FBR FAMILY OF FUNDS, N-30D, 2000-06-29

FBR FAMILY OF FUNDS
N-30D, 2000-06-29

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FBR FAMILY OF FUNDS

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

[LOGO]

SEMI-ANNUAL REPORT
APRIL 30, 2000

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

May 31, 2000

Dear Fellow Shareholders:

As I am sure you are aware, the stock market has been very volatile over the
last few months, and less seasoned investors have learned that the market does
not always go up. As of May 24, 2000, the tech heavy NASDAQ had dropped over 37%
from its high on March 10, 2000 and the S&P 500 has fallen over 13% during that
same time period. However, this type of activity is not unusual. Since 1970,
approximately once every two years, the stock market has corrected 10% or more.
In fact, we have had five such declines in the past four years, including one
this year. While these periods in the market can be disconcerting, they also
present good opportunities to invest.

The recent market volatility is a positive for investors who have adopted a
long-term investment philosophy. It provides our experienced portfolio managers
the opportunity to put shareholder capital to work at depressed prices and
valuation levels. Then, when investors refocus on corporate earnings, which is
the true force that drives the market long-term, our shareholders should be in a
position to benefit.

The Federal Reserve's attempts to keep inflation in check by repeatedly
raising interest rates has caused the financial services sector to be wildly out
of favor for the past two years. We remain positive on the long-term outlook for
the sector. Despite a flattening yield curve, which has caused a noticeable
slowdown in the earnings growth of depository institutions, financial services
companies are earning money (unlike many technology companies), have valuable
assets, and are trading at historically low valuation levels.

This semi-annual report of the FBR Family of Funds (the "Trust") covers the
six months ended April 30, 2000. During the period, the FBR Financial Services
Fund and FBR Small Cap Financial Fund returned (18.29)% and (10.62)%,
respectively, while the S&P 500 Composite Index and Russell 2000 Index returned
7.19% and 18.88%, respectively, for the same time period. Portfolio manager Dave
Ellison has not changed his investment discipline of owning well run financial
services companies with simple, predictable earnings streams at the lowest
market multiples. Remaining fully invested and continuing to invest in these
types of companies, especially when others shun them, should afford him and our
shareholders the opportunity to participate in the next up-turn in the cycle.

The FBR Small Cap Value Fund continues to produce outstanding returns year
in and year out despite investors' demand for growth at any price as opposed to
traditional value investing. Since our annual report, October 31, 1999 through
April 30, 2000, the FBR Small Cap Value Fund returned 18.91% versus its
benchmarks, the Russell 2000 Index and the Lipper Small Cap Value Index, which
returned 18.88% and 10.25%, respectively, for the same time period. By focusing
his attention on exactly what has been out of favor, bottom-up value stock
picking, portfolio manager Chuck Akre has been able to garner outstanding
returns despite a lackluster environment for small cap stocks.

At the end of the reporting period, the FBR Realty Growth Fund returned
2.59% while the S&P 500 Composite Index returned 7.19% and the NAREIT Total
Return Index returned 9.89% for the same period. Real estate securities have
outperformed almost every market barometer so far this year. This performance is
attributable, in part, to pension funds taking advantage of the low valuations
on a cash flow basis across the sector. In an even more interesting analysis,
BARRON'S recently cited a study by LaSalle Investment Management (Caret &
Pauley) which states

2
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that REITs have a negative correlation with technology. Therefore, money may be
finding its way back into the real estate sector as a potential hedge against
technology holdings.

Diversification is a pivotal component of responsible investing. A
well-rounded portfolio should have an allocation to the sectors in which the
Funds specialize: financial services, real estate and small companies. Value can
be found in all of these sectors especially for investors willing to take a
long-term approach. Our shareholders also have the benefit of having portfolio
managers with extensive experience in their respective sectors working on their
behalf. Detailed performance data for each fund can be found in the "Financial
Highlights" and line graph sections of this report.

Finally, we would like to bring you up to date on our pending acquisition of
Money Management Associates, L.P., a registered investment advisor located in
Bethesda, Maryland. The acquisition will provide our shareholders with new
investment options in our growing family of funds, as well as the prospect of
providing you a higher degree of service at a lower cost. We anticipate
regulatory approval this summer.

As always, we appreciate your support and hope you find this report helpful
in your evaluation of your investment in the Trust. We encourage each of you to
contact us with any questions or concerns that you may have. To obtain a copy of
a free prospectus and to address your concerns, please contact our marketing
representatives at 1-888-888-0025. To discuss issues particular to your account,
contact our shareholder service representatives at 1-800-821-3460.

Sincerely,

/s/ C. Eric Brugel
C. Eric Brugel
Chairman & President
FBR Family of Funds

----------------
An investment in any of the funds entail investment risks inherent in equity
investments. These risks may be enhanced by the small capitalization of the
issuers in which the funds may invest, as these issuers may be particularly
susceptible to adverse economic developments, and the market prices of their
securities tend to be more volatile than those of larger companies. Further, the
funds' focused investment styles closely tie their performance to developments
affecting a narrow market sector or a limited number of issuers.

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 the 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.

Total return represents past performance, which is no guarantee of future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Pursuant to the terms of an expense limitation agreement, FBR Fund
Advisers, Inc., the investment adviser to each of the funds, agreed
contractually to waive a portion of its advisory fee and/or reimburse a portion
of each fund's operating expenses, as necessary, to maintain certain expense
limitations, as set forth in the notes to the financial statements during this
time period. Without waivers and related reimbursements, total returns would
have been lower.

The indices are unmanaged and unlike the FBR Family of Funds have no management
fees or operating costs that reduce reported returns. The volatility and other
risk characteristics for each fund will differ from the volatility and risk
characteristics of the indices.

3
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[FBR LOGO]
FBR FAMILY OF FUNDS
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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 COMPOSITE INDEX FUND INDEX
FUND
<S> <C> <C> <C>
Jan. 3, 1997 $10,000 $10,000 $10,000
Apr. 30, 1997 $10,567 $10,936 $11,006
Oct. 31, 1997 $13,358 $12,593 $13,678
Apr. 30, 1998 $16,649 $15,425 $16,756
Oct. 31, 1998 $14,309 $15,362 $14,438
Apr. 30, 1999 $16,065 $18,791 $17,172
Oct. 31, 1999 $15,282 $19,304 $16,267
Apr. 30, 2000 $12,487 $20,692 $14,637
</TABLE>

Past performance is not predictive of future performance.

<TABLE>
TOTAL RETURNS
ONE YEAR ENDED AVERAGE
APRIL 30, 2000 ANNUAL(3)
----------- -------
<S> <C> <C>
FBR Financial Services Fund(1)(2).... (22.27)% 6.90%
S&P 500 Composite Index(1)........... 10.12 24.41
Lipper Financial Services Fund
Index(1)............................. (14.77) 12.12
</TABLE>

------------------------
(1) The graph 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 fees and agreed to
contractually reimburse a portion of the Fund's operating expenses, as
necessary, to maintain existing expense limitations, 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 waiver of fees and/or reimbursement of expenses in excess of
expense limitations.
(3) For the period January 3, 1997 (commencement of investment operations)
through April 30, 2000. Certain purchases made by shareholders within this
period would have been subject to an initial maximum sales charge of up to
5.50%. As a result, total returns for such shareholders would have been
lower.

4
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[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 2000 SERVICES
FINANCIAL FUND INDEX FUND INDEX
<S> <C> <C> <C>
Jan. 3, 1997 $10,000 $10,000 $10,000
Apr. 30, 1997 $10,617 $9,604 $11,006
Oct. 31, 1997 $14,608 $12,213 $13,678
Apr. 30, 1998 $17,081 $13,695 $16,756
Oct. 31, 1998 $13,150 $10,791 $14,438
Apr. 30, 1999 $13,662 $12,437 $17,172
Oct. 31, 1999 $13,701 $12,404 $16,267
Apr. 30, 2000 $12,246 $14,745 $14,637
</TABLE>

Past performance is not predictive of future performance.

<TABLE>
TOTAL RETURNS
ONE YEAR ENDED AVERAGE
APRIL 30, 2000 ANNUAL(3)
------- ------
<S> <C> <C>
FBR Small Cap Financial Fund(1)(2)... (10.36)% 6.28%
Russell 2000 Index(1)................ 18.56 12.37
Lipper Financial Services Fund
Index(1)............................. (14.77) 12.12
</TABLE>

5
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[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>
LIPPER
FBR SMALL CAP RUSSELL SMALL CAP
VALUE FUND 2000 INDEX VALUE INDEX
<S> <C> <C> <C>
Jan. 3, 1997 $10,000 $10,000 $10,000
Apr. 30, 1997 $9,750 $9,604 $9,980
Oct. 31, 1997 $13,917 $12,213 $12,724
Apr. 30, 1998 $15,751 $13,695 $14,177
Oct. 31, 1998 $12,585 $10,791 $11,183
Apr. 30, 1999 $15,248 $12,437 $11,740
Oct. 31, 1999 $14,629 $12,404 $11,432
Apr. 30, 2000 $17,396 $14,745 $12,603
</TABLE>

Past performance is not predictive of future performance.

<TABLE>
TOTAL RETURNS
ONE YEAR ENDED AVERAGE
APRIL 30, 2000 ANNUAL(3)
----------- -------
<S> <C> <C>
FBR Small Cap Value Fund(1)(2)....... 14.09% 18.10%
Russell 2000 Index(1)................ 18.56 12.37
Lipper Small Cap Value Index(1)...... 7.35 7.20
</TABLE>

6
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[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
Oct. 31, 1995 $9,664 $10,709 $10,303
Apr. 30, 1996 $10,495 $12,178 $11,294
Oct. 31, 1996 $12,657 $13,277 $12,962
Apr. 30, 1997 $14,779 $15,226 $14,601
Oct. 31, 1997 $17,781 $17,529 $17,081
Apr. 30, 1998 $18,953 $21,471 $17,050
Oct. 31, 1998 $14,684 $21,383 $14,560
Apr. 30, 1999 $15,501 $26,156 $14,971
Oct. 31,1999 $14,131 $26,871 $13,336
Apr. 30, 2000 $14,496 $28,804 $14,654
</TABLE>

Past performance is not predictive of future performance.

<TABLE>
TOTAL RETURNS
ONE YEAR ENDED AVERAGE
APRIL 30, 2000 ANNUAL(3)
----------- -------
<S> <C> <C>
FBR Realty Growth Fund(1)(2)......... (6.48)% 7.99%
S&P 500 Composite Index(1)........... 10.12 24.47
NAREIT Total Return Index(1)......... (2.11) 8.23
</TABLE>

(2) FBR Fund Advisers, Inc. waived its advisory fees and agreed to
contractually reimburse a portion of the Fund's operating expenses, as
necessary, to maintain existing expense limitations, 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 waiver of fees and/or reimbursement of 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, 2000. Purchases made by shareholders prior to December 21, 1998,
would have been subject to an initial maximum sales charge of up to 5.50%.
As a result, total returns for such shareholders would have been lower.

7
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[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

FBR FINANCIAL SERVICES FUND

PORTFOLIO OF INVESTMENTS

APRIL 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 96.4%
BANKS - COMMERCIAL -- 13.8%
34,000 AmSouth Bancorporation................................ $ 495,125
2,000 Fifth Third Bancorp................................... 126,250
33,000 Hibernia Corporation, Class A......................... 350,625
47,000 North Fork Bancorporation, Inc........................ 760,812
73,000 Peoples Heritage Financial Group, Inc. *.............. 953,562
4,000 Zions Bancorporation.................................. 166,000
-----------
2,852,374
-----------
BANKS - MONEY CENTER -- 5.5%
20,000 Bank of America Corporation........................... 980,000
4,000 Bank of New York Company, Inc. (The).................. 164,250
-----------
1,144,250
-----------
BANKS - SUPER REGIONAL -- 25.0%
28,000 Bank One Corp. *...................................... 854,000
24,000 Comerica Incorporated................................. 1,017,000
26,000 First Union Corporation............................... 828,750
44,000 KeyCorp............................................... 814,000
11,000 PNC Financial Services Group.......................... 479,875
17,000 U.S. Bancorp.......................................... 345,312
20,000 Wells Fargo & Company **.............................. 821,250
-----------
5,160,187
-----------
BROKERS -- 1.5%
8,000 Knight/Trimark Group, Inc., Class A */**.............. 301,500
-----------
COMPUTER SOFTWARE & SERVICES -- 0.7%
3,000 eSPEED, Inc., Class A */**............................ 141,750
-----------
FINANCIAL SERVICES -- 19.2%
1,000 American Express Company.............................. 150,062
4,000 Capital One Financial Corp............................ 175,000
8,000 Charles Schwab Corporation (The)...................... 356,000
</TABLE>

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<C> <S> <C>
FINANCIAL SERVICES (CONTINUED)
15,000 Citigroup Inc......................................... $ 891,562
15,000 Fannie Mae............................................ 904,688
25,000 FleetBoston Financial Corporation..................... 885,938
8,000 Freddie Mac........................................... 367,500
1,000 Goldman Sachs Group, Inc. (The)....................... 93,250
1,000 Merrill Lynch & Co., Inc. **.......................... 101,938
1,000 SLM Holding Corporation............................... 31,313
-----------
3,957,251
-----------
INSURANCE -- 2.1%
11,000 John Hancock Financial Services, Inc. */**............ 200,750
14,000 MetLife, Inc. */**.................................... 231,875
-----------
432,625
-----------
REGIONAL BANK -- 0.8%
5,000 Mellon Financial Corporation.......................... 160,625
-----------
SAVINGS & LOANS - SAVINGS BANKS -- 27.8%
36,000 Astoria Financial Corporation......................... 992,250
53,000 Charter One Financial, Inc............................ 1,076,563
30,000 Commercial Federal Corporation........................ 466,875
2,000 Dime Bancorp, Inc..................................... 37,500
33,000 Golden West Financial Corporation..................... 1,126,125
56,000 Washington Federal, Inc............................... 976,500
36,000 Washington Mutual, Inc................................ 920,250
7,000 Webster Financial Corporation......................... 149,625
-----------
5,745,688
-----------
Total Common Stocks
(Cost $22,957,232).................................. 19,896,250
-----------
</TABLE>

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

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

FBR FINANCIAL SERVICES FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)

APRIL 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
-------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT -- 4.3%
REPURCHASE AGREEMENT -- 4.3%
$ 896,369 Bear, Stearns & Co. Inc. (Agreement dated 04/28/00 to
be repurchased at $896,796) 5.72%,
05/01/00 (Note 6)
(Cost $896,369)..................................... $ 896,369
-----------
Total Investments -- 100.7%
(Cost $23,853,601).................................. 20,792,619
Liabilities in Excess of Other Assets -- (0.7)%....... (141,708)
-----------
Net Assets -- 100.0%.................................. $20,650,911
===========
</TABLE>

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

* Non-income producing.

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

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

APRIL 30, 2000 (UNAUDITED)

<TABLE>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS -- 99.4%
SAVINGS & LOANS - SAVINGS BANKS - CENTRAL -- 18.1%
24,500 CFS Bancorp, Inc..................................... $ 215,906
17,000 First Defiance Financial Corp........................ 148,750
72,000 First Place Financial Corp........................... 720,000
1,700 First SecurityFed Financial, Inc..................... 19,019
70,200 Jacksonville Bancorp, Inc............................ 908,212
5,300 Lincoln Bancorp...................................... 51,344
5,000 Local Financial Corporation *........................ 40,312
51,900 Logansport Financial Corp............................ 489,806
44,500 North Central Bancshares, Inc........................ 656,375
-----------
3,249,724
-----------
SAVINGS & LOANS - SAVINGS BANKS - EAST -- 53.1%
26,500 American Financial Holdings, Inc. *.................. 334,562
70,900 BostonFed Bancorp, Inc............................... 939,425
19,000 Brookline Bancorp, Inc............................... 179,312
27,558 Camden National Corporation.......................... 378,922
31,000 Catskill Financial Corporation....................... 480,500
30,000 Cohoes Bancorp, Inc.................................. 352,500
35,000 Connecticut Bancshares, Inc. *....................... 417,266
5,000 Dime Community Bancshares............................ 86,563
28,800 First Bell Bancorp, Inc.............................. 450,000
22,000 First Federal Savings & Loan Association of East
Hartford........................................... 633,875
75,800 First Keystone Financial, Inc........................ 758,000
3,300 First Sentinel Bancorp Inc........................... 24,750
15,500 FirstFed America Bancorp, Inc. **.................... 177,281
3,000 Flushing Financial Corporation....................... 42,000
86,900 Hingham Institution for Savings...................... 1,086,250
19,000 Independence Community Bank Corp..................... 223,250
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<C> <S> <C>
SAVINGS & LOANS - SAVINGS BANKS - EAST (CONTINUED)
18,800 Parkvale Financial Corporation....................... $ 296,100
83,000 PennFed Financial Services, Inc...................... 1,021,938
22,000 Port Financial Corp. *............................... 244,750
63,310 Seacoast Financial Services Corporation.............. 593,531
1,000 Thistle Group Holdings, Co........................... 6,250
62,500 Woronoco Bancorp..................................... 632,813
11,500 Yonkers Financial Corporation........................ 166,750
-----------
9,526,588
-----------
SAVINGS & LOANS - SAVINGS BANKS -
SOUTH -- 3.5%
49,600 Pocahontas Bancorp, Inc.............................. 289,850
19,600 Texarkana First Financial Corporation................ 333,200
-----------
623,050
-----------
SAVINGS & LOANS - SAVINGS BANKS -
WEST -- 24.7%
87,500 FirstFed Financial Corp. *........................... 1,093,750
64,000 ITLA Capital Corporation *........................... 876,000
30,500 Klamath First Bancorp, Inc........................... 305,000
68,500 Pacific Crest Capital, Inc........................... 830,563
20,700 PFF Bancorp, Inc..................................... 291,094
5,000 Provident Financial Holdings, Inc. *................. 69,687
68,300 Quaker City Bancorp, Inc. *.......................... 964,738
-----------
4,430,832
-----------
Total Common Stocks
(Cost $23,461,113)................................. 17,830,194
-----------
</TABLE>

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

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

FBR SMALL CAP FINANCIAL FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)

APRIL 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
-------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT -- 2.4%
REPURCHASE AGREEMENT -- 2.4%
$ 428,421 Bear, Stearns & Co. Inc. (Agreement dated 04/28/00 to
be repurchased at $428,625) 5.72%,
05/01/00 (Note 6)
(Cost $428,421)..................................... $ 428,421
-----------
Total Investments -- 101.8%
(Cost $23,889,534).................................. 18,258,615
Liabilities in Excess of Other Assets -- (1.8)%....... (324,368)
-----------
Net Assets -- 100.0%.................................. $17,934,247
===========
</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 SMALL CAP VALUE FUND

PORTFOLIO OF INVESTMENTS

APRIL 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------
SHARES VALUE
------------------------------------------------------------------------------
<C> <S> <C>
GAMING -- 20.7%
200,000 Penn National Gaming, Inc. *......................... $ 2,500,000
-----------
INSURANCE - PROPERTY/CASUALTY -- 16.7%
13,900 Markel Corporation *................................. 2,015,500
-----------
MANUFACTURING - SPECIALTY -- 13.4%
40,000 II-VI Incorporated *................................. 1,620,000
-----------
MOTOR SPORTS -- 17.4%
48,000 Dover Downs Entertainment, Inc....................... 588,000
11,650 International Speedway Corporation, Class A.......... 500,950
23,800 International Speedway Corporation, Class B **....... 1,017,450
-----------
2,106,400
-----------
Total Investments -- 100.1% (Cost $9,501,575)........ 12,098,203
Liabilities in Excess of Other Assets -- (0.1)%...... (9,482)
-----------
Net Assets -- 100.0%................................. $12,088,721
===========
</TABLE>

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

* Non-income producing.

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

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

APRIL 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<C> <S> <C>

COMMON STOCKS -- 94.9%
REAL ESTATE INVESTMENT TRUSTS -- 60.1%
APARTMENTS -- 14.8%
5,400 BNP Residential Properties, Inc........................ $ 46,575
2,000 Cornerstone Realty Income Trust, Inc................... 20,375
1,000 Equity Residential Properties Trust **................. 45,500
5,000 Merry Land Properties, Inc. *.......................... 29,375
1,000 Post Properties, Inc................................... 42,000
1,200 Sun Communities, Inc................................... 39,750
2,000 United Dominion Realty Trust, Inc...................... 20,000
----------
243,575
----------
DIVERSIFIED -- 7.5%
3,000 Crescent Real Estate Equities Company.................. 51,375
21,500 Meditrust Companies *.................................. 43,000
25,000 TIS Mortgage Investment Company *...................... 12,516
1,000 Washington Real Estate Investment Trust................ 16,062
----------
122,953
----------
HEALTHCARE -- 2.4%
10,000 Ventas, Inc. *......................................... 39,375
----------
HOTEL/RESTAURANT -- 18.3%
1,900 Hospitality Properties Trust........................... 42,275
4,200 Host Marriott Corporation.............................. 44,887
7,700 Innkeepers USA Trust................................... 69,300
20,500 Innsuites Hospitality Trust............................ 43,562
6,500 Winston Hotels, Inc.................................... 49,969
25,000 Wyndham International, Inc. *.......................... 51,562
----------
301,555
----------
MORTGAGE -- 3.0%
1,800 Annaly Mortgage Management Inc......................... 15,525
1,800 Apex Mortgage Capital, Inc. **......................... 16,650
</TABLE>

MORTGAGE (CONTINUED)
2,000 Thornburg Mortgage, Inc................................ $ 17,500
----------
49,675
----------
NET LEASED -- 5.5%
2,000 Golf Trust of America, Inc............................. 34,500
1,000 Pinnacle Holdings Inc. *............................... 56,187
----------
90,687
----------
OUTLET CENTERS -- 1.6%
800 Chelsea GCA Realty, Inc................................ 26,100
----------
REGIONAL MALLS -- 0.2%
63,000 EQK Realty Investors I *............................... 3,780
----------
SHOPPING CENTERS -- 4.8%
1,000 Bradley Real Estate, Inc............................... 18,062
3,000 JDN Realty Corporation................................. 29,063
800 Weingarten Realty Investors............................ 32,400
----------
79,525
----------
STORAGE -- 2.0%
90,000 Liberty Self-Stor, Inc. *.............................. 33,075
----------

Total Real Estate Investment Trusts
(Cost $1,178,294).................................... 990,300
----------

OTHER REAL ESTATE RELATED -- 34.8%
COMMERCIAL SERVICES -- 16.8%
1,200 American Tower Corporation, Class A */**............... 55,800
1,300 Cendant Corporation *.................................. 20,069
1,000 Central Parking Corporation **......................... 25,625
13,000 Crescent Operating, Inc. *............................. 22,344
1,400 Crown Castle International Corp. *..................... 53,725
1,200 SBA Communications Corporation *....................... 48,750
2,400 Spectrasite Holdings, Inc. *........................... 50,400
----------
276,713
----------
</TABLE>

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

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

FBR REALTY GROWTH FUND

PORTFOLIO OF INVESTMENTS (CONTINUED)

APRIL 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
SHARES VALUE
-------------------------------------------------------------------------------
<C> <S> <C>

DIVERSIFIED -- 4.1%
900 Alexander & Baldwin, Inc............................... $ 18,900
1,000 Florida East Coast Industries, Inc..................... 49,188
----------
68,088
----------
HOTELS -- 0.9%
10,500 Host Funding, Inc. *................................... 14,109
----------
REAL ESTATE DEVELOPMENT -- 6.2%
3,900 Catellus Development Corporation *..................... 50,700
3,000 Semele Group, Inc. *................................... 14,438
1,300 The St. Joe Company.................................... 37,456
----------
102,594
----------
REAL ESTATE INVESTMENT/MANAGEMENT -- 3.6%
77,000 Banyan Hotel Investment Fund *......................... 33,688
8,000 Liberte Investors, Inc................................. 25,500
----------
59,188
----------
WATER -- 3.2%
1,100 American States Water Company.......................... 33,138
800 California Water Service Group......................... 18,650
----------
51,788
----------
Total Other Real Estate Related (Cost $568,161)........ 572,480
----------
Total Common Stocks (Cost $1,746,455).................. 1,562,780
----------
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
-------------------------------------------------------------------------------
<C> <S> <C>
SHORT-TERM INVESTMENT -- 2.0%
REPURCHASE AGREEMENT -- 2.0%
$ 32,095 Bear, Stearns & Co. Inc. (Agreement dated 04/28/00 to
be repurchased at $32,110) 5.72%, 05/01/00
(Note 6)(Cost $32,095)............................... $ 32,095
----------
Total Investments -- 96.9% (Cost $1,778,550)........... 1,594,875
Other Assets in Excess of Liabilities -- 3.1%.......... 51,044
----------
Net Assets -- 100.0%................................... $1,645,919
==========
</TABLE>

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

* Non-income producing.

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

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

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

STATEMENTS OF ASSETS AND LIABILITIES

APRIL 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
FBR FBR FBR FBR
FINANCIAL SMALL CAP SMALL CAP REALTY
SERVICES FUND FINANCIAL FUND VALUE FUND GROWTH FUND
------------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Cost -- $23,853,601, $23,889,534,
$9,501,575 and $1,778,550, respectively)................. $20,792,619 $18,258,615 $12,098,203 $1,594,875
Cash...................................................... 1,320 -- 3,881 --
Collateral received for securities loaned (Note 5)........ 442,416 168,438 629,367 100,345
Receivable for investments sold........................... 148,203 140,565 208,418 61,198
Receivable for Fund shares sold........................... 1,243 47,200 -- --
Dividends and interest receivable......................... 35,771 3,961 591 7,052
Receivable from investment adviser........................ -- -- -- 11,191
Deferred organization costs and other assets.............. 14,731 21,069 20,152 6,508
----------- ----------- ----------- ----------
Total assets............................................ 21,436,303 18,639,848 12,960,612 1,781,169
----------- ----------- ----------- ----------
LIABILITIES
Due to custodian.......................................... -- -- 199,161 --
Payable upon return of securities loaned (Note 5)......... 442,416 168,438 629,367 100,345
Payable for Fund shares redeemed.......................... 254,267 234,292 -- --
Payable for investments purchased......................... -- 246,196 -- 6,308
Distribution fees payable................................. 15,921 13,791 9,257 1,315
Advisory fees payable..................................... 10,684 5,565 3,287 --
Accrued expenses and other liabilities.................... 62,104 37,319 30,819 27,282
----------- ----------- ----------- ----------
Total liabilities....................................... 785,392 705,601 871,891 135,250
----------- ----------- ----------- ----------
NET ASSETS
Capital stock (unlimited number of shares authorized, with
no par value)............................................ 26,447,963 29,377,670 9,318,639 2,516,520
Undistributed net investment income/(loss)................ 95,981 90,217 (111,090) 6,153
Accumulated net realized gain/(loss) from investments..... (2,832,051) (5,902,721) 284,544 (693,079)
Net unrealized appreciation/(depreciation) on
investments.............................................. (3,060,982) (5,630,919) 2,596,628 (183,675)
----------- ----------- ----------- ----------
Net assets applicable to shares outstanding............. $20,650,911 $17,934,247 $12,088,721 $1,645,919
=========== =========== =========== ==========
Shares outstanding........................................ 1,547,769 1,408,267 614,163 186,069
----------- ----------- ----------- ----------
Net asset value, offering and redemption price per
share.................................................... $13.34 $12.73 $19.68 $8.85
=========== =========== =========== ==========
</TABLE>

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

15
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------

STATEMENTS OF OPERATIONS

FOR THE SIX MONTHS ENDED APRIL 30, 2000 (UNAUDITED)

<TABLE>
<CAPTION>
FBR FBR FBR FBR
FINANCIAL SMALL CAP SMALL CAP REALTY
SERVICES FUND FINANCIAL FUND VALUE FUND GROWTH FUND
------------- -------------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends................................................. $ 327,839 $ 293,960 $ 16,480 $ 43,964
Interest.................................................. 16,431 11,873 3,751 1,535
----------- ----------- ---------- ---------
344,270 305,833 20,231 45,499
----------- ----------- ---------- ---------
EXPENSES
Advisory fees............................................. 102,795 107,190 60,610 7,872
Transfer agent fees and expenses.......................... 37,803 44,708 20,868 21,109
Administration and accounting fees........................ 20,598 21,673 12,377 31,795
Distribution fees......................................... 28,519 29,775 16,836 1,968
Audit and legal fees...................................... 16,087 16,409 16,518 16,486
Printing.................................................. 10,739 10,056 4,450 568
Federal and state registration fees....................... 13,650 5,460 4,550 --
Custodian fees and expenses............................... 7,946 6,565 3,583 3,932
Insurance................................................. 5,632 6,070 4,541 2,839
Trustees' fees and expenses............................... 3,853 3,853 3,853 3,746
Amortization of organization expenses..................... 3,567 3,567 3,567 --
Other..................................................... 3,873 2,583 4,453 501
----------- ----------- ---------- ---------
Total expenses before waivers and related
reimbursements......................................... 255,062 257,909 156,206 90,816
Less: waivers and related reimbursements................ (32,612) (30,421) (24,885) (75,202)
----------- ----------- ---------- ---------
Total expenses after waivers and related
reimbursements......................................... 222,450 227,488 131,321 15,614
----------- ----------- ---------- ---------
Net investment income/(loss).............................. 121,820 78,345 (111,090) 29,885
----------- ----------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) from investments................. (2,637,165) (2,693,534) 413,534 (168,518)
Net change in unrealized appreciation/(depreciation) on
investments............................................. (3,035,958) (665,357) 2,114,110 174,659
----------- ----------- ---------- ---------
Net realized and unrealized gain/(loss) on investments.... (5,673,123) (3,358,891) 2,527,644 6,141
----------- ----------- ---------- ---------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................. $(5,551,303) $(3,280,546) $2,416,554 $ 36,026
=========== =========== ========== =========
</TABLE>

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

16
<PAGE>
(This page has been left blank intentionally.)

17
<PAGE>
[FBR LOGO]
FBR FAMILY OF FUNDS
----------------
STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FBR FINANCIAL SERVICES FUND
------------------------------------
FOR THE SIX FOR THE FISCAL
MONTHS ENDED YEAR
APRIL 30, 2000 ENDED
(UNAUDITED) OCTOBER 31, 1999
--------------- -----------------
<S> <C> <C>
DECREASE IN NET ASSETS FROM
OPERATIONS
Net investment income/(loss).................... $ 121,820 $ 168,364
Net realized gain/(loss) from investments....... (2,637,165) 478,246
Net change in unrealized
appreciation/(depreciation) on investments..... (3,035,958) 2,154,719
------------ ------------
Net increase/(decrease) in net assets resulting
from operations................................ (5,551,303) 2,801,329
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... (144,149) (341,817)
Net realized capital gains...................... (229,257) (3,690,277)
Tax return of capital........................... -- --
------------ ------------
Total dividends and distribuitions to
shareholders................................... (373,406) (4,032,094)
------------ ------------
FUND SHARE TRANSACTIONS
Net proceeds from the sale of shares............ 4,019,335 3,409,487
Cost of shares repurchased...................... (8,490,270) (26,108,166)
Shares issued in reinvestment of dividends...... 365,099 3,890,730
------------ ------------
Decrease in net assets derived from fund share
transactions................................... (4,105,836) (18,807,949)
------------ ------------
Total decrease in net assets.................... (10,030,545) (20,038,714)
NET ASSETS
Beginning of period............................. 30,681,456 50,720,170
------------ ------------
End of period*.................................. $ 20,650,911 $ 30,681,456
============ ============
</TABLE>

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

<TABLE>
<CAPTION>
* Includes undistributed net investment income as follows:
FOR THE SIX FOR THE
MONTHS ENDED FISCAL YEAR
APRIL 30, 2000 ENDED
(UNAUDITED) OCTOBER 31, 1999
-------------------------------------------------------- -----------------
<S> <C> <C>
FBR Financial Services Fund.......... $95,981 $118,310
FBR Small Cap Financial Fund......... 90,217 46,216
FBR Realty Growth Fund............... 6,153 17,450
</TABLE>

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

18
<PAGE>
<TABLE>
<CAPTION>

FBR SMALL CAP FINANCIAL FUND FBR SMALL CAP VALUE FUND
-------------------------------------- ------------------------------------
FOR THE SIX FOR THE FISCAL FOR THE SIX FOR THE FISCAL
MONTHS ENDED YEAR MONTHS ENDED YEAR
APRIL 30, 2000 ENDED APRIL 30, 2000 ENDED
(UNAUDITED) OCTOBER 31, 1999 (UNAUDITED) OCTOBER 31, 1999
----------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C>
DECREASE IN NET ASSETS FROM
OPERATIONS
Net investment income/(loss).................... $ 78,345 $ 50,268 $ (111,090) $ (225,053)
Net realized gain/(loss) from investments....... (2,693,534) (2,955,966) 413,534 (98,137)
Net change in unrealized
appreciation/(depreciation) on investments..... (665,357) 4,932,426 2,114,110 2,794,280
------------ ------------ ----------- -----------
Net increase/(decrease) in net assets resulting
from operations................................ (3,280,546) 2,026,728 2,416,554 2,471,090
------------ ------------ ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... (34,344) (234,650) -- --
Net realized capital gains...................... -- (6,461,151) -- (464,197)
Tax return of capital........................... -- -- -- --
------------ ------------ ----------- -----------
Total dividends and distribuitions to
shareholders................................... (34,344) (6,695,801) -- (464,197)
------------ ------------ ----------- -----------
FUND SHARE TRANSACTIONS
Net proceeds from the sale of shares............ 2,055,605 3,677,672 411,523 2,554,656
Cost of shares repurchased...................... (13,480,309) (28,332,723) (4,562,503) (6,838,679)
Shares issued in reinvestment of dividends...... 32,984 6,489,666 -- 454,755
------------ ------------ ----------- -----------
Decrease in net assets derived from fund share
transactions................................... (11,391,720) (18,165,385) (4,150,980) (3,829,268)
------------ ------------ ----------- -----------
Total decrease in net assets.................... (14,706,610) (22,834,458) (1,734,426) (1,822,375)
NET ASSETS
Beginning of period............................. 32,640,857 55,475,315 13,823,147 15,645,522
------------ ------------ ----------- -----------
End of period*.................................. $ 17,934,247 $ 32,640,857 $12,088,721 $13,823,147
============ ============ =========== ===========

FBR REALTY GROWTH FUND
------------------------------------
FOR THE SIX FOR THE FISCAL
MONTHS ENDED YEAR
APRIL 30, 2000 ENDED
(UNAUDITED) OCTOBER 31, 1999
--------------- -----------------
<S> <C> <C>
DECREASE IN NET ASSETS FROM
OPERATIONS
Net investment income/(loss).................... $ 29,885 $ 93,938
Net realized gain/(loss) from investments....... (168,518) (228,634)
Net change in unrealized
appreciation/(depreciation) on investments..... 174,659 71,473
---------- ----------
Net increase/(decrease) in net assets resulting
from operations................................ 36,026 (63,223)
---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income........................... (41,182) (93,299)
Net realized capital gains...................... -- --
Tax return of capital........................... -- (5,559)
---------- ----------
Total dividends and distribuitions to
shareholders................................... (41,182) (98,858)
---------- ----------
FUND SHARE TRANSACTIONS
Net proceeds from the sale of shares............ 232,330 438,779
Cost of shares repurchased...................... (312,423) (954,915)
Shares issued in reinvestment of dividends...... 36,526 86,206
---------- ----------
Decrease in net assets derived from fund share
transactions................................... (43,567) (429,930)
---------- ----------
Total decrease in net assets.................... (48,723) (592,011)
NET ASSETS
Beginning of period............................. 1,694,642 2,286,653
---------- ----------
End of period*.................................. $1,645,919 $1,694,642
========== ==========
</TABLE>

19
<PAGE>
[FBR LOGO]
FBR Family of Funds
----------------

FINANCIAL HIGHLIGHTS

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

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

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

<TABLE>
<CAPTION>
NET NET DISTRIBUTIONS
ASSET NET REALIZED AND DIVIDENDS FROM NET
VALUE, INVESTMENT UNREALIZED FROM NET REALIZED
BEGINNING INCOME/ GAIN/(LOSS) ON INVESTMENT CAPITAL
OF PERIOD (LOSS)*(1) INVESTMENTS*(2) INCOME GAINS
----------- ----------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
FBR FINANCIAL SERVICES FUND
For the six months ended
April 30, 2000
(unaudited).............. $16.59 $ 0.08 $(3.12) $(0.08) $(0.13)
For the fiscal year ended
October 31, 1999......... 16.94 0.09 0.97 (0.12) (1.29)
For the fiscal year ended
October 31, 1998......... 16.03 0.10 1.04 (0.04) (0.19)
For the period January 3,
1997** through
October 31, 1997......... 12.00 0.04 3.99 -- --

FBR SMALL CAP FINANCIAL FUND
For the six months ended
April 30, 2000
(unaudited).............. 14.26 0.06 (1.57) (0.02) --
For the fiscal year ended
October 31, 1999......... 15.62 0.02 0.62 (0.07) (1.93)
For the fiscal year ended
October 31, 1998......... 17.53 0.08 (1.81) (0.03) (0.15)
For the period January 3,
1997** through
October 31, 1997......... 12.00 0.02 5.51 -- --

FBR SMALL CAP VALUE FUND
For the six months ended
April 30, 2000
(unaudited).............. 16.55 (0.18) 3.31 -- --
For the fiscal year ended
October 31, 1999......... 14.67 (0.27) 2.58 -- (0.43)
For the fiscal year ended
October 31, 1998......... 16.70 (0.08) (1.46) -- (0.49)
For the period January 3,
1997** through
October 31, 1997......... 12.00 (0.05) 4.75 -- --

FBR REALTY GROWTH FUND
For the six months ended
April 30, 2000
(unaudited).............. 8.86 0.17 0.05 (0.23) --
For the fiscal year ended
October 31, 1999......... 9.68 0.47 (0.81) (0.45) --
For the period April 1,
1998*** through
October 31, 1998......... 14.51 0.22 (3.57) (0.13) (1.35)
For the fiscal year ended
March 31, 1998........... 12.69 0.11 3.00 (0.11) (1.18)
For the fiscal year ended
March 31, 1997........... 10.09 0.33 4.14 (0.33) (1.53)
For the period July 3,
1995** through March 31,
1996..................... 10.00 0.20 0.36 (0.20) (0.22)
</TABLE>

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

* 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 the actual shares outstanding on the dates of distributions.
** Commencement of investment operations.
*** 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.
(1) Reflects waivers and related reimbursements.

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

20
<PAGE>
<TABLE>
<CAPTION>

NET NET
DISTRIBUTIONS ASSET ASSETS,
FROM TAX VALUE, TOTAL END OF
RETURN OF END OF INVESTMENT PERIOD
CAPITAL PERIOD RETURN(3) (000'S OMITTED)
------------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
FBR FINANCIAL SERVICES FUND
For the six months ended
April 30, 2000
(unaudited).............. -- $13.34 (18.29)% $20,651
For the fiscal year ended
October 31, 1999......... -- 16.59 6.80 30,681
For the fiscal year ended
October 31, 1998......... -- 16.94 7.12 50,720
For the period January 3,
1997** through
October 31, 1997......... -- 16.03 33.58 23,985

FBR SMALL CAP FINANCIAL FUND
For the six months ended
April 30, 2000
(unaudited).............. -- 12.73 (10.62) 17,934
For the fiscal year ended
October 31, 1999......... -- 14.26 4.19 32,641
For the fiscal year ended
October 31, 1998......... -- 15.62 (9.99) 55,475
For the period January 3,
1997** through
October 31, 1997......... -- 17.53 46.08 43,362

FBR SMALL CAP VALUE FUND
For the six months ended
April 30, 2000
(unaudited).............. -- 19.68 18.91 12,089
For the fiscal year ended
October 31, 1999......... -- 16.55 16.24 13,823
For the fiscal year ended
October 31, 1998......... -- 14.67 (9.57) 15,646
For the period January 3,
1997** through
October 31, 1997......... -- 16.70 39.17 8,269

FBR REALTY GROWTH FUND
For the six months ended
April 30, 2000
(unaudited).............. -- 8.85 2.59 1,646
For the fiscal year ended
October 31, 1999......... $(0.03) 8.86 (3.77) 1,695
For the period April 1,
1998*** through
October 31, 1998......... -- 9.68 (21.14) 2,287
For the fiscal year ended
March 31, 1998........... -- 14.51 24.80 2,376
For the fiscal year ended
March 31, 1997........... (0.01) 12.69 45.12 1,158
For the period July 3,
1995** through March 31,
1996..................... (0.05) 10.09 5.70 182

<CAPTION>
INCREASE/(DECREASE)
REFLECTED IN
EXPENSE RATIOS
AND NET
RATIO OF NET INVESTMENT
RATIO OF INVESTMENT INCOME/(LOSS)
EXPENSES TO INCOME/(LOSS) DUE TO WAIVERS PORTFOLIO
AVERAGE NET TO AVERAGE AND RELATED TURNOVER
ASSETS(1) NET ASSETS(1) REIMBURSEMENTS RATE
----------- ------------- ------------------- -----------
<S> <C> <C> <C> <C>
FBR FINANCIAL SERVICES FUND
For the six months ended
April 30, 2000
(unaudited).............. 1.95%(4) 1.07%(4) 0.29%(4) 48.31%
For the fiscal year ended
October 31, 1999......... 1.88 0.43 0.34 70.25
For the fiscal year ended
October 31, 1998......... 1.65 0.61 0.22 105.58
For the period January 3,
1997** through
October 31, 1997......... 1.65(4) 0.57(4) 1.42(4) 49.68
FBR SMALL CAP FINANCIAL FUND
For the six months ended
April 30, 2000
(unaudited).............. 1.91(4) 0.66(4) 0.26(4) 9.65
For the fiscal year ended
October 31, 1999......... 1.89 0.12 0.29 25.00
For the fiscal year ended
October 31, 1998......... 1.63 0.35 0.14 94.23
For the period January 3,
1997** through
October 31, 1997......... 1.65(4) 0.57(4) 1.43(4) 35.41
FBR SMALL CAP VALUE FUND
For the six months ended
April 30, 2000
(unaudited).............. 1.95(4) (1.65)(4) 0.37(4) 2.41
For the fiscal year ended
October 31, 1999......... 1.92 (1.46) 0.54 24.45
For the fiscal year ended
October 31, 1998......... 1.65 (0.81) 0.60 78.26
For the period January 3,
1997** through
October 31, 1997......... 1.65(4) (0.79)(4) 3.84(4) 42.59
FBR REALTY GROWTH FUND
For the six months ended
April 30, 2000
(unaudited).............. 1.98(4) 3.80(4) 9.56(4) 84.08
For the fiscal year ended
October 31, 1999......... 2.00 4.68 5.97 138.65
For the period April 1,
1998*** through
October 31, 1998......... 2.00(4) 2.98(4) 3.41(4) 136.24
For the fiscal year ended
March 31, 1998........... 2.00 0.59 3.68 170.19
For the fiscal year ended
March 31, 1997........... 1.89 3.12 7.70 197.90
For the period July 3,
1995** through March 31,
1996..................... 2.00(4) 3.62(4) 29.34(4) 44.44
</TABLE>

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

(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 on
investments during the respective periods because of the timing of sales
and repurchases of fund shares in relation to fluctuating net asset values
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 reinvestment of dividends and distributions, if any. Total
investment return is not annualized.
(4) Annualized.

21
<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.

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 18, 1998. Currently, shares of the
FBR Technology Fund are not being offered. However, a registration statement
relating to these securities filed with the Securities and Exchange Commission
is effective but has yet to commence its public offering.

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
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 18, 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 incurred in
connection with the reorganization of the Grand View-SM- Realty Growth Fund and
the Grand View-SM- S&P-Registered Trademark- REIT Index Fund into the Realty
Growth Fund were borne by the Adviser. 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.

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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)

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, 2000) 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 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 Statements 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

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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)
exchanges which do not result in counterparty credit risks. The Funds did not
engage in options transactions during the six months ended April 30, 2000.

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, 2000.

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

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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)
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 -- Each Fund intends to distribute substantially all of
its taxable income and to comply with the other requirements of the Internal
Revenue Code of 1986, as amended, applicable to regulated investment companies.
Accordingly, no provision for U.S. federal income taxes is required. In
addition, by distributing during each calendar year substantially all of its
ordinary income and capital gains, if any, each Fund intends not to be subject
to a U.S. federal excise tax.

At October 31, 1999 certain of the Funds had capital loss carryforwards
available as a reduction to the extent provided in regulations of any future net
capital gains realized before the end of the fiscal year 2007. To the extent
that the capital loss carryforwards are used to offset future capital gains, it
is probable that the gains so offset will not be distributed to shareholders.
The Funds had the following capital loss carryforwards at October 31, 1999:

<TABLE>
<CAPTION>
FUND
----
<S> <C>
Small Cap Financial Fund.................................... $3,020,811
Small Cap Value Fund........................................ 98,137
Realty Growth Fund.......................................... 462,525
</TABLE>

The capital loss carryforwards at October 31, 1999 will expire in 2007, except
for the Realty Growth Fund, of which $227,439 will expire in 2006 and $235,086
will expire in 2007.

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 a monthly fee equal to an
annual rate of each Fund's average daily net assets, computed daily and paid
monthly as follows:

<TABLE>
<CAPTION>
FUND
----
<S> <C>
Financial Services Fund..................................... 0.90%
Small Cap Financial Fund.................................... 0.90
Small Cap Value Fund........................................ 0.90
Realty Growth Fund.......................................... 1.00
</TABLE>

The Adviser has contractually undertaken to limit each Fund's total operating
expenses to the extent that such expenses exceed 1.95% of each Fund's average
daily net assets. Prior to February 28, 2000, the Adviser had contractually
undertaken to limit the Realty Growth Fund's total operating expenses to the
extent that such expenses exceeded 2.00% of its average daily net assets. As
necessary, these limitations were effected by waivers by the Adviser

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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)
of its advisory fees and reimbursements of expenses exceeding the advisory fee.
For the six months ended April 30, 2000, advisory fees, waivers and
reimbursements of expenses were as follows:

<TABLE>
<CAPTION>
GROSS ADVISORY NET
ADVISORY FEE ADVISORY EXPENSE
FUND FEES WAIVERS FEES REIMBURSEMENTS
---- --------- --------- --------- ----------------
<S> <C> <C> <C> <C>
Financial Services Fund.............. $102,795 $(32,612) $70,183 --
Small Cap Financial Fund............. 107,190 (30,421) 76,769 --
Small Cap Value Fund................. 60,610 (24,885) 35,725 --
Realty Growth Fund................... 7,872 (7,872) -- $(67,330)
</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, 2000, the
Distributor earned $28,519, $29,775, $16,836 and $1,968 for the Financial
Services Fund, Small Cap Financial Fund, Small Cap Value Fund, and Realty Growth
Fund, respectively, in distribution fees.

For the six months ended April 30, 2000, the Financial Services Fund and Small
Cap Financial Fund paid $900 and $200, respectively, in brokerage commissions
from portfolio transactions executed on behalf of the Funds to FBR, an affiliate
of the Adviser and the Distributor.

3. INVESTMENT IN SECURITIES

For U.S. federal income tax purposes, the costs of securities owned, gross
appreciation, gross depreciation and net unrealized appreciation/(depreciation)
on investments for each Fund were as follows:

<TABLE>
<CAPTION>
NET
GROSS GROSS APPRECIATION/
FUND COST APPRECIATION DEPRECIATION (DEPRECIATION)
---- ------------ ------------- ------------- --------------
<S> <C> <C> <C> <C>
Financial Services Fund............. $24,569,286 $ 641,867 $(4,418,534) $(3,776,667)
Small Cap Financial Fund............ 23,974,707 105,129 (5,821,221) (5,716,092)
Small Cap Value Fund................ 9,501,650 3,164,075 (567,522) 2,596,553
Realty Growth Fund.................. 1,912,474 86,699 (404,298) (317,599)
</TABLE>

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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)

For the six months ended April 30, 2000, aggregate purchases and sales of
investment securities (excluding short-term investments) were as follows:

<TABLE>
<CAPTION>
FUND PURCHASES SALES
---- ------------ ------------
<S> <C> <C>
Financial Services Fund..................................... $11,120,148 $14,994,786
Small Cap Financial Fund.................................... 2,307,792 12,594,080
Small Cap Value Fund........................................ 324,672 4,315,720
Realty Growth Fund.......................................... 1,313,771 1,435,845
</TABLE>

4. FUND SHARE TRANSACTIONS

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, 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 the shares of each Fund were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED APRIL 30, 2000
(UNAUDITED)
-------------------------------------------
FUND SALES REPURCHASES REINVESTMENTS
---- ------------- ------------- -------------
<S> <C> <C> <C>
Financial Services Fund................ 302,963 632,042 27,267
Small Cap Financial Fund............... 159,426 1,043,277 2,510
Small Cap Value Fund................... 21,736 242,700 --
Realty Growth Fund..................... 27,612 37,176 4,285

<CAPTION>
FOR THE FISCAL YEAR ENDED
OCTOBER 31, 1999*
-------------------------------------------
FUND SALES REPURCHASES REINVESTMENTS
---- ------------- ------------- -------------
<S> <C> <C> <C>
Financial Services Fund................ 205,789 1,595,321 245,329
Small Cap Financial Fund............... 251,199 1,967,951 453,578
Small Cap Value Fund................... 159,802 423,286 31,805
Realty Growth Fund..................... 45,274 99,305 9,040
</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'
shares transactions shown are inclusive of Class B and C shares transactions.

There is a 1.00% redemption fee on fund shares redeemed, which have been held 90
days or less. Redemption fees for each Fund were as follows:

<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED APRIL 30, 2000 FOR THE FISCAL YEAR
FUND (UNAUDITED) ENDED OCTOBER 31, 1999
---- --------------------- ----------------------
<S> <C> <C>
Financial Services Fund............... $12,502 $1,531
Small Cap Financial Fund.............. 1,125 915
Small Cap Value Fund.................. 128 1,303
Realty Growth Fund.................... 14 88
</TABLE>

The dollar values of the share repurchases have been reduced for these fees. The
redemption fees were collected and retained by each Fund for the benefit of the
remaining shareholders.

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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)

5. SECURITIES LENDING

Loans of securities are required at all times to be secured by collateral equal
to at least 100% 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 lender is insufficient to cover the value of loaned
securities, the borrower is obligated to pay the amount of the shortfall (and
interest thereon) to the Funds. The value of securities on loan to brokers and
the related collateral received at April 30, 2000, were as follows:

<TABLE>
<CAPTION>
VALUE OF SECURITIES
FUND ON LOAN VALUE OF COLLATERAL
---- ------------------- --------------------
<S> <C> <C>
Financial Services Fund................... $418,440 $442,416
Small Cap Financial Fund.................. 161,474 168,438
Small Cap Value Fund...................... 620,218 629,367
Realty Growth Fund........................ 98,210 100,345
</TABLE>

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

For the six months ended April 30, 2000, income from securities lending was
$1,014, $348, $1,942 and $266 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
Statements of Operations.

6. COLLATERAL FOR REPURCHASE AGREEMENTS

Listed below is the collateral associated with the repurchase agreements with
Bear, Stearns & Co. Inc., outstanding at April 30, 2000.

FINANCIAL SERVICES FUND

<TABLE>
<CAPTION>
FACE TOTAL
ISSUER AMOUNT MATURITY VALUE
------ --------- --------- ---------
<S> <C> <C> <C>
United States Treasury Strips............................... 1,795,000 11/15/10 $915,450
========
</TABLE>

SMALL CAP FINANCIAL FUND

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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)

REALTY GROWTH FUND

7. SUBSEQUENT EVENT -- SUB-ADVISORY AGREEMENT (SMALL CAP VALUE FUND ONLY)

At a Special Meeting of Shareholders held on June 1, 2000, the shareholders of
the Small Cap Value Fund approved a new Sub-Advisory Agreement. Effective on
such date, the Adviser has retained Akre Capital Management, LLC ("ACM") to
serve as investment sub-adviser to the Small Cap Value Fund. Charles Thomas
Akre, Jr., the managing member of ACM, has served as portfolio manager of the
Small Cap Value Fund since its commencement of operations.

Under the terms of the Sub-Advisory Agreement, the Adviser, and not the Small
Cap Value Fund, will pay ACM an annual fee equal to the greater of (i) 0.40% of
the Small Cap Value Fund's average daily net assets (which shall be accrued
daily and paid monthly), or (ii) $3,500 per month. There is no change in the
advisory fee paid to the Adviser by the Small Cap Value Fund.

29
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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

<TABLE>
<S> <C> <C>
F. David Fowler Trustee
George W. Grosz Trustee
Michael A. Willner Trustee
C. Eric Brugel Chairman of the Board
and President
Winsor H. Aylesworth Vice President and
Treasurer
W. Bart Sanders Senior Vice President
Frank J. Maresca Assistant Treasurer
Vincent L. Pereira Assistant Secretary
</TABLE>

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 PUBLIC 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.

04/00SEMI