ARIEL GROWTH FUND, N-30B-2, 2000-02-16

ARIEL GROWTH FUND
N-30B-2, 2000-02-16

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ARIEL MUTUAL FINDS
[LOGO]
THE PATIENT INVESTOR
Ariel Fund
Ariel Appreciation Fund
Ariel Premier Bond Fund
[GRAPHIC]

Quarterly Report--December 31, 1999

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IMPORTANT FIRM NEWS

TALENT SHOW
At Ariel Mutual Funds, we believe people are central to any business proposition
and represent the crux of all opportunities. With this in mind, we are dedicated
to assembling and continually motivating a diverse and talented team. In keeping
with this ongoing effort, we are pleased to announce one important promotion as
well as the addition of two new staff members.

MANAGING FOR SUCCESS
First, as a direct result of his hard work and significant contribution to the
growth of our firm over the past ten years, John Miller, CFA has been appointed
Vice President of Research and Assistant Portfolio Manager of Ariel Fund. In
this capacity, John Miller plays a key role in the research process and is the
primary sounding board for John W. Rogers, Jr. in the portfolio management
process of Ariel Fund. Prior to joining Ariel in 1989, John spent three years as
an institutional equity trader at Cantor, Fitzgerald & Co. after earning his
Bachelor of Business degree from Western Illinois University.

A NEW FACE FOR A NEW MILESTONE
On December 1, 1999, Ariel Appreciation Fund celebrated its 10-year anniversary.
We are pleased with the fund's long-term track record and anticipate a bright
future of growth. The newest addition to Ariel's research team, Tim Fidler, Vice
President of Research and Assistant Portfolio Manager of Ariel Appreciation
Fund, works directly with Eric McKissack, CFA in the research and portfolio
management process for Ariel Appreciation Fund. Tim earned a BA from
Northwestern University as well as an MBA from The University of Chicago, where
he graduated with High Honors. In addition, Tim brings six years of research and
portfolio management experience to his position. He worked at Morgan Stanley &
Co. Asset Management and Lunn Partners, LLC/Lehman Brothers, Private Bank and
has completed Level II of the Chartered Financial Analyst program.

A QUALIFIED COMMITMENT
Roxanne Ward has been appointed Vice President and Corporate Secretary. Roxanne
earned both her Bachelor of Arts and Master of Arts degrees from The University
of Chicago and received her Juris Doctor from Harvard Law School. She joins
Ariel after spending four years working as the First Assistant General
Counsel/Board Liaison for the Chicago Park District. In addition to helping
coordinate the civic, community, charitable and political activities of the
firm, Roxanne serves as Corporate Secretary of Ariel Capital Management, Inc.
and Ariel Mutual Funds. In this capacity, she works with the external directors
and trustees. Moreover, as Secretary to the Office of the President, Ariel's
senior management group, she is responsible for facilitating its functioning and
accountability. With her extensive legal experience, Roxanne is uniquely suited
to handle a plethora of corporate legal issues and help oversee outside
counsel.

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Ariel Investment Trust
307 North Michigan Avenue
Suite 500
Chicago, Illinois 60601
800.292.7435
312.726.0140
www.arielmutualfunds.com

FOR MORE INFORMATION ABOUT THE ARIEL MUTUAL FUNDS INCLUDING MANAGEMENT FEES,
EXPENSES AND POTENTIAL RISKS, PLEASE SEE THE CURRENT PROSPECTUS WHICH MUST
PRECEDE OR ACCOMPANY THIS REPORT. ARIEL DISTRIBUTORS, INC.

PERFORMANCE DATA PROVIDED REPRESENTS PAST PERFORMANCE AND IS NOT INDICATIVE
OF FUTURE RESULTS. THE INVESTMENT RETURN AND PRINCIPAL VALUE OF AN INVESTMENT
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST. INVESTING IN SMALL CAP AND MID-CAP STOCKS
MAY BE MORE RISKY AND MORE VOLATILE THAN INVESTING IN LARGE CAP STOCKS.

TABLE OF CONTENTS

<S> <C>
The Patient Investor 2

Company in Focus 7

Company Updates 9

Ariel Equity Funds 11

Schedule of Equity Investments 13

Equity Statistical Summary 17

Ariel Bond Fund 19

Schedule of Bond Investments 22

Board of Trustees 27

</TABLE>

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SLOW AND STEADY WINS THE RACE.-AESOP
[LOGO]

THE PATIENT INVESTOR -Registered Trademark-

DEAR FELLOW SHAREHOLDER: For the quarter ended December 31, 1999, the Ariel
Fund fell -0.87% while the Ariel Appreciation Fund managed a +1.47% gain.(1)
Like so many of our value peers, we were frustrated by the protracted
weakness in the stock prices of small and mid-cap value issues during a time
when their aggressive growth counterparts continued to scale new heights. The
return differentials of the small and mid-cap style specific indices tell the
whole story. For example, while the small issues comprising the Russell 2000
Growth Index surged +33.39% over the last THREE MONTHS, those of the Russell
2000 Value Index gained just +1.53%. Similarly, on the mid-cap front, the
+39.47% quarter-end return for the Russell Mid Cap Growth Index blew away
that of the Russell MidCap Value Index, which rose +3.77%. Moreover, the
growth biases of the seemingly style blended Russell 2000 and Russell Mid Cap
indices are clearly evident in their +18.44% and +17.23% three-month returns.

For the year, the style-based performance gaps are even more pronounced as shown
in the following chart.

ONE YEAR RETURNS--12/31/98 THROUGH 12/31/99
-------------------------------------------
<S> <C>
Russell 2000 Growth Index +43.09%
Russell 2000 Index +21.26%
Russell 2000 Value Index -1.49%

Russell Mid Cap Growth Index +51.29%
Russell Mid Cap Index +18.23%
Russell Mid Cap Value Index -0.11%
</TABLE>

And so, against this disparate backdrop--some say the biggest differential
ever--news reports all read the same. SMART MONEY

* PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Total returns assume
reinvestment of dividends and capital gains. The principal value and investment
returns will fluctuate so that an investor's shares, when redeemed, may be worth
more or less than their original cost. For the period ended December 31, 1999,
the average annual returns of the Ariel Fund for the one-, three-, five- and
ten-year periods were -5.76%, 12.21%, 15.64%, and 10.36%, respectively. The
Ariel Appreciation Fund's average annual returns for the one-, three-, five- and
ten-year periods ended December 31, 1999 were -3.79%, 16.63%, 19.50%, and
13.60%, respectively.

<PAGE>

MAGAZINE--"The cheap just get cheaper." MUTUAL FUND MAGAZINE--"Value
investing . . . the pariah of the fund world." BARRON'S--"Under the old
paradigm, a stock that doubled overnight might give pause to would-be buyers;
under the new paradigm, a stock that doubles overnight becomes four times
more attractive." MORNINGSTAR INVESTOR--"Nineteen ninety-nine . . . another
bitter year for dedicated value investors."

Although we are disappointed with value's results, we are not discouraged. In
fact, we are encouraged by the past and believe today's investment environment
is brimming with opportunity. Just as we read in FORBES, "Comfort isn't what
delivers investment return. It is doubt, skepticism and demonstrated
under-performance." With these three criteria in place, we eagerly anticipate
2000.

PORTFOLIO COMINGS AND GOINGS

In the Ariel Fund, we eliminated our position in CenturyTel (NYSE: CTL) when
the appreciation of its shares pushed its market capitalization beyond our
comfort level for a small-cap fund. It is worth noting that the stock had
been a very strong performer--having risen more than 200% over the course of
our four-year holding period. Additionally, despite such a short holding
period--just six months--we sold True North Communications (NYSE: TNO). The
company's stock price rose from $24 to $44 a share, reaching our estimate of
full value. On the buy side, we continued to build positions in two
undervalued property and casualty insurers: HCC Insurance Holdings, Inc.
(NYSE: HCC) and Horace Mann Educators Corporation (NYSE: HMN). We also
accumulated more shares of Hasbro (NYSE: HAS), the toy maker, as well as
carpet tile manufacturer, Interface (OTC: IFSIA) on price weakness.

In the mid-cap Ariel Appreciation Fund, we sold The Northern Trust Bank (OTC:
NTRS) and Omnicom Group (NYSE: OMC) after long and successful holding periods.
We also continued to pare back our position in the increasingly expensive
Tribune Company (NYSE: TRB). However, in an effort to maximize our meticulous
research and further profit from this timeless industry, we initiated purchase
of another newspaper company, McClatchy Company (NYSE: MNI). Additionally, we
had the opportunity to repurchase an old favorite at a compelling valuation,
SunGard Data Systems, Inc. (NYSE: SDS), the computer services and software
company. We also added to a number of existing holdings

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at attractive prices. They included: Newell Rubbermaid, Inc. (NYSE: NWL); Sybron
International Corporation (NYSE: SYB) and Hussmann International, Inc.
(NYSE: HSM).

LESSONS FROM LOMBARDI

As we have discussed on so many occasions, reading is the underlying foundation
of our research process at Ariel. We constantly devour magazines, newspapers,
books, Wall Street research reports and company-specific literature in order to
understand trends, avoid fads, uncover new stock ideas and stay abreast of
current holdings. As we strive to continually hone our own skills and get better
and better, we also frequently read about leaders and leadership. In our view,
the defining characteristics of all leaders--the good ones and the bad ones--are
strikingly similar and are often easily translated across a myriad of industries
and disciplines. And so, this year THE WARREN BUFFETT PORTFOLIO took us deeper
into the thinking of a great investor; CHAINSAW recounted the excesses of a
desperate chief executive whose vainglorious dealings led to a bankrupt Sunbeam
Corporation; TOY WARS detailed the history of Hasbro; TITAN described John D.
Rockefeller's empire building and BUILT TO LAST chronicled some of America's
best businesses. But it was a book on, of all things, a football coach that
presented some of the most compelling insights we have ever read about precision
and discipline. While these two ideals are clearly important in the world of
competitive sports, they are also two of the most important characteristics of
successful investing.

Vince Lombardi said, "Leaders are made, not born," stressing the importance
of preparation and training in life. WHEN PRIDE STILL MATTERED describes how
he went from an over-rated college football player at Fordham University, to
an assistant coach at West Point and then the New York Giants--by his own
account, twenty years of "apprenticeship" before being named head coach of
the Green Bay Packers. His two sources of inspiration were a 15th century
priest and a modern day army colonel. More specifically, he was influenced by
St. Ignatius of Loyola who, in the Jesuit tradition, believed that
"perfection went to those who sought it most eagerly." Equally influential in
his life was Colonel Red Blaik, the indomitable coach of the West Point
football team who Lombardi called "the most prepared man he had ever
met . . . a miserable loser and proud of it." As the book's author
David Maraniss writes, "Both emphasized discipline, order, organization,
planning, attention to detail, repetition, the ability to adjust to different

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situations and remain flexible in pursuit of a goal while sustaining an
obsession with one big idea."

Lombardi's obsession, like that of his living mentor, was winning. Winning was
his perfection and the pursuit of it required discipline. As such, he once
remarked, "I've never really known a successful man who deep in his heart did
not appreciate the discipline it takes to win." For him, this discipline was
played out with repetition, and repetition begat precision. "Even in repetitive
drills, he had a way of making the mundane seem important . . . Everything was
accounted for, labeled, identified, put in order, fundamental and
sound . . . He would drill the same play over and over again until it was more
than routine and familiar, it was in [the team's] blood, part of their
reflexive being." He said, "They call it coaching, but its teaching. You do not
just tell them it is so, you show them the reasons why it is so and you repeat
and repeat until they are convinced, until they know."

And so, from Vince Lombardi's football teachings, we can be better stock
pickers. First, there is the idea of the apprenticeship. While some people are
born with talent, Lombardi's remarkable career effectively demonstrates that
real greatness comes with study. In his case, St. Ignatius and Red Blaik were
his subjects and he mastered and adopted the best of their ideas, mixing in his
own along the way. As a result, Lombardi was said to have "revered Blaik without
following him blindly." His reverence is unambiguous in a letter sent to Blaik
from Green Bay. "My football is your football. My approach to problem solving is
the way I think you would approach it. I just hope and pray I can do justice to
it and to you." In our own world of investing, we are students of Ben Graham,
the father of value investing, and his protege Warren Buffett, the greatest
investor of our era. In our quest to be great investors, our view is
that the "apprenticeship" never ends.

Interestingly, "the game itself was the superficial part of coaching for
Lombardi. He had already done his work getting his team prepared" before they
walked onto the field. In reading this strategy, we are reminded of the
importance of our own exhaustive research effort BEFORE a stock goes into our
portfolios. Once it has passed our high standards, monitoring a holding and
watching as it realizes its potential is secondary to our initial analysis. We
believe this uncompromising due diligence inevitably leads to fewer mistakes.

<PAGE>

On the subject of discipline--clearly, having a well-defined investment
philosophy that is executed with razor-sharp precision is a key ingredient to
realizing above average rates of return. The real challenge is having the
resolve to stick with the discipline in difficult periods. Even armed with his
unbending will and intense preparation, Lombardi's teams did not win every game.
No team does. (Nor is there an investment manager who outperforms every single
year.) To this point, Lombardi would say, "Our greatest glory is not in never
falling, but in rising every time we fall." The current climate for value
investing speaks to the importance of this perspective.

Lombardi said he always played the game as if the score was "nothing to
nothing"--no matter what the team's lead. The same cannot be said of a growing
contingent of investment managers who, in an effort to stay in the performance
game, build portfolios to perform "in line" with the indices and therefore never
have the opportunity to achieve truly exceptional long-term results. These
"closet indexers" fear under-performance. Yet, when Lombardi was confronted with
a tough challenge like a title clinching game, he taught his team to manage
their nerves. His view, "In football, as in life, excessive fear and anxiety can
dim the brightest mind." Again, the parallels to investing are uncanny as some
of the biggest investment mistakes often follow knee-jerk reactions to
unfavorable events.

And so, we urge our fellow shareholders to let go of those anxieties that may be
fueled by short-term setbacks. This game is far from over, and we have our eye
on the ball. As always, we appreciate the opportunity to serve you and welcome
any questions or comments you may have.

Sincerely,

/s/ John W. Rogers, Jr. /s/ Eric T. McKissack, CFA
- ----------------------- ----------------------------
John W. Rogers, Jr. Eric T. McKissack, CFA
Portfolio Manager Portfolio Manager
Ariel Fund Ariel Appreciation Fund

THE FUNDS' PORTFOLIO SECURITIES AS OF DECEMBER 31, 1999, INCLUDING THE
SECURITIES DISCUSSED IN THIS LETTER, ARE LISTED IN THE SCHEDULE OF INVESTMENTS.
PORTFOLIO HOLDINGS ARE SUBJECT TO CHANGE.

<PAGE>

COMPANY

NEWELL RUBBERMAID, INC. (NYSE: NWL) manufactures consumer staple products that
are primarily sold to mass merchants under three main product categories. The
company's Hardware and Home Furnishings division produces window treatments,
picture frames, tools, storage, and home hardware. Newell's Office Products
business focuses on markers and writing instruments as well as office storage
and organization accessories. The Housewares business manufactures branded
cookware and bakeware, glassware, storage products, infant and juvenile care
products and hair accessories.

NEWELLRUBBERMAID
- -----------------
29 EAST STEPHENSON sTREET
FREEPORT, IL 61032
(815) 235-4171

REASONS FOR RECOMMENDATION

A UNIQUE ABILITY TO SERVE ITS CUSTOMER BASE

In a world in which manufacturers of consumer products who serve the mass retail
channel are having difficulty maintaining their profit margins, Newell has shown
a remarkable ability to not only survive in this environment, but prosper. The
company partners with its mass merchant customers by providing them with
unparalleled service: on-time delivery, category management programs, vendor
managed inventory, innovative merchandising and display programs, sophisticated
management information systems, and enhanced product visibility through brand
promotions. Many smaller competitors in Newell's product categories cannot
provide this level of service, and as a result, they have often ended up selling
their product lines to Newell over the years.

OUTSTANDING MANAGEMENT TEAM WITH A UNIQUE AND DISCIPLINED ORGANIZATIONAL CULTURE

As we do with all new ideas, we met with Newell's top management team prior to
purchasing a position in the company. We were extremely impressed with the
disciplined and consistent approach they take to managing their business and
employees. For example, one unique characteristic of the company is their
rigorous management and career development program, which exposes employees to
different departments within the company and thereby ensures they master all
aspects of the business. When given the opportunity to hear from several other
divisional managers within the organization, we were pleased to see this same
disciplined culture exemplified in their own management style. The
"Newellization" process of integrating acquisi

<PAGE>

IN FOCUS

tions into the company's unique style of management has created a culture
that allows the company to duplicate its past successes and learn from mistakes.

FAVORABLE ECONOMICS

Over the years, Newell has built a disciplined culture, maintained product
category dominance, brand presence, and close relationships with its core
customers, allowing it to earn attractive returns. Newell is a profitable
business with high margins and high returns on equity and tangible assets.
Management has developed a well-honed business model characterized by 3-5%
internal growth, supplemented by acquisitions. The business generates
significant levels of free cash flow which is used to fund Newell's appetite for
acquisition growth.

ACQUISITION INTEGRATION

In March of 1999, Newell completed the acquisition of Rubbermaid Inc., by far
its largest and most ambitious to date. Although we believe the Rubbermaid brand
and product portfolio will be an excellent long-term strategic fit for Newell,
the acquisition was not problem-free. Historically, Rubbermaid had been a very
under-managed franchise. However, since the acquisition, management has been
rigorously initiating Rubbermaid in the "Newellization" process to bring it up
to its high performance standards. Although a number of operational difficulties
have caused several earnings shortfalls along the way, we believe management has
the integration under control. We capitalized on the valuation opportunity that
resulted from these earnings shortfalls by buying a well-managed franchise with
significant long-term growth opportunities.

COMPELLING VALUATION

At $29, the stock is currently trading at 13.5 times our cash earnings estimate
for this year, 7.3 times cash flow, and a 49% discount to our estimate of its
private market value (PMV) of approximately $57 per share.

We recommend investors initiate a position in Newell Rubbermaid at current
levels.

<PAGE>

COMPANY

SPECIALTY EQUIPMENT (NYSE: SEC)Specialty Equipment's calendar year 1999 revenues
are expected to decline slightly due to lower than expected sales of
Beverage-Air coolers to the soft drink market. However, excluding the difficult
soft drink market, Specialty Equipment's revenues should increase approximately
6% for the year as the company benefits from successful product placement.
Specifically, its Taylor frozen carbonated beverage machines are in Burger Kings
and its Fruit and Chocolate Coolatta machines can be found in Dunkin' Donuts. As
for new products, the innovative and practical design of the upcoming Crown line
of ice cream machines is expected to attract new orders from both existing and
potential customers.

The economics of the business continue to look good as measured by its free cash
flow generation and return on assets. Specifically, the company continues to
produce the highest operating cash flow margins in the industry. Additionally,
Specialty Equipment generates returns that far exceed its cost of capital. The
company has taken advantage of the recent decline in share price, buying back
much of its mispriced stock and thereby aligning management's interest with that
of its shareholders.

Specialty Equipment is selling at a remarkable discount to private market value
based on recent acquisition multiples. Currently at $23.94, Specialty is trading
at only 11.5 times our forward twelve-month earnings per share estimate of $2.09
and at a 42% discount to our estimated private market value (PMV) of $41.00.

TRUE NORTH COMMUNICATIONS, INC. (NYSE: TNO) After a brief but lucrative holding
period, True North Communications has been sold from Ariel's portfolio. As the
world's sixth-largest advertising holding company, True North has benefited from
improved organizational structure and industry trends, and its success has been
recognized in its stock price.

David Bell was elected Chairman and CEO in March of 1999 and has led the
rejuvenation of True North over the past nine months. Bell has emphasized
"collaboration" among holding company subsidiaries as a way to generate revenue
growth. In addition, he made the difficult but important decision to combine the
major offices of True North's two global networks, FCB Worldwide and Bozell
Worldwide, resulting in more productive use of resources and a reduced cost
structure.

We continue to believe True North is a fine company led by talented management
in an attractive industry. True North hit a 52-week high of $47 on December 8th,
1999, representing full-value, in our opinion. In keeping with our disciplined
investment philosophy, we sold the stock. If investor sentiment changes over
time without a corresponding change in fundamentals, we would consider adding
shares of this wonderful business to our portfolios again.

[LOGO]
1245 CORPORATE BOULEVARD
SUITE 401
AURORA, IL 60504
(630) 585-5111

[LOGO]
101 EAST ERIE STREET
CHICAGO, IL 60611
(312) 425-6500

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UPDATES

FRANKLIN RESOURCES, INC. (NYSE: BEN) With offices in 25 countries around the
world, Franklin Resources is a leading global investment manager with
approximately $225 billion in assets under management. Its three families of
mutual funds are sold under the well-known and widely respected brand names:
Templeton (international), Franklin (fixed income and domestic equities), and
Mutual Series (domestic equities).

[LOGO]
FRANKLIN RESOURCES, INC.
777 MARINERS ISLAND BLVD.
SAN MATEO, CA 94404

(650) 312-2000

In 1998, the stock fell 50% due to the turmoil in the international markets and
their subsequent decline. We took advantage of this opportunity to purchase the
stock when it was out of favor. In addition to operating under three great brand
names, Franklin Resources is extremely profitable and generates substantial
excess cash flow which management has used judiciously to make acquisitions, pay
dividends, and repurchase shares. After a modest earnings per share (EPS)
decline in 1999, greater attention to the cost side of the business and
improving markets have returned the company to its traditional growth pattern.
Longer-term, Franklin Resources is a prime beneficiary of increasing personal
savings rates around the world. In a consolidating industry, we expect Franklin
Resources to be one of the winners. The shares sell at approximately 14 times
this year's expected EPS, or a 45% discount to the S&P 500 Index. We recommend
investors buy shares at current levels.

WESLEY JESSEN VISIONCARE (OTC: WJCO) Wesley Jessen VisionCare is the leading
worldwide developer, manufacturer and marketer of specialty soft contact lenses.
The company's financial performance met our expectations in 1999, and we
continue to have a positive outlook for Wesley Jessen in 2000.

[LOGO]
WESLEY JESSEN
333 EAST HOWARD AVENUE
DES PLAINES, IL 60018
(847) 294-3000

The company is focused on the specialty contact lens market, a niche which
offers strong growth and excellent profitability. Wesley Jessen offers
value-added features for which customers are willing to pay a premium price,
such as color, precise shaping to correct astigmatism, comfort for dry eyes, and
UV protection. As the market for such products has grown more than 10% over the
past few years, the company has leveraged its fixed manufacturing base to
generate 20% gains in earnings.

Wesley Jessen should be able to maintain similar growth for several more years.
With baby boomers' children coming of age and increased buying power abroad,
contact lenses are becoming more popular. Successful new product development,
such as a bi-focal product, will also increase the size of specialty markets.
Finally, with over 70 U.S. patents and a well-established sales and distribution
network, Wesley Jessen should be able to maintain profitability in the face of
growing competition.

Over the past year, the stock has shown significant volatility--ranging in price
from $21 to $41. Ariel has been able to take advantage of this opportunity,
adding to our position at the low end of the range when price and value
diverged. Currently, our estimate of full value is $43, and we recommend
purchase of shares.

<PAGE>

ARIEL FUND
Inception November 6, 1986

AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1999 (assume reinvestment of
dividends and capital gains) Total return does not reflect a maximum 4.75% sales
load charged prior to 7/15/94

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4th Quarter YTD 1 Year 3 Year 5 Year 10 Year Life of Fund
- ----------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C>
Ariel Fund -0.87% -5.76% -5.76% +12.21% +15.64% +10.36% +13.57%
- ----------------------------------------------------------------------------------------------------------------
Russell 2000 Index +18.44% +21.26% +21.26% +13.08% +16.69% +13.40% +12.22%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]

ARIEL FUND
Technology 3.31%
Health Care 3.41%
Consumer Discretionary & Services 35.75%
Consumer Staples 8.81%
Materials & Processing 16.18%
Producer Durables 19.67%
Financial Services 11.72%
Cash and Other 1.15%
Integrated Oils 0%

RUSSELL 2000 INDEX
Technology 23.6%
Health Care 9.9%
Consumer Discretionary & Services 16.8%
Consumer Staples 2.1%
Other Energy 2.7%
Materials & Processing 8.2%
Producer Durables 9.0%
Autos & Transportation 3.2%
Financial Services 17.5%
Utilities 6.1%
Cash & Other 0.9%
Integrated Oils 0%

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTED IN ARIEL FUND AND
COMPARABLE INDICES*

[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]

DATE ARIEL FUND S&P RUSSELL 2000
1986 $10,000 $10,000 $10,000
1987 $11,367 $10,256 $8,860
1988 $15,905 $11,960 $11,065
1989 $19,900 $15,749 $12,863
1990 $16,699 $15,260 $10,354
1991 $22,163 $19,910 $15,122
1992 $24,763 $21,427 $17,906
1993 $26,924 $23,587 $21,292
1994 $25,786 $23,897 $20,904
1995 $30,581 $32,878 $26,849
1996 $37,747 $40,426 $31,279
1997 $51,502 $53,914 $38,274
1998 $56,595 $69,320 $37,300
1999 $53,335 $83,912 $45,228

*Statistics represent past performance which is not indicative of future
results. The S&P 500 is a broad market-weighted index dominated by blue-chip
stocks. The Russell 2000 Index measures the performance of smaller companies.
All indexes are unmanaged and returns include reinvested dividends. An
investor cannot invest directly in an index.

TEN LARGEST HOLDINGS
as of December 31, 1999

1 LEE ENTERPRISES
Diversified media company

2 BRADY CORP.
Manufacturer and distributor of niche industrial safety-related products

3 CENTRAL NEWSPAPERS, INC.
Leading media company with daily newspapers in Phoenix and Indianapolis

4 INTERNATIONAL GAME TECHNOLOGY
World's leading supplier of computerized gaming devices

5 MBIA, INC.
Leading insurer of municipal bonds

6 ROUSE CO.
Retail mall developer

7 SPECIALTY EQUIPMENT COS.
Manufacturer of commercial and institutional food service equipment

8 HERMAN MILLER, INC.
One of the country's largest manufacturers of office furniture

9 IDEX CORP.
Manufacturer of proprietary engineered industrial products

10 HASBRO, INC.
Prominent toy manufacturer

ARIEL FUND SEEKS LONG-TERM CAPITAL APPRECIATION BY INVESTING IN UNDERVALUED
COMPANIES IN CONSISTENT INDUSTRIES THAT SHOW STRONG POTENTIAL FOR GROWTH. THE
FUND LOOKS FOR ISSUERS THAT PROVIDE QUALITY PRODUCTS OR SERVICES. TO CAPTURE
ANTICIPATED GROWTH, THE FUND GENERALLY HOLDS INVESTMENTS FOR A RELATIVELY LONG
PERIOD, USUALLY THREE TO FIVE YEARS. THE FUND PRIMARILY INVESTS IN COMPANIES
WITH MARKET CAPITALIZATIONS UNDER $1.5 BILLION WITH AN EMPHASIS ON SMALLER
CAPITALIZATION (SMALL CAP) STOCKS.

<PAGE>

ARIEL APPRECIATION FUND
Inception December 1, 1989
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1999
(assume reinvestment of dividends and capital gains) Total return does not
reflect a maximum 4.75% sales load charged prior to 7/15/94.

<TABLE>
<CAPTION>
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4th Quarter YTD 1 Year 3 Year 5 Year 10 Year Life of Fund
- ----------------------------------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C>
Ariel Appreciation Fund +1.47% -3.79% -3.79% +16.63% +19.50% +13.60% +13.53%
- ----------------------------------------------------------------------------------------------------------------
Russell Mid Cap Index +17.23% +18.23% +18.23% +18.86% +21.86% +15.92% +15.97%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]

ARIEL APPRECIATION FUND
Technology 1.31%
Health Care 6.71%
Consumer Discretionary & Services 35.21%
Consumer Staples 12.88%
Materials & Processing 9.65%
Producer Durables 9.77%
Financial Services 17.98%
Utilities 4.78%
Cash & Other 1.71%

RUSSELL MID CAP INDEX
Technology 22.8%
Health Care 5.8%
Consumer Discretionary & Services 16.2%
Consumer Staples 3.2%
Integrated Oils 1.5%
Other Energy 3.6%
Materials & Processing 7.7%
Producer Durables 6.1%
Autos & Transportation 3.8%
Financial Services 16.5%
Utilities 11.5%
Cash and Other 1.3%

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTED IN ARIEL FUND AND
COMPARABLE INDICES*

[EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC]

DATE APP S&P RUSSELL MID-CAP
1989 $10,000 $10,000 $10,000
1990 $9,902 $9,922 $9,006
1991 $13,184 $12,945 $12,744
1992 $14,930 $13,932 $14,826
1993 $16,115 $15,336 $16,947
1994 $14,763 $15,539 $16,592
1995 $18,330 $21,378 $22,308
1996 $22,677 $26,286 $26,547
1997 $31,283 $35,056 $34,247
1998 $37,398 $45,074 $37,705
1999 $35,981 $54,559 $44,579

*Statistics represent past performance which is not indicative of future
results. The S&P 500 is a broad market-weighted index dominated by blue-chip
stocks. The Russell MidCap Index measures the performance of small and
mid-sized companies. All indexes are unmanaged and returns include reinvested
dividends. An investor cannot invest directly in an index.

TEN LARGEST HOLDINGS AS OF DECEMBER 31, 1999

1 CENTURYTEL, INC.
Diversified telecommunications company

2 LEE ENTERPRISES
Diversified media company

3 SYBRON INTERNATIONAL CORP.
Principal manufacturer of products for the laboratory and professional
orthodontic and dental markets

4 MBIA, INC.
Leading insurer of municipal bonds

5 HASBRO, INC.
Prominent toy manufacturer

6 ROUSE CO.
Retail mall developer

7 CENTRAL NEWSPAPERS, INC.
Leading media company with daily newspapers in Phoenix and Indianapolis

8 HERMAN MILLER, INC.
One of the country's largest manufacturers of office furniture

9 MCCORMICK & CO. INC.
World's largest spice company

10 HOUGHTON MIFFLIN CO.
Leading publisher of educational textbooks and multimedia products

ARIEL APPRECIATION FUND ALSO PURSUES LONG-TERM CAPITAL APPRECIATION BY INVESTING
IN UNDERVALUED FIRMS WITH GROWTH POTENTIAL. LIKE ARIEL FUND, THIS FUND SEEKS OUT
ISSUERS THAT PROVIDE QUALITY PRODUCTS OR SERVICES. TO CAPTURE ANTICIPATED
GROWTH, THE FUND WILL ALSO HOLD INVESTMENTS FOR A RELATIVELY LONG PERIOD -
USUALLY THREE TO FIVE YEARS. THE FUND PRIMARILY INVESTS IN SMALL AND MIDSIZE
COMPANIES WITH MARKET CAPITALIZATIONS FROM $200 MILLION TO $5 BILLION, WITH AN
EMPHASIS ON MEDIUM CAPITALIZATION (MID CAP) STOCKS.

12
<PAGE>

SCHEDULE OF INVESTMENTS

ARIEL FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
Number COMMON STOCKS-98.85% Cost Market Value
of Shares
<S> <C> <C> <C>
CONSUMER DISCRETIONARY--35.75%
499,033 Bob Evans Farms, Inc. $8,211,424 $7,703,822
270,400 Central Newspapers, Inc.,
Class A 3,728,076 10,647,000
195,100 Day Runner, Inc.* 2,336,476 762,109
263,100 Department 56, Inc.* 8,535,653 5,952,638
15,500 Grey Advertising, Inc. 5,223,062 6,200,000
409,200 Hasbro, Inc. 4,931,382 7,800,375
494,200 International Game Technology* 9,057,596 10,038,438
351,900 Lee Enterprises 9,779,201 11,238,806
281,000 Leggett & Platt, Inc. 2,724,420 6,023,937
242,700 Libbey, Inc. 8,806,015 6,977,625
--------- ---------
63,333,305 73,344,750
---------- ----------

CONSUMER STAPLES--8.81%
247,800 Longs Drug Stores Corp. 5,354,648 6,396,337
261,000 McCormick & Co., Inc. 6,390,529 7,764,750
291,200 Whitman Corp. 4,529,000 3,913,000
---------- ---------
16,274,177 18,074,087
---------- ----------

13
<PAGE>

<CAPTION>
Number COMMON STOCKS-98.85% (cont) Cost Market Value
of Shares
<S> <C> <C> <C>
FINANCIAL SERVICES --11.72%
47,300 Arthur J. Gallagher & Co. $1,821,142 $3,062,675
387,950 HCC Insurance Holdings, Inc. 5,370,920 5,116,091
300,400 Horace Mann Educators Corp. 7,992,656 5,895,350
189,000 MBIA, Inc. 7,379,126 9,981,562
--------- ---------
22,563,844 24,055,678
---------- ----------

HEALTH CARE--3.41%
184,500 Wesley Jessen VisionCare, Inc.* 4,876,807 6,987,938
--------- ---------

MATERIALS & PROCESSING--16.18%
325,700 Brady Corp. 8,128,562 11,053,444
143,900 Hunt Corp. 1,916,478 1,367,050
625,100 Interface, Inc., Class A 3,652,440 3,594,325
456,100 Rouse Co. 9,199,370 9,692,125
422,250 Shorewood Packaging Corp.* 3,483,657 7,483,359
--------- ---------
26,380,507 33,190,303
---------- ----------

PRODUCER DURABLES--19.67%
237,570 General Binding Corp. 4,393,121 2,791,448
146,000 Graco, Inc. 4,160,389 5,237,750
444,200 Hussmann International, Inc. 7,079,186 6,690,763
267,400 IDEX Corp. 6,703,947 8,122,275
357,900 Miller (Herman), Inc. 6,138,750 8,231,700
388,175 Specialty Equipment Cos., Inc.* 4,666,647 9,291,939
---------- -----------
33,142,040 40,365,875
---------- -----------

<CAPTION>
Number COMMON STOCKS-98.85% (cont) Cost Market Value
of Shares
<S> <C> <C> <C>
TECHNOLOGY--3.31%
280,050 Littelfuse, Inc.* $7,133,451 $6,795,588
---------- ----------

Total Common Stocks 173,704,131 202,814,219
----------- -----------

<CAPTION>
Principal REPURCHASE AGREEMENT-1.22%
Amount
<S> <C> <C> <C>
$2,497,254 State Street Bank & Trust
Company Repurchase Agreement,
2.50%, dated 12/31/1999, repurchase
price $2,497,775, maturing 1/3/2000
(collateralized by U.S. Treasury
Note, 7.50%, 2/15/2005) 2,497,254 2,497,254
---------- ----------
Total Repurchase Agreement 2,497,254 2,497,254
---------- ----------

Total Investments-100.07% $176,201,385 205,311,473
------------
------------

Liabilities less Other Assets-(0.07)% (152,416)
------------

NET ASSETS-100.00% $205,159,057
------------
------------
</TABLE>

*Non-income producing

14
<PAGE>

ARIEL APPRECIATION FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
Number COMMON STOCKS-98.29% Cost Market Value
of Shares
<S> <C> <C> <C>
CONSUMER DISCRETIONARY--35.21%
339,000 Bob Evans Farms, Inc. $6,772,133 $5,233,312
134,300 Carnival Corp. 1,004,894 6,421,219
311,000 Central Newspapers, Inc.,
Class A 9,246,338 12,245,625
254,700 Galileo International, Inc. 10,660,921 7,625,081
266,650 Harte-Hanks, Inc. 2,342,964 5,799,637
701,550 Hasbro, Inc. 11,285,231 13,373,297
283,400 Houghton Mifflin Co. 9,832,804 11,955,937
574,500 International Game Technology* 9,442,394 11,669,531
470,200 Lee Enterprises 13,200,844 15,017,013
546,945 Leggett & Platt, Inc. 7,447,654 11,725,134
183,200 Libbey, Inc. 6,323,642 5,267,000
47,300 McClatchy Company 1,878,254 2,045,725
245,600 Newell Rubbermaid, Inc. 7,157,658 7,122,400
42,000 Tribune Co. 532,098 2,312,625
------- ---------
97,127,829 117,813,536
---------- -----------

CONSUMER STAPLES--12.88%
227,472 The Clorox Co. 7,929,919 11,458,902
329,440 Longs Drug Stores Corp. 7,637,019 8,503,670
403,155 McCormick & Co., Inc. 10,736,899 11,993,861
828,100 Whitman Corp. 13,734,096 11,127,594
---------- ----------
40,037,933 43,084,027
---------- ----------

<CAPTION>
Number COMMON STOCKS-98.29% (cont) Cost Market Value
of Shares
<S> <C> <C> <C>
FINANCIAL SERVICES--17.98%
70,800 Arthur J. Gallagher & Co. $2,866,302 $4,584,300
438,300 Equifax, Inc. 13,918,574 10,327,444
308,000 Franklin Resources, Inc. 10,484,728 9,875,250
276,600 MBIA, Inc. 12,768,920 14,607,937
422,200 MBNA Corp. 7,101,389 11,504,950
29,800 SunGard Data Systems, Inc.* 672,288 707,750
164,400 XL Capital Ltd. 9,347,523 8,528,250
--------- ---------
57,159,724 60,135,881
---------- ----------

HEALTH CARE--6.71%
153,800 Allergan, Inc. 2,476,374 7,651,550
599,400 Sybron International Corp.* 11,125,291 14,797,688
---------- ----------
13,601,665 22,449,238
---------- ----------

MATERIALS & PROCESSING--9.65%
127,600 Avery Dennison Corp. 7,812,745 9,298,850
94,525 Brady Corp. 1,864,128 3,207,942
625,200 Rouse Co. 11,866,774 13,285,500
366,515 Shorewood Packaging Corp.* 2,457,803 6,495,547
--------- ---------
24,001,450 32,287,839
---------- ----------

PRODUCER DURABLES--9.77%
338,950 Hussmann International, Inc. 4,996,533 5,105,434
528,400 Miller (Herman), Inc. 10,431,718 12,153,200
85,000 Pitney Bowes, Inc. 3,335,462 4,106,563
473,000 Specialty Equipment Cos., Inc.* 6,501,376 11,322,438
--------- ----------
25,265,089 32,687,635
---------- ----------

15
<PAGE>

<CAPTION>
Number COMMON STOCKS-98.29% (cont) Cost Market Value
of Shares
<S> <C> <C> <C>
TECHNOLOGY--1.31%
180,325 Littelfuse, Inc.* $4,375,871 $4,375,699
---------- ----------

UTILITIES--4.78%
337,825 CenturyTel, Inc. 4,808,537 16,004,459
--------- ----------

Total Common Stocks 266,378,098 328,838,314
----------- -----------

<CAPTION>
Principal REPURCHASE AGREEMENT-1.70%
Amount
<S> <C> <C> <C>
$5,703,572 State Street Bank & Trust
Company Repurchase Agreement,
2.50%, dated 12/31/1999, repurchase
price $5,704,761, maturing 1/3/2000
(collateralized by U.S. Treasury
Bond, 8.875%, 2/15/2019) 5,703,572 5,703,572
--------- ---------

Total Repurchase Agreement 5,703,572 5,703,572
--------- ---------

Total Investments-99.99% $272,081,670 334,541,886
------------
------------

Other Assets less Liabilities-0.01% 46,510
------

NET ASSETS-100.00% $334,588,396
------------
------------
</TABLE>

*Non-income producing

16
<PAGE>

EQUITY STATISTICAL SUMMARY

<TABLE>
<CAPTION>
ARIEL FUND
(UNAUDITED) Earnings Per Share
52 - Week -----------------------------
Range 1998 1999 2000 1998 1999 2000 Market
Ticker Price ----------- Actual Estimated Estimated P/E P/E P/E Cap.
Company Symbol 12/31/99 Low High Calendar Calendar Calendar Calendar Calendar Calendar ($MM)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Day Runner, Inc. DAYR 3.91 3.63 15.50 1.16 -1.17 0.25 3.4 NM 15.6 47
Hunt Corp. HUN 9.50 6.63 12.19 0.80 0.91 1.15 11.9 10.4 8.3 99
General Binding Corp. GBND 11.75 6.00 40.00 1.63 -0.20 0.19 7.2 NM 61.8 185
Interface, Inc. IFSIA 5.75 4.00 11.75 0.87 0.46 0.66 6.6 12.5 8.7 303
Department 56, Inc. DFS 22.63 18.31 37.88 2.45 2.48 2.83 9.2 9.1 8.0 379
Libbey, Inc. LBY 28.75 24.00 33.75 2.31 2.56 2.93 12.4 11.2 9.8 460
Grey Advertising, Inc. GREY 400.00 284.00 408.00 18.98 5.13 24.64 21.1 78.0 16.2 499
Specialty Equipment Cos., Inc. SEC 23.94 20.44 34.13 2.18 2.13 2.09 11.0 11.2 11.5 499
Shorewood Packaging Corp. SWD 18.94 11.75 20.63 1.08 1.27 1.43 17.5 14.9 13.2 518
Littelfuse, Inc. LFUS 24.27 16.25 25.00 0.86 1.15 1.40 28.2 21.1 17.3 534
Bob Evans Farms, Inc. BOBE 15.44 12.75 26.38 1.30 1.40 1.50 11.9 11.0 10.3 594
HCC Insurance Holdings, Inc. HCC 13.19 8.00 25.13 1.41 1.22 1.38 9.4 10.8 9.6 644
Wesley Jessen VisionCare, Inc. WJCO 37.88 20.25 40.94 1.57 1.89 2.31 24.1 20.0 16.4 663
Graco, Inc. GGG 35.88 19.88 36.19 2.01 2.75 3.13 17.9 13.0 11.5 732
Hussmann International, Inc. HSM 15.06 12.63 19.00 1.20 1.28 1.43 12.6 11.8 10.5 767
Brady Corp. BRC 33.94 19.50 36.31 1.49 1.98 2.10 22.8 17.1 16.2 769
Horace Mann Educators Corp. HMN 19.63 19.13 33.00 1.80 1.64 1.92 10.9 12.0 10.2 805
IDEX Corp. IEX 30.38 21.63 34.13 1.81 1.84 2.16 16.8 16.5 14.1 900
Longs Drug Stores Corp. LDG 25.81 22.25 39.50 1.64 1.83 2.05 15.7 14.1 12.6 1,016
Arthur J. Gallagher & Co. AJG 64.75 42.25 66.25 3.10 3.47 3.82 20.9 18.7 17.0 1,190
Lee Enterprises LEE 31.94 26.13 32.25 1.41 1.56 1.73 22.7 20.5 18.5 1,414
Rouse Company RSE 21.25 19.75 27.75 2.69 2.98 3.29 7.9 7.1 6.5 1,529
Central Newspapers, Inc. ECP 39.38 29.88 45.69 1.78 2.25 2.60 22.1 17.5 15.1 1,530
International Game Technology IGT 20.31 14.13 24.13 1.33 1.41 1.60 15.3 14.4 12.7 1,746
Herman Miller, Inc. MLHR 23.00 15.63 27.13 1.62 1.70 1.93 14.2 13.5 11.9 1,841
Whitman Corp. WH 13.44 12.19 24.94 0.61 0.57 0.63 22.0 23.6 21.3 1,897
McCormick & Company, Inc. MKC 29.75 26.63 34.63 1.43 1.68 1.88 20.8 17.7 15.8 2,106
Hasbro, Inc. HAS 18.94 16.88 37.00 1.07 1.39 1.35 17.7 13.6 14.0 3,670
Leggett & Platt, Inc. LEG 21.44 18.63 28.31 1.24 1.44 1.61 17.4 14.9 13.3 4,208
MBIA, Inc. MBI 52.81 45.13 71.88 4.58 4.70 5.30 11.5 11.2 10.0 5,259
</TABLE>

Note: All earnings per share numbers are fully diluted. Such numbers are from
continuing operations and are adjusted for non-recurring items.
The Rouse Company numbers are before depreciation and deferred taxes.
NM=Not Meaningful.

17
<PAGE>

<TABLE>
<CAPTION>
ARIEL APPRECIATION FUND
(UNAUDITED) Earnings Per Share
52 - Week -----------------------------
Range 1998 1999 2000 1998 1999 2000 Market
Ticker Price ----------- Actual Estimated Estimated P/E P/E P/E Cap.
Company Symbol 12/31/99 Low High Calendar Calendar Calendar Calendar Calendar Calendar ($MM)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Libbey, Inc. LBY 28.75 24.00 33.75 2.31 2.56 2.93 12.4 11.2 9.8 460
Specialty Equipment Cos., Inc. SEC 23.94 20.44 34.13 2.18 2.13 2.09 11.0 11.2 11.5 499
Shorewood Packaging Corp. SWD 18.94 11.75 20.63 1.08 1.27 1.43 17.5 14.9 13.2 518
Littelfuse, Inc. LFUS 24.27 16.25 25.00 0.86 1.15 1.40 28.2 21.1 17.3 534
Bob Evans Farms, Inc. BOBE 15.44 12.75 26.38 1.30 1.40 1.50 11.9 11.0 10.3 594
Hussmann International, Inc. HSM 15.06 12.63 19.00 1.20 1.28 1.43 12.6 11.8 10.5 767
Brady Corp. BRC 33.94 19.50 36.31 1.49 1.98 2.10 22.8 17.1 16.2 769
Longs Drug Stores Corp. LDG 25.81 22.25 39.50 1.64 1.83 2.05 15.7 14.1 12.6 1,016
Arthur J. Gallagher & Co. AJG 64.75 42.25 66.25 3.10 3.47 3.82 20.9 18.7 17.0 1,190
Houghton Mifflin Company HTN 42.19 34.88 52.50 1.40 1.65 2.95 30.1 25.6 14.3 1,312
Lee Enterprises LEE 31.94 26.13 32.25 1.41 1.56 1.73 22.7 20.5 18.5 1,414
Harte-Hanks, Inc. HHS 21.75 19.06 29.25 0.88 1.03 1.19 24.7 21.1 18.3 1,493
Rouse Company RSE 21.25 19.75 27.75 2.69 2.98 3.29 7.9 7.1 6.5 1,529
Central Newspapers, Inc. ECP 39.38 29.88 45.69 1.78 2.25 2.60 22.1 17.5 15.1 1,530
International Game Technology IGT 20.31 14.13 24.13 1.33 1.41 1.60 15.3 14.4 12.7 1,746
Herman Miller, Inc. MLHR 23.00 15.63 27.13 1.62 1.70 1.93 14.2 13.5 11.9 1,841
Whitman Corp. WH 13.44 12.19 24.94 0.61 0.57 0.63 22.0 23.6 21.3 1,897
McClatchy Co. MNI 43.25 29.00 43.75 1.41 1.79 1.96 30.7 24.2 22.1 1,944
McCormick & Company, Inc. MKC 29.75 26.63 34.63 1.43 1.68 1.88 20.8 17.7 15.8 2,106
Sybron International Corp. SYB 24.69 20.69 30.81 1.02 1.25 1.50 24.2 19.8 16.5 2,549
Galileo International, Inc. GLC 29.94 25.31 59.31 1.86 2.25 2.57 16.1 13.3 11.6 2,708
SunGard Data Systems, Inc. SDS 23.75 16.88 41.94 1.19 1.34 1.51 20.0 17.7 15.7 3,046
Equifax, Inc. EFX 23.56 20.13 39.88 1.34 1.55 1.82 17.6 15.2 12.9 3,332
Hasbro, Inc. HAS 18.94 16.88 37.00 1.07 1.39 1.35 17.7 13.6 14.0 3,670
Leggett & Platt, Inc. LEG 21.44 18.63 28.31 1.24 1.44 1.61 17.4 14.9 13.3 4,208
MBIA, Inc. MBI 52.81 45.13 71.88 4.58 4.70 5.30 11.5 11.2 10.0 5,259
CenturyTel, Inc. CTL 47.38 35.19 49.00 1.42 1.68 1.86 33.4 28.2 25.5 6,619
XL Capital Ltd. XL 51.88 41.94 75.75 4.32 4.58 5.25 12.0 11.3 9.9 6,620
Allergan, Inc. AGN 49.75 31.69 57.81 1.01 1.28 1.53 49.3 38.9 32.5 6,742
Franklin Resources, Inc. BEN 32.06 27.00 45.00 1.86 1.95 2.20 17.2 16.4 14.6 8,083
Newell Rubbermaid, Inc. NWL 29.00 25.25 52.00 1.99 1.65 2.02 14.6 17.6 14.4 8,179
Avery Dennison Corp. AVY 72.88 39.38 73.00 2.15 2.51 2.85 33.9 29.0 25.6 8,212
The Clorox Company CLX 50.38 37.50 66.47 1.53 1.59 1.87 32.9 31.7 26.9 11,910
Pitney Bowes, Inc. PBI 48.31 40.88 73.31 2.03 2.30 2.60 23.8 21.0 18.6 12,815
Tribune Company TRB 55.06 30.16 60.88 1.27 1.54 1.75 43.4 35.8 31.5 13,084
MBNA Corporation KRB 27.25 20.81 33.25 0.97 1.20 1.44 28.1 22.7 18.9 21,849
Carnival Corporation CCL 47.81 38.13 53.50 1.40 1.65 1.95 34.2 29.0 24.5 29,342
</TABLE>

18
<PAGE>

Dear Fellow Shareholder: For the fourth quarter ended December 31, 1999, the
Ariel Premier Bond Fund, Investor Class returned -0.28% and the Institutional
Class retuned -0.08%, compared to a -0.12% return for the Lehman Brothers
Aggregate Bond Index. For the one-year period ended December 31, 1999, the
Ariel Premier Bond Fund, Institutional Class ranked in the top 9th percentile
of Corporate Debt A-Rated Bond Funds tracked by Lipper Analytical
Services--specifically, the 14th best performer out of 164 funds. The Ariel
Premier Bond Fund, Investor Class also ranked well as the 24th best performer
out of 164 funds over the same period.

The poor performance of the bond market in 1999 resulted from dashed
expectations. During the year, almost every fundamental determinant of interest
rates was the opposite of the consensus expectations built into yields a year
ago. At year-end 1998, the fixed income markets anticipated falling interest
rates and falling inflation. Both were to have resulted from global economic
weakness and recessionary conditions in the U.S. In actuality, 1999 proved quite
different. The U.S. economy grew 4.1%, foreign economies strengthened, and both
inflation and interest rates rose. Moreover, if not for Y2K considerations, the
Fed would likely have raised interest rates even higher. These major factors
helped produce the second negative total return for the bond market in 27 years,
exceeded only by 1994. What a difference a year makes!

Besides the magnitude of the increase in interest rates, the other striking
feature of the year was the volatility in the spreads of non-Treasury sectors.
After a significant narrowing over the first five months of 1999, spreads
widened during the summer (back to 1998 crisis levels) as Y2K risk aversion
peaked. As the year progressed, Y2K concerns faded and spreads subsequently
narrowed sharply again. This left investment grade spreads modestly narrower for
the year, with mortgages tightening the most, followed by the asset-backed and
corporate sectors. High yield and emerging market debt did quite well.

The best performing portfolios over the last 12 months were short in duration
with significant exposure to non-Treasury sectors. As such, Ariel Premier Bond
Fund's short duration strategy and general overweighting in non-Treasury sectors
throughout the year led to good performance in 1999.

<PAGE>

In our view, today's interest rate levels are consistent with underlying
fundamentals, and non-Treasury spreads have room for modest improvement over the
first half of 2000. Accordingly, the portfolio's duration equals that of the
Lehman Brothers Aggregate Bond Index, while spread exposure exceeds the
benchmark by roughly 1.2 years.

In 2000, we expect a better bond market. We believe that growth in the U.S.
economy will slow modestly, closer to 3.5% than the 4% experienced in 1999. The
Consumer Price Index should rise only modestly from current levels, and the Fed
will keep a watchful eye on signs of growth, likely raising short-term rates
early in the year.

We appreciate the opportunity to serve you and, as always, welcome your
questions and comments.

Sincerely,

/s/John W. Rogers, Jr. /s/Kenneth R. Meyer
- ---------------------- ---------------------
John W. Rogers, Jr. Kenneth R. Meyer
President President
Ariel Capital Management, Inc. Lincoln Capital Management Company

Lipper Analytical Services, Inc. is a nationally recognized organization that
reports performance and calculates rankings for mutual funds. Each fund is
ranked within a universe of funds with similar investment objectives. Ranking is
based on total returns. Ariel Premier Bond Fund, Institutional Class ranked 13
out of 130 funds and 25 out of 116 funds in the Corporate Debt A-Rated Funds
category for the three-year and since inception (10/01/95) periods ended
12/31/99, respectively. Ariel Premier Bond Fund, Investor Class ranked 16 out of
133 funds in the Corporate Debt A-Rated Funds category for the since inception
(02/01/97) period ended 12/31/99.

[GRAPHIC]

<PAGE>

ARIEL PREMIER
BOND FUND

Institutional Class Inception
October 1, 1995

Investor Class Inception
February 1, 1997

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1999 (assume reinvestment of dividends and capital gains)

- -------------------------------------------------------------------------------------------------------
4th Quarter YTD 1 Year 3 Year Life of Fund
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ariel Premier Bond Fund, Inst. Cl. -0.08% -0.57% -0.57% +5.33% +5.34%
- -------------------------------------------------------------------------------------------------------
Ariel Premier Bond Fund, Inv. Cl. -0.28% -0.97% -0.97% -- +4.94%
- -------------------------------------------------------------------------------------------------------
Lehman Bros. Aggregate Bond Index -0.12% -0.82% -0.82% +5.73% +5.92% (Inst.)
+5.79% (Inv.)
</TABLE>

<TABLE>
<CAPTION>
ARIEL PREMIER BOND FUND PORTFOLIO COMPOSITION
<S> <C>
Government & Agency 18.7%
Mortgage-Backed 33.3%
Corporate 17.0%
Asset-Backed 19.1%
Commercial Mortgage-Backed 3.3%
Cash 8.6%

<CAPTION>
LEHMAN BROTHERS AGGREGATE BOND INDEX PORTFOLIO COMPOSITION
<S> <C>
Government & Agency 41.6%
Mortgage-Backed 34.2%
Corporate 21.5%
Asset-Backed 1.3%
Commercial Mortgage-Backed 1.4%
Cash 0%
</TABLE>

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTED IN ARIEL PREMIER BOND FUND,
INVESTOR CLASS AND COMPARABLE INDEX*

<TABLE>
<CAPTION>
INVESTOR CLASS
DATE BOND LEHMAN
<S> <C> <C>
Feb-97 $10,000 $10,000
Mar-97 $9,930 $9,914
Jun-97 $10,265 $10,278
Sep-97 $10,573 $10,619
Dec-97 $10,838 $10,932
Mar-98 $10,997 $11,102
Jun-98 $11,234 $11,361
Sep-98 $11,616 $11,841
Dec-98 $11,621 $11,882
Mar-99 $11,611 $11,823
Jun-99 $11,482 $11,719
Sep-99 $11,514 $11,798
Dec-99 $11,509 $11,784
</TABLE>

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTED IN ARIEL PREMIER BOND FUND,
INSTITUTIONAL CLASS AND COMPARABLE INDEX*

<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
DATE BOND LEHMAN
<S> <C> <C>
Oct-95 $1,000,000 $1,000,000
Dec-95 $1,035,122 $1,042,614
Jun-96 $1,018,867 $1,029,953
Dec-96 $1,067,709 $1,080,467
Jun-97 $1,101,595 $1,113,887
Dec-97 $1,165,544 $1,184,770
Jun-98 $1,210,570 $1,231,317
Dec-98 $1,254,703 $1,287,699
Jun-99 $1,240,901 $1,270,046
Dec-99 $1,247,569 $1,277,108
</TABLE>

*Statistics represent past performance which is not indicative of future
results. The Lehman Brothers Aggregate Bond Index is composed of securities from
Lehman Brothers Government/Corporate Bond Index, Mortgage-Backed Securities
Index, and the Asset-Backed Securities Index. Total return comprises price
appreciation/depreciation and income as a percentage of the original investment.
An investor cannot invest directly in an index.

[SIDENOTE:]
ARIEL PREMIER BOND FUND SEEKS TO MAXIMIZE TOTAL RETURN THROUGH A COMBINATION OF
INCOME AND CAPITAL APPRECIATION BY INVESTING IN HIGH-QUALITY FIXED INCOME
SECURITIES. THE FUND MAY INVEST IN INVESTMENT-GRADE BONDS INCLUDING U.S.
GOVERNMENT (AND GOVERNMENT AGENCY) SECURITIES, CORPORATE BONDS, MORTGAGE-RELATED
SECURITIES AND ASSET-BACKED SECURITIES. UNDER NORMAL CONDITIONS, AT LEAST 80% OF
THE FUND'S ASSETS WILL BE INVESTED IN FIXED INCOME SECURITIES RATED A OR BETTER
BY THE RECOGNIZED RATING AGENCIES. ARIEL PREMIER BOND FUND WILL NOT INVEST IN
"JUNK BONDS" OR OTHER LOW-RATED SECURITIES.

21
<PAGE>

ARIEL PREMIER BOND FUND
SCHEDULE OF INVESTMENTS
DECEMBER 31, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
Par Value ASSET-BACKED SECURITIES-19.12% Cost Market Value
<S> <C> <C> <C>
$700,000 Americredit Auto Receivables,
98-B A4, 6.06%, 12/12/2002 $699,919 $694,148
750,000 Americredit Auto Receivables,
99-A A4, 5.88%, 12/12/2005 749,859 732,713
416,517 Associates Manufactured Housing,
972A-3, 6.275%, 3/15/2028 416,396 416,105
1,000,000 Auto Leasing Investors,
6.177%, 8/12/2005+ 1,000,000 961,850
650,000 BEA, 1998-2A A2A,
6.72%, 6/15/2010+ 628,249 595,563
695,000 Circuit City Credit Card,
1995-1A, 6.375%, 8/15/2005 705,518 694,340
2,000,000 Contimortgage Home Equity,
97-A5, 6.44%, 12/15/2012 2,017,534 1,966,800
616,250 Credit Card Receivables Trust,
98-1, 6.478%, 12/22/2004+ 619,641 610,088
2,000,000 EQCC Home Equity,
973-A9, 6.57%, 2/15/2029 1,984,116 1,907,440
1,800,000 First Omni,
96-AA, 6.65%, 9/15/2003 1,819,566 1,797,570
1,040,729 Fleetwood,
97BA, 6.40%, 5/15/2013 1,039,399 1,033,475
500,000 Green Tree Financial,
98-A4, 6.09%, 2/1/2030 499,948 494,450

<CAPTION>
Par Value ASSET-BACKED SECURITIES-19.12% (cont) Cost Market Value
<S> <C> <C> <C>
$37,086 Green Tree Financial,
1995-1 A5, 8.40%, 6/15/2025 $40,629 $37,363
950,000 Greenpoint Manufacturing,
99-1 A2, 6.01%, 8/15/2015 949,762 916,779
1,415,000 Healthcare Rec.,
99-1, 6.25%, 2/1/2003+ 1,413,183 1,372,989
715,747 IMC Excess Cash Flow Sec. Trust,
97-A A, 7.41%, 11/26/2028+ 715,720 506,949
1,450,000 J.C. Penney Master
Credit Card Trust,
1990-C1, 9.625%, 6/30/2000 1,471,729 1,465,327
1,445,000 MBNA Master Credit Card Trust,
1999-JA, 7.00%, 2/15/2012 1,440,404 1,416,346
60,887 The Money Store,
1996-1 A3, 6.85%, 12/20/2002 60,882 60,912
450,000 Onyx Acceptance Auto Trust,
99-1 A2, 5.83%, 3/15/2004 449,973 440,573
1,440,000 Prime, 95-1A, 6.75%, 11/15/2005 1,445,073 1,432,224
3,001,511 Railcar Leasing,
971A, 6.75%, 7/15/2006 3,039,014 2,963,061
1,144,185 Railcar Trust,
92-A1, 7.75%, 6/1/2004 1,178,734 1,155,169
776,548 Salomon Brothers Mortgage Sec.,
97LB6A3, 6.76%, 12/25/2027 775,600 775,756
13,429 UCFC,
96-C1 A3, 7.15%, 12/15/2013 13,427 13,394
1,071,090 Union Acceptance Corp.,
97AA2, 6.375%, 10/8/2003 1,077,293 1,067,052

22
<PAGE>

<CAPTION>
Par Value ASSET-BACKED SECURITIES-19.12% (cont) Cost Market Value
<S> <C> <C> <C>
$2,630,000 Union Financial Services
Taxable Student Loan,
98A A8, 5.50%, 9/1/2005 $2,613,526 $2,475,698
1,880,000 World Financial,
96-AA, 6.70%, 2/15/2004 1,886,601 1,878,440
2,165,385 World Omni Auto Lease,
97B3, 6.18%, 11/25/2003 2,165,226 2,164,865
---------- ----------
Total Asset-Backed Securities 32,916,921 32,047,439
---------- ----------
<CAPTION>
COMMERCIAL MORTGAGE-BACKED SECURITIES-3.33%
<S> <C> <C> <C>
315,000 CMAT, 99-C2 A3, 7.737%,
12/17/2012 315,015 311,711
400,000 CSFB, 99-C1 A2, 7.29%,
9/15/2009 401,978 392,728
1,150,000 GMAC Commercial, 99-CTL1 A,
7.151%, 1/15/2008+ 1,149,978 1,137,063
550,000 GMAC Commercial, 99-1 A2,
6.175%, 5/15/2033 558,270 500,368
1,025,345 GS Mortgage Securities Corp.,
98-GL11 A1, 6.312%,
4/13/2031 1,046,716 992,924
746,250 GS Mortgage Securities Corp.,
99-C1 A1, 5.85%, 11/18/2030 747,562 703,803
515,000 Lehman Large Loan, 97-LL1 A2,
6.84%, 9/12/2006 511,394 505,230
617,053 MLMI, 99-C1 A1,
7.37%, 6/15/2008 624,091 615,634

<CAPTION>
Par Value COMMERCIAL MORTGAGE-BACKED
SECURITIES-3.33% (cont) Cost Market Value
<S> <C> <C> <C>
$440,000 Morgan Stanley Capital I,
1999-RM1 A2, 6.71%,
12/15/2031 $439,949 $416,076
-------- --------

Total Commercial
Mortgage-Backed Securities 5,794,953 5,575,537
--------- ---------

CORPORATE DEBT-17.02%

1,000,000 AES Ironwood LLC, 8.857%,
11/30/2025+ 1,000,000 946,680
550,000 American Stores, 8.00%,
6/1/2026 604,654 556,609
615,000 Avalonbay Communities,
7.50%, 8/1/2009 612,202 586,540
550,000 Bestfoods, 5.60%, 10/15/2097 424,430 380,708
410,000 Boeing Co., 6.875%, 10/15/2043 367,961 350,267
560,000 Camden Property Trust,
7.00%, 4/15/2004 557,239 539,055
1,000,000 Citigroup Capital II,
7.75%, 12/1/2036 1,035,494 913,451
1,575,000 Consumers Energy CMS,
6.20%, 5/1/2003 1,557,673 1,500,062
840,000 Dow Chemical Co.,
7.375%, 11/1/2029 832,146 803,679
700,000 Duke Realty LP,
7.30%, 6/30/2003 699,465 688,632

<PAGE>

<CAPTION>
Par Value CORPORATE DEBT-17.02% (cont) Cost Market Value
<S> <C> <C> <C>

$1,310,000 Edison International, Inc.,
6.875%, 9/15/2004 $1,300,432 $1,282,900
515,000 FedEx, 7.60%, 7/1/2097 540,541 458,892
680,000 FPL Group Capital, Inc.,
7.625%, 9/15/2006 678,011 684,317
1,100,000 GTE California, 6.75%,
5/15/2027 1,150,814 964,275
1,020,000 J.C. Penney Co.,
7.625%, 3/1/2097 914,505 794,633
500,000 Kohl's Corp., 7.25%, 6/1/2029 472,399 453,511
800,000 LSP Energy LP, 8.16%, 7/15/2025+ 800,000 744,248
610,000 Mirage Resorts, 7.25%, 8/1/2017 606,914 501,580
300,000 News America Holdings,
7.25%, 5/18/2018 298,044 271,901
730,000 Northwest Airlines Corp.,
7.575%, 3/1/2019 730,000 701,129
1,200,000 NRG Energy, Inc.,
7.50%, 6/1/2009 1,199,655 1,112,480
1,190,000 Park Place Entertainment,
7.95%, 8/1/2003+ 1,180,283 1,178,502
650,000 Peco Energy Co.,
7.38%, 4/6/2028 650,000 555,846
1,400,000 Philip Morris, 7.125%,
8/15/2002 1,394,360 1,377,335
700,000 PNC Funding Corp.,
7.00%, 9/1/2004 697,153 688,692
970,000 Principal Financial Group,
8.20%, 8/15/2009+ 967,053 980,356
775,000 Provident Companies,
6.375%, 7/15/2005 772,753 722,875
$1,220,000 Provident Companies,
7.00%, 7/15/2018 $1,219,624 $1,063,547
675,000 Rohm & Haas Co.,
7.85%, 7/15/2029+ 674,509 678,389
1,000,000 Safeco Capital Trust,
8.072%, 7/15/2037 1,000,000 879,482
750,000 Security Capital Group,
7.75%, 11/15/2003 749,429 727,936
845,000 Spieker Properties LP,
6.75%, 1/15/2008 785,609 772,769
805,000 Suntrust Cap II,
7.90%, 6/15/2027 809,603 752,931
580,000 Telecom De Puerto Rico,
6.80%, 5/15/2009+ 558,659 529,684
750,000 Virginia Electric Power,
6.75%, 2/1/2007 753,451 709,664
1,110,000 WorldCom Inc.,
7.750%, 4/1/2027 1,230,100 1,132,503
560,000 Zurich Capital Trust,
8.376%, 6/1/2037+ 595,561 544,625
---------- ----------

Total Corporate Debt 30,420,726 28,530,685
---------- ----------

<CAPTION>
U.S. GOVERNMENT AGENCIES-39.93%

MORTGAGE-BACKED SECURITIES--33.26%
<S> <C> <C> <C>
13,900,000 Fannie Mae, 7.50%, 1/1/2030x 13,873,938 13,747,962
7,335,000 Freddie Mac, Gold,
6.00%, 1/1/2030x 6,816,966 6,720,694

<PAGE>

Par Value U.S. GOVERNMENT AGENCIES-39.93% (cont) Cost Market Value

<CAPTION>
MORTGAGE-BACKED SECURITIES--33.26% (cont)
<S> <C> <C> <C>
MORTGAGE-BACKED SECURITIES--33.26% (CONT)
$36,155,000 Freddie Mac, 6.50%, 1/1/2030x $34,528,923 $34,177,682
1,173,492 Freddie Mac, Gold,
6.50%, 11/1/2025 1,109,770 1,117,471
----------- -----------
56,329,597 55,763,809
----------- -----------

<CAPTION>
OTHER AGENCY ISSUES--6.67%
<S> <C> <C> <C>
11,730,000 Fannie Mae,
6.25%, 5/15/2029 10,560,957 10,425,296
734,175 Government Trust Certificate,
Israel Trust, Series 2E, 9.40%,
5/15/2002 760,841 751,977
----------- -----------
11,321,798 11,177,273
----------- -----------
TOTAL U.S. GOVERNMENT AGENCIES 67,651,395 66,941,082
----------- -----------
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS-12.06%
<S> <C> <C> <C>
7,885,000 U.S. Treasury Bond,
13.875%, 5/15/2011 10,896,563 10,797,522
755,000 U.S. Treasury Bond,
10.375%, 11/15/2012 944,480 917,325
2,765,000 U.S. Treasury Bond,
8.125%, 8/15/2021 3,249,487 3,172,838
4,605,000 U.S. Treasury Note,
7.50%, 11/15/2001 4,716,756 4,705,734
200,000 U.S. Treasury Note,
6.25%, 6/30/2002 202,870 199,875
435,000 U.S. Treasury Note,
5.50%, 1/31/2003 430,411 424,668
----------- -----------
Total U.S. Government
Obligations 20,440,567 20,217,962
----------- -----------

<CAPTION>
Par Value COMMERCIAL PAPER-34.14% Cost Market Value
<S> <C> <C> <C>
$3,200,000 American Express Corp.,
5.9 4%, 1/19/2000* $3,190,320 $3,190,320
3,200,000 American General Finance Group,
6.02%, 1/19/2000* 3,190,368 3,190,368
3,200,000 Associates First Capital Corp.,
6.05%, 1/19/2000* 3,190,320 3,190,320
3,200,000 AT&T Corp., 6.01%, 1/19/2000* 3,190,384 3,190,384
3,200,000 Chevron Corp., 6.45%, 1/18/2000* 3,190,253 3,190,253
3,200,000 Citicorp, 6.07%, 1/19/2000* 3,190,288 3,190,288
3,200,000 Clorox Co., 6.09%, 1/14/2000* 3,192,963 3,192,963
3,200,000 Deere & Co., 6.09%, 1/19/2000* 3,190,256 3,190,256
3,000,000 Duke Energy Corp.,
6.00%, 1/14/2000* 2,993,500 2,993,500
3,200,000 Ford Motor Credit,
5.98%, 1/19/2000* 3,190,208 3,190,208
3,200,000 General Electric Capital Corp.,
6.06%, 1/19/2000* 3,190,304 3,190,304
3,200,000 General Motors, 6.12%, 1/19/2000* 3,190,208 3,190,208
3,200,000 Grainger (W.W.) Inc.,
6.20%, 1/13/2000* 3,193,387 3,193,387
3,200,000 Heinz Co., 6.04%, 1/13/2000* 3,193,557 3,193,557
3,200,000 Hertz Corp., 6.23%, 1/19/2000* 3,190,032 3,190,032
3,200,000 Household Finance Corp.,
6.00%, 1/19/2000* 3,190,400 3,190,400
3,200,000 Prudential Funding Corp.,
6.12%, 1/19/2000* 3,190,208 3,190,208
3,200,000 Wells Fargo & Co.,
6.11%, 1/19/2000* 3,190,224 3,190,224
----------- -----------

Total Commercial Paper 57,237,180 57,237,180
----------- -----------
25

<PAGE>

<CAPTION>
Principal REPURCHASE AGREEMENT-7.14% Cost Market Value
Amount
$11,975,577 State Street Bank & Trust
Company Repurchase Agreement,
2.50%, dated 12/31/1999, repurchase
price $11,978,072, maturing
1/3/2000 (collateralized by
U.S. Treasury Note, 7.25%,
2/15/2005) $11,975,577 $11,975,577
------------ -----------

Total Repurchase Agreement 11,975,577 11,975,577
------------ -----------

Total Investments-132.74% $226,437,319 222,525,462
------------ -----------
------------

Liabilities less Other Assets-(32.74)% (54,880,177)
-------------

NET ASSETS-100.00% $167,645,285
-------------
-------------
</TABLE>

+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration normally to qualified institutional buyers.
x When-issued security.
* Security pledged as collateral for when-issued purchase commitment
outstanding as of December 31, 1999.

<PAGE>

BOARD OF TRUSTEES

BERT N. MITCHELL, C.P.A. Bert is founder and chairman of Mitchell & Titus,
LLP, the nation's largest minority-owned accounting firm. He holds B.B.A.,
M.B.A. and Honorary Doctorate degrees from the Baruch School of Business
of the City University of New York. Bert is also a graduate of the
Owner-President Management Program of the Harvard Business School. He
serves on the board of BJ's Wholesale Club, Inc.

MARIO L. BAEZA, ESQ. Chairman and CEO of TWC/Latin America Partners,
L.L.C., Mario is widely regarded as a preeminent expert in business and
legal issues in Latin America. He received a B.A. from Cornell University
and a J.D. from Harvard Law School, where he later taught.

JAMES W. COMPTON Jim serves as the president and CEO of the Chicago Urban
League, which has worked to eliminate racial discrimination and
segregation since 1916. He has a B.A. degree from Morehouse College and
serves on the board of directors of Commonwealth Edison Company and Unicom
Corp.

WILLIAM C. DIETRICH, C.P.A. Bill serves as director of finance and
administration of Streamline.com, Inc.-Washington Division. He has a B.A.
from Georgetown University and serves on the board and program staff of
the Shalem Institute, an internationally known ecumenical organization.

ROYCE N. FLIPPIN, JR. Royce is president of Flippin Associates, a
broad-based consulting firm providing strategic and implementation
services in the management of critical needs for the public and private
sectors. Formerly, he was director of program advancement for the
Massachusetts Institute of Technology. He earned his A.B. from Princeton
University and an M.B.A. from Harvard Business School. Royce is on the
board of several corporations and non-profit institutions.

JOHN G. GUFFEY, JR. Currently, John is director and treasurer of Silby
Guffey & Co., Inc., a venture capital firm investing in early stage
companies in the health care and environmental industries. John has a B.S.
from the University of Pennsylvania's Wharton School. He does volunteer
work and holds directorships with various local and national non-profit
organizations.

MELLODY HOBSON As senior vice president and director of marketing, Mellody
oversees the servicing of Ariel Capital Management Inc.'s institutional
clients, as well as the marketing of the Ariel Mutual Funds. She received
an A.B. from Princeton University's Woodrow Wilson School. She serves as a
director of the Chicago Public Library and the Field Museum, as well as
the Civic Federation of Chicago. Mellody works with a variety of civic
institutions, including those affiliated with Princeton.

CHRISTOPHER G. KENNEDY Chris is executive vice president of Merchandise
Mart Properties, Inc. which manages, among other prime properties, The
Merchandise Mart; The Washington Design Center; and New York's Decoration
and Design Building. He earned his B.A. from Boston College and his M.B.A.
at the J.L. Kellogg Graduate School of Management at Northwestern
University. Chris serves on the board of directors of the Chicago
Convention & Tourism Bureau; Boston-based Citizens Energy Corp. and
Citizens Corp.; and the Greater Chicago Food Depository.

ERIC T. MCKISSACK, CFA In the capacity of vice chairman and co-chief
investment officer of Ariel Capital Management, Inc., Eric is responsible
for co-managing client and mutual fund portfolios. He received a B.S. in
both Management and Architecture from the Massachusetts Institute of
Technology and he earned his M.B.A. from the University of California at
Berkeley. He has earned the Chartered Financial Analyst designation. Eric
serves on a variety of civic and corporate boards.

<PAGE>
ARIEL MUTUAL FUNDS
Ariel Investment Trust
307 North Michigan Avenue
Suite 500
Chicago, Illinois 60601
800.292.7435
www.arielmutualfunds.com

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