ARIEL GROWTH FUND, 497, 1999-02-05

ARIEL GROWTH FUND
497, 1999-02-05

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<PAGE>

Ariel Mutual Funds

STOCK FUNDS
ARIEL FUND

ARIEL APPRECIATION FUND

BOND FUND

ARIEL PREMIER BOND FUND - INVESTOR CLASS

NO-LOAD MUTUAL FUNDS

PROSPECTUS

FEBRUARY 1, 1999

The Securities and Exchange Commission has not approved or disapproved of the
shares of Ariel Mutual Funds. Nor has the Securities and Exchange Commission
determined whether this prospectus is accurate or complete. Any representation
to the contrary is a criminal offense.

<PAGE>

TABLE OF CONTENTS

<TABLE>

<S> <C>
ARIEL STOCK FUNDS OVERVIEW. . . . . . . . . . . . . . . . . . . . . . . . .1

ARIEL STOCK FUNDS IN DEPTH. . . . . . . . . . . . . . . . . . . . . . . . .7

ARIEL STOCK FUNDS FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . . . . . .13

ARIEL PREMIER BOND FUND OVERVIEW. . . . . . . . . . . . . . . . . . . . . .15

ARIEL PREMIER BOND FUND IN DEPTH. . . . . . . . . . . . . . . . . . . . . .21

PREMIER BOND FUND FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . . . . . .25

HOW THE ARIEL FUNDS ARE ORGANIZED . . . . . . . . . . . . . . . . . . . . .26

MANAGING YOUR ARIEL ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . .33

</TABLE>

<PAGE>

ARIEL STOCK FUNDS OVERVIEW

Both the Ariel Fund and the Ariel Appreciation Fund are no-load mutual funds
that seek long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGY

The Ariel Fund invests primarily in the stocks of small companies with market
capitalization's under $1.5 billion at the time of investment.

The Ariel Appreciation Fund invests primarily in the stocks of medium size
companies with market capitalizations between $200 million and $5 billion at the
time of investment.

[SIDEBAR: "MARKET CAPITALIZATION," OR "MARKET CAP," PROVIDES A READY GAUGE OF A
COMPANY'S SIZE. IT IS THE TOTAL NUMBER OF THE COMPANY'S OUTSTANDING SHARES
MULTIPLIED BY THE CURRENT PRICE OF ITS STOCK. THE CHART [TK] USES MARKET CAP TO
COMPARE THE AVERAGE SIZE OF THE COMPANIES HELD BY THE ARIEL FUND WITH THE SIZE
OF THE COMPANIES IN THE ARIEL APPRECIATION FUND AND WITH THE COMPANIES IN THE
STANDARD & POOR'S 500-STOCK INDEX.]

Both Ariel Stock Funds seek to invest in sound companies that many other
institutional investors have misunderstood or ignored. These companies share
three attributes that we believe should result in capital appreciation over
time:

- a product or service whose strong brand franchise and loyal customer
base pose formidable barriers to potential competition

- capable, dedicated management

- a solid balance sheet with high levels of cash flow and a low burden
of debt.

The essence of the Ariel Stock Funds' strategy is patience. Ariel Capital
Management, Inc., the Stock Funds' Investment Adviser, holds investments for a
relatively long period of time--typically three to five years.

Page No.: 3
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PRINCIPAL INVESTMENT RISKS

Although we make every effort to achieve the Ariel Stock Funds' objective of
long-term capital appreciation, we cannot guarantee we will attain that
objective. You could lose money on your purchase of shares in the Ariel Fund or
Ariel Appreciation Fund. The table below lists some of the principal risks of
investing in the Ariel Stock Funds and the measures we take in attempting to
limit those risks:

<TABLE>
<CAPTION>
RISKS HOW WE TRY TO MANAGE THEM
<S> <C>
- The general level of stock prices - Buy stocks whose prices are low
declines. relative to their earnings
potential; such stocks have done
better than the market average in
past declines.
- Small-cap and mid-cap stocks like - Avoid startup ventures and highly
those held by the Ariel Stock cyclical or speculative
Funds fall out of favor. companies; seek companies with
solid finances and proven
records.
- Ariel Stock Funds hold relatively - Research stocks exhaustively
few stocks; a fluctuation in one before purchase; monitor
stock could significantly affect continuously after purchase;
the Funds' overall performance. limit the value of a single stock
as a percentage of total Fund--if
its price rises to exceed the
limit, sell the excess.
</TABLE>

Page No.: 4
<PAGE>

WHO SHOULD CONSIDER INVESTING IN THE FUNDS--AND WHO SHOULD NOT

You should consider investing in the Ariel Stock Funds if you are looking for
long-term capital appreciation and are willing to accept the associated risks.
Although past performance cannot predict future results, stock investments
historically have outperformed most bond and money-market investments.

However, this higher return has come at the expense of greater short-term price
fluctuations, down as well as up. Thus, you should NOT consider investing in the
Funds if you anticipate a near-term need--typically within five years--for
either the principal or the gains from your investment.

An investment in either of the Ariel Stock Funds, like any mutual fund, is not a
bank deposit. It is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.

Page No.: 5
<PAGE>

TOTAL RETURNS, AFTER FEES AND EXPENSES

The bar charts and tables below can help you evaluate the potential risk and
rewards of investing in the Ariel Stock Funds by showing changes in the Funds'
performance from year to year and by showing how the Funds' average annual
returns for one, five and ten years (or since inception) compare with those of a
broad measure of market performance. Total return measures how much the price of
an investment in a mutual fund changes, assuming that all dividend income and
capital gain distributions are reinvested. For any fund, you should evaluate
total return in light of the fund's particular investment objectives and
policies, as well as general market conditions during the reported time periods.
The bar chart for the Ariel Fund shows the Fund's annual total returns for each
of the last ten calendar years. For the Ariel Appreciation Fund, the bar chart
shows its returns for each full calendar year after inception in December 1,
1989. The returns include reinvestment of all dividends and distributions.

The tables compare AVERAGE annual returns for the Ariel Mutual Funds with
standard benchmark indices: the S&P 500-stock Index and the Russell 2000 Index
for the Ariel Fund; the S&P 500-stock Index and the Russell Mid-Cap Index for
the Ariel Appreciation Fund. The indices do not represent the actual returns an
investor might experience. They measure overall market returns. They do not take
into account the costs of buying and selling securities or managing a stock
portfolio, costs which are deducted from mutual fund returns.

[SIDEBAR: THE S&P 500-STOCK INDEX FOLLOWS THE STOCK-MARKET PERFORMANCE OF 500 OF
THE LARGEST COMPANIES IN THE UNITED STATES. THE COMPANIES COVER THE ENTIRE RANGE
OF AMERICAN BUSINESS AND REPRESENT A SUBSTANTIAL PROPORTION OF THE STOCKS TRADED
EVERYDAY. INVESTORS CAN COMPARE THE PERFORMANCE OF STOCK MUTUAL FUNDS WITH THIS
BROAD INDICATOR OF HOW THE "MARKET" WAS DOING.

THE RUSSELL 2000 AND THE RUSSELL MID-CAP INDEX ARE MORE SPECIFIC AND RELEVANT
INDICES FOR THE ARIEL AND ARIEL APPRECIATION FUNDS, RESPECTIVELY:

Page No.: 6

<PAGE>

- - THE RUSSELL 2000 CONSISTS OF COMPANIES IN THE RUSSELL 3000. THE RUSSELL
3000 TRACKS THE STOCK RETURNS OF THE 3,000 LARGEST PUBLICLY HELD COMPANIES
IN THE UNITED STATES. THE RUSSELL 2000 FOLLOWS THE SMALLEST 2,000 OF THOSE
COMPANIES.

- - THE RUSSELL MIDCAP INDEX MEASURES THE PERFORMANCE OF THE 800 SMALLEST
COMPANIES IN THE RUSSELL 1000 INDEX. THE RUSSELL 1000 INDEX MEASURES THE
PERFORMANCE OF THE 1,000 LARGEST US COMPANIES BASED ON TOTAL MARKET
CAPITALIZATION.]

The tables show the average annual returns for the last one, five, ten years and
since inception for the Ariel Fund. For the Ariel Appreciation Fund, they show
the average annual returns for the last one and five year periods and since
inception.

Page No.: 7
<PAGE>

ARIEL FUND
Year-by-Year Returns
for each full calendar year since 1988

[BAR CHART]

9.89 36.44 23.51 18.52 -4.22 8.72 11.73 32.72 -16.08 25.12 39.93
- ---- ----- ----- ----- ----- ---- ----- ----- ------ ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988

</TABLE>

<TABLE>
<S> <C> <C>
Best Quarter: Q1 1988 20.30%

Worst Quarter: Q3 1980 -25.39%

</TABLE>

Return for the fiscal quarter ended 12/31/98 was 20.10%. The Ariel Fund's
past returns do not provide any indication of future performance.

ARIEL FUND
Average Annual Returns
as of December 31, 1998

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years Life
<S> <C> <C> <C> <C> <C>
Ariel Fund 9.89% 22.80% 16.02% 13.53% 15.32%

Russell 2000 Index -2.55% 11.58% 11.86% 12.92% 11.51%

S&P 500 Index 28.58% 28.23% 24.06% 19.21% 17.36%

</TABLE>

Page No.: 8
<PAGE>

ARIEL APPRECIATION FUND
Year-by-Year Returns
for each full calendar year since inception
(December 1, 1989)

[BAR CHART]

<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
19.55% 37.95 23.72 24.16 (8.39) 7.94 13.24 33.15 (1.51)
- ----- ----- ------ ----- ------ ------ ------ ------ ------
1998 1997 1996 1995 1994 1993 1992 1991 1990

</TABLE>

<TABLE>
<S> <C> <C> <C>
Best Quarter: Q4 1998 23.38%

Worst Quarter: Q3 1990 -22.44%

</TABLE>

Return for the fiscal quarter ended 12/31/98 was 23.38%. The Ariel
Appreciation Fund's past returns do not provide any indication of future
performance.

ARIEL APPRECIATION FUND
Average Annual Returns
as of December 31, 1998

1 year 3 years 5 years Since Inception
<S> <C> <C> <C> <C>
Ariel Appreciation Fund 19.55% 26.83% 18.34% 15.62%

Russell Midcap Index 10.10% 19.11% 17.34% 15.08%

S&P 500 Index 28.58% 28.23% 24.06% 18.01%

</TABLE>

Page No.: 9

<PAGE>

ANNUAL OPERATING EXPENSES FOR FISCAL YEAR ENDED SEPTEMBER 30, 1998

The tables below describe the fees and expenses the Funds pay and that you bear
indirectly if you buy and hold shares in the Ariel or the Ariel Appreciation
Fund. BOTH ARIEL STOCK FUNDS ARE "NO-LOAD" FUNDS. YOU DO NOT PAY A SALES CHARGE
WHEN YOU BUY OR SELL THEIR SHARES.

ARIEL FUND APPRECIATION FUND
(percentage of average (percentage of average
daily net Fund assets) daily net Fund assets)
<S> <C> <C>
Management fees 0.65% 0.75%

Distribution (12b-1) fees 0.25% 0.25%

Other expenses 0.31% 0.26%

Total annual operating expenses 1.21% 1.26%

</TABLE>

[SIDEBAR:

- - MANAGEMENT FEES COVER THE COSTS OF OVERSEEING THE FUND'S INVESTMENTS AND
THE COSTS OF ADMINISTRATION AND ACCOUNTING.

- - 12b-1 FEES PAY FOR PROMOTION AND DISTRIBUTION OF FUND SHARES AND SERVICES
PROVIDED TO SHAREHOLDERS. BECAUSE THESE FEES ARE PAID FROM FUND ASSETS ON
AN ONGOING BASIS, THESE FEES WILL INCREASE THE COST OF YOUR INVESTMENT AND
MAY COST YOU MORE THAN OTHER TYPES OF SALES CHARGES.

- - OTHER EXPENSES INCLUDE THE COSTS OF THE CUSTODIAN AND TRANSFER AGENT,
ACCOUNTANTS, ATTORNEYS AND DIRECTORS.]

COST COMPARISON EXAMPLES

The examples below illustrate the expenses you would incur on a $10,000
investment in the Ariel or the Ariel Appreciation Fund based on each Fund's
current level of expenses. The examples assume that each Fund each earned an
annual return of 5% over the periods

Page No.: 10

<PAGE>

shown and you redeem your shares at the end of each time period.

<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years/Inception
<S> <C> <C> <C> <C>
Ariel Fund $123 $384 $665 $1,466

Ariel Appreciation Fund $128 $400 $692 $1,523

</TABLE>

These examples are hypothetical and are included for the purpose of comparing
the Funds' expenses with other mutual funds. They do not represent estimates of
future expenses or returns, either of which may be greater or less than the
amounts shown.

Page No.: 11

<PAGE>

ARIEL STOCK FUNDS IN DEPTH

INVESTMENT OBJECTIVE

The Ariel Fund and the Ariel Appreciation Fund pursue a common objective:
long-term capital appreciation--the Ariel Fund primarily through investment in
small company stocks, the Ariel Appreciation Fund primarily through investment
in medium-sized company stocks. The two Ariel Stock Funds invest for
appreciation, not income. They seek stocks whose underlying value should
increase over time. Any dividend and interest income these Funds earn is
incidental to their fundamental objective. Ariel Capital Management, Inc., the
Funds' Investment Adviser, cannot guarantee either Fund will achieve capital
appreciation in every circumstance, but we are dedicated to that objective. We
believe long-term capital appreciation:

- results from investments in undervalued stocks; stocks that other
investors have overlooked or ignored.

[SIDEBAR: INVESTORS CONSIDER A STOCK UNDERVALUED WHEN IT TRADES AT A PRICE
BELOW WHAT THEY THINK THE BUSINESS IS WORTH. THE CONCEPT IS RELATIVE. INVESTORS
MIGHT JUDGE A STOCK UNDERVALUED ON THE BASIS OF PRICE TO EARNINGS RATIO: THEY
PAY LESS FOR A DOLLAR OF CORPORATE EARNINGS WHEN THEY BUY A PARTICULAR STOCK
THAN THEY WOULD IF THEY BOUGHT ANOTHER. OR THEY MIGHT JUDGE A STOCK UNDERVALUED
ON THE BASIS OF THE RATIO OF THE VALUE OF ITS ASSETS TO THE VALUE OF ITS MARKET
CAPITALIZATION: THEY PAY LESS FOR A DOLLAR OF UNDERLYING ASSETS THAN THEY WOULD
IF THEY BOUGHT ANOTHER STOCK. ]

- results from investing in companies with long histories of consistent
earnings in both good and bad economic times.

- is more likely to be found in consistent, predictable businesses that
often sell everyday goods or services and enjoy a high level of repeat
sales.

- occurs when companies dominate their markets. These companies'
products have gained such strong brand recognition that in many cases
their names are synonymous with the products themselves.

Page No.: 12

<PAGE>

- is a product of committed and experienced management running its
business efficiently and delivering solid value to its customers.

INVESTMENT STRATEGY AND APPROACH

OUR APPROACH TO INVESTING

We believe successful long-term investing results from disciplined research, not
from impulsive speculation or arbitrary guesswork. This conviction has shaped
our process for the past 16 years. It has defined an investment agenda that
emphasizes small and mid-size companies.

SMALL AND MID-SIZE COMPANIES

The concept of undervalued companies whose long-term growth prospects have gone
largely unappreciated by the market implies an information gap. Investors have
misjudged these companies: They may not have recognized the companies' inherent
strengths or they may have overlooked them altogether. Because Wall Street
follows large corporations closely, such companies rarely encounter such
misperceptions. If a large company's share price seems low, its stock will
probably have fallen for a well-documented reason. If its prospects are strong,
investors will usually have bid up its price in anticipation of growth. Wall
Street covers small and mid-cap companies far less intensively than large
companies. According to a 1998 survey(a), an average of seven professional
financial analysts covered each of the stocks held in the Ariel Fund compared to
an average of 24 for each large stock listed in the S&P 500. We believe this
discrepancy in coverage makes it more likely that we will discover the
opportunities often inherent in small- and mid-cap stocks ahead of the rest of
the market.

- ------------------------
(a) Frank B. Russell & Co.

Page No.: 13

<PAGE>

CONSISTENT INDUSTRIES

Our disciplined research process favors tried-and-true businesses with
predictable revenues over trendy "concept stocks". We avoid areas characterized
by rapid obsolescence and industries vulnerable to new competition. We prefer
established businesses with mature markets--the quiet, unnoticed businesses that
produce the goods and services of everyday life. And we prefer companies with
long track records built over several business cycles. We prefer steady earnings
to cyclical peaks and valleys.

THE RESPONSIBILITY FACTOR

We believe ethical business practices make good investment sense. In the long
run, a company that adopts environmentally sound policies will face less
government intrusion. A company that fosters community involvement among its
employees will inspire community support. We believe that a company that
cultivates diversity is more likely to attract and recruit the best talent and
broaden its markets in profitable new directions. For these reasons, we avoid
corporations whose primary business involves the sale or production of alcoholic
beverages, tobacco products or nuclear weapons and energy. We feel these
industries are more likely to face shrinking growth prospects, draining
litigation costs and legal liability which cannot be quantified.

Page No.: 14

<PAGE>

INVESTMENT PROCESS: A FOCUS ON RESEARCH

UNCOVERING VALUE AND GROWTH

Our proprietary research process begins with the usual Wall Street
sources--financial analysts' reports, the standard computer databases and
company press releases. Digging deeper, we review more than 150 newspapers,
trade periodicals and technical journals. We often say our research team reads
for a living. In this way, we believe they can uncover the outstanding companies
buried in the day-to-day routine of the nation's business.

We apply the same intensive research once we have identified a candidate for
investment. We comb through the company's financial history and analyze its
prospects. We develop independent long-range financial projections and detail
the risks.

We verify our findings first-hand. We visit a portfolio candidate to form our
own impression. We meet with its suppliers and customers. We talk to its
competitors and former employees. We measure the shelf space a consumer products
manufacturer commands in the supermarket; we count a newspaper's ad lineage and
the cars in a retailer's parking lot on a Saturday morning. We sample a
restaurant chain's menu at units around the country to assure ourselves of
quality and consistency.

We learn all we can about a company's management. We believe the character and
quality of a company's management weighs at least as heavily as any other factor
in determining its success, especially in the smaller companies in which we
invest. The skill of the management team will help the company overcome
unforeseen obstacles. Its contacts and experience will alert the company to
emerging opportunities.

Page No.: 15

<PAGE>

A LONG-TERM VIEW

When we have completed our research process, we "own" the companies in which we
invest, we don't merely trade their stock. We believe the market will ultimately
reward these companies, and we give them the time such recognition requires,
five years on average and sometimes, even longer. This means that the Ariel
Stock Funds typically have low rates of turnover.

Each time a fund turns over a holding--sells one stock to buy another--it incurs
transaction charges that negatively impact investment returns--the higher the
turnover rate, the more negative the impact. High turnover rates can reduce
investment performance; low turnover rates can enhance it. A low rate of
turnover can offer yet another advantage because it may reduce a fund's taxable
capital gains.

[SIDEBAR: TURNOVER IS AN INDICATION OF HOW LONG A FUND TYPICALLY HOLDS TO STOCKS
IT PURCHASES. A TURNOVER RATE OF 100% IMPLIES THAT A FUND CHANGES ITS ENTIRE
INVESTMENT PORTFOLIO EVERY YEAR.]

PRINCIPAL INVESTMENTS

We are demanding and selective investors. Each company we choose for our
portfolio must meet ALL our criteria:

- - a competitive stock price relative to its peers as well as historic market
valuations,

- - seasoned management,

- - a solid balance sheet and sound finances, and

- - a dominant market niche.

Only a few such companies exist at any one time. A portfolio consisting
exclusively of stocks in these companies is highly select: The Ariel Fund
generally contains no more than 35 stocks and the Ariel Appreciation Fund no
more than 45.

[SIDEBAR: FROM A DATABASE OF 9,200 PUBLICLY TRADED COMPANIES, ONLY SOME 200
QUALIFY FOR CLOSER ANALYSIS AND 80 FOR INTENSE ANALYSIS. FROM THIS GROUP, ONLY
SIX OR SEVEN NEW STOCKS MAY MAKE THEIR WAY INTO AN ARIEL STOCK FUND EACH YEAR.]

Page No.: 16
<PAGE>

FINANCIAL HIGHLIGHTS: ARIEL STOCK FUNDS

The tables below provide the Ariel Stock Funds' financial performance for the
past five fiscal years. The information reflects financial results for a single
share of either the Ariel or the Ariel Appreciation Fund. The total returns
represent the rates of return that an investor would have earned, assuming all
dividends and distributions were reinvested in additional shares. Ernst & Young
LLP, the Funds' Independent Auditors, has audited this information. The Funds'
financial statements are included in the Funds' Annual Report, which is
available free of charge by request.

ARIEL FUND

Year Ended September 30

1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $41.49 $30.58 $30.78 $28.84 $30.46
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.13 0.07 0.18 0.36 0.18
Net realized and unrealized gains (losses)
on investments (1.41) 12.62 4.24 3.51 0.23
----- ----- ---- ----- ----
Total from
investment operation (1.28) 12.69 4.42 3.87 0.41
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (0.14) -- (0.44) (0.23) (0.30)
Distributions from capital gains (3.58) (1.78) (4.18) (1.70) (1.73)
----- ----- ----- ----- -----
Total distributions (3.72) (1.78) (4.62) (1.93) (2.03)
----- ----- ----- ----- -----
Net asset value, end
of year $36.49 $41.49 $30.58 $30.78 $28.84
----- ----- ----- ----- -----
----- ----- ----- ----- -----
Total return (3.83)% 43.25% 16.28% 14.38% 1.41%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of year, in thousands $162,279 $164,065 $109,770 $120,953 $149,511
Ratio of expenses to average net assets 1.21% 1.25% 1.31% 1.37%(a) 1.25%
Ratio of net investment income to average net assets 0.30% 0.23% 0.57% 1.18%(a) 0.56%
Portfolio turnover rate 22% 20% 17% 16% 9%

</TABLE>

- --------------------------------
(a) Net of reimbursements. Without the fee waiver, the ratio of expenses to
average net assets would have been 1.39%, and the ratio of expenses to
average net assets would have been 1.16% for the fiscal year ended 1998.

Page No.: 17
<PAGE>

ARIEL APPRECIATION FUND

Year Ended September 30

1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $33.70 $24.99 $22.76 $21.82 $21.67
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.09 0.02 0.13 0.14 0.04
Net realized and unrealized gains on investments 1.14 10.13 4.07 2.26 0.51
----- ------ ----- ------ -----
Total from
investment operation 1.23 10.15 4.20 2.40 0.55
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income (0.07) (0.07) (0.20) (0.06) (0.05)
Distributions from capital gains (3.06) (1.37) (1.77) (1.40) (0.35)
----- ------ ----- ------ -----
Total Distributions (3.13) (1.44) (1.97) (1.46) (0.40)
Net asset value, end of year $31.80 $33.70 $24.99 $22.76 $21.82
----- ------ ----- ------ -----
----- ------ ----- ------ -----
Total Return 3.40% 42.33% 19.60% 12.11% 2.56%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of year, in thousands $213,812 $186,478 $135,627 $143,312 $162,280
Ratio of expenses to average net assets 1.26% 1.33% 1.36%(a) 1.36%(a) 1.35%(a)
Ratio of net investment income to average net assets 0.25% 0.07% 0.50%(a) 0.61%(a) 0.17%(a)
Portfolio turnover rate 20% 19% 26% 18% 12%

</TABLE>

- --------------------
(a) Net of reimbursements. Without the fee waiver, the ratio of expenses to
average net assets would have been 1.40%, 1.58%, and 1.40% for 1996,
1995, and 1994; and the ratio of net investment income to average net
assets for the periods would have been 0.46%, 0.39% and 0.12%.

Page No.: 18

<PAGE>

ARIEL PREMIER BOND FUND OVERVIEW

The Ariel Premier Bond Fund currently offers two classes of shares, the Investor
Class and the Institutional Class. The Institutional Class is offered through a
separate prospectus primarily to institutional investors. All discussion of the
Premier Bond Fund in this Prospectus relates to the Investor Class.

INVESTMENT OBJECTIVE. The Ariel Premier Bond Fund seeks to maximize total
return through a combination of income and capital appreciation. [SIDEBAR: A
BOND'S TOTAL RETURN REFLECTS TWO COMPONENTS: FIRST, THE INTEREST INCOME IT
GENERATES IN A GIVEN PERIOD; AND SECOND, THE CHANGE IN THE BOND'S VALUE DURING
THE PERIOD. (AN INCREASE IN THE VALUE OF THE BOND ADDS TO TOTAL RETURN, A
DECREASE REDUCES TOTAL RETURN.) THE CALCULATIONS ASSUME THE REINVESTMENT OF ALL
DIVIDENDS AND DISTRIBUTIONS.]

PRINCIPAL INVESTMENT STRATEGY. The Ariel Premier Bond Fund invests no less than
80% of its assets in high-quality fixed income securities for which a ready
market exists. If the securities are private-sector issues--corporate bonds,
commercial paper or bonds secured by assets such as home mortgages--they must
have earned an "A" rating or better from a nationally recognized statistical
rating organization such as Moody's Investors Service or the Standard & Poor's
Corporation. We also consider all bonds issued by the U.S. Government and its
agencies to be high quality.

PRINCIPAL INVESTMENT RISKS. Although the Ariel Premier Bond Fund's Investment
Sub-Adviser, Lincoln Capital Management Company, makes every effort to achieve
the Fund's objective of maximizing total investment returns, there can be no
guarantee the Fund will attain its objective. You could lose money on your
purchase of shares in the Ariel Premier Bond Fund. The table below lists some of
the principal risks of investing in the Ariel Premier Bond Fund and the measures
the Fund's Investment Sub-Adviser takes in attempting to limit those risks.

<TABLE>
<CAPTION>
RISKS HOW THE FUND TRIES TO MANAGE THEM
<S> <C>
Issuers of bonds held by the Fund cannot Only hold bonds with high credit ratings,
make timely payments of either interest or A or better, on average.
principal when they fall due.

Highly rated bonds are downgraded because Conduct independent evaluation of the
of issuers' financial problems. creditworthiness of the bonds and their issuers.

Bond prices decline because of an Actively manage Fund's average duration in
increase in interest rates. anticipation of interest rate changes.

</TABLE>

Page No.: 19

<PAGE>

WHO SHOULD CONSIDER INVESTING IN THE FUND--AND WHO SHOULD NOT

You should consider investing in the Ariel Premier Bond Fund if you are seeking
current income and capital appreciation. You should be willing to accept
short-term price fluctuations, which will occur from time to time. Traditionally
these fluctuations have been less than those associated with stocks.

You should not consider investing in the Ariel Premier Bond Fund if you cannot
tolerate moderate short-term declines in share value or if you are seeking the
higher returns historically achieved by stocks.

Page No.: 20

<PAGE>

TOTAL RETURNS, AFTER FEES AND EXPENSES

The bar table below can help you evaluate the potential risk and rewards of
investing in the Ariel Premier Bond Fund by showing changes in the Fund's
performance for its first calendar year and comparing the Fund's performance
with a broad measure of market performance. The bar chart shows the Fund's total
return for 1998, the first full calendar year since it began operations in
February 1997. The table compares the Fund's total annual return with the return
of a relevant benchmark, the Lehman Brothers Aggregate Bond Index.

As is the case with indices, the Lehman Brothers Aggregate Bond Index does not
represent the actual returns an investor might experience. It measures the bond
market's total return (the interest income it earns, plus or minus the price
change in a given period). It does not take into account the costs of buying and
selling securities or the fees related to managing a portfolio.

[SIDEBAR: THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS ONE OF THE MOST WIDELY
ACCEPTED BENCHMARKS OF BOND MARKET TOTAL RETURN. IT INCLUDES MORE THAN 6,000
TAXABLE GOVERNMENT, INVESTMENT-GRADE CORPORATE AND MORTGAGE-BACKED SECURITIES.]

Page No.: 21

<PAGE>

ARIEL PREMIER BOND FUND
Return for 1998
[BAR CHART]

(first full calendar year)

7.23%

<TABLE>
<CAPTION>
<S> <C> <C>
Best Quarter: 3Q 1998 3.40%
Worst Quarter: 4Q 1998 0.04%

</TABLE>

The inception date for the Ariel Premier Bond Fund is February 1997.

Return for the fiscal quarter ended 12/31/98 was 0.04%. Ariel Premier Bond
Fund's past returns do not provide any indication of future performance.

Ariel Premier Bond Fund
Annual Return
as of December 31, 1998

<TABLE>
<CAPTION>
1 Year
<S> <C>
Ariel Premier Bond Fund 7.23%
Lehman Brothers Aggregate Bond Index 8.69%
</TABLE>

ANNUAL OPERATING EXPENSES FOR FISCAL YEAR END SEPTEMBER 30, 1998

The table below shows the fees and expenses the Fund pays and that you bear
indirectly if you buy and hold shares in the Ariel Premier Bond Fund.

<TABLE>
<CAPTION>
Percentage of average
daily net assets of the Fund
<S> <C>
Management fees 0.60%

Distribution (12b-1) fees 0.25%
Other expenses (0)
Total annual operating expenses 0.85%

</TABLE>

Ariel Capital Management paid the Premier Bond Fund's other expenses.

Page No.: 22
<PAGE>

COST COMPARISON EXAMPLE

The Examples below illustrate the expenses you would incur on a $10,000
investment in the Ariel Premier Bond Fund Based on the Fund's Current Level of
Expenses. The Example Assumes That the Fund Earned an Annual Return of 5% over
the Periods Shown and That You Redeemed Your Shares at the End of Each Time
Period.

YEAR YEARS YEARS 10 YEARS
<S> <C> <C> <C> <C>
RIEL PREMIER BOND FUND $87 $271 $471 $1,049

</TABLE>

The example is hypothetical and for the purpose of comparing the Fund's expense
ratio with other mutual funds. It does not represent estimates of future
expenses or returns, either of which may be greater or less than the amounts
depicted.

Page No.: 23

<PAGE>

ARIEL PREMIER BOND FUND IN DEPTH

INVESTMENT OBJECTIVE

The Ariel Premier Bond Fund seeks to maximize total return in a bond portfolio
through a combination of interest income and capital appreciation.

INVESTMENT STRATEGY

Ariel Premier Bond Fund's Investment Sub-Adviser, Lincoln Capital Management
Company, considers three principal factors in managing the Fund's investments:

[SIDEBAR: THE PREMIER BOND FUND'S INVESTMENT ADVISER, ARIEL CAPITAL MANAGEMENT
HAS APPOINTED LINCOLN CAPITAL MANAGEMENT COMPANY TO ACT AS INVESTMENT
SUB-ADVISER. THUS, LINCOLN CAPITAL MAKES THE PREMIER BOND FUND'S DAY-TO-DAY
INVESTMENT DECISIONS WHILE ARIEL CAPITAL MANAGEMENT HANDLES THE FUND'S
ADMINISTRATION.]

- - the current level of and expected changes in interest rates;

- - the relative attractiveness of the different sectors of the bond market:
U.S. Treasury bonds or government agency bonds, mortgage-backed bonds,
asset-backed bonds, corporate bonds, and commercial paper; and

[SIDEBAR: THE BOND-ISSUING AGENCIES OF THE FEDERAL GOVERNMENT ARE THE FEDERAL
FARM CREDIT SYSTEM, THE STUDENT LOAN MARKETING ASSOCIATION, THE FEDERAL HOME
LOAN MORTGAGE ASSOCIATION, THE FEDERAL HOME LOAN BANK, THE FEDERAL NATIONAL
MORTGAGE ASSOCIATION AND THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION. ISSUERS
OF MORTGAGE-BACKED BONDS, PRIMARILY THE FEDERAL HOME LOAN MORTGAGE ASSOCIATION
AND THE GOVERNMENT NATIONAL MORTGAGE ASSOCIATION, BUY UP MORTGAGES AND PACKAGE
THEM TOGETHER INTO BONDS, WHICH THEY SELL TO INVESTORS. THE MORTGAGES SECURE THE
BONDS AND THE MORTGAGE PAYMENTS FLOW THROUGH TO THE BONDHOLDERS. ASSET-BACKED
BONDS ARE SIMILARLY PACKAGED WITH OTHER ASSETS, RANGING FROM CREDIT-CARD
RECEIPTS TO AUTOMOBILE LOANS. COMMERCIAL PAPER FUNCTIONS AS A SHORT-TERM
CORPORATE BOND, WITH FULL PAYMENT DUE IN LESS THAN A YEAR.]

- Individual issue selection criteria.

Page No.: 24

<PAGE>

THE FUND'S INTEREST RATE STRATEGY

Lincoln Capital seeks to protect the value of the Fund's bonds from interest
rate increases--and capture the gain in value when interest rates fall--by
managing the Fund's average duration against that of the overall U.S. bond
market.

[SIDEBAR: DURATION MEASURES THE SENSITIVITY OF BOND PRICES TO CHANGES IN
PREVAILING INTEREST RATES. THE LONGER THE DURATION OF A BOND, THE LONGER IT WILL
TAKE TO REPAY THE PRINCIPAL AND INTEREST OBLIGATIONS AND THE MORE SENSITIVE IT
IS TO CHANGES IN PREVAILING INTEREST RATES.]

The duration of all the bonds in the Lehman Brothers Aggregate Index usually
averages about five years. The Fund's duration will normally vary up to one year
from the average: shorter than the market average if Lincoln Capital's analysis
indicates interest rates will rise and bond prices will fall, and longer than
the market average if the analysis indicates the opposite trend--that rates will
fall and bond prices will rise. The Fund may deviate up to two years from the
bond market's average duration although Lincoln Capital does not anticipate
extending that far except in the most extreme circumstances.

[SIDEBAR: THE FUND'S DURATION FIGURE REPRESENTS A WEIGHTED AVERAGE. EVERY BOND
THE FUND OWNS WILL NOT NECESSARILY HAVE THE SAME DURATION TO ACHIEVE A GIVEN
DURATION TARGET. HOWEVER, THE WEIGHTED AVERAGE OF ALL THE BONDS IN THE FUND
EQUALS THE DURATION TARGET. THAT MEANS SHORTENING OR LENGTHENING THE FUND'S
DURATION WILL ONLY REQUIRE THE PURCHASE AND SALE OF A RELATIVELY SMALL AMOUNT OF
BONDS.]

Lincoln Capital balances a combination of three key factors in its analysis of
the future course of interest rates:

LINCOLN CAPITAL EXPECTS... INTEREST RATES TO RISE/ INTEREST RATES TO FALL/
BOND PRICES TO FALL BOND PRICES TO RISE
<S> <C> <C>
1. Pace of economic activity growing economy slowing economy

2. U.S. monetary policy Federal Reserve raises Federal Reserve lowers
interest rates interest rates

3. Public's expectations for Rising inflation rate Stable or slowing inflation
inflation rate
</TABLE>

Page No.: 25
<PAGE>

SECTOR SELECTION

The difference in interest paid on bonds in various sectors remains fairly
constant. For example, when interest rates on Treasury bonds rise, rates on
corporate bonds will generally rise by a similar amount. But depending on
outside economic influences, investor sentiment, and the law of supply and
demand, a sector may deviate from the norm. This deviation may offer an
opportunity for the Fund to earn more than usual for bonds at a given level of
risk. As Lincoln Capital monitors the bond market, it compares the differences
in sector interest rates with historical levels in an effort to profit from
deviations.

INDIVIDUAL ISSUE SELECTION

When making investment decisions, Lincoln Capital examines the unique
characteristics of each security. These include credit quality, maturity, issue
structure and mortgage prepayment risks. Lincoln seeks to assure that the Fund
receives adequate compensation for the risk it is assuming; and, if possible,
they seek bonds that pay more than the prevailing rate of interest for the risks
they embody.

PRINCIPAL INVESTMENTS

The Fund may invest freely in U.S. Treasury bonds and bonds guaranteed by an
agency of the Federal government. In addition, the Fund may invest in
investment-grade corporate bonds and corporate paper, and mortgage and other
asset-backed bonds. All of these securities must be investment grade, with at
least 80% of them ranking in the three highest grades the rating agencies
assign.

[SIDEBAR: STANDARD & POOR'S RATES INVESTMENT-GRADE BONDS BBB OR HIGHER AND
MOODY'S BAA OR HIGHER. S&P'S THREE HIGHEST CATEGORIES ARE AAA, AA AND A, MOODY'S
ARE AAA, AA AND A.]

Page No.: 26
<PAGE>

FINANCIAL HIGHLIGHTS: ARIEL PREMIER BOND FUND

The table below provides the Ariel Premier Bond Fund's performance for the 1998
fiscal year. The information reflects financial results for a single share. The
total returns in the table represent the rate of return that an investor would
have earned on an investment in the Fund. The returns assume all income and
distributions earned were reinvested in the Fund. Ernst & Young LLP, the Fund's
Independent Auditors, has audited this information. The Fund's financial
statements are included in its Annual Report, which is available free of charge
by request.

ARIEL PREMIER BOND FUND

Year Ended September 30
- -------------------------------------------------------------------------------
1998 Feb. 1(a) to
Sep. 30, 1997
---------- --------------
<S> <C> <C>
Net asset value, beginning of period $10.29 $10.10
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.57 0.37
Net realized and unrealized gains (losses)
on investments 0.41 0.19
----- -----
Total from investment operation 0.98 0.56
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.57) (0.37)
Distributions from capital gains (0.07) ----
----- -----
Total distributions (0.64) (0.37)
----- -----
Net asset value, end of period $10.63 $10.29
----- -----
----- -----
Total Return 9.34% 5.73%(b)
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period, in thousands $1,779 $401
Ratio of expenses to average net assets 0.85% 0.85%(c)
Ratio of net investment income to average net assets 5.46% 5.60%(c)
Portfolio turnover rate 60% 218%

</TABLE>

(a)Commencement of operations
(b)Total return is not annualized
(c) Annualized

Page No.: 27

<PAGE>

HOW THE ARIEL FUNDS ARE ORGANIZED

The accompanying chart outlines the organizational structure of the Ariel Mutual
Funds [TK].

BOARD OF TRUSTEES

The Ariel Mutual Funds operate under the supervision of a Board of Trustees
responsible to each Fund's shareholders. The Trustees are:

- - Bert N. Mitchell, CPA
Chairman
Mitchell & Titus, LLP

HEADS NATION'S LARGEST MINORITY-OWNED ACCOUNTING FIRM; HOLDS B.B.A., M.B.A. AND
HONORARY DOCTORATE FROM THE BARUCH SCHOOL OF BUSINESS OF THE CITY UNIVERSITY OF
NEW YORK; SERVES ON BARUCH FACULTY; ACTIVE IN COMMUNITY AFFAIRS, PHILANTHROPY
AND POLITICS.

- - Mario L. Baeza, Esq.
Chairman and Chief Executive Officer
Latin American Equity Partners, L.P.

REGARDED AS AN EXPERT ON LATIN AMERICAN BUSINESS AND LEGAL ISSUES; HOLDS B.A.
FROM CORNELL UNIVERSITY, J.D. FROM HARVARD LAW SCHOOL

- - James W. Compton
President and Chief Executive Officer
Chicago Urban League

HEADS CHICAGO URBAN LEAGUE, WHICH HAS WORKED TO ELIMINATE RACIAL DISCRIMINATION
SINCE 1916; MEMBER OF THE BOARDS OF COMMONWEALTH EDISON AND UNICOM CORP.; HOLDS
B.A. FROM MOREHOUSE COLLEGE.

Page No.: 28

<PAGE>

- - William C. Dietrich, CPA

INDEPENDENT FINANCIAL CONSULTANT SPECIALIZING IN EARLY STAGE ENTREPRENEURIAL
COMPANIES; HOLDS B.A. FROM GEORGETOWN UNIVERSITY; SERVES ON BOARD OF SHALEM
INSTITUTE, AN INTERNATIONALLY KNOWN ECUMENICAL ORGANIZATION.

- - Royce N. Flippin, Jr.
President, Flippin Associates
formerly Director of Program Advancement, Massachusetts Institute of
Technology

HEADS BROAD-BASED CONSULTING ORGANIZATION PROVIDING STRATEGIC AND IMPLEMENTATION
SERVICES TO THE PUBLIC AND PRIVATE SECTORS; HOLDS B.A. FROM PRINCETON
UNIVERSITY, M.B.A. FROM HARVARD BUSINESS SCHOOL.

- - John G. Guffey, Jr.
Chair, Calvert Social Investments Foundation
Treasurer and Director, Silby, Guffey and Co., Inc.

TREASURER OF VENTURE CAPITAL FIRM SPECIALIZING IN THE HEALTHCARE AND
ENVIRONMENTAL INDUSTRIES; HOLDS B.S. FROM THE WHARTON SCHOOL; SERVES ON BOARDS
OF LOCAL AND NATIONAL NON-PROFIT INSTITUTIONS.

- - Mellody L. Hobson
Senior Vice President, Director of Marketing
Ariel Capital Management, Inc.

DIRECTOR OF MARKETING FOR ARIEL MUTUAL FUNDS; HOLDS B.A. FROM PRINCETON
UNIVERSITY; DIRECTOR OF CHICAGO PUBLIC LIBRARY AND CIVIC FEDERATION OF CHICAGO.

- - Christopher G. Kennedy
Executive Vice President and Director, Merchandise Mart Properties, Inc.

EXECUTIVE OF LEADING NATIONAL MANAGER OF COMMERCIAL REAL ESTATE; HOLDS B.A. FROM
BOSTON COLLEGE, M.B.A. FROM NORTHWESTERN UNIVERSITY; ACTIVE IN COMMUNITY
AFFAIRS.

Page No.: 29

<PAGE>

- - Eric T. McKissack, CFA
Vice Chairman and Co-Chief Investment Officer
Ariel Capital Management, Inc.

BACKGROUND DETAILED BELOW AS PORTFOLIO MANAGER OF ARIEL APPRECIATION FUND.

INVESTMENT ADVISERS

STOCK FUNDS

Ariel Capital Management, Inc. directly manages the investments of the Ariel
Fund and Ariel Appreciation Fund. Its investment management services included
buying and selling securities on behalf of the Ariel Stock Funds and conducting
the research that led to the purchase and sale decisions. It is located at 307
North Michigan Avenue, Suite 500, Chicago, IL 60601.

BOND FUND

Ariel Capital Management, Inc. is the investment adviser of the Ariel Premier
Bond Fund. With the approval of the Ariel Premier Bond Fund's Board of Trustees,
Ariel Capital Management has appointed Lincoln Capital Management Company to act
as Investment Sub-Adviser to the Ariel Premier Bond Fund. It buys and sells
securities for the Premier Bond Fund and conducts the research necessary to
maintain the portfolio.

PORTFOLIO MANAGERS

- - ARIEL FUND

JOHN W. ROGERS, JR., Chairman, President and Treasurer of Ariel Capital
Management, acts as Portfolio Manager of the Ariel Fund. Mr. Rogers founded
Ariel in 1983. He worked previously as a stockbroker for the investment banking
firm of William Blair & Co. and graduated from Princeton University. Mr. Rogers
currently serves as President

Page No.: 30

<PAGE>

of the Board of Commissioners of the Chicago Park District and Director of the
Chicago Urban League. He also sits on the boards of Bank One, Aon Corporation,
Burrell Communications Group and GATX Corp.

- - ARIEL APPRECIATION FUND

ERIC T. MCKISSACK, Chartered Financial Analyst, has managed the Ariel
Appreciation Fund since its inception. He is Vice Chair and Co-Chief Investment
Officer of Funds' Investment Adviser. Prior to joining Ariel in 1986, he worked
as a securities analyst for The First National Bank of Chicago. He holds degrees
from the Massachusetts Institute of Technology and the University of California
at Berkeley. Mr. McKissack sits on the Boards of the Investment Analyst Society
of Chicago and the Travelers and Immigrant Aid Society.

ARIEL PREMIER BOND FUND

Lincoln Capital Management manages the Premier Bond Fund through a committee
composed of five members:

TIMOTHY DOUBEK is a Principal in Portfolio Management at Lincoln Capital. He has
11 years investment experience. He is a Chartered Financial Analyst and holds a
Bachelor of Science degree from the University of Wisconsin and an M.B.A. from
the University of Michigan.

RICHARD W. KNEE is an Executive Vice President and Managing Director of the
firm. He has 18 years investment experience, 16 of them with Lincoln Capital. He
earned a Bachelors in Business Administration Degree from the University of
Notre Dame and an M.B.A. from the University of California at Berkeley.

Page No.: 31
<PAGE>

PETER KNEZ is a Research Principal. He holds a Ph.D. in finance from the Wharton
School of the University of Pennsylvania.

KENNETH R. MEYER is the President and Managing Director of the firm. He has 30
years of investment experience, 17 of them with Lincoln Capital. He holds a
Bachelor of Arts degree from the University of Notre Dame and an M.B.A. from the
Wharton School of the University of Pennsylvania. Mr. Meyer is a Director of
Irish Life of North America and serves on the Arts and Letters Council of the
University of Notre Dame and the Finance Council of the Archdiocese of Chicago.

RAY B. ZEMON is an Executive Vice President and Managing Director of the firm.
He has 22 years of investment experience, 17 of them with Lincoln Capital. He
earned a Bachelor of Science degree from Rensselaer Polytechnic Institute and an
M.B.A. from the University of Wisconsin.

ADMINISTRATION

ARIEL CAPITAL MANAGEMENT IS RESPONSIBLE FOR THE ADMINISTRATIVE SERVICES OF ALL
THE ARIEL MUTUAL FUNDS. THESE SERVICES INCLUDE:

- - Opening Fund accounts

- - Processing purchase and sales orders for Fund shares

- - Responding to shareholder requests for information on their accounts and on
the Ariel Mutual Funds in general

- - Preparing quarterly reports to shareholders on the Funds' strategies and
the progress of their investments

- - Preparing and distributing proxy materials to shareholders

- - Marketing shares of the Funds through banks, brokers and other financial-
service firms under the wholly owned subsidiary, Ariel Distributors, Inc.

Page No.: 32

<PAGE>

Ariel Capital management has appointed an independent organization, SUNSTONE
FINANCIAL GROUP, INC., to perform the day-to-day fund administration and
services for the fund, and prepare reports for the Board of Trustees. INVESTORS
FIDUCIARY TRUST COMPANY is the Funds' transfer agent, fund accountant and
custodian. In this role, IFTC prices the shares of each Ariel Mutual Fund daily;
maintains the records of the Funds' shareholders; oversees the payment of
distributions to shareholders; and issues share certificates on request.

MANAGEMENT FEES FOR THE LAST FISCAL YEAR ENDED SEPTEMBER 30, 1998

STOCK FUNDS

Ariel Capital Management, Inc. was paid for its investment and administration
services for the Ariel Fund and Appreciation Fund at the annual rate of 0.65%
and 0.75% of average daily net assets, respectively.

BOND FUND

Ariel Capital Management, Inc. was paid as investment adviser at the annual rate
of 0.35% of average daily net assets of the Fund. For its administrative
services, it was paid 0.25% of average daily net assets of the Investor Class.

Lincoln Capital Management Company was paid by Ariel Capital Management (not the
Fund) for its services as sub-adviser at the annual rate of 0.23% of average
daily net assets.

YEAR 2000

Like all financial service providers, Ariel Capital Management, Inc., Ariel
Distributors, Inc., Lincoln Capital Management Company, the Sunstone Financial
Group and

Page No.: 33
<PAGE>

IFTC rely on computer systems that may not accommodate the transition from 1999
to the year 2000. Such a failure could negatively affect individual account
services as well as the handling of securities trades, payment of interest and
dividends, and pricing mutual fund shares. Although we cannot yet be certain
that Year 2000 transition problems will have no adverse impact, the Funds'
service providers are actively working on the necessary changes. These service
providers have informed the Funds that they expect that their computer systems
and those of the third parties with whom they regularly conduct business will be
adapted in time.

Page No.: 34
<PAGE>

MANAGING YOUR ARIEL ACCOUNT

HOW TO CONTACT ARIEL

BY PHONE

Call 1-800-29-ARIEL (1-800-292-7435) during normal business hours.

IN WRITING

Address all correspondence to:

Ariel Mutual Funds
P.O. Box 419121
Kansas City, MO 64141-6121

ON THE WEB: www.arielmutualfunds.com

CHOOSING YOUR ARIEL ACCOUNT

Ariel Mutual Funds come in the account formats described below:

ACCOUNT TYPE SPECIAL FEATURES ACCOUNT MINIMUMS
INITIAL INVESTMENT EACH SUBSEQUENT
INVESTMENT
<S> <C> <C> <C>
Regular $1,000 $50

Retirement Plan Accounts investment earnings grow $250 $50
tax deferred during your
working years

Automatic Investment regular, automatic investment none $50
direct from your bank account
to Ariel; available either monthly
or quarterly

</TABLE>

Please note:

- - You must return an original completed and signed application for every new
account you open, regardless of format.

- - We will charge your Automatic Investment account $10, plus any costs
incurred, any time a scheduled investment cannot be made because your bank
account has insufficient funds, and we reserve the right to close the
account after two successive incidents of insufficient funds.

Page No.: 35

<PAGE>

BUYING ARIEL MUTUAL FUND SHARES

CONTACT US AT TO ASSURE YOUR SECURITY
<S> <C> <C>
Automatic Investment Fill out the Automatic Investment
application in the prospectus.

By wire 1-800-29-ARIEL for complete details Provide our operator with your name
and social security number and the
name and address of the financial
institution wiring the money.

By mail Ariel Mutual Funds Make your check or money order payable
P.O. Box 419121 to Ariel Mutual Funds. Send it along the
Kansas City, MO 64141-6121 bottom of your most recent account
statement, or with a note that includes
the registered account name and the name
of the Fund you wish to invest in.

</TABLE>

Please note:

- - We calculate the number of shares you have purchased based on the net asset
value of shares next computed after we receive your order.

- - We can only process purchase orders in U.S. dollars in funds drawn from
U.S. banks.

- - We cannot accept cash, credit-card payments, or third-party checks, except
those payable to an existing shareholder.

- - We cannot send to you the proceeds from a redemption of shares that were
purchased by mail or through Automatic Investment until your purchase
check has cleared.

- - We will only issue share certificates if you request them at the time of
purchase.

Page No.: 36

<PAGE>

SELLING ARIEL FUND SHARES

<TABLE>
<CAPTION>
CONTACT US AT TO ASSURE YOUR SECURITY
<S> <C> <C>
Automatic withdrawal Ariel Mutual Funds Send us a letter with your account name
P.O. Box 419121 and minimum withdrawal of $100 number,
Kansas City, MO 64141-6121 the dollar amount you wish to receive with
each check and how often you wish to receive
checks (either monthly or quarterly).
NOTE: YOU MUST MAINTAIN A MINIMUM BALANCE OF $10,000.

By mail Ariel Mutual Funds Send us a letter with your account name
P.O. Box 419121 and number, the number of shares you wish
Kansas City, MO 64141-6121 to sell or the dollar amount you wish to receive and
where you wish us to send the check.

By phone 1-800-29-ARIEL Provide our operator with your name, social security
number and Ariel account number

By wire 1-800-29-ARIEL or Call or send us a letter with your account
Ariel Mutual Funds name and number, the number of shares you wish
P.O. Box 419121 to sell or the dollar amount you wish
Kansas City, MO 64141-6121 to receive.
NOTE: WE CAN ONLY WIRE THE SALE PROCEEDS TO
THE FINANCIAL INSTITUTION YOU DESIGNATED WHEN
BUYING SHARES. $10 WIRE CHARGE.

By Turtletalk 1-800-29-ARIEL
24 hours, 7 days
</TABLE>

Page No.: 37
<PAGE>

Please note:

- - You may sell all or any portion of your Ariel Stock Fund shares on any day
the New York Stock Exchange is open for business, and your Ariel Premier
Bond Fund shares on any day the New York Stock Exchange is open, plus
Columbus Day and Veterans' Day.

- - We redeem the Ariel shares at the net asset value of shares calculated at
the end of the business we receive your redemption order.

- - We normally send the proceeds of your redemption to you the next business
day, except, as noted, in the case of shares purchased by mail or through
Automatic Investment. If, however, we feel the sale may adversely affect
the operation of the Fund, we may take up to seven days to send your
proceeds.

- - We only honor telephone redemption orders up to $25,000 and we require a
signature for sales in excess of $25,000.

- - We only send proceeds of such sales to the registered address of the
account or we require a guarantee if you instruct us to make payment to
anyone other than the shareholder of record at the address on file for your
account.

- - The address must have been on file with us for no less than 60 days.

- - We require a signature guarantee for redemption in excess of $25,000.

- - We charge a $10 fee to process payment by wire.

- - To sell shares for which we have issued certificates, you must return the
endorsed certificates to us.

- - If a sale or transfer of shares reduces the value of your account below
$1,000, we reserve the right to close your account with 30 days notice.

- - Qualified dealers may charge a fee for processing a sale or purchase.

- - We reserve the right to pay redemptions in the Bond Fund in kind
(marketable portfolio securities).

Page No.: 38
<PAGE>

SHAREHOLDER SERVICES

CONFIRMING YOUR TRANSACTIONS

We will send you a written confirmation of every purchase and sale, including
automatic purchases and sales. Please check them to verify their accuracy.

SECURING YOUR TELEPHONE ORDERS

Ariel will take reasonable precautions to assure that your telephone
transactions are authentic, including tape-recording your instructions. We
cannot, however, be held liable for executing instructions we reasonably believe
are genuine.

EXCHANGING SHARES

You may exchange the shares of any Ariel Mutual Fund you own for shares of any
of the other Ariel Mutual Funds. Also you may exchange your shares for shares of
Cash Resource Trust Money Market Fund, Cash Resource Trust U.S. Government Money
Market Fund or Cash Resource Trust Tax-Exempt Money Market Fund. As long as you
meet the required minimums for each fund, you do not have to pay for the
exchange. You should read the prospectus for any new fund in which you invest.
You can obtain prospectuses by calling 1-800-29 ARIEL.

Bear in mind that:

- - Each exchange represents both a sale and a purchase of fund shares. You may
therefore incur a gain or loss for income tax purposes on any exchange.

- - Shares purchased by exchange must be registered in your current account
name with the same Social Security or taxpayer identification number.

- - Telephone exchanges may be made by any person other than the shareholder of
record--a broker, financial planner, or family member--who can provide the
proper information.

Page No.: 39

<PAGE>

- - You must allow at least 36 hours to make a second exchange between any one
pair of Ariel Mutual Funds.

Ariel Mutual Funds have the right to revoke or modify your exchange privilege
with 60 days written notice, or with no notice on evidence of disruptive or
excessive exchanging of shares.

CALCULATING THE FUNDS' SHARE PRICES

We calculate the price of Ariel Mutual Funds shares (also known as the "Net
Asset Value" or "NAV") in accordance with the standard formula for valuing
mutual-fund shares as of the close of regular trading on the New York Stock
Exchange every day the Exchange is open for business. The formula calls for
deducting all of a fund's liabilities from the total value of its assets--the
market value of the securities it holds, plus its cash reserves--and dividing
the result by the number of shares outstanding.

[SIDEBAR: THE EXCHANGE IS NORMALLY OPEN EVERY WEEK MONDAY THROUGH FRIDAY, EXCEPT
WHEN THE FOLLOWING HOLIDAYS ARE CELEBRATED: NEW YEAR'S DAY, MARTIN LUTHER KING,
JR. DAY (THE THIRD MONDAY IN JANUARY), PRESIDENTS' DAY (THE THIRD MONDAY IN
FEBRUARY), GOOD FRIDAY, MEMORIAL DAY (THE LAST MONDAY IN MAY), JULY 4TH, LABOR
DAY (THE FIRST MONDAY IN SEPTEMBER), THANKSGIVING DAY (THE FOURTH THURSDAY IN
NOVEMBER) AND CHRISTMAS DAY.]

We value the securities in the Funds at their reported market values if price
quotations are available. When price quotes for a particular security are not
readily available, we value the security at a value determined by or under the
direction of the Board of Trustees.

Page No.: 40

<PAGE>

PAYING OUT FUND EARNINGS

Each year, the Ariel Mutual Funds pay out all income (minus expenses) and
capital gains generated by the securities in their portfolios. Unless otherwise
instructed, we reinvest these distributions in additional shares at the share
price computed on the day of the distribution. You may, however, choose to have
dividends or capital gains distributions totaling more than $10 paid out in
cash. To do so, you must notify the Ariel Mutual Funds in writing 60 days prior
to the payment date.

PAYING TAXES ON YOUR ARIEL MUTUAL FUND EARNINGS

The tax status of your distributions from a Fund does not depend on whether you
reinvest them or take them in cash or does it depend on how long you have owned
your shares. Dividends and distributions of short-term capital gains are subject
to federal income tax as ordinary income. Different tax rates apply for
distributions of long-term capital gains.

If you sell shares that you have held for a year or longer, any gain or loss is
treated as a capital gain or loss. If you sell shares within on year after
purchase, any gain is treated as ordinary income; losses are subject to special
rules.

THE TAX LAWS ARE SUBJECT TO CHANGE. WE RECOMMEND CONSULTING YOUR TAX ADVISOR
ABOUT YOUR PARTICULAR TAX SITUATION UNDER THE CURRENT LAWS.

Page No.: 41

<PAGE>

BACK COVER

Additional information about the Ariel Mutual Funds' investments is available in
the Funds' annual and semi-annual reports to shareholders. In the Funds' annual
report, you will find a discussion of the market conditions and investment
strategies that significantly affected their performance during their last
fiscal year.

You can find more detailed information about the Ariel Mutual Funds in the
current Statements of Additional Information, dated February 1, 1999, which we
have filed electronically with the Securities and Exchange Commission (SEC) and
are incorporated by reference into this Prospectus. To receive your free copy of
a Statement of Additional Information, or any of the annual or semi-annual
reports, or if you have questions about investing in the Funds, write to us at:

ARIEL MUTUAL FUNDS
P.O. BOX 419121
KANSAS CITY, MO 64141-6121

or call our toll-free number: 1-800-29-ARIEL (1-800-292-7435)

or visit Ariel Mutual Funds' website:
www.arielmutualfunds.com

You can find reports and other information about the Funds on the SEC Website
(http://www.sec.gov), or you can get copies of this information, after payment
of a duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Information about the Funds, including their
Statements of Additional Information, can be reviewed and copied at the SEC's
Public Reference Room in Washington, D.C. For information on the Public
Reference Room, call the SEC at 1-800-SEC-0330.

Investment Company Act file 811-4786

Page No. 42

<PAGE>

Ariel Mutual Funds

BOND FUND
ARIEL PREMIER BOND FUND - INSTITUTIONAL CLASS

NO-LOAD MUTUAL FUND

PROSPECTUS

FEBRUARY 1, 1999

<PAGE>

<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARIEL PREMIER BOND FUND--INSTITUTIONAL CLASS OVERVIEW.........................1

ARIEL PREMIER BOND FUND--INSTITUTIONAL CLASS IN DEPTH.........................7

ARIEL PREMIER BOND FUND FINANCIAL HIGHLIGHTS.................................10

HOW THE ARIEL PREMIER BOND--INSTITUTIONAL CLASS IS ORGANIZED.................12

MANAGING YOUR ARIEL ACCOUNT..................................................18
</TABLE>

- --------------

<PAGE>

ARIEL PREMIER BOND FUND--INSTITUTIONAL CLASS OVERVIEW

The Ariel Premier Bond Fund--Institutional Class seeks to maximize total return
through a combination of income and capital appreciation.

[SIDEBAR: A BOND'S TOTAL RETURN DERIVES FROM TWO SOURCES: FIRST, THE INTEREST
INCOME IT GENERATES IN A GIVEN PERIOD; AND SECOND, FROM CAPITAL APPRECIATION--AN
INCREASE IN THE PRICE OF THE BOND FROM THE BEGINNING TO THE END OF A GIVEN TIME
PERIOD. (AN INCREASE IN THE PRICE OF THE BOND ADDS TO TOTAL RETURNS, A DECREASE
REDUCES TOTAL RETURNS.) THE CALCULATIONS ASSUME THE REINVESTMENT OF ALL INTEREST
PAYMENTS AND CAPITAL APPRECIATION.]

PRINCIPAL INVESTMENT STRATEGY

The Ariel Premier Bond Fund--Institutional Class invests no less than 80% of its
assets in high-quality fixed-income securities for which a ready market exists.
If the securities are private-sector issues--corporate bonds, commercial paper
or bonds secured by assets such as home mortgages--they will have earned an "A"
rating or better from a nationally recognized statistical rating organization
such as Moody's Investors Service or the Standard & Poor's Corporation. We also
consider all bonds issued by the U.S. government and its agencies to be high
quality.

Page No.: 3
<PAGE>

PRINCIPAL INVESTMENT RISKS

Although the Fund's Investment Sub-Adviser, Lincoln Capital Management Company,
makes every effort to achieve the Fund's objective of maximizing total
investment returns, there can be no guarantee the Fund will attain its
objective. You could lose money on your purchase of shares in the Fund. The
table below lists some of the principal risks of investing in the Fund and the
measures the Fund's Investment Sub-Adviser takes in attempting to limit those
risks.

<TABLE>
<CAPTION>
RISKS HOW THE FUND TRIES TO MANAGE THEM
<S> <C>
- - Issuers of bonds held by the Fund cannot make - Only hold bonds with high credit ratings.
timely payment of either interest or principal
when they fall due.

- - Highly rated bonds are downgraded because of - Conduct independent evaluation of creditworthiness
issuer's financial problems. of the bonds and their issuers.

- - Bond prices decline because of an increase in - Actively manage Fund's average duration to maintain
interest rates. its value despite interest rate increases.
</TABLE>

WHO SHOULD CONSIDER INVESTING IN THE FUND--AND WHO SHOULD NOT

You should consider investing in the Fund if you are seeking current income and
capital appreciation. You should be willing to accept the short-term price
fluctuations, which have occurred from time to time. Traditionally these
fluctuations are less than those associated with stocks.

You should not consider investing in the Fund if you cannot tolerate moderate
short-term declines in share value or if you are seeking the higher returns
historically achieved by stocks.

Page No.: 4
<PAGE>

TOTAL RETURNS, AFTER FEES AND EXPENSES

The bar chart and table below can help you evaluate the potential risk and
rewards of investing in the Fund. They show changes in the Fund's performance
from year to year and how the Fund's average annual returns for one year and
since inception compare with those of a broad measure of market performance. The
bar chart shows the Fund's ACTUAL returns for 1998 and for each full calendar
year since it began operation in October 1, 1995. The table compares the Fund's
AVERAGE annual return with the returns of a relevant benchmark index, the Lehman
Brothers Aggregate Bond Index. Total return measures how much the prices of an
investment in a mutual fund change, assuming that all dividend, income and
capital gains distributions are reinvested. For any fund, you should evaluate
total return in light of the fund's particular investment objectives and
policies, as well as general market conditions during the reported time periods.

As is the case with indices, Lehman Brothers Aggregate Bond Index does not
represent the actual returns an investor might experience. It measures the bond
market's total return (the interest income it earns, plus or minus the price
change in a given period). It does not take into account the costs of buying and
selling securities or the fees related to managing a portfolio.

Page No.: 5
<PAGE>

ARIEL PREMIER BOND FUND
for each full calendar year since 1996

[BAR CHART]

<TABLE>

<S> <C> <C>
Best Quarter: Q2 1997 3.56%
Worst Quarter: Q1 1996 -2.51%

</TABLE>

Return for the fiscal quarter ended 12/31/98 was 0.24%. The inception date
for the Ariel Premier Bond Fund--Institutional Class is October 1, 1995.

Past returns do not provide any indication of the Fund's future performance.

<TABLE>
<CAPTION>
Ariel Premier Bond Fund
Annual Return
as of December 31, 1998

<S> <C> <C>
1 Year 3 Years
Ariel Premier Bond Fund 7.65% 6.62%
Lehman Brothers Aggregate Bond Index 8.69% 7.29%
</TABLE>

ANNUAL OPERATING EXPENSES FOR FISCAL YEAR ENDED SEPTEMBER 30, 1998
The table below shows the fees and expenses that you may pay if you buy and hold
shares in the Ariel Premier Bond Fund--Institutional Class. These expenses are
paid from the Fund's assets.

<TABLE>
<CAPTION>
Percentage of average
daily net assets of the Fund
<S> <C>
Management fee 0.45%
Distribution (12b-1) fees -0-
Other expenses -0-
Total annual operating expenses 0.45%
</TABLE>

Ariel Capital Management paid the Premier Bond Fund's other expenses.

Page No.: 6
<PAGE>

COST COMPARISON EXAMPLE

The example below illustrate the expenses you would have incurred on a
$1,000,000 investment in the Ariel Premier Bond Fund--Institutional Class
(minimum initial investment) based on its current level of expenses. The example
assumes that the Fund earned an annual return of 5% over the periods shown and
that you redeem your shares at the end of each time period.

1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Ariel Premier Bond Fund $4,602 $14,445 $25,203 $56,687
</TABLE>

Page No.: 7
<PAGE>

THE ARIEL PREMIER BOND FUND--INSTITUTIONAL CLASS IN DEPTH

INVESTMENT OBJECTIVE
The Ariel Premier Bond Fund--Institutional Class seeks to maximize total return
in a bond portfolio through a combination of interest income and capital
appreciation.

INVESTMENT STRATEGY
The Fund's Investment Sub-Adviser, Lincoln Capital Management Company, considers
three principal factors in managing the Fund's investments:

[SIDEBAR: THE PREMIER BOND FUND'S INVESTMENT ADVISER, ARIEL CAPITAL MANAGEMENT,
HAS APPOINTED LINCOLN CAPITAL MANAGEMENT COMPANY TO ACT AS INVESTMENT
SUB-ADVISER. THUS, LINCOLN CAPITAL MAKES THE PREMIER BOND FUND'S DAY-TO-DAY
INVESTMENT DECISIONS, SUBJECT TO THE FUND'S BOARD OF TRUSTEES, WHILE ARIEL
HANDLES THE FUND'S ADMINISTRATION.]

- - the current level of and expected changes in interest rates;
the relative attractiveness of the different sectors of the bond
market: U.S. Treasury bonds or government ency bonds, mortgage-backed
bonds, asset-backed bonds, corporate bonds, and commercial paper; and

- - Individual issue selection criteria.

Page No.: 8
<PAGE>

THE FUND'S INTEREST RATE STRATEGY
Lincoln Capital seeks to insulate the value of the Fund's bonds from interest
rate increases--and capture the gain in value when interest rates fall--by
managing the Fund's average duration against that of the overall U.S. bond
market.

[SIDEBAR: DURATION MEASURES THE SENSITIVITY OF BOND PRICES TO CHANGES IN
INTEREST RATES. THE LONGER THE DURATION OF A BOND, THE LONGER IT WILL TAKE TO
REPAY THE PRINCIPAL AND INTEREST OBLIGATIONS AND THE MORE SENSITIVE IT IS TO
CHANGES IN INTEREST RATES.]

The duration of all the bonds in the Lehman Brothers Aggregate Index usually
averages about five years. The Fund's duration will normally vary up to one year
from the average: shorter than the market average if Lincoln Capital's analysis
indicates interest rates will rise and bond prices will fall, and longer than
the market average if the analysis indicates the opposite trend--that rates will
fall and bond prices will rise. The Fund may deviate up to two years from the
bond market's average duration, although Lincoln Capital does not anticipate
extending that far except in the most extreme circumstances.

Lincoln Capital balances a combination of three key factors in its analysis of
the future course of interest rates:

<TABLE>
<CAPTION>
LINCOLN CAPITAL EXPECTS . . . INTEREST RATES TO RISE/ INTEREST RATES TO FALL/
BOND PRICES TO FALL BOND PRICES TO RISE
<S> <C> <C>
1. Pace of economic activity growing economy slowing economy
2. U.S. monetary policy Federal Reserve raises interest Federal Reserve lowers interest
rates rates
3. Public's expectations Rising inflation rate Stable or slowing inflation rate
for inflation
</TABLE>

Page No.: 9
<PAGE>

SECTOR SELECTION

The difference in interest paid on bonds in various sectors remains fairly
constant. For example when interest rates on Treasury bonds rise, rates on
corporate bonds will generally rise by a similar amount. But depending on
outside economic influences, investor sentiment, and the law of supply and
demand, a sector may deviate from the norm. This deviation may offer an
opportunity for the Fund to earn more than usual for bonds at a given level of
risk. As Lincoln Capital monitors the bond market, it compares differences in
sector interest rates with historical level in an effort to profit from
deviations.

INDIVIDUAL ISSUE SELECTION

PRINCIPAL INVESTMENTS

The Fund may invest freely in U.S. Treasury bonds and bonds guaranteed by an
agency of the Federal government. In addition, the Fund may invest in
investment-grade corporate bonds and corporate paper, and mortgage and other
asset-backed bonds. All of these securities must be investment grade; with at
least 80% of them ranking in the three highest grades rating these agencies
assign.

[SIDEBAR: STANDARD & POOR'S RATES INVESTMENT-GRADE BONDS BBB OR HIGHER AND
MOODY'S Baa OR HIGHER. S&P'S THREE HIGHEST CATEGORIES ARE AAA, AA AND A; MOODY'S
ARE Aaa, Aa AND A.]

Page No.: 10
<PAGE>

FINANCIAL HIGHLIGHTS: ARIEL PREMIER BOND FUND--INSTITUTIONAL CLASS

The table below provides the performance for the Ariel Premier Bond
Fund--Institutional Class for every fiscal year since its inception. The total
returns in the table represent the rate of return that an investor would have
earned on an investment in the Fund. The returns assume all income and
distributions earned were reinvested in the Fund. Ernst & Young LLP, the Fund's
Independent Auditors, has audited this information. The Fund's financial
statements are included in its Annual Report, which is available free of charge
by request.

<TABLE>
<CAPTION>
ARIEL PREMIER BOND FUND
Year ended September 30
<S> <C> <C> <C>
Net Asset Value, beginning of $10.30 $9.95 $10.00
Period
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.61 0.52 0.43
Net realized and unrealized gains 0.40 0.37 (0.04)
(losses) on investments
Total from investment operation 1.01 0.89 0.39
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment (0.61) (0.52) (0.43)
income
Distributions from capital gains (0.07) (0.02) (0.01)
Total distributions (0.68) (0.54) (0.44)
Net asset value, end of period $10.63 $10.30 $9.95)
Total Return 10.20% 9.26% 3.96%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period, in $149,977 $113,998 $15,367
thousands
Ratio of expenses to average net 0.45% 0.45% 0.48%
assets
Ratio of net investment income to 5.86% 6.05% 5.85%
average net assets
Portfolio turnover rate 60% 218% 423%
</TABLE>

Page No.: 11
<PAGE>

HOW THE ARIEL PREMIER BOND FUND--INSTITUTIONAL CLASS IS ORGANIZED

The accompanying chart outlines the organizational structure of the Ariel
Premier Bond--Institutional Class Fund [TK].

BOARD OF TRUSTEES
The Ariel Mutual Funds operate under the supervision of a Board of Trustees
responsible to each Fund's shareholders. The Trustees are:

- - Bert N. Mitchell, CPA
Chairman
Mitchell & Titus, LLP

- - Mario L. Baeza, Esq.
Chairman and Chief Executive Officer
Latin American Equity Partners, L.P.

REGARDED AS AN EXPERT ON LATIN AMERICAN BUSINESS AND LEGAL ISSUES; HOLDS B.A.
FROM CORNELL UNIVERSITY, J.D. FROM HARVARD LAW SCHOOL

- - James W. Compton
President and Chief Executive Officer
Chicago Urban League

HEADS CHICAGO URBAN LEAGUE, WHICH HAS WORKED TO ELIMINATE RACIAL DISCRIMINATION
SINCE 1916; MEMBER OF THE BOARDS OF COMMONWEALTH EDISON AND UNICOM CORP.; HOLDS
B.A. FROM MOREHOUSE COLLEGE.

- - William C. Dietrich, CPA

INDEPENDENT FINANCIAL CONSULTANT SPECIALIZING IN EARLY STAGE ENTREPRENEURIAL
COMPANIES,

Page No.: 12
<PAGE>

HOLDS B.A. FROM GEORGETOWN UNIVERSITY; SERVES ON BOARD OF SHALEM INSTITUTE, AN
INTERNATIONALLY KNOWN ECUMENICAL ORGANIZATION.

- - Royce N. Flippin, Jr.
President, Flippin Associates
Formerly Director of Program Advancement, Massachusetts Institute of
Technology

HEADS BROAD-BASED CONSULTING ORGANIZATION PROVIDING STRATEGIC AND IMPLEMENTATION
SERVICES TO THE PUBLIC AND PRIVATE SECTORS; HOLDS B.A. FROM PRINCETON
UNIVERSITY, M.B.A. FROM HARVARD BUSINESS SCHOOL.

- - John G. Guffey, Jr.
Chair, Calvert Social Investments Foundation
Treasurer and Director, Silby, Guffey and Co., Inc.

TREASURER OF VENTURE CAPITAL FIRM SPECIALIZING IN THE HEALTHCARE AND
ENVIRONMENTAL INDUSTRIES; HOLDS B.S. FROM THE WHARTON SCHOOL; SERVES ON BOARDS
OF LOCAL AND NATIONAL NON-PROFIT INSTITUTIONS.

- - Mellody L. Hobson
Senior Vice President, Director of Marketing
Ariel Capital Management, Inc.

DIRECTOR OF MARKETING FOR ARIEL MUTUAL FUNDS; HOLDS B.A. FROM PRINCETON
UNIVERSITY; DIRECTOR OF CHICAGO PUBLIC LIBRARY AND CIVIC FEDERATION OF CHICAGO.

- - Christopher G. Kennedy
Executive Vice President and Director
Merchandise Mart Properties, Inc.

EXECUTIVE OF NATIONAL MANAGER OF COMMERCIAL REAL ESTATE; HOLDS B.A. FROM BOSTON
COLLEGE, M.B.A. FROM NORTHWESTERN UNIVERSITY; ACTIVE IN COMMUNITY AFFAIRS.

- - Eric T. McKissack, CFA
Vice Chairman and Co-Chief Investment Officer
Ariel Capital Management, Inc.

HOLDS DEGREES FROM THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY AND THE UNIVERSITY
OF CALIFORNIA, BERKELEY, SITS ON BOARDS OF THE INVESTMENT ANALYST SOCIETY OF
CHICAGO AND THE TRAVELERS AND IMMIGRANT AID SOCIETY.

Page No.: 13
<PAGE>

INVESTMENT ADVISOR AND SUB-ADVISER

Ariel Capital Management, Inc., is the investment adviser of the Ariel Premier
Bond Fund--Institutional Class. It is located at 307 North Michigan Avenue,
Suite 500, Chicago, IL 60601. Ariel Capital Management Company has appointed
Lincoln Capital Management Company to act as Investment Sub-Adviser to the Ariel
Premier Bond Fund. Subject to Ariel Capital Management's oversight, Lincoln
Capital buys and sells securities for the Premier Bond Fund and conducts the
research necessary to maintain the portfolio. It is located at 200 South Wacker
Drive, Chicago, IL 60606.

PORTFOLIO MANAGER

Lincoln Capital Management manages the Fund through a committee composed of five
members:

RICHARD W. KNEE is an Executive Vice President and Managing Director of the
firm. He has 18 years investment experience 16 of them with Lincoln Capital. He
earned a Bachelor in Business Administration Degree from the University of Notre
Dame and a M.B.A. from the University of California at Berkeley.

Page No.: 14
<PAGE>

PETER KNEZ is a Research Principal. He holds a Ph.D. in finance from the Wharton
School of the University of Pennsylvania.

KENNETH R. MEYER is the President and Managing Director of the firm. He has 30
years of investment experience, 17 of them with Lincoln Capital. He holds a
Bachelor of Arts degree from the University of Notre Dame and a M.B.A. from the
Wharton School of the University of Pennsylvania. Mr. Meyer is a Director of
Irish Life of North America and serves on the Arts and Letters Council of the
University of Notre Dame and the Finance Council of the Archdiocese of Chicago.

ADMINISTRATION

Ariel Capital Management is responsible for the administrative services of the
Fund. These services include:

- - Opening Fund accounts

- - Processing purchase and sales orders for Fund shares

- - Responding to shareholder requests for information on their accounts and on
the Fund in general

- - Preparing quarterly reports to shareholders on the Fund's strategies and
the progress of its investments

- - Preparing and distributing proxy materials to shareholders

- - Marketing shares of the Funds through banks, brokers and other financial-
services firm under the wholly owned subsidiary, Ariel Distributors, Inc.

Ariel Capital Management has appointed an independent organization, the SUNSTONE
FINANCIAL GROUP, to perform the day-to-day FUND ADMINISTRATION AND ACCOUNTING
SERVICES and prepare reports for the Board of Trustees. INVESTORS FIDUCIARY
TRUST COMPANY as the Fund's TRANSFER AGENT and CUSTODIAN. In this dual role,
IFTC prices the shares of the Ariel Mutual Fund daily; maintains the records of
the Fund's shareholders; oversees the payment of distributions to shareholders;
and issues share certificates on request.

Page No.: 15
<PAGE>

MANAGEMENT FEES FOR THE LAST FISCAL YEAR ENDED SEPTEMBER 30, 1998

Ariel Capital Management, Inc. was paid as investment adviser at the annual rate
of 0.35% of average daily net assets. For its administrative services, it was
paid 0.10% of average daily net assets.

Lincoln Capital Management Inc. was paid by Ariel Capital Management (not the
Fund) for its services as subadviser at the annual rate of 0.23% of average
daily net assets.

YEAR 2000

Like all financial service providers, Ariel Capital Management, Lincoln Capital,
the Sunstone Financial Group and IFTC rely on computer systems that may not
accommodate the transition from 1999 to the year 2000. Such a failure could
negatively affect individual account services as well as the handling of
securities trades, payment of interest and dividends and pricing mutual fund
shares. Although we cannot yet be certain that Year 2000 transition problems
will have no adverse impact, the Fund's service providers are actively working
on the necessary changes. These service providers have informed the Fund that
they expect that their computer systems and those of the third parties with whom
they regularly conduct business will be adapted in time.

Page No.: 16
<PAGE>

MANAGING YOUR ARIEL ACCOUNT

HOW TO CONTACT ARIEL
BY PHONE
Call 1-800-29-ARIEL (1-800-292-7435) during normal business hours.

IN WRITING
Address all correspondence to:

Ariel Mutual Funds
P.O. Box 419121
Kansas City, MO 64141-6121

ON THE WEB: www.arielmutualfunds.com

MINIMUM INITIAL INVESTMENT

The minimum initial investment in the Institutional Class is $1,000,000.

<TABLE>
<CAPTION>
BUYING ARIEL MUTUAL FUND SHARES
CONTACT US AT TO ASSURE YOUR SECURITY
<S> <C> <C>
Through your financial
advisor
By wire 1-800-29-ARIEL for Provide our operator with your name and social
complete details security number and the name and address of the
financial institution wiring the money.
By mail Ariel Mutual Funds Make your check or money order payable to Ariel
P.O. Box 419121 Mutual Funds. Send it along with the bottom of your
Kansas City, MO most recent account statement, or with a note that
64141-6121 includes the registered account name and the name of
the Fund you wish to invest in.
</TABLE>

Page No.: 17
<PAGE>

Please note:

- - We calculate the number of shares you have purchased based on the net
asset value of shares next computed after we receive your order.

- - We can only process purchase orders in U.S. dollars in funds drawn from
U.S. banks.

- - We cannot accept cash, credit-card payments, or third-party
checks, except that payable to an existing shareholder.

- - You cannot sell the shares you haveWe cannot send to you the proceeds from
a redemption of shares that were purchased by mail or through Automatic
Investment until your purchase check has cleared.

- - We will only issue share certificates if you request them at the time of
purchase.

SELLING ARIEL FUND SHARES
<TABLE>
<CAPTION>

CONTACT US AT TO ASSURE YOUR SECURITY
<S> <C> <C>
Through your Financial
Advisor
By mail Ariel Mutual Funds Send us a letter with your account name and number,
P.O. Box 419121 the number of shares you wish to sell or the dollar
Kansas City, MO amount you wish to receive and where you wish us to
64141-6121 send the check.
By phone 1-800-29-ARIEL Provide our operator with your Ariel account number.
By wire 1-800-29-ARIEL or Call or send us a letter with your account name and
Ariel Mutual Funds number, the number of shares you wish to sell or the
P.O. Box 419121 dollar amount you wish to receive.
Kansas City, MO NOTE: WE CAN ONLY WIRE THE SALE PROCEEDS TO THE
64141-6121 FINANCIAL INSTITUTION YOU DESIGNATED WHEN BUYING
SHARES.
</TABLE>

Please note:

- - You may sell all or any portion of your Ariel Premier Bond Fund shares on
any day the New York Stock Exchange is open, plus Columbus Day and
Veterans' Day.

- - We redeem Ariel shares at the net asset value of shares next computed at
the end of the business day on which we receive your order.

- - We normally send the proceeds of your sale to you the next business day,
except, as noted, in the case of shares purchased by mail or through
Automatic Investment. If,

Page No.: 18
<PAGE>

however, we feel the sale may adversely affect the operation of the Fund,
we may take up to seven days to send your proceeds.

- - We only honor telephone sales orders up to $25,000.

- - We require a signature guarantee for sales in excess of $25,000.

- - We charge a $10 fee to process wire sales.

- - To sell shares, for which we have issued certificates, you must return the
endorsed certificates to us.

- - If a sale or transfer of shares reduces the value of your account below
$1,000,000, we reserve the right to close your account with 30 days notice.

- - Qualified dealers may charge a fee for processing a sale or purchase.

- - We reserve the right to pay redemptions in the Bond Fund in kind
(marketable portfolio securities).

SHAREHOLDER SERVICES
CONFIRMING YOUR TRANSACTIONS
We will send you a written confirmation of every purchase and sale, including
automatic purchases and sales. Please check them to verify their accuracy.

Page No.: 19
<PAGE>

SECURING YOUR TELEPHONE ORDERS
Ariel will take reasonable precautions to assure that your telephone
transactions are authentic, including tape-recording your instructions. We
cannot, however, be held liable for executing instructions we reasonably believe
are genuine.

EXCHANGING SHARES

Bear in mind that:

- - Each exchange represents both a sale and a purchase of fund shares. You
may therefore incur gain or loss for income tax purposes on any exchange.

- - Shares purchased by exchange must be registered in your current account
name with the same Social Security or taxpayer identification number.

- - Any person other than the shareholder of record such as a broker, financial
planner, or family member who can provide the proper information may make
telephone exchanges.

- - You must allow at least 36 hours to make a second exchange between any one
pair of Ariel Funds.

Page No.: 20
<PAGE>

Ariel Mutual Funds have the right to revoke or modify your exchange privilege
with 60 days written notice, or with no notice on evidence of disruptive or
excessive exchanging of shares.

CALCULATING THE FUND'S SHARE PRICES

We calculate the daily price of Ariel Mutual Funds shares (also known as the
"Net Asset Value" or "NAV") in accordance with the standard formula for valuing
mutual-fund shares as of the close of regular trading on the New York Stock
Exchange every day the Exchange is open for business. The formula calls for
deducting all of a fund's liabilities from the total value of its assets--the
market value of the securities it holds, plus its cash reserves--and dividing
the result by the number of shares outstanding.

Page No.: 21
<PAGE>

PAYING OUT FUND EARNINGS

Each year, the Ariel Mutual Funds pay out all income (minus expenses) and
capital gains generated by the securities in their portfolios. Unless otherwise
instructed, we reinvest these distributions in additional shares at the share
price computed on the day of the distribution. You may, however, choose to have
dividends or capital gain distributions totaling more than $10 paid out in cash.
To do so, you must notify the Ariel Premier Bond Fund--Institutional Class in
writing 60 days prior to the payment date.

PAYING TAXES ON YOUR FUND EARNINGS

The tax status of your distributions from a fund does not depend on whether you
reinvest them or take them in cash. Nor does it depend on how long you have
owned your shares. Dividends and distributions of short-term capital gains are
subject to federal tax as ordinary income. Different tax rates apply for
distributions of the long-term capital gains.

If you sell shares that you have held for a year or longer, any gains or loss is
treated as a capital gain or loss. If you sell shares within one year after
purchase, any gain is treated as ordinary income; losses are subject to special
rules.

THE TAX LAWS ARE SUBJECT TO CHANGE. WE RECOMMEND CONSULTING YOUR TAX
ADVISOR ABOUT YOUR PARTICULAR TAX SITUATION UNDER THE CURRENT LAWS.

Page No.: 22
<PAGE>

[BACK COVER]

You can find more detailed information about the Ariel Mutual Funds in the
current Statements of Additional Information, dated February 1, 1999, which we
have filed electronically with the Securities and Exchange Commission (SEC) and
which are incorporated by reference into this Prospectus. To receive your free
copy of a Statement of Additional Information, or any of the annual or
semi-annual reports, or if you have questions about investing in the Funds,
write to us at:
ARIEL MUTUAL FUNDS
P.O. BOX 419121
KANSAS CITY, MO 64141-6121

Or call our toll-free number: 1-800-29-ARIEL (1-800-292-7435)

or visit Ariel Mutual Funds' web site:
www.arielmutualfunds.com

Investment Company Act file number 811-4786

Page No.: 23