx xx%
City of Chicago
P.O. Box 160
Westerville, OH 43086-0160
Comerica Bank xx xx%
Cust IBEW Local 9 & Outside
Contractors Pension Plan
High Point Plaza Office Ctr.
4415 Harrison St., Ste 330
Hillside, IL 60162-1905
Putnam Fiduciary Trust Co. xx xx%
IBEW Local 134 Joint Pension Trust
Attn: DCPA Doug Denigris
P.O. Box 9740
Providence, RI 02940-9740
</Table>
15
<Page>
<Table>
LaSalle National Bank Cust xx xx%
FBO Chicagoland Race Meet Operators
P.O. Box 1443
Chicago, IL 60690-1443
</Table>
16
<Page>
APPENDIX B
OFFICERS AND DIRECTORS OF LINCOLN CAPITAL FIXED INCOME MANAGEMENT COMPANY, LLC
OFFICERS
Except for Messrs. Janulis and Rosenthal, the principal occupation of each of
the officers and directors is working for Lincoln Capital Fixed Income
Management Company, LLC. Lincoln Capital Fixed Income Management Company, LLC
maintains its principal offices at 200 South Wacker Drive, Suite 2100, Chicago,
Illinois 60606. The principal occupation of Messrs. Janulis and Rosenthal is
working for Lehman Brothers Holdings Inc., with its principal offices at 745
Seventh Avenue, New York, NY 10019.
<Table>
<Caption>
NAME POSITION
Kenneth R. Meyer Chief Executive Officer
Richard W. Knee Chief Financial Officer
Ann H. Benjamin Managing Director
Andrew A. Johnson Managing Director
</Table>
DIRECTORS
<Table>
<Caption>
NAME POSITION
Kenneth R. Meyer Chief Executive Officer
Theodore Janulis Chairman
James Rosenthal Managing Director
</Table>
PARENT COMPANY OF LINCOLN CAPITAL FIXED INCOME MANAGEMENT COMPANY, LLC
Lincoln Capital Fixed Income Management Company, LLC is a wholly-owned
subsidiary of Lehman Brothers Holdings Inc., a Delaware corporation and publicly
traded company (NYSE: LEH). Lehman Brothers Holdings Inc., with its principal
offices at 745 Seventh Avenue, New York, NY 10019, owns 100 percent of the units
of Lincoln Capital Fixed Income Management Company, LLC.
17
<Page>
APPENDIX C
NEW SUB-ADVISORY AGREEMENT
SUBADVISORY AGREEMENT
IN RESPECT TO ARIEL PREMIER BOND FUND
THIS SUBADVISORY AGREEMENT (the "Agreement") is made as of _______, 2003,
by and between ARIEL CAPITAL MANAGEMENT, INC., an Illinois corporation
("Ariel"), and LINCOLN CAPITAL FIXED INCOME MANAGEMENT COMPANY, LLC, a Delaware
limited liability company and wholly owned subsidiary of Lehman Brothers
Holdings Inc., a Delaware corporation ("Lincoln").
In consideration of the mutual covenants hereinafter set forth, IT IS
HEREBY AGREED between the parties as follows:
1. Ariel is the Adviser/Manager of the series of the Ariel Investment
Trust (the "Trust"), entitled "Ariel Premier Bond Fund" (the "Fund"), under an
Investment Advisory Agreement (the "Advisory Agreement") with the Trust dated
August 15, 1995. Ariel hereby retains Lincoln to manage the investment and
reinvestment of the assets of the Fund, subject to the supervision of the
Trust's Board of Trustees (the "Board of Trustees") on the terms hereinafter set
forth. Lincoln hereby accepts and agrees during such period to render the
services and to assume the obligations herein set forth for the compensation
herein provided. Lincoln shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority under this Agreement to act for
or represent Ariel or the Trust in any way or otherwise be deemed an agent of
either.
2. Lincoln undertakes to provide the following services and to assume
the following obligations:
a. Lincoln shall manage the investment and reinvestment of the
assets of the Fund, subject to and in accordance with the investment
objectives, policies and limitations of the Fund as set forth in the
Trust's effective registration statements under the Investment Company
Act of 1940 (the "1940 Act") and the Securities Act of 1933 as they may
be amended from time to time ("Registration Statements"). In pursuance of
the foregoing, Lincoln shall make all determinations with respect to the
investment of the assets of the Fund and the purchase and sale of
portfolio securities and shall take such action necessary to implement
the same.
b. Lincoln shall, in the name of the Trust, place orders for
the execution of the Trust's portfolio transactions in accordance with
the policies with respect thereto set forth in the Registration
Statements.
18
<Page>
3. Lincoln shall provide Ariel or its designee with any reasonable
reports, analyses or other documentation Ariel requires to carry out its
responsibilities under its Advisory Agreement with the Trust, including Ariel's
administrative responsibilities and its responsibility to monitor compliance
with stated investment objectives, policies and limitations and the investment
performance of the Fund. Lincoln shall directly or through an agent, provide
daily information in respect to the portfolio transactions of the Fund to Ariel
or its designee. Lincoln shall provide all documentation reasonably required by
Ariel to maintain accounting records in respect to the Fund in accordance with
the 1940 Act and the Investment Advisers Act of 1940 and the regulations issued
thereunder, and to preserve copies of all documents and records related to asset
transactions, positions and valuations related to the Fund in the manner and for
the periods prescribed by such regulations. Lincoln agrees that all documents
and records or copies of such documents and records it maintains in respect to
the Fund will be surrendered to Ariel or the Trust upon the request of either.
Lincoln agrees to provide information and to allow inspection of such documents
and records at reasonable times by any authorized representative of Ariel, the
Board of Trustees or any committee thereof, the Trust's independent public
accountants or any appropriate regulatory authorities. Lincoln agrees to comply
with directions issued by Ariel or the Board of Trustees in respect to
compliance and other administrative matters.
4. Lincoln shall make its personnel who are engaged in activities on
behalf of the Fund available at reasonable times for consultations with Ariel
personnel and the Board of Trustees or any committee thereof, including
attendance at meetings of the Board of Trustees. Reasonable travel, meals and
lodging expenses shall be reimbursed by Ariel.
5. Lincoln shall provide all office facilities, equipment and
personnel for carrying out its duties hereunder at its own expense. Lincoln
shall not be responsible for any other expenses of the Trust.
6. As investment sub-adviser, Lincoln understands that it will be
responsible for complying with all provisions of applicable law, including the
1940 Act, the Investment Advisers Act of 1940, the Insider Trading and
Securities Fraud Enforcement Act of 1988 and all rules and regulations
thereunder. Lincoln agrees to adopt and comply at all times with a written Code
of Ethics and related procedures meeting the requirements of Rule 17j-1 under
the 1940 Act and acceptable to the Board of Trustees.
7. Lincoln shall promptly give Ariel (within 5 business days of the
event) written notice of the occurrence of any of the following events: (a) any
pending or threatened suit or claim in which Lincoln is named as a defendant and
the amount of alleged damages are not specifically stated, or if alleged damages
are specifically stated, they are stated at $250,000 or more; (b) any
investigation instituted against Lincoln, whether formal or informal, by any
state or the federal government, any agency thereof or any self regulatory
agency; (c) any administrative proceeding instituted against Lincoln by any
state or federal governmental, self-regulatory or administrative agency; (d) any
administrative order or action issued against Lincoln by any state or federal
governmental, self-regulatory or administrative agency; (e) any judgment or
order entered against Lincoln by a court of law in any suit, claim or
proceeding; (f) Lincoln's authorization to do business or its qualification to
serve as an investment adviser pursuant to
19
<Page>
section 9 (a) of the 1940 Act or otherwise, is denied, suspended, revoked, or
restricted by any state or federal governmental, self-regulatory or
administrative agency; or (g) any change in Lincoln's senior officers, directors
or portfolio managers who manage the Fund. In addition, Lincoln shall provide
Ariel any amendments to Parts I and II of Lincoln's Form ADV within a reasonable
time after such amendments are made. For the purposes of this paragraph 7,
Lincoln shall also include each executive officer of Lincoln in his or her
capacity as an officer of Lincoln Capital Fixed Income Management Company but
not in any other capacity.
8. Lincoln's services are not to be deemed exclusive and it shall be
free to render similar services or other services to others provided that (i)
Lincoln's services hereunder are not impaired and are not in violation of
federal or state securities laws and (ii) Lincoln shall not provide services to
any registered investment company or series thereof which primarily invests in
fixed income securities (other than a money market fund) while Lincoln acts as a
subadviser to the Fund, without Ariel's express written permission. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of Lincoln's obligations or duties hereunder, Lincoln shall not be
subject to liability for any act or omission in the cause of, or connected with,
rendering service hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security. In the event of any claim,
arbitration, suit, or administrative proceedings in which Lincoln or Ariel is a
party and in which it is finally determined that there is a liability or
wrongdoing by only one party, the party liable or found to be the wrongdoer
shall pay for all liability and expenses of such claim or proceeding including
reasonable attorneys' fees. If it is determined that there is liability or
wrongdoing by both parties or neither party, then each party shall pay for its
own liability and expenses. In the event of any settlement of any such claim,
arbitration, suit or proceeding before final determination by a court or
arbitrator(s), the liability and expenses shall be assumed as agreed between the
parties, but if there is no agreement within thirty (30) days of such
settlement, then the responsibility for liability and expenses shall be settled
by arbitration, in accordance with the then applicable rules of the American
Arbitration Association. Judgment upon the award rendered by the arbitrator
shall be final and binding and may be entered in any court having jurisdiction.
The parties shall pay for their own costs and expenses in respect to any such
arbitration, which may be included in the arbitrator's award.
9. Ariel shall pay to Lincoln a fee based on the average daily net
assets of the Fund set forth in the attached addendum and reimburse expenses
expressly approved for reimbursement by Ariel. Payment for Lincoln's services
and reimbursement of expenses approved by Ariel shall be made monthly. No fee
waiver or reimbursements of expenses of the Fund by Ariel shall affect Ariel's
payments hereunder unless Lincoln expressly agrees in writing to assume part of
such waivers or reimbursements.
10. This Agreement shall become effective on _______, 2003 (the
"Effective Date"). Thereafter, subject to the termination provisions herein,
this Agreement shall continue in effect until two (2) years after the Effective
Date, and thereafter shall continue in force from year to year, but only as long
as such continuance is specifically approved at least annually in the manner
required by the 1940 Act; provided, however, that if the continuation of this
Agreement is not approved, you may continue to serve in the manner and to the
extent permitted by the 1940 Act and the rules and regulations thereunder.
20
<Page>
11. In addition to the provisions of Section 10, this Agreement shall
automatically terminate immediately in the event of its assignment (except as
otherwise permitted by the 1940 Act or rules thereunder) or in the event of the
termination of the Advisory Agreement. This Agreement may be terminated without
payment of any penalty at any time (a) upon thirty (30) days' written notice to
Lincoln by Ariel or upon thirty (30) days' written notice to Lincoln by the
Trust pursuant to action by the Board of Trustees or by the vote of a majority
of the outstanding voting securities of the Fund, or (b) upon sixty (60) or more
days' written notice by Lincoln to Ariel and the Trust. The terms "assignment"
and "vote of a majority of the outstanding voting securities" shall have the
meaning set forth in the 1940 Act and the rules and regulations thereunder.
Termination of this Agreement shall not affect Lincoln's right to receive
payments on any unpaid balance of the compensation earned and reimbursable
expenses incurred prior to such termination.
12. This Agreement shall be construed according to the laws of the
State of Illinois. It may be executed in counterparts, each of which shall be
deemed an original and all of which together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first above
written.
ARIEL CAPITAL MANAGEMENT, INC. LINCOLN CAPITAL FIXED INCOME
MANAGEMENT COMPANY, LLC
By: By:
------------------------------- --------------------------------
Name: Mellody Hobson Name: Kenneth R. Meyer
----------------------------- ------------------------------
Title: President Title: Chief Executive Officer
---------------------------- -----------------------------
Acknowledged and Approved:
ARIEL INVESTMENT TRUST
By:
-------------------------------
Name: Mellody Hobson
-----------------------------
Title: President
----------------------------
21
<Page>
ADDENDUM TO SUBADVISORY AGREEMENT
DATED ______, 2003 BETWEEN
ARIEL CAPITAL MANAGEMENT, INC. AND
LINCOLN CAPITAL FIXED INCOME MANAGEMENT COMPANY, LLC
The compensation payable by Ariel Capital Management, Inc. pursuant to
Section 9 of the Agreement shall be at the following annual rates:
<Table>
<Caption>
ANNUAL RATE VALUE OF AVERAGE DAILY NET ASSETS OF THE FUND
- ----------- ---------------------------------------------
0.30% First $50 million
0.20% Next $50 million
0.15% Next $150 million
0.10% Next $250 million
</Table>
Dated ______, 2003
ARIEL CAPITAL MANAGEMENT, INC.
By:
------------------------------------------
Name: Mellody Hobson
----------------------------------------
Title: President
---------------------------------------
LINCOLN CAPITAL FIXED INCOME
MANAGEMENT COMPANY, LLC
By:
------------------------------------------
Name: Kenneth R. Meyer
----------------------------------------
Title: Chief Executive Officer
---------------------------------------
Acknowledged and Approved:
ARIEL INVESTMENT TRUST
By:
--------------------------------------
Name: Mellody Hobson
------------------------------------
Title: President
-----------------------------------
22
<Page>
FORM OF PROXY CARD
ARIEL PREMIER BOND FUND
This proxy is solicited on behalf of the Board of Trustees of the Ariel
Investment Trust. The undersigned, revoking previous proxies for such shares,
hereby appoints Merrillyn J. Kosier and Arthur Don, or either of them, attorneys
of the undersigned with full power of substitution, to vote all shares of the
Ariel Premier Bond Fund (the "Fund"), which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the Fund (the "Special Meeting") to be
held at 200 East Randolph Drive, Suite 2900, Chicago, IL 60601 on May 20, 2003
commencing at 9 a.m. Central Time, and at any and all adjournment(s) thereof.
Receipt of the Notice of and Proxy Statement for said Special Meeting is
acknowledged.
If properly executed and returned, the shares presented by this proxy will be
voted as specified by the undersigned. As to any other matter, the shares will
be voted by said attorneys in accordance with their judgment.
Please vote your proxy today! Prompt response will save the expense of
additional solicitations. If you do not vote your proxy, a D.F. King & Co.,
Inc., representative will request your vote via telephone.
Choose the voting method that is most convenient for you. The voting methods are
listed in the order that costs the least to the Fund.
PROXY VOTING INSTRUCTIONS
1. Internet (Available 24 hours a day, 7 days a week)*
Log onto _______________
Enter your control number listed on the reverse side of this card. Each card has
a control number. Follow the instructions on the screen. If you received more
than one proxy card, you will have to vote each card separately.
2. Touch-Tone Phone (Available 24 hours a day, 7 days a week)*
Dial 1-888-221-0697. The call is toll-free.
Enter your control number listed on the reverse side of this card. Each card has
a control number. Follow the instructions as spoken. If you received more than
one proxy card, you will have to vote each card separately.
3. Fax (Available 24 hours a day, 7 days a week)*
Read both sides of this proxy card. Complete, sign and date the card on the
reverse side. Fax the reverse side to 1-877-226-7171.
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<Page>
4. Mail (Available through U.S. Postal Service)
Please complete the reverse side of this proxy card. Sign and date the reverse
side of this proxy card. Return the card in the enclosed postage paid envelope.
* If you choose one of these methods, do not return your proxy card in the
envelope.
/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
ARIEL PREMIER BOND FUND
Please refer to the lower portion of this card for the proposal summary. The
full text of the proposal can be found within the enclosed proxy statement. This
proposal shall be voted at the meeting on May 20, 2003.
Note: Please sign exactly as your name(s) appear below. If joint owners, EITHER
may sign this Proxy. When signing as attorney, executor, administrator, trustee,
guardian, or custodian for a minor, please give your full title. When signing on
behalf of a corporation or as a partner for a partnership, please give the full
corporate or partnership name and your title, if any.
CONTROL NUMBER:
RECORD DATE SHARES:
Review the Instructions for Proxy Card Endorsement outlined within the enclosed
proxy materials or the note on the reverse side of this card. Please be sure to
sign and date this Proxy Date Proposal below.
Date:
------------------------------
- ----------------------------- ------------------------
Shareholder sign here Co-owner sign here
Detach this proxy card at the perforation below if you wish to mail your vote.
DETACH CARD
PROPOSAL SUMMARY
To approve the Sub-Advisory Agreement with Lincoln Capital Fixed Income
Management Company, LLC
For Against Abstain
/ / / / / /
24