FBR FAMILY OF FUNDS, N-30D, 1999-06-30

FBR FAMILY OF FUNDS
N-30D, 1999-06-30

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<PAGE>
FBR FAMILY OF FUNDS

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

FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

[LOGO]

SEMI-ANNUAL REPORT
APRIL 30, 1999

FBR FAMILY OF FUNDS

Potomac Tower
1001 Nineteenth Street North
Arlington, VA 22209

1-888-888-0025
e-mail: [email protected]
Internet: http://www.fbrfunds.com
<PAGE>
FBR FAMILY OF FUNDS
----------------

FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

LETTER TO SHAREHOLDERS

June 14, 1999

Dear Shareholder:

We are pleased to bring you the 1999 semi-annual report. The FBR Family of
Funds continues to offer shareholders an excellent means of investing in the
financial services, real estate and small cap sectors. In addition, we will soon
be adding a technology fund to the mix.(1) (More about this later.) With this
addition we will round out our original vision of providing sector funds
concentrating in these four areas, and run by experienced portfolio managers.
While we have no other plans to add to the FBR Family of Funds, let me assure
you that when we can add additional portfolio managers of the same caliber as
our current portfolio managers we will always seize those opportunities.

The FBR Family of Funds operates on an October fiscal year-end; consequently
the information provided in this report is as of April 30, 1999. Our two
financial funds have lagged the broad market as that sector remains out of
favor. The average annual return since inception (01/03/97) for the FBR
Financial Services Fund and FBR Small Cap Financial Fund were 22.61% and 14.36%,
respectively.

The FBR Small Cap Value Fund's average annual return since inception
(01/03/97) was 19.89% and FBR Realty Growth Fund's average annual return since
inception (07/03/95) was 12.12%. We must remind you that investments in real
estate companies and REITs may be adversely affected by a decline in value of
real estate assets, fluctuations in interest rates, credit quality trends and
the cash flow of underlying assets. Certain REITs have relatively small market
capitalizations and, therefore, may not respond to market rallies or downturns
as much as other types of equity securities.

The above total returns represent past performance, which is no guarantee of
future results. Your investment return and principal value will fluctuate so
that your shares, when redeemed, may be worth more or less than their original
cost. FBR Fund Advisers, Inc. has waived a portion of its advisory fees and has
agreed to voluntarily reimburse a portion of the operating expenses, as
necessary, to maintain the expense limitation, as set forth in the notes to the
financial statements during this time period. Without waivers and related
reimbursements, the returns stated above would have been different.

The new technology fund should be up and running by this fall.(1) The new
fund will be an equity fund concentrating on Internet and other technology
related companies. It will be no-load and structured in a similar fashion to the
other members of the family. Needless to say, we are excited about adding this
capability to the FBR Family of Funds.

2
<PAGE>
Thank you for your continued support. Please know that we work hard to
provide you the very best service and portfolio management possible, but if you
have an idea, question or complaint that could help us improve, please contact
us. You can reach our shareholder service representatives at 1-800-821-3460 or a
marketing representative at 1-888-888-0025.

Sincerely,

/s/ C. Eric Brugel

C. Eric Brugel
Chairman & President
FBR Family of Funds

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

(1) A registration statement relating to these securities has been filed with
the Securities and Exchange Commission but has not yet become effective.
These securities may not be sold nor may offers to buy be accepted prior to
the time the registration statement becomes effective. This communication
shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any state in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such state.

3
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR FINANCIAL SERVICES FUND

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
FUND SHARES(1)(2) VS. VARIOUS INDICES
(UNAUDITED)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LIPPER FINANCIAL
FBR FINANCIAL S&P 500 SERVICES
SERVICES FUND COMPOSITE INDEX FUND INDEX
<S> <C> <C> <C>
Jan. 3, 1997 $10,000 $10,000 $10,000
Jan. 31, 1997 $10,292 $10,762 $10,684
Apr. 30, 1997 $10,567 $10,936 $11,006
Jul. 31, 1997 $12,917 $13,086 $13,431
Oct. 31, 1997 $13,358 $12,593 $13,678
Jan. 31, 1998 $14,225 $13,551 $14,458
Apr. 30, 1998 $16,649 $15,425 $16,756
Jul. 31, 1998 $15,923 $15,607 $16,586
Oct. 31, 1998 $14,309 $15,362 $14,438
Jan. 31, 1999 $14,886 $17,952 $15,819
Apr. 30, 1999 $16,065 $18,791 $17,172
Past performance is not predictive of future
performance.
</TABLE>

<TABLE>
<CAPTION>
TOTAL RETURNS
ONE YEAR ENDED AVERAGE
APRIL 30, 1999(3) ANNUAL(4)
------------------ ------------
<S> <C> <C>
FBR Financial Services Fund(2)................. (3.51)% 22.61%
S&P 500 Composite Index(1)..................... 21.82 31.15
Lipper Financial Services Fund Index(1)........ 2.48 26.17
</TABLE>

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

(1) The chart assumes a hypothetical $10,000 initial investment in the Fund and
reflects all Fund expenses. Investors should note that the Fund is a
professionally managed mutual fund while the indices are unmanaged, do not
incur sales charges or expenses and are not available for investment.

(2) FBR Fund Advisers, Inc. waived a portion of its advisory fee and agreed to
voluntarily reimburse a portion of the Fund's operating expenses, as
necessary, to maintain the expense limitation, as set forth in the notes to
the financial statements. Total returns shown include fee waivers and
expense reimbursements, if any; total returns would have been lower had
there been no assumption of fees and/or expenses in excess of expense
limitations.

(3) Purchases made by shareholders within the one year period would have been
subject to an initial maximum sales charge of 5.50%. As a result, total
returns for such shareholders would have been lower.

(4) For the period January 3, 1997 (commencement of investment operations)
through April 30, 1999.

4
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR SMALL CAP FINANCIAL FUND

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
FUND SHARES(1)(2) VS. VARIOUS INDICES
(UNAUDITED)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
LIPPER FINANCIAL
FBR SMALL CAP RUSSELL SERVICES
FINANCIAL FUND 2000 INDEX FUND INDEX
<S> <C> <C> <C>
Jan. 3, 1997 $10,000 $10,000 $10,000
Jan. 31, 1997 $10,258 $10,301 $10,684
Apr. 30, 1997 $10,617 $9,604 $11,006
Jul. 31, 1997 $12,775 $11,648 $13,431
Oct. 31, 1997 $14,608 $12,213 $13,678
Jan. 31, 1998 $15,372 $12,159 $14,458
Apr. 30, 1998 $17,081 $13,695 $16,756
Jul. 31, 1998 $15,507 $11,936 $16,586
Oct. 31, 1998 $13,150 $10,791 $14,438
Jan. 31, 1999 $13,499 $12,227 $15,819
Apr. 30, 1999 $13,662 $12,437 $17,172
Past performance is not predictive of future
performance.
</TABLE>

<TABLE>
<CAPTION>
TOTAL RETURNS
ONE YEAR ENDED AVERAGE
APRIL 30, 1999(3) ANNUAL(4)
------------------ ------------
<S> <C> <C>
FBR Small Cap Financial Fund(2)................ (20.02)% 14.36%
Russell 2000 Index(1).......................... (9.19) 9.83
Lipper Financial Services Fund Index(1)........ 2.48 26.17
</TABLE>

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

(4) For the period January 3, 1997 (commencement of investment operations)
through April 30, 1999.

5
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR SMALL CAP VALUE FUND

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
FUND SHARES(1)(2) VS. VARIOUS INDICES
(UNAUDITED)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
FBR SMALL CAP RUSSELL LIPPER SMALL-CAP
VALUE FUND 2000 INDEX FUND INDEX
<S> <C> <C> <C>
Jan. 3, 1997 $10,000 $10,000 $10,000
Jan. 31, 1997 $10,192 $10,301 $10,352
Apr. 30, 1997 $9,750 $9,604 $9,091
Jul. 31, 1997 $12,675 $11,648 $11,346
Oct. 31, 1997 $13,917 $12,213 $11,739
Jan. 31, 1998 $14,215 $12,159 $11,417
Apr. 30, 1998 $15,751 $13,695 $12,943
Jul. 31, 1998 $14,327 $11,936 $11,527
Oct. 31, 1998 $12,585 $10,791 $10,138
Jan. 31, 1999 $14,506 $12,227 $11,640
Apr. 30, 1999 $15,248 $12,437 $11,633
Past performance is not predictive of future
performance.
</TABLE>

<TABLE>
<CAPTION>
TOTAL RETURNS
ONE YEAR ENDED AVERAGE
APRIL 30, 1999(3) ANNUAL(4)
------------------ ------------
<S> <C> <C>
FBR Small Cap Value Fund(2).................... (3.19)% 19.89%
Russell 2000 Index(1).......................... (9.19) 9.83
Lipper Small Cap Fund Index(1)................. (10.12) 6.72
</TABLE>

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

(4) For the period January 3, 1997 (commencement of investment operations)
through April 30, 1999.

6
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR REALTY GROWTH FUND

COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
FUND SHARES(1)(2) VS. VARIOUS INDICES
(UNAUDITED)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
FBR REALTY S&P 500 NAREIT TOTAL
GROWTH FUND COMPOSITE INDEX RETURN INDEX
<S> <C> <C> <C>
Jul. 3, 1995 $10,000 $10,000 $10,000
Jul. 31, 1995 $9,720 $10,287 $10,156
Oct. 31,1995 $9,664 $10,709 $10,303
Jan. 31, 1996 $10,584 $11,780 $11,188
Apr. 30, 1996 $10,495 $12,178 $11,294
Jul. 31, 1996 $11,439 $11,982 $11,862
Oct. 31, 1996 $12,657 $13,277 $12,962
Jan. 31, 1997 $15,019 $14,869 $15,068
Apr. 30, 1997 $14,779 $15,226 $14,602
Jul. 31, 1997 $16,484 $18,215 $16,264
Oct. 31, 1997 $17,781 $17,529 $17,081
Jan. 31, 1998 $18,245 $18,862 $17,630
Apr. 30, 1998 $18,953 $21,471 $17,050
Jul. 31, 1998 $17,643 $21,725 $15,699
Oct. 31, 1998 $14,684 $21,383 $14,560
Jan. 31, 1999 $14,729 $24,989 $14,272
Apr. 30, 1999 $15,501 $26,156 $15,099
Past performance is not predictive of future
performance.
</TABLE>

<TABLE>
<CAPTION>
TOTAL RETURNS
ONE YEAR
ENDED
APRIL 30, AVERAGE
1999 ANNUAL(3)
------------ ----------
<S> <C> <C>
FBR Realty Growth Fund(2)...................... (18.21)% 12.12%
S&P 500 Composite Index(1)..................... 21.82 28.54
NAREIT Total Return Index(1)................... (11.44) 11.36
</TABLE>

- ------------------------
(1) The chart assumes a hypothetical $10,000 initial investment in the Fund and
reflects all Fund expenses. Investors should note that the Fund is a
professionally managed mutual fund while the indices are unmanaged, do not
incur sales charges or expenses and are not available for investment.
Purchases made by shareholders prior to December 21, 1999, would have been
subject to an initial maximum sales charge of 5.50%. As a result, total
returns for such shareholders would have been lower.

(2) FBR Fund Advisers, Inc. waived its advisory fee and agreed to voluntarily
reimburse a portion of the Fund's operating expenses, as necessary, to
maintain the expense limitation, as set forth in the notes to the financial
statements. Total returns shown include fee waivers and expense
reimbursements, if any; total returns would have been lower had there been
no assumption of fees and/or expenses in excess of expense limitations.
Commencing September 21, 1998, FBR Fund Advisers, Inc. assumed the daily
portfolio management responsibility for the Fund. For the period July 3,
1995 through September 18, 1998, the Fund's investment adviser was GrandView
Advisers, Inc.

(3) For the period July 3, 1995 (commencement of investment operations) through
April 30, 1999.

7
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR FINANCIAL SERVICES FUND

PORTFOLIO OF INVESTMENTS

APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 99.8%
BANKS - COMMERCIAL -- 25.2%
10,000 Colonial BancGroup, Inc. (The)........................ $ 123,750
7,000 Fifth Third Bancorp................................... 501,812
5,000 Hibernia Corporation, Class A......................... 66,562
25,000 Hudson United Bancorp................................. 884,375
56,000 North Fork Bancorporation, Inc........................ 1,260,000
21,000 Pacific Century Financial Corporation................. 456,750
76,000 Peoples Heritage Financial Group, Inc................. 1,472,500
3,000 State Street Corporation.............................. 262,500
29,500 Summit Bancorp........................................ 1,250,062
48,000 TCF Financial Corporation............................. 1,392,000
5,000 UnionBanCal Corporation............................... 170,625
21,000 Union Planters Corporation............................ 899,062
47,500 UST Corp.............................................. 1,148,906
------------
9,888,904
------------
BANKS - MONEY CENTER -- 6.5%
19,500 BankAmerica Corporation............................... 1,404,000
15,000 BankBoston Corporation**.............................. 735,000
10,000 Bank of New York Company, Inc. (The).................. 400,000
------------
2,539,000
------------
BANKS - SUPER REGIONAL -- 18.0%
20,000 Bank One Corporation.................................. 1,180,000
18,000 Comerica Incorporated................................. 1,171,125
18,000 First Union Corporation............................... 996,750
17,000 Fleet Financial Group, Inc............................ 732,062
37,000 KeyCorp............................................... 1,144,688
23,000 PNC Bank Corp......................................... 1,331,125
12,000 Wells Fargo & Company................................. 518,250
------------
7,074,000
------------
BROKERS -- 2.2%
3,000 Ameritrade Holding Corporation, Class A*.............. 400,688
3,000 Knight/Trimark Group, Inc., Class A*.................. 459,563
------------
860,251
------------

<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES -- 7.0%
6,000 Citigroup Inc......................................... $ 451,500
13,000 Countrywide Credit Industries, Inc.................... 589,063
18,000 Fannie Mae............................................ 1,276,875
16,000 MBNA Corporation...................................... 451,000
------------
2,768,438
------------
INSURANCE -- 2.2%
18,000 MGIC Investment Corporation........................... 874,125
------------
INSURANCE - MULTI-LINE -- 2.0%
1,000 American International Group, Inc..................... 117,438
15,000 CMAC Investment Corporation**......................... 688,125
------------
805,563
------------
SAVINGS & LOANS - SAVINGS BANKS -- 36.7%
30,000 Astoria Financial Corporation......................... 1,503,750
47,500 Charter One Financial, Inc............................ 1,484,375
50,000 Commercial Federal Corporation........................ 1,212,500
79,000 FirstFed Financial Corp.*............................. 1,367,688
41,000 Golden State Bancorp Inc.*............................ 1,007,063
15,000 Golden West Financial Corporation..................... 1,501,875
14,000 GreenPoint Financial Corp............................. 490,000
54,000 Roslyn Bancorp, Inc................................... 985,500
60,000 Sovereign Bancorp, Inc................................ 817,500
62,850 Washington Federal, Inc............................... 1,390,556
32,000 Washington Mutual, Inc................................ 1,316,000
43,000 Webster Financial Corporation......................... 1,322,250
------------
14,399,057
------------
Total Investments -- 99.8%
(Cost $36,881,417).................................. 39,209,338
Other Assets in Excess of Liabilities -- 0.2%......... 64,953
------------
Net Assets -- 100.0%.................................. $ 39,274,291
------------
------------
</TABLE>

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

* Non-income producing.

** Security or a portion thereof is out on loan.

The accompanying notes are an integral part of the financial statements.

8
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR SMALL CAP FINANCIAL FUND

PORTFOLIO OF INVESTMENTS

<CAPTION>
- ----------------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------------
<C> <S> <C>
SAVINGS & LOANS - SAVINGS BANKS -
EAST (CONTINUED)
111,000 Ocean Financial Corp................................. $ 1,748,250
59,150 Parkvale Financial Corporation....................... 1,242,150
107,000 PennFed Financial Services, Inc...................... 1,578,250
61,000 Richmond County Financial Corp....................... 1,002,687
59,310 Seacoast Financial Services Corporation*............. 596,807
10,000 South Jersey Financial Corporation, Inc.*............ 116,250
76,000 Staten Island Bancorp, Inc........................... 1,372,750
14,000 Thistle Group Holdings, Co........................... 115,500
5,000 Troy Financial Corporation.*......................... 50,000
24,000 Virginia Capital Bancshares, Inc..................... 330,000
9,000 Woronoco Bancorp*.................................... 85,500
53,100 Wyman Park Bancorporation, Inc.*..................... 630,563
47,900 Yonkers Financial Corporation........................ 751,431
-------------
21,576,037
-------------
SAVINGS & LOANS - SAVINGS BANKS -
SOUTH -- 1.8%
3,500 GS Financial Corp.................................... 37,188
30,000 Pocahontas Bancorp, Inc.............................. 200,625
18,100 Texarkana First Financial Corporation................ 436,663
-------------
674,476
-------------
SAVINGS & LOANS - SAVINGS BANKS -
WEST -- 24.8%
95,000 FirstFed Financial Corp.*............................ 1,644,688
5,000 First Washington Bancorp, Inc........................ 100,625
82,500 ITLA Capital Corporation*............................ 1,299,375
45,600 Klamath First Bancorp, Inc........................... 741,000
69,000 Oregon Trail Financial Corp.......................... 866,813
91,000 Pacific Crest Capital, Inc........................... 1,262,625
50,000 PBOC Holdings, Inc.*................................. 437,500
</TABLE>

The accompanying notes are an integral part of the financial statements.

9
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR SMALL CAP FINANCIAL FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)

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

* Non-income producing.

** Security or a portion thereof is out on loan.

The accompanying notes are an integral part of the financial statements.

10
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR SMALL CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 100.5%
AUTO REPAIR -- 1.3%
92,500 Precision Auto Care, Inc.*........................... $ 202,344
-------------
BUSINESS SERVICES -- 13.5%
18,000 Fair, Isaac and Company, Incorporated................ 612,000
38,300 Realty Information Group, Inc.*...................... 1,500,881
-------------
2,112,881
-------------
COMMUNICATIONS -- 3.6%
26,500 American Tower Corporation, Class A*................. 561,469
-------------
COMPUTER SERVICES -- 9.6%
10,000 MICROS Systems, Inc.*................................ 295,000
68,400 Powerhouse Technologies, Inc.*....................... 1,197,000
-------------
1,492,000
-------------
DIVERSIFIED OPERATIONS -- 1.3%
80 Berkshire Hathaway, Inc., Class B*................... 197,600
-------------
GAMING -- 13.1%
26,285 Alliance Gaming Corporation*/**...................... 128,139
200,000 Penn National Gaming, Inc.*.......................... 1,925,000
-------------
2,053,139
-------------
HEALTH CARE -- 7.5%
66,750 United Payors & United Providers, Inc.*/**........... 1,176,469
-------------
INSURANCE - PROPERTY/CASUALTY -- 18.6%
13,900 Markel Corporation*.................................. 2,592,350
10,000 RLI Corp............................................. 318,125
-------------
2,910,475
-------------
MANUFACTURING - SPECIALTY -- 4.1%
68,000 II-VI Incorporated*.................................. 641,750
-------------
MEDICAL INSTRUMENTS -- 1.8%
10,000 Techne Corporation*.................................. 274,375
-------------

NUMBER OF
CONTRACTS
- ----------
<C> <S> <C>
WRITTEN PUT OPTIONS -- 0.0%
MOTOR SPORTS -- 0.0%
35 International Speedway Corporation, Class A 06/18/99
@ $35* (Premiums received $13,895)................. $ (875)
-------------
-------------
</TABLE>

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

* Non-income producing.

** Security or a portion thereof is out on loan.

The accompanying notes are an integral part of the financial statements.

11
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR REALTY GROWTH FUND

PORTFOLIO OF INVESTMENTS

<CAPTION>
- ----------------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------------
<C> <S> <C>
HOTEL/RESTAURANT (CONTINUED)
1,000 Innkeepers USA Trust**................................. $ 10,312
18,200 Innsuites Hospitality Trust............................ 45,500
12,000 Patriot American Hospitality, Inc...................... 60,750
3,000 Winston Hotels, Inc.................................... 29,250
------------
244,710
------------
INDUSTRIAL/WAREHOUSE -- 5.5%
600 Cabot Industrial Trust................................. 12,225
2,400 EastGroup Properties, Inc.............................. 43,350
66,742 Meridian Point Realty Trust '83*....................... 37,542
1,000 ProLogis Trust**....................................... 21,000
------------
114,117
------------
MANUFACTURED HOMES -- 0.5%
300 Sun Communities, Inc................................... 10,500
------------
MORTGAGE -- 6.9%
2,000 Annaly Mortgage Management Inc......................... 20,750
1,600 Apex Mortgage Capital, Inc............................. 21,000
2,000 BRT Realty Trust*...................................... 13,750
3,000 Capstead Mortgage Corporation**........................ 17,437
9,000 Dynex Capital, Inc..................................... 26,438
5,000 Hanover Capital Mortgage Holdings, Inc................. 28,437
1,700 Thornburg Mortgage Asset Corporation................... 14,875
------------
142,687
------------
NET LEASED -- 2.9%
2,000 Entertainment Properties Trust......................... 36,750
1,000 Golf Trust of America, Inc............................. 22,187
------------
58,937
------------
OFFICE/PROPERTY -- 3.5%
1,300 Alexandria Real Estate Equities, Inc................... 36,644
300 Boston Properties, Inc................................. 10,894
</TABLE>

The accompanying notes are an integral part of the financial statements.

12
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR REALTY GROWTH FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)

APRIL 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------------
<C> <S> <C>
OFFICE/PROPERTY (CONTINUED)
1,500 Cornerstone Properties, Inc............................ $ 24,469
------------
72,007
------------
OUTLET CENTERS -- 0.6%
400 Chelsea GCA Realty, Inc................................ 13,175
------------
REGIONAL MALLS -- 2.6%
68,300 EQK Realty Investors I*................................ 19,124
1,200 Simon Property Group, Inc.............................. 34,425
------------
53,549
------------
SHOPPING CENTERS -- 10.3%
10,700 Acadia Realty Trust.................................... 58,181
1,800 Bradley Real Estate, Inc............................... 35,888
2,000 Burnham Pacific Properties, Inc........................ 23,000
2,100 JP Realty, Inc......................................... 42,131
400 Kimco Realty Corporation............................... 15,700
1,600 Malan Realty Investors, Inc............................ 24,900
800 Saul Centers, Inc...................................... 13,050
------------
212,850
------------
STORAGE -- 2.9%
400 Public Storage, Inc.................................... 11,150
1,300 Sovran Self Storage, Inc.**............................ 31,769
500 Storage USA, Inc....................................... 16,063
------------
58,982
------------
Total Real Estate Investment Trusts (Cost
$1,516,787).......................................... 1,440,932
------------
OTHER REAL ESTATE RELATED -- 15.2%
COMMERCIAL SERVICES -- 2.2%
1,000 Cendant Corporation*................................... 18,000
7,000 Crescent Operating, Inc.*/**........................... 27,562
------------
45,562
------------
HOTELS -- 1.2%
9,800 Host Funding, Inc.*/**................................. 24,500
------------
REAL ESTATE DEVELOPMENT -- 7.1%
5,000 Atlantic Gulf Communities Corporation*................. 5,938
1,000 Castle & Cooke, Inc*................................... 14,750
<CAPTION>
- ----------------------------------------------------------------------------------
SHARES VALUE
- ----------------------------------------------------------------------------------
<C> <S> <C>
REAL ESTATE DEVELOPMENT (CONTINUED)
3,900 Catellus Development Corporation*...................... $ 59,963
8,700 Semele Group, Inc.*.................................... 32,625
1,300 The St. Joe Company.................................... 33,069
------------
146,345
------------
REAL ESTATE INVESTMENT/MANAGEMENT -- 2.8%
65,500 Banyan Hotel Investment Fund*.......................... 28,656
8,900 Liberte Investors, Inc................................. 28,369
------------
57,025
------------
TRANSPORT/MARINE -- 0.8%
800 Alexander & Baldwin, Inc............................... 17,400
------------
WATER -- 1.1%
6,000 Western Water Company*................................. 22,500
------------
Total Other Real Estate Related (Cost $368,672)........ 313,332
------------
Total Common Stocks (Cost $1,885,459).................. 1,754,264
------------
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<C> <S> <C>
SHORT-TERM INVESTMENT -- 10.4%
REPURCHASE AGREEMENT -- 10.4%
214,073 Bear, Stearns & Co. Inc. (Agreement dated 04/30/99 to
be repurchased at $214,160) 4.88%, 05/03/99 (Note 6)
(Cost $214,073)...................................... 214,073
------------
Total Investments -- 95.4% (Cost $2,099,532)........... 1,968,337
Other Assets in Excess of Liabilities -- 4.6%.......... 95,229
------------
Net Assets -- 100.0%................................... $ 2,063,566
------------
------------
</TABLE>

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

* Non-income producing.

** Security or a portion thereof is out on loan.

(1) With an additional 4,000 rights attached, expiring 05/12/99, with no market
value.

The accompanying notes are an integral part of the financial statements.

13
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

STATEMENT OF ASSETS AND LIABILITIES

APRIL 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
FBR
FBR SMALL CAP FBR FBR
FINANCIAL FINANCIAL SMALL CAP REALTY
SERVICES FUND FUND VALUE FUND GROWTH FUND
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost -- $36,881,417, $43,685,362,
$14,092,643 and $2,099,532, respectively)................ $ 39,209,338 $37,709,324 $ 15,702,888 $1,968,337
Collateral received for securities loaned (Note 5)........ 124,093 305,500 862,321 88,249
Receivable for investments sold........................... 513,410 141,253 13,895 110,271
Dividends and interest receivable......................... 51,846 39,226 1,417 9,994
Receivable for Fund shares sold........................... 26,942 44,952 14,871 2,040
Receivable from investment adviser........................ -- -- -- 14,274
Deferred organization costs and other assets.............. 41,696 33,243 29,931 4,086
------------- ------------- ------------- ------------
Total assets............................................ 39,967,325 38,273,498 16,625,323 2,197,251
------------- ------------- ------------- ------------
LIABILITIES
Due to custodian.......................................... 155,752 112,074 65,723 2,447
Written put options, at value (Premiums received --
$13,895)................................................. -- -- 875 --
Payable upon return of securities loaned (Note 5)......... 124,093 305,500 862,321 88,249
Payable for investments purchased......................... 282,867 41,915 -- 28,511
Payable for Fund shares redeemed.......................... 96,471 27,117 44,931 34
Advisory fees payable..................................... 16,996 13,016 8,964 --
Distribution fees payable................................. 8,298 7,618 1,999 386
Accrued expenses and other liabilities.................... 8,557 6,003 16,619 14,058
------------- ------------- ------------- ------------
Total liabilities....................................... 693,034 513,243 1,001,432 133,685
------------- ------------- ------------- ------------
NET ASSETS
Capital stock (unlimited number of shares authorized, with
no par value)............................................ 37,007,189 46,062,128 14,902,636 2,725,033
Undistributed net investment income/(loss)................ 47,895 22,930 (115,474) 9,812
Accumulated net realized loss from investments and options
transactions, if any..................................... (108,714) (2,348,765) (786,536) (540,084)
Net unrealized appreciation/(depreciation) on investments
and options transactions, if any......................... 2,327,921 (5,976,038) 1,623,265 (131,195)
------------- ------------- ------------- ------------
Net assets applicable to shares outstanding............. $ 39,274,291 $37,760,255 $ 15,623,891 $2,063,566
------------- ------------- ------------- ------------
------------- ------------- ------------- ------------
Shares outstanding........................................ 2,252,508 2,654,828 905,867 207,348
------------- ------------- ------------- ------------
Net asset value, offering and redemption price per
share.................................................... $17.44 $14.22 $17.25 $9.95
------------- ------------- ------------- ------------
------------- ------------- ------------- ------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

14
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)

<TABLE>
<CAPTION>
FBR FBR
FINANCIAL SMALL CAP FBR FBR
SERVICES FINANCIAL SMALL CAP REALTY
FUND FUND VALUE FUND GROWTH FUND
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................................................. $ 465,577 $ 428,628 $ 11,763 $ 63,301
Interest.................................................. 46,429 25,531 20,216 934
------------ ------------- ------------ -------------
512,006 454,159 31,979 64,235
------------ ------------- ------------ -------------
EXPENSES
Advisory fees............................................. 203,354 207,948 70,957 10,288
Transfer agent fees and expenses.......................... 68,293 89,659 43,100 16,135
Distribution fees......................................... 56,912 59,766 20,130 2,572
Administration and accounting fees........................ 39,609 42,750 14,326 12,271
Audit and legal fees...................................... 30,994 31,394 8,112 1,744
Federal and state registration fees....................... 11,935 16,188 11,527 17,894
Custodian fees and expenses............................... 13,009 12,691 3,314 6,626
Printing.................................................. 14,755 13,043 3,634 662
Trustees' fees and expenses............................... 6,806 4,397 4,177 4,036
Insurance................................................. 5,419 6,255 4,000 3,263
Amortization of organization expenses..................... 3,548 3,548 3,548 --
Other..................................................... 2,433 3,338 1,460 1,488
------------ ------------- ------------ -------------
Total expenses before waivers and related
reimbursements......................................... 457,067 490,977 188,285 76,979
Less: waivers and related reimbursements................ (43,582) (64,419) (40,832) (56,403)
------------ ------------- ------------ -------------
Total expenses after waivers and related
reimbursements......................................... 413,485 426,558 147,453 20,576
------------ ------------- ------------ -------------
Net investment income/(loss).............................. 98,521 27,601 (115,474) 43,659
------------ ------------- ------------ -------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS
Net realized gain/(loss) from:
Investments............................................. 335,155 (2,095,544) (825,040) (244,157)
Options transactions.................................... -- -- 69,357 --
Net change in unrealized depreciation on:
Investments............................................. 4,507,664 3,921,950 4,072,199 301,881
Options transactions.................................... -- -- (137,172) --
------------ ------------- ------------ -------------
Net realized and unrealized gain on investments........... 4,842,819 1,826,406 3,179,344 57,724
------------ ------------- ------------ -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $4,941,340 $ 1,854,007 $ 3,063,870 $ 101,383
------------ ------------- ------------ -------------
------------ ------------- ------------ -------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

15
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------
STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FBR FINANCIAL SERVICES FUND
---------------------------------
FOR THE FISCAL
FOR THE SIX YEAR
MONTHS ENDED ENDED
APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998
-------------- --------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income/(loss).................... $ 98,521 $ 304,554
Net realized gain/(loss) from investments....... 335,155 3,267,813
Net change in unrealized
appreciation/(depreciation) on investments..... 4,507,664 (5,133,972)
-------------- --------------
Net increase/(decrease) in net assets resulting
from operations................................ 4,941,340 (1,561,605)
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... (342,389) (70,555)
Net realized capital gains...................... (3,690,271) (311,918)
-------------- --------------
Total dividends and distributions to
shareholders................................... (4,032,660) (382,473)
-------------- --------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from the sale of shares............ 2,195,661 50,376,443
Cost of shares repurchased...................... (18,440,950) (22,066,182)
Shares issued in reinvestment of dividends...... 3,890,730 368,559
-------------- --------------
Increase/(decrease) in net assets derived from
capital share transactions..................... (12,354,559) 28,678,820
-------------- --------------
Total increase/(decrease) in net assets......... (11,445,879) 26,734,742
NET ASSETS
Beginning of period............................. 50,720,170 23,985,428
-------------- --------------
End of period................................... $ 39,274,291(1) $50,720,170(2)
-------------- --------------
-------------- --------------
</TABLE>

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

* Reported amounts include the results of operations of the FBR Realty Growth
Fund for the period April 1, 1998 through October 31, 1998. Prior to
September 18, 1998, the FBR Realty Growth Fund operated as the
GrandView-SM- Realty Growth Fund, which had a fiscal year end of March 31,
1998. Net proceeds from the sale of shares for FBR Realty Growth Fund
includes $814,924, from the conversion of GrandView-SM-
S&P-Registered Trademark- REIT Index Fund into the FBR Realty Growth Fund
on September 18, 1998.
(1) Includes undistributed net investment income of $47,895.
(2) Includes undistributed net investment income of $291,763.
(3) Includes undistributed net investment income of $22,930.
(4) Includes undistributed net investment income of $230,598.
(5) Includes undistributed net investment income of $9,812.
(6) Includes undistributed net investment income of $20,080.

The accompanying notes are an integral part of the financial statements.

16
<PAGE>
<TABLE>
<CAPTION>
FBR SMALL CAP FINANCIAL FUND FBR SMALL CAP VALUE FUND
--------------------------------- ---------------------------------
FOR THE FISCAL FOR THE FISCAL
FOR THE SIX YEAR FOR THE SIX YEAR
MONTHS ENDED ENDED MONTHS ENDED ENDED
APRIL 30, 1999 OCTOBER 31, APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998 (UNAUDITED) 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income/(loss).................... $ 27,601 $ 275,599 $ (115,474) $ (130,537)
Net realized gain/(loss) from investments....... (2,095,544) 6,209,896 (755,683) 564,052
Net change in unrealized
appreciation/(depreciation) on investments..... 3,921,950 (14,197,474) 3,935,027 (3,393,765)
-------------- -------------- -------------- --------------
Net increase/(decrease) in net assets resulting
from operations................................ 1,854,007 (7,711,979) 3,063,870 (2,960,250)
-------------- -------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... (235,269) (100,673) -- --
Net realized capital gains...................... (6,461,151) (470,536) (464,197) (249,613)
-------------- -------------- -------------- --------------
Total dividends and distributions to
shareholders................................... (6,696,420) (571,209) (464,197) (249,613)
-------------- -------------- -------------- --------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from the sale of shares............ 2,463,930 105,428,314 1,796,413 18,358,863
Cost of shares repurchased...................... (21,825,750) (85,579,803) (4,872,471) (8,020,115)
Shares issued in reinvestment of dividends...... 6,489,173 548,154 454,754 248,119
-------------- -------------- -------------- --------------
Increase/(decrease) in net assets derived from
capital share transactions..................... (12,872,647) 20,396,665 (2,621,304) 10,586,867
-------------- -------------- -------------- --------------
Total increase/(decrease) in net assets......... (17,715,060) 12,113,477 (21,631) 7,377,004
NET ASSETS
Beginning of period............................. 55,475,315 43,361,838 15,645,522 8,268,518
-------------- -------------- -------------- --------------
End of period................................... $ 37,760,255(3) $55,475,315(4) $15,623,891 $15,645,522
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------

<CAPTION>
FBR REALTY GROWTH FUND
---------------------------------
FOR THE PERIOD
FOR THE SIX APRIL 1, 1998*
MONTHS ENDED THROUGH
APRIL 30, 1999 OCTOBER 31,
(UNAUDITED) 1998
-------------- --------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM
OPERATIONS
Net investment income/(loss).................... $ 43,659 $ 43,403
Net realized gain/(loss) from investments....... (244,157) (233,287)
Net change in unrealized
appreciation/(depreciation) on investments..... 301,881 (549,393)
-------------- --------------
Net increase/(decrease) in net assets resulting
from operations................................ 101,383 (739,277)
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... (53,927) (23,323)
Net realized capital gains...................... -- (232,383)
-------------- --------------
Total dividends and distributions to
shareholders................................... (53,927) (255,706)
-------------- --------------
CAPITAL SHARE TRANSACTIONS
Net proceeds from the sale of shares............ 310,126 1,769,579
Cost of shares repurchased...................... (627,057) (1,082,426)
Shares issued in reinvestment of dividends...... 46,388 218,262
-------------- --------------
Increase/(decrease) in net assets derived from
capital share transactions..................... (270,543) 905,415
-------------- --------------
Total increase/(decrease) in net assets......... (223,087) (89,568)
NET ASSETS
Beginning of period............................. 2,286,653 2,376,221
-------------- --------------
End of period................................... $ 2,063,566(5) $ 2,286,653(6)
-------------- --------------
-------------- --------------
</TABLE>

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

The accompanying notes are an integral part of the financial statements.

17
<PAGE>
[FBR LOGO]
FBR Family of Funds
----------------

FINANCIAL HIGHLIGHTS

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

Contained below is per share operating performance data for each share
outstanding, total investment returns, ratios to average net assets and other
supplemental data for each period. This information has been derived from
information provided in the financial statements.
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FBR FINANCIAL SERVICES FUND
----------------------------------------------
FOR THE SIX
MONTHS ENDED
APRIL 30,
1999 FOR THE
(UNAUDITED) FOR THE PERIOD
------------ FISCAL YEAR JANUARY 3,
ENDED 1997*
OCTOBER 31, THROUGH
1998 OCTOBER 31,
------------ 1997
------------
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE**
Net asset value, beginning
of period................ $ 16.94 $ 16.03 $ 12.00
------------ ------------ ------------
Net investment
income/(loss)(1)......... 0.04 0.10 0.04
Net realized and
unrealized gain/(loss) on
investments(2)........... 1.87 1.04 3.99
------------ ------------ ------------
Net increase/(decrease) in
net assets resulting from
operations............... 1.91 1.14 4.03
------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income..... (0.12) (0.04) --
Net realized capital
gains.................... (1.29) (0.19) --
Tax return of capital..... -- -- --
------------ ------------ ------------
Total dividends and
distributions to
shareholders............. (1.41) (0.23) --
------------ ------------ ------------
Net asset value, end of
period................... $ 17.44 $ 16.94 $ 16.03
------------ ------------ ------------
------------ ------------ ------------
Total investment
return(3)................ 12.27% 7.12% 33.58%
------------ ------------ ------------
------------ ------------ ------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted).......... $39,274 $50,720 $23,985
Ratio of expenses to
average net assets(1).... 1.83%(4) 1.65% 1.65%(4)
Ratio of net investment
income/(loss) to average
net assets(1)............ 0.44%(4) 0.61% 0.57%(4)
Increase/(decrease)
reflected in above
expense ratios and net
investment income/(loss)
due to waivers and
related reimbursements... 0.19%(4) 0.22% 1.42%(4)
Portfolio turnover rate... 42.24% 105.58% 49.68%
</TABLE>

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

* Commencement of investment operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and related reimbursements.
(2) The amounts shown for a share outstanding throughout the respective periods
are not in accordance with the changes in the aggregate gains and losses in
investments during the respective periods because of the timing of sales
and repurchases of Fund shares in relation to fluctuating net asset value
during the respective periods.
(3) Total investment return is calculated assuming a purchase of shares on the
first day and a sale of shares on the last day of each period reported and
will include reinvestments of dividends and distributions, if any. Total
investment return is not annualized.
(4) Annualized.
(5) Reported amounts include the results of operations of the FBR Realty Growth
Fund for the period April 1, 1998 through October 31, 1998. Prior to
September 18, 1998, the FBR Realty Growth Fund operated as the
GrandView-SM- Realty Growth Fund, which had a fiscal year end of March 31,
1998.

The accompanying notes are an integral part of the financial statements.

18
<PAGE>
<TABLE>
<CAPTION>
FBR SMALL CAP FINANCIAL FUND
----------------------------------------------
FOR THE SIX
MONTHS ENDED FBR SMALL CAP VALUE FUND
APRIL 30, ----------------------------------------------
1999 FOR THE FOR THE
(UNAUDITED) FOR THE PERIOD FOR THE SIX FOR THE PERIOD
------------ FISCAL YEAR JANUARY 3, MONTHS ENDED FISCAL YEAR JANUARY 3,
ENDED 1997* APRIL 30, ENDED 1997*
OCTOBER 31, THROUGH 1999 OCTOBER 31, THROUGH
1998 OCTOBER 31, (UNAUDITED) 1998 OCTOBER 31,
------------ 1997 ------------ ------------ 1997
------------ ------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE**
Net asset value, beginning
of period................ $ 15.62 $ 17.53 $ 12.00 $ 14.67 $ 16.70 $ 12.00
------------ ------------ ------------ ------------ ------------ ------------
Net investment
income/(loss)(1)......... 0.05 0.08 0.02 (0.13) (0.08) (0.05)
Net realized and
unrealized gain/(loss) on
investments(2)........... 0.55 (1.81) 5.51 3.14 (1.46) 4.75
------------ ------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in
net assets resulting from
operations............... 0.60 (1.73) 5.53 3.01 (1.54) 4.70
------------ ------------ ------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income..... (0.07) (0.03) -- -- -- --
Net realized capital
gains.................... (1.93) (0.15) -- (0.43) (0.49) --
Tax return of capital..... -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total dividends and
distributions to
shareholders............. (2.00) (0.18) -- (0.43) (0.49) --
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, end of
period................... $ 14.22 $ 15.62 $ 17.53 $ 17.25 $ 14.67 $ 16.70
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
Total investment
return(3)................ 3.90% (9.99)% 46.08% 21.16% (9.57)% 39.17%
------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted).......... $37,760 $55,475 $43,362 $15,624 $15,646 $ 8,269
Ratio of expenses to
average net assets(1).... 1.85%(4) 1.63% 1.65%(4) 1.87%(4) 1.65% 1.65%(4)
Ratio of net investment
income/(loss) to average
net assets(1)............ 0.12%(4) 0.35% 0.57%(4) (1.46)%(4) (0.81)% (0.79)%(4)
Increase/(decrease)
reflected in above
expense ratios and net
investment income/(loss)
due to waivers and
related reimbursements... 0.27%(4) 0.14% 1.43%(4) 0.52%(4) 0.60% 3.84%(4)
Portfolio turnover rate... 15.79% 94.23% 35.41% 11.29% 78.26% 42.59%

FBR REALTY GROWTH FUND GRANDVIEW-SM- REALTY GROWTH FUND
----------------------------- ----------------------------------------------
FOR THE FOR THE
FOR THE SIX PERIOD FOR THE FISCAL YEARS ENDED PERIOD
MONTHS ENDED APRIL 1, MARCH 31, JULY 3,
APRIL 30, 1998(5) ----------------------------- 1995*
1999 THROUGH THROUGH
(UNAUDITED) OCTOBER 31, 1998 1997 MARCH 31,
------------ 1998 ------------ ------------ 1996
------------ ------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE**
Net asset value, beginning
of period................ $ 9.68 $ 14.51 $ 12.69 $ 10.09 $ 10.00
------------ ------------ ------------ ------------ ------------
Net investment
income/(loss)(1)......... 0.22 0.22 0.11 0.33 0.20
Net realized and
unrealized gain/(loss) on
investments(2)........... 0.31 (3.57) 3.00 4.14 0.36
------------ ------------ ------------ ------------ ------------
Net increase/(decrease) in
net assets resulting from
operations............... 0.53 (3.35) 3.11 4.47 0.56
------------ ------------ ------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS
TO SHAREHOLDERS FROM:
Net investment income..... (0.26) (0.13) (0.11) (0.33) (0.20)
Net realized capital
gains.................... -- (1.35) (1.18) (1.53) (0.22)
Tax return of capital..... -- -- -- (0.01) (0.05)
------------ ------------ ------------ ------------ ------------
Total dividends and
distributions to
shareholders............. (0.26) (1.48) (1.29) (1.87) (0.47)
------------ ------------ ------------ ------------ ------------
Net asset value, end of
period................... $ 9.95 $ 9.68 $ 14.51 $ 12.69 $ 10.09
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Total investment
return(3)................ 5.57% (21.14)% 24.80% 45.12% 5.70%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(000's omitted).......... $ 2,064 $ 2,287 $ 2,376 $ 1,158 $ 182
Ratio of expenses to
average net assets(1).... 2.00%(4) 2.00%(4) 2.00% 1.89% 2.00%(4)
Ratio of net investment
income/(loss) to average
net assets(1)............ 4.24%(4) 2.98%(4) 0.59% 3.12% 3.62%(4)
Increase/(decrease)
reflected in above
expense ratios and net
investment income/(loss)
due to waivers and
related reimbursements... 5.48%(4) 3.41%(4) 3.68% 7.70% 29.34%(4)
Portfolio turnover rate... 70.04% 136.24% 170.19% 197.90% 44.44%
</TABLE>

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

The accompanying notes are an integral part of the financial statements.

19
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

The FBR Family of Funds (the "Trust") is an open-end management investment
company organized under the laws of the State of Delaware on April 30, 1996. The
Trust currently consists of five series which represent interests in one of the
following investment portfolios: FBR Financial Services Fund ("Financial
Services Fund"), FBR Small Cap Financial Fund ("Small Cap Financial Fund"), FBR
Small Cap Value Fund ("Small Cap Value Fund"), FBR Realty Growth Fund ("Realty
Growth Fund") (each a "Fund" and collectively, the "Funds") and FBR Technology
Fund. Financial Services Fund, Small Cap Financial Fund and Realty Growth Fund
are diversified portfolios and Small Cap Value Fund and FBR Technology Fund are
non-diversified portfolios. Each Fund is treated as a separate entity for
certain matters under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and for other purposes, and a shareholder of one Fund
is not deemed to be a shareholder of any other Fund.

Prior to December 21, 1998, the Funds offered three classes of shares which were
designated as Class A, B and C shares. Effective December 21, 1998, the Funds'
Class B and C shares (except for the Realty Growth Fund) were converted to Class
A shares, which have been redesignated as fund shares. As of the date hereof,
the Funds offer one class of shares, which are offered as no-load shares. Each
Fund has an unlimited number of shares authorized with no par value. Financial
Services Fund, Small Cap Financial Fund and Small Cap Value Fund commenced
investment operations on January 3, 1997. Realty Growth Fund commenced
investment operations on September 21, 1998. Currently, shares of the FBR
Technology Fund are not offered. However, a registration statement relating to
these securities has been filed with the Securities and Exchange Commission but
has not yet become effective.

Investment operations of the Realty Growth Fund was constituted through an
Agreement and Plan of Reorganization (the "Reorganization Plan"), which included
the liquidation and termination of the GrandView-SM- Realty Growth Fund and the
GrandView-SM- S&P-Registered Trademark- REIT Index Fund (collectively the
"GrandView Funds") following the transfer of all or substantially all of the
assets of the GrandView Funds. The Reorganization Plan provides for the
acquisition of all or substantially all of the assets of the GrandView Funds by
the Realty Growth Fund in exchange for shares of the Realty Growth Fund and the
assumption by the Realty Growth Fund of certain identified liabilities of the
GrandView Funds.

Such Reorganization Plan was consummated on September 21, 1998, with each
shareholder of the GrandView Funds receiving on such date that number of shares
of the Realty Growth Fund having an aggregate net asset value equal to the
aggregate net asset value of such shareholder's shares of the GrandView Funds.
Shareholders in the GrandView Funds received Class A shares, which have been
redesignated as fund shares, of the Realty Growth Fund. The GrandView-SM- Realty
Growth Fund's historical financial data is presented as part of the Realty
Growth Fund's financial statements, as the objectives and adviser of the
GrandView-SM- Realty Growth Fund continue under the Realty Growth Fund.

ORGANIZATIONAL MATTERS -- Prior to commencing investment operations on January
3, 1997, the Financial Services Fund, Small Cap Financial Fund and Small Cap
Value Fund did not have any transactions other than those relating to

20
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
organizational matters and the sale of 2,777, 2,778 and 2,778 fund shares,
respectively, to Friedman, Billings, Ramsey & Co., Inc. ("FBR") on December 16,
1996. Prior to commencing investment operations on September 21, 1998, the
Realty Growth Fund did not have any transactions other than those relating to
organizational matters and the sale of three fund shares to FBR Fund Advisers,
Inc. (the "Adviser") on September 15, 1998. Costs of approximately $35,784,
$35,784 and $35,785 which were incurred by Financial Services Fund, Small Cap
Financial Fund and Small Cap Value Fund, respectively, in connection with the
organization of its shares have been deferred and are being amortized using the
straight-line method over the period of benefit not exceeding sixty months,
beginning with the commencement of investment operations of each Fund. In the
event that FBR, the Adviser or any transferee thereof redeems any of its
original shares in any such Funds prior to the end of the sixty month period,
the proceeds of the redemption payable in respect of such shares shall be
reduced by the pro rata share (based on the proportionate share of the original
shares redeemed to the total number of original shares outstanding at the time
of the redemption) of the unamortized deferred organization expenses as of the
date of such redemption. In the event that any of such Funds are liquidated
prior to the end of the sixty month period, FBR, the Adviser or any transferee
thereof shall bear the unamortized deferred organization expenses. Costs
incurred in connection with the Reorganization Plan were borne by the Adviser.

MANAGEMENT ESTIMATES -- The preparation of financial statements in accordance
with generally accepted accounting principles requires management to make
certain estimates and assumptions that may affect the reported amounts and
disclosures in the financial statements. Actual results could differ from those
estimates.

PORTFOLIO VALUATION -- The net asset value of each Fund is determined as of the
close of regular trading on the New York Stock Exchange (normally 4:00 p.m., New
York time) on each business day. Each Fund's securities are valued at the last
sale price on the securities exchange or national securities market on which
such securities are primarily traded. Securities not listed on an exchange or
national securities market, or securities in which there were no transactions,
are valued at the average of the most recent bid and asked prices, except in the
case of open short positions where the asked price is used for valuation
purposes. Bid price is used when no asked price is available. Short-term
investments are carried at amortized cost, which approximates value. Any
securities or other assets (of which there were none as of April 30, 1999) for
which recent market quotations are not readily available are valued at fair
value as determined in good faith by the Funds' Board of Trustees. Restricted
securities, as well as securities or other assets for which market quotations
are not readily available, or are not valued by a pricing service approved by
the Board of Trustees, are valued at fair value in good faith by the Board of
Trustees. The Board of Trustees will review the method of valuations on a
current basis. Expenses and fees, including the investment advisory fee and
distribution fee, are accrued daily and taken into account for the purpose of
determining the net asset value of each Fund's shares.

OPTIONS -- Each Fund may buy and sell call and put options to hedge against
changes in net asset value or to attempt to realize a greater current return.
The risk associated with purchasing an option is that a Fund pays a premium
whether or not the option is exercised. Additionally, a Fund bears the risk of
loss of premium and change in market value should the counterparty not perform
under the contract. Put and call options purchased are accounted for in the same
manner as portfolio securities. The cost of securities acquired through the
exercise of call options is

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FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
increased by the premiums paid. The proceeds from securities sold through the
exercise of put options are decreased by the premiums paid.

When a Fund writes an option, an amount equal to the premium received by the
Fund is recorded as a liability and is subsequently adjusted to the current
market value of the option written. Premiums received from writing options which
expire unexercised are recorded by a Fund on the expiration date as realized
gains from option transactions. The difference between the premium and the
amount paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium is less than
the amount paid for the closing purchase transaction, as a realized loss. If a
call option is exercised, the premium is added to the proceeds from the sale of
the underlying securities in determining whether a Fund has a realized gain or
loss. If a put option is exercised, the premium reduces the cost basis of the
securities purchased by a Fund. Each Fund's use of written options involves, to
varying degrees, elements of market risk in excess of the amount recognized in
the Statement of Assets and Liabilities. The contract or notional amounts
reflect the extent of a Fund's involvement in these financial instruments. In
writing an option, a Fund bears the market risk of an unfavorable change in the
price of the security underlying the written option. Exercise of an option
written by a Fund could result in a Fund selling or buying a security at a price
different from the current market value. A Fund's activities in written options
are conducted through regulated exchanges which do not result in counterparty
credit risks. Financial Services Fund, Small Cap Financial Fund and Realty
Growth Fund did not engage in options transactions during the six months ended
April 30, 1999.

<TABLE>
<CAPTION>
CALL OPTIONS PURCHASED PUT OPTIONS
WRITTEN
---------------------------- ----------------------------
SMALL CAP VALUE FUND CONTRACTS PREMIUMS CONTRACTS PREMIUMS
- -------------------------------------------- --------------- ----------- --------------- -----------
<S> <C> <C> <C> <C>
Outstanding at beginning of period.......... 40 $ 81,808 -- --
Options written............................. -- -- 35 $ 13,895
Options sold................................ (40) (81,808) -- --
------ ----------- ------ -----------
Outstanding at end of period................ -- $ -- 35 $ 13,895
------ ----------- ------ -----------
------ ----------- ------ -----------
</TABLE>

SHORT SELLING -- When a Fund makes a short sale, an amount equal to the proceeds
received by the Fund is recorded as a liability and is subsequently adjusted to
the current market value of the short sale. Short sales represent obligations of
a Fund to make future delivery of specific securities and, correspondingly,
create an obligation to purchase the security at market prices prevailing at the
later delivery date (or to deliver the security if already owned by the Fund).
Upon the termination of a short sale, a Fund will recognize a gain, limited to
the price at which the Fund sold the security short, if the market price is less
than the proceeds originally received. A Fund will recognize a loss, unlimited
in magnitude, if the market price at termination is greater than the proceeds
originally received. As a result, short sales create the risk that a Fund's
ultimate obligation to satisfy the delivery requirements may exceed the amount
of the proceeds initially received or the liability recorded in the financial
statements. The Funds did not engage in short selling during the six months
ended April 30, 1999.

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FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

REPURCHASE AGREEMENTS -- Each Fund has agreed to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price ("repurchase agreement"). The financial
institutions with whom each Fund enters into repurchase agreements are banks and
broker/dealers which the Adviser considers creditworthy pursuant to criteria
approved by the Trust's Board of Trustees. The seller under a repurchase
agreement will be required to maintain the value of the securities as
collateral, subject to the agreement at not less than the repurchase price plus
accrued interest. The Adviser marks to market daily the value of the collateral,
and, if necessary, requires the seller to maintain additional securities, to
ensure that the value is not less than the repurchase price. Default by or
bankruptcy of the seller would, however, expose each Fund to possible loss
because of adverse market action or delays in connection with the disposition of
the underlying securities.

INVESTMENT TRANSACTIONS AND INVESTMENT INCOME -- Transactions are accounted for
on the trade date (the day in which the order to buy or sell is executed). The
cost of investments sold is determined by use of the specific identification
method for both financial reporting and income tax purposes in determining
realized gains and losses on investments. Interest income is recorded on the
accrual basis. Dividend income is recorded on the ex-dividend date. The Funds'
record distributions received from its investments in real estate investment
trusts that represent a tax return of capital as a reduction of the cost basis
of investments. Expenses not directly attributable to a specific Fund are
allocated based on relative net assets of each Fund.

DIVIDENDS AND DISTRIBUTIONS -- Dividends from net investment income, if any,
will be declared and paid at least annually to shareholders of each of the
Funds, except for the Realty Growth Fund which will be declared and paid
quarterly to shareholders. Distributions from net realized capital gains, if
any, will be distributed at least annually for each Fund. Dividends and
distributions to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with U.S. federal income
tax regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are considered either temporary or permanent in
nature. To the extent differences are permanent in nature, such amounts are
reclassified within capital accounts based on their U.S. federal tax-basis
treatment; temporary differences do not require reclassification.

U.S. FEDERAL TAX STATUS -- No provision is made for U.S. federal income taxes as
it is each Fund's intention to qualify for and elect the tax treatment
applicable to regulated investment companies under Subchapter M of the Internal
Revenue Code of 1986, as amended, and make the requisite distributions to its
shareholders which will be sufficient to relieve it from U.S. federal income and
excise taxes.

2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES

FBR Fund Advisers, Inc. serves as each Fund's investment adviser. For its
advisory services, the Adviser is entitled to receive from the Financial
Services Fund, Small Cap Financial Fund and Small Cap Value Fund a monthly fee
equal to an annual rate of 0.90% of each Fund's average daily net assets,
computed daily and paid monthly. For its advisory services, the Adviser is
entitled to receive from the Realty Growth Fund a monthly fee equal to an annual
rate of 1.00% of such Fund's average daily net assets, computed daily and paid
monthly.

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FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Prior to December 21, 1998, the Adviser had voluntarily undertaken to limit each
Fund's total operating expenses to the extent that such expenses exceeded 1.65%
of Financial Services Fund, Small Cap Financial Fund and Small Cap Value Fund's
average daily net assets, respectively. Effective December 21, 1998, the Adviser
has voluntarily undertaken to limit each Fund's total operating expenses to the
extent that such expenses exceed 1.95% of Financial Services Fund, Small Cap
Financial Fund and Small Cap Value Fund's average daily net assets,
respectively, and 2.00% of Realty Growth Fund's average daily net assets. As
necessary, these limitations were effected by waivers by the Adviser of its
advisory fees and reimbursements of expenses exceeding the advisory fee. For the
six months ended April 30, 1999, advisory fees, waivers and reimbursements of
expenses were as follows:

<TABLE>
<CAPTION>
GROSS NET
ADVISORY ADVISORY ADVISORY EXPENSE
FUND FEES FEE WAIVERS FEES REIMBURSEMENTS
- ------------------------------------------ ----------- ----------- ----------- -------------------
<S> <C> <C> <C> <C>
Financial Services Fund................... $ 203,354 $ (43,582) $ 159,772 --
Small Cap Financial Fund.................. 207,948 (64,419) 143,529 --
Small Cap Value Fund...................... 70,957 (39,196) 31,761 $ (1,636)
Realty Growth Fund........................ 10,288 (10,288) -- (46,115)
</TABLE>

The Funds will not pay the Adviser at a later time for any amounts it may waive
nor will the Funds reimburse the Adviser for any amounts which it may assume.

The Trust, on behalf of each Fund, has adopted an amended and restated
Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the Investment
Company Act. Under the Plan, each Fund pays FBR Investment Services, Inc. (the
"Distributor") a fee at an annual rate of 0.25% of each Fund's average daily net
assets. These fees paid to the Distributor under the Plan are payable without
regard to actual expenses incurred. For the six months ended April 30, 1999, the
Distributor earned $56,912, $59,766, $20,130 and $2,572 for the Financial
Services Fund, Small Cap Financial Fund, Small Cap Value Fund, and Realty Growth
Fund, respectively, in distribution fees. Prior to December 21, 1998, Financial
Services Fund, Small Cap Financial Fund and Small Cap Value Fund had a
distribution and shareholder servicing plan in effect for its Class B and C
shares which were converted to Class A shares, which have been redesignated as
fund shares, on December 21, 1998.

For the six months ended April 30, 1999, the Financial Services Fund, Small Cap
Financial Fund, Small Cap Value Fund and Realty Growth Fund paid approximately
$46,900, $29,900, $8,000 and $12,100, respectively, in brokerage commissions
from portfolio transactions executed on behalf of the Funds. Approximately
$13,000, $7,800, $300 and $1,000, respectively, of such brokerage commissions
were paid to FBR, an affiliate of the Adviser and the Distributor.

Prior to December 21, 1998, the Distributor collected the sales charges imposed
on sales of each Fund's Class A shares, which have been redesignated as fund
shares, and reallowed a portion of such charges to dealers through which the
sales were made. The Distributor advanced 4.00% and 1.00% in sales commissions
on the sale of Class B

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FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
and C shares, respectively, to dealers at the time of such sales. For the period
November 1, 1998 through December 20, 1998, the Distributor has advised each
Fund that they retained approximately $2,700, $4,600 and $3,000 in front-end
sales charges resulting from sales of Class A shares of the Financial Services
Fund, Small Cap Financial Fund and Small Cap Value Fund, respectively. From
these fees, the Distributor paid such sales charges to dealers which in turn
paid commissions to salespersons. In addition, the Distributor has advised the
Funds that during the period November 1, 1998 through December 20, 1998, it did
not receive any contingent deferred sales charges upon certain redemptions by
Class B and C shareholders.

3. INVESTMENT IN SECURITIES AND OPTIONS

For U.S. federal income tax purposes, the costs of securities and options owned
at April 30, 1999, were $37,100,706, $43,876,063, $14,123,503 and $2,322,485 for
Financial Services Fund, Small Cap Financial Fund, Small Cap Value Fund and
Realty Growth Fund, respectively. Accordingly, the net unrealized
appreciation/(depreciation) on investments and options transactions, if any,
were as follows:

<TABLE>
<CAPTION>
NET APPRECIATION/
FUND APPRECIATION DEPRECIATION (DEPRECIATION)
- ---------------------------------------------- ---------------- ---------------- ----------------------
<S> <C> <C> <C>
Financial Services Fund....................... $ 2,754,405 $ (645,773) $ 2,108,632
Small Cap Financial Fund...................... 360,555 (6,527,294) (6,166,739)
Small Cap Value Fund.......................... 3,866,204 (2,286,819) 1,579,385
Realty Growth Fund............................ 60,087 (414,235) (354,148)
</TABLE>

For the six months ended April 30, 1999, aggregate purchases and sales of
investment securities and options transactions, if any, (excluding short-term
investments) were as follows:

<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ----------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Financial Services Fund...................................................... $ 18,160,063 $ 23,654,906
Small Cap Financial Fund..................................................... 7,201,684 21,376,678
Small Cap Value Fund......................................................... 1,729,135 3,234,461
Realty Growth Fund........................................................... 1,397,411 1,747,535
</TABLE>

4. CAPITAL SHARE TRANSACTIONS

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FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Each Fund has an unlimited number of shares authorized with no par value, of
which FBR owned 2,777, 2,778, 2,778 and 3 Fund shares of Financial Services
Fund, Small Cap Financial Fund, Small Cap Value Fund and Realty Growth Fund,
respectively. Transactions in each Fund's capital stock were as follows:
<TABLE>
<CAPTION>
FINANCIAL SERVICES FUND*
---------------------------------------------
SALES REPURCHASES REINVESTMENTS
------------- ------------- -------------
<S> <C> <C> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
Shares.................................. 130,484 1,117,089 245,329
Value................................... $ 2,195,661 $ 18,440,950 $ 3,890,730
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998
Shares.................................. 2,741,726 1,265,509 21,591
Value................................... $ 50,376,443 $ 22,066,182 $ 368,559

<CAPTION>
SMALL CAP FINANCIAL FUND*
---------------------------------------------
SALES REPURCHASES REINVESTMENTS
------------- ------------- -------------
<S> <C> <C> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999
Shares.................................. 167,557 1,519,089 453,578
Value................................... $ 2,463,930 $ 21,825,750 $ 6,489,173
FOR THE FISCAL YEAR ENDED OCTOBER 31, 19
Shares.................................. 5,677,018 4,628,869 30,657
Value................................... $ 105,428,314 $ 85,579,803 $ 548,154
</TABLE>
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND*
---------------------------------------------
SALES REPURCHASES REINVESTMENTS
------------- ------------- -------------
<S> <C> <C> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999 (UNAUDITED)
Shares.................................. 115,965 308,709 31,805
Value................................... $ 1,796,413 $ 4,872,471 $ 454,754
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1998
Shares.................................. 1,055,949 499,213 15,001
Value................................... $ 18,358,863 $ 8,020,115 $ 248,119

<CAPTION>
REALTY GROWTH FUND**
---------------------------------------------
SALES REPURCHASES REINVESTMENTS
------------- ------------- -------------
<S> <C> <C> <C>
FOR THE SIX MONTHS ENDED APRIL 30, 1999
Shares.................................. 32,058 65,906 4,857
Value................................... $ 310,126 $ 627,057 $ 46,388
FOR THE FISCAL YEAR ENDED OCTOBER 31, 19
Shares.................................. 143,851 93,361 22,029
Value................................... $ 1,769,579 $ 1,082,426 $ 218,262
</TABLE>

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

* Transactions in the Funds' Class B and C shares were converted to Class A
shares, which have been redesignated as fund shares. As a result, the Funds'
share transactions shown are inclusive of Class B and C shares transactions.

** Reported amounts include the results of the Realty Growth Fund for the
period April 1, 1998 through October 31, 1998. Prior to September 18, 1998,
the Realty Growth Fund operated as the GrandView-SM- Realty Growth Fund,
which had a fiscal year end of March 31, 1998. Sales transactions include
additional shares and their associated dollar value from the conversion of
the GrandView-SM- S&P-Registered Trademark- REIT Index Fund into the Realty
Growth Fund on September 18, 1998.

Prior to April 18, 1998 and effective December 21, 1998, there was a 1.00%
redemption fee on fund shares redeemed, which have been held 90 days or less.
For the period November 1, 1997 through April 18, 1998, these fees amounted to
$28,710, $128,967 and $5,839 for Financial Services Fund, Small Cap Financial
Fund and Small Cap Value Fund, respectively. The redemption fees were collected
and retained by each Fund for the benefit of the remaining shareholders.

5. SECURITIES LENDING

Loans of securities are required at all times to be secured by collateral equal
to at least 102% of the market value of the securities on loan. However, in the
event of default or bankruptcy by the other party to the agreement, realization
and/or retention of the collateral may be subject to legal proceedings. In the
event that the borrower fails to return securities, and cash collateral being
maintained by the borrower is insufficient to cover the value of loaned
securities and provided such collateral insufficiency is not the result of
investment losses, the lending agent has agreed to pay

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FBR FINANCIAL SERVICES FUND
FBR SMALL CAP FINANCIAL FUND
FBR SMALL CAP VALUE FUND
FBR REALTY GROWTH FUND

NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
the amount of the shortfall to the Funds. The value of securities on loan to
brokers and the related collateral and indemnification received at April 30,
1999, were as follows:

<TABLE>
<CAPTION>
VALUE OF SECURITIES ON VALUE OF COLLATERAL AND
FUND LOAN INDEMNIFICATION
- ---------------------------------------------------- ----------------------- -------------------------
<S> <C> <C>
Financial Services Fund............................. $ 124,104 $ 127,778
Small Cap Financial Fund............................ 299,625 314,122
Small Cap Value Fund................................ 812,612 889,124
Realty Growth Fund.................................. 81,894 95,834
</TABLE>

The cash collateral was reinvested into a repurchase agreement which was in turn
collateralized by United States Treasury Notes.

For the six months ended April 30, 1999, income from securities lending was
$2,820, $1,727, $2,324 and $214 for the Financial Services Fund, Small Cap
Financial Fund, Small Cap Value Fund and Realty Growth Fund, respectively. Such
income from securities lending is included under the caption INTEREST in the
Statement of Operations.

6. COLLATERAL FOR REPURCHASE AGREEMENTS

Listed below is the collateral associated with the repurchase agreement with
Bear, Stearns & Co. Inc., outstanding at April 30, 1999 for the Realty Growth
Fund.

<TABLE>
<CAPTION>
ISSUER FACE AMOUNT MATURITY INTEREST RATE TOTAL VALUE
- --------------------------------------------------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C>
United States Treasury Note........................ 210,000 02/15/07 6.25% $ 223,612
</TABLE>

27
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FBR FAMILY OF FUNDS

Potomac Tower
1001 Nineteenth Street North
Arlington, VA 22209

1-888-888-0025
e-mail: [email protected]
Internet: http://www.fbrfunds.com

INVESTMENT ADVISER
FBR Fund Advisers, Inc.
Potomac Tower
1001 Nineteenth Street North
Arlington, VA 22209

DISTRIBUTOR
FBR Investment Services, Inc.
Potomac Tower
1001 Nineteenth Street North
Arlington, VA 22209

ADMINISTRATOR
Bear Stearns Funds Management Inc.
575 Lexington Avenue
New York, NY 10022

ADMINISTRATION AND ACCOUNTING SERVICES/
TRANSFER AGENT
PFPC Inc.
Bellevue Corporate Center
400 Bellevue Parkway
Wilmington, DE 19809

CUSTODIAN
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 08540

INDEPENDENT ACCOUNTANTS
Arthur Andersen LLP
8000 Towers Cresent Drive
Vienna, VA 22182

COUNSEL
Dechert Price & Rhoads
1775 Eye Street, N.W.
Washington, DC 20006

The financial information included herein is taken from the records of each Fund
without examination by independent auditors who do not express an opinion
thereon.

This report is submitted for the general information of the shareholders of each
Fund. It is not authorized for the distribution to prospective investors in each
Fund unless it is preceded or accompanied by a current prospectus which includes
details regarding each Fund's objectives, policies, fees and other information.
Total return is based on historical results and is not intended to indicate
future performance. The investment return and principal value of an investment
in each Fund will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than original cost.

04/99SEMI