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May 16, 2002
Two More Social Mutual Funds Top the Billion-Dollar Mark in Assets
    by William Baue

The Ariel Fund and the Ariel Appreciation Fund reap the rewards of consistent performance.

In an indication of the continually increasing popularity of social investing, two social funds surpassed the billion-dollar asset mark in April, joining two other social funds in this category of distinction. Both funds that crossed this threshold, the Ariel Appreciation Fund and the Ariel Fund, are managed by Chicago-based Ariel Capital Management. All statistics quoted in this article are provided by Weisenberger, and are current as of April 30.

The Ariel Fund (ticker: ARGFX), a small-cap value fund, jumped from $749.2 million as of March 31 to $1.1 billion as of April 30, and the Ariel Appreciation Fund (CAAPX), a mid-cap value fund, increased from $980.3 million to $1.4 billion over the same period. The Domini Social Equity Fund and the Pax World Balanced Fund are the other two social funds with over $1 billion in assets.

"Our assets have dramatically grown for a couple of reasons," said Merrillyn Kosier, senior vice president of Chicago-based Ariel Mutual Funds. "One, our research team has done an extraordinarily good job on their stocks and we now are rated as 5-star funds by Morningstar, which grab a lot of attention and a lot of inflow. The second part of that story is that we've worked extra hard on integrating our marketing strategy: we have direct marketing, print advertising, sponsorships, and cross selling to our current shareholders, all in play, and they cross pollinate each other."

Another public relations boost was the February launch of a large-cap growth fund, the Ariel Premier Growth Fund. The introduction of this new fund, which is sub-advised by Lincoln Capital, helped draw interest to Ariel's existing funds.

The Ariel Fund and the Ariel Appreciation Fund topped's list of equity funds during the year ending April 30, rising 22.63 percent and 18.53 percent respectively. The Ariel Fund outperformed 87 percent of its peers over that one-year period, and the Ariel Appreciation Fund outperformed 96 percent of its peers.

Over a three-year period, the Ariel Fund gained 16.23 percent and the Ariel Appreciation Fund grew by 17.97 percent on an annualized basis. These returns enabled the Ariel Fund to outperform 91 percent of its peers and the Ariel Appreciation Fund 92 percent of its peers.

In 2002, both the Ariel Fund and the Ariel Appreciation Fund are doing better than most equity funds. While the average U.S. stock fund has fallen by 3.3 percent since the first of the year, according to data from Lipper Inc., the Ariel Appreciation Fund has gained over 10 percent. Mainstream small-cap value funds have fared better than the overall stock fund market, according to Lipper, returning 2.2 percent. However, the Ariel Fund outperformed this segment, rising 6.21 percent.

"We are constantly evaluating and refining our tactics," said Ms. Kosier. "This year we're going to stay on course with what we've been doing because it's been working extraordinarily well."


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