<PAGE>
THE FBR FAMILY OF FUNDS
Supplement Dated December 10, 1998
to the Prospectus Dated September 18, 1998
Effective December 10, 1998, Class B and Class C shares of the Funds are no
longer offered for sale. The Prospectus is amended by deleting all references
to Class B and Class C shares. In addition, effective December 21, 1998, Class
A shares will be offered without a front end sales charge. In connection with
this change, effective December 21, 1998, the section of the Prospectus
captioned "Fund Expenses" is amended to read as follows:
<TABLE>
<CAPTION>
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C>
Maximum Sales Charge Imposed on Purchases NONE
Maximum Sales Charge Imposed on Reinvested Dividends NONE
Maximum Deferred Sales Charges NONE
Redemption Fees on Shares held 90 days or less
(as a percentage of redemption amount)* 1.00%
Exchange Fees NONE
</TABLE>
_____________
* In addition, a $15.00 redemption fee will be charged for all payments by
wire made through the Funds' transfer agent.
<TABLE>
<CAPTION>
Financial Small Cap Small Cap Realty
Services Fund Financial Fund Value Fund Growth Fund
------------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average
daily net assets)
Investment Advisory Fees (after fee 0.90% 0.90% 0.60% 0.00%
waivers, if any)*
Distribution (Rule 12b-1) Fees 0.25% 0.25% 0.25% 0.25%
Other Expenses (after 0.72% 0.61% 1.10% 1.75%
applicable expense limitations)* ----- ----- ----- -----
TOTAL FUND OPERATING EXPENSES 1.87% 1.76% 1.95% 2.00%
(after applicable fee waivers ----- ----- ----- -----
and expense limitations)* ----- ----- ----- -----
</TABLE>
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* The Adviser has voluntarily undertaken to waive a portion of its investment
advisory fees and assume certain expenses of each Fund other than brokerage
commissions, extraordinary items, interest and taxes to the extent annual
fund operating expenses exceed 1.95% for Class A shares of each Fund's
average daily net assets for the Financial Services Fund, Small Cap
Financial Fund and Small Cap Value Fund, and to the extent annual fund
operating expenses exceed 2.00% for Class A shares of the Realty Growth
Fund's average daily net assets. Without this fee waiver and expense
reimbursement, if any, investment advisory fees stated above would be 0.90%
for each of the Financial Services Fund, Small Cap Financial Fund and
<PAGE>
Small Cap Value Fund, and 1.00% for the Realty Growth Fund. Without the
expense limitation, other expenses for Class A shares of the Realty Growth
Fund are estimated to be 4.16%. Without the expense limitation, total fund
operating expenses for Class A shares of the Small Cap Value Fund and
Realty Growth Fund are estimated to be 2.25% and 5.41%, respectively. The
Adviser has agreed to maintain the expense limitation with regard to the
Realty Growth Fund at least through October 31, 1999. With respect to the
other Funds, the expense limitation is voluntary and may be revised or
terminated at any time, which may affect Fund expenses and performance.
Example: You would pay the following expenses on a hypothetical $1,000
investment in Class A shares, assuming a 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
FUND
- ----
<S> <C> <C> <C> <C>
FINANCIAL SERVICES FUND $19 $59 $101 $219
SMALL CAP FINANCIAL FUND 18 55 95 207
SMALL CAP VALUE FUND 20 61 105 227
REALTY GROWTH FUND 20 63 108 233
</TABLE>
The purpose of the table above is to assist the investor in understanding
the various costs and expenses that an investor in Class A shares of a Fund will
bear directly or indirectly. See "Fund Organization and Fees" for a more
complete discussion of annual operating expenses of the Funds. The foregoing
example is based upon estimated expenses after fee waivers and reimbursements,
if any for the current fiscal year. The foregoing example should not be
considered a representation of past or future expenses. Actual expenses may be
greater or less than those shown.
Effective December 21, 1998, the minimum initial investment in the Funds is
$2,000 ($1,000 for IRA accounts). Subsequent investments ordinarily must be
at least $100. Payment for Fund shares generally is due to the distributor or
another authorized dealer on the next business day (the "Settlement Date")
after the trade date.
The last paragraph under "Fund Organization and Fees - Investment Adviser" is
amended to read as follows:
Winsor H. Aylesworth serves as portfolio manager for the Realty Growth
Fund. He has served in this capacity for the Fund since commencement of
operations of the Fund on July 3, 1995. Prior to the Fund's conversion to
a series of the Trust, Mr. Aylesworth co-managed the Fund as an officer of
GrandView Advisers, Inc. Before organizing GrandView Advisers, Inc. in
1994, Mr. Aylesworth was an officer of Bank of Boston Corporation, where
his responsibilities included real estate and loan portfolio management.
The Distributor of the Funds is FBR Investment Services, Inc. Friedman,
Billings, Ramsey & Co., Inc. no longer serves as co-distributor of the Funds.
