The information in this article is provided to assist shareholders in their tax preparation.  If you have additional questions about how this information should be used, we recommend you contact a professional tax advisor.

Qualified Dividend Income (QDI): Qualified dividends are those income dividends received by the respective Ariel Mutual Fund from domestic corporations or qualified foreign corporations where the respective Fund has met the required holding period. A fund must hold the security for greater than 60 days during the 121 day period beginning 60 days before the ex-dividend date and 60 days after the ex-dividend date.

Dividend Received Deduction (DRD): Investment income eligible for corporate shareholders.

US Government Income: Investment income paid from U.S. Government obligations

As a result of the 2003 Tax Act, a portion of the total ordinary dividends paid by the Ariel Mutual Funds may be designated as qualified dividends. Qualified dividends are:

• Shown in Form 1099-DIV Box 1b
• Taxed at the lower long-term capital gain rates through 2008

To qualify for the reduced rates, you (the taxpayer) must hold your fund shares for a period of 61 days or longer. If this holding period requirement is not met, the qualified dividends will be taxed as ordinary dividend income.

Qualified dividends are subject to a maximum tax rate of 15% (5% for taxpayers whose other income is taxed at the 10% or 15% rate).