Ariel Focus Fund 3 RD Q UARTER 2006

About the Fund The no-load Ariel Focus Fund pursues long-term capital appreciation by investing in undervalued companies that show strong potential for growth. The Fund primarily invests in companies with market capitalizations in excess of $10 billion at the time of initial purchase. Ariel Focus Fund is a non-diversified fund and generally will hold 20 securities.

Fund Performance as of September 30, 2006 1 Month Quarter YTD 1 Year Life of Fund (Inception 6/30/05) Ariel Focus Fund 4.29% 3.69% 2.59% 6.00% 6.67% Russell 1000 Value Index1 1.99% 6.22% 13.19% 14.62% 14.35% Russell 1000 Index2 2.37% 5.06% 7.95% 10.25% 10.91% S&P 500 Index3 2.58% 5.67% 8.53% 10.79% 11.00% Lipper Rankings Within multi-cap value fund category — — — 453/487 387/422

Ariel Focus Fund is a non-diversified fund and therefore may be subject to greater volatility than a more diversified investment. Performance data quoted represents past performance. Past performance does not guarantee future results. All performance assumes reinvestment of dividends and capital gains. 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. Current performance may be lower or higher than the performance data quoted. Performance data current to the most recent month-end may be obtained by visiting our web site, arielmutualfunds.com.. Lipper, 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. Portfolio Composition Fund Facts Portfolio Characteristics

Russell Investment Style Mid/large cap value Average Mkt Cap ($ weighted) $39.4 billion Ariel 1000 Russell S&P Focus Value 1000 500 Inception June 30, 2005 Number of Issues 20 Fund † Index Index Index Total Assets $29.0 million One-Year Turnover 29.43% Consumer Discretionary 37.7% 7.3% 12.9% 11.9% Expense Ratio 1.25% P/E Forward 13.9 & Services Ticker Symbol ARFFX Beta (Russell 3000 Index) 1.04 Financial 18.6% 37.0% 23.4% 23.1% Services

Other 13.7% 3.7% 4.0% 4.7%

Technology 11.3% 3.8% 12.8% 13.1%

Health Care 9.9% 7.2% 12.7% 12.4%

Autos & 6.2% 1.5% 2.4% 2.4% Transportation Investing in mid-cap stocks is more risky and more volatile than investing in large cap stocks. Materials & 2.6% 4.4% 3.9% 3.4% Processing 1The Russell 1000® Value Index measures the performance of large-sized, value-oriented companies with lower Utilities 0.0% 12.8% 7.7% 7.6% price-to-earnings ratios. 2The Russell 1000® Index measures the performance of large-sized companies. Integrated Oils 0.0% 10.7% 5.5% 6.1% 3The Standard & Poor’s 500 Index is a broad market weighted index dominated by blue-chip stocks. Consumer 0.0% 6.9% 7.2% 7.7% This fact sheet candidly discusses a number of individual companies and sectors. These opinions are current as of Staples the date of this fact sheet but are subject to change. The information provided in this fact sheet does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a rec- Other Energy 0.0% 2.6% 3.0% 3.2% ommendation to purchase or sell any particular security. Producer 0.0% 2.0% 4.6% 4.3% For a current prospectus, which includes the investment objectives, risks, management fees, charges and expenses as Durables well as other information, call 800-292-7435. Please read the prospectus and consider this information carefully before

† investing. ©2006, Ariel Distributors, Inc. Represents percentage of total equity holdings in the portfolio.

Equity 99.4% Cash & Other 0.6% Ariel Focus Fund 3rd Quarter 2006

Portfolio Commentary TopTen Equity Holdings For the third quarter ended September 30, 2006, Ariel Focus Fund gained a solid +3.69%, but 1 Berkshire Hathaway Inc. 7.0% Insurance and investment firm trailed its benchmarks. Specifically, the S&P 500 Index gained +5.67% and the Russell 1000 2 Accenture Ltd 6.9% Value Index rose +6.22%. Global management consulting, technology services and outsourcing firm During the quarter, performance was helped by several stocks. Specifically, Pfizer Inc’s stock gained 3 Tyco International Ltd. 6.6% as the result of its cholesterol drug, Lipitor, maintaining better than anticipated market share. We Manufacturing conglomerate are excited about the company’s long-term prospects. Pfizer is aggressively cutting costs, investing 4 International Business 6.6% in new products and launching two new drugs: Chantix, a smoking cessation pill, and Exubera, an Machines Corp. Worldwide provider of computer inhaled insulin. Additionally, Accenture Ltd traded up on news that it was able to exit a problem- products and services atic contract with the United Kingdom’s National Health Service for a $120 million break-up fee, 5 Toyota Motor Corp. 6.2% far less than the $1 billion expected. We continue to believe Accenture is the best positioned con- Global auto manufacturer sulting firm in the industry, and removing this contract should further accentuate the company’s 6 Pfizer Inc 5.9% Pharmaceutical company solid earnings growth. 7 H&R Block, Inc. 5.5% Tax, investment and mortgage Several holdings struggled during the quarter. Specifically, H&R Block, Inc.’s shares fell due to higher services provider than anticipated mortgage delinquencies, prompting the company to book a higher than expected 8 Carnival Corp. 4.9% loss provision. Although we continue to monitor these mortgage credit issues closely, we believe the Worldwide cruise company company is attractively valued given the strength of the core tax business. Cendant Corp. completed 9 Black & Decker Corp. 4.8% its spin-off of , Corp. and Wyndham Worldwide Corp. on July 31. The Travelport Manufacturer of power tools and accessories business, which included .com, was sold to . Cendant spun-off its real 10 Dell Inc. 4.5% estate and hotel businesses as Realogy and Wyndham Worldwide, respectively. In the end, Cendant Global computer and technology provider retained only its car rental business and changed the company’s name to , Inc. % of Portfolio in Top Ten 58.9% Since the split, shares of Avis Budget, Realogy and Wyndham all fell as investors sold the portions of Cendant they no longer wanted to own. This is to be expected after a spin-off. While we maintained our position in Realogy, we sold our shares of Avis Budget and Wyndham during the quarter due to Quality their poor growth prospects. Ariel seeks to invest in quality companies with quality management teams and After more than three years of low-quality cyclical stock leadership combined with runaway energy solid financials. prices, it appears the market is once again returning to normalcy. As the trendier, more volatile cyclical issues stop and catch their breath, we believe conditions favor our slow and steady quality Expertise Ariel’s industry concentration helps to holdings. Our stocks have low debt loads and strong franchises that should allow them to regain add value in areas we know well. ground in this period of slowing economic growth.

Value About the Portfolio Managers As value investors, Ariel makes oppor- tunistic purchases when companies Charles K. Bobrinskoy that we believe are high quality are Charlie brings more than two decades of investment banking experience to temporarily out of favor. Ariel. He joined the firm in 2004 as Vice Chairman and oversees Ariel’s Investment and Trading Team. Prior to Ariel, Charlie worked for Salomon Brothers and Citigroup, most recently as Managing Director and Head of North American Investment Banking Branch Offices. He graduated from Duke University and earned an MBA from The University of Chicago.

Timothy Fidler, CFA Tim has over 13 years of research and portfolio management experience. As the Director of Research, Tim supervises our Research Analysts and is ultimately responsible for all of our proprietary research. Prior to joining Ariel in 1999, Tim worked at Morgan Stanley as a Research Analyst and Portfolio Manager. He graduated Phi Beta Kappa from Northwestern University and earned his MBA from The University of Chicago, where he graduated with High Honors.

As of 9/30/06, Pfizer comprised 5.9% of Ariel Focus Fund; Accenture, 6.9%; H&R Block, 5.5%; Cendant, 0.0%; Travelport, 0.0%; Realogy, 2.6%; Wyndham Worldwide, 0.0%; and Avis Budget Group, 0.0%. This fact sheet candidly discusses a number of individual companies and sectors. These opinions are current as of the date of this fact sheet but are subject to change. The information provided in this fact sheet does not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular security. Slow and Steady Wins the Race arielmutualfunds.com 800-292-7435