THE FBR FAMILY OF FUNDS
POTOMAC TOWER
1001 NINETEENTH STREET NORTH
ARLINGTON, VIRGINIA 22209
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
JUNE 18, 1997
To the Shareholders:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of The FBR Family of Funds (the "Trust") will be held at the Trust's
offices, Potomac Tower, 1001 Nineteenth Street North, Arlington, Virginia 22209,
on June 18, 1997 at 2:00 P.M. for the following purposes:
(1) To elect six members to the Board of Trustees of the Trust to serve
indefinite terms until their successors are duly elected and qualified;
(2) To ratify the selection of Arthur Andersen L.L.P. as independent
public accountants of the Trust for its fiscal year ending October 31,
1997; and
(3) To transact such other business as may properly come before the Meeting
or any adjournments thereof.
The Board of Trustees has fixed the close of business on May 7, 1997 as
the record date for the determination of shareholders entitled to notice of, and
to vote at, the Meeting or any adjournment thereof, and only holders of record
of shares at the close of business on that date are entitled to notice of, and
to vote at, the Meeting and any adjournment thereof.
You are cordially invited to attend the Meeting. All shareholders are
requested to complete, date and sign the enclosed form of proxy and return it
promptly in the envelope provided for that purpose. The enclosed proxy is being
solicited on behalf of the Board of Trustees of the Trust.
By Order of the Board of Trustees,
W. Russell Ramsey, Secretary
Dated: May 14, 1997
- --------------------------------------------------------------------------------
PLEASE RESPOND - YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO
ATTEND THE MEETING, PLEASE FILL IN, SIGN AND MAIL THE PROXY IN THE MANNER
PROVIDED. IT IS IMPORTANT THAT YOU RETURN YOUR PROXY AS SOON AS POSSIBLE TO
ASSURE THAT YOUR PROXY WILL BE VOTED AND TO AVOID ANY ADDITIONAL EXPENSE TO
THE TRUST OF FURTHER SOLICITATION.
- --------------------------------------------------------------------------------
<PAGE>
PROXY STATEMENT
THE FBR FAMILY OF FUNDS
POTOMAC TOWER
1001 NINETEENTH STREET NORTH
ARLINGTON, VIRGINIA 22209
---------
SPECIAL MEETING OF SHAREHOLDERS
JUNE 18, 1997
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Trustees of The FBR Family of Funds (the
"Trust"), a registered open-end management investment company organized under
the laws of Delaware, to be voted at the Special Meeting of Shareholders of the
Trust (the "Meeting") to be held at the Trust's offices, Potomac Tower, 1001
Nineteenth Street North, Arlington, Virginia 22209 on June 18, 1997 at 2:00 P.M.
and at any adjournments thereof. The approximate mailing date of this Proxy
Statement is May 14, 1997.
The Trust is a registered open-end management investment company which
currently consists of four series: FBR Financial Services Fund ("Financial
Services Fund"), FBR Small Cap Financial Fund ("Small Cap Financial Fund"), FBR
Small Cap Growth/Value Fund ("Growth Value Fund"), and FBR Information
Technologies Fund ("Information Technologies Fund") (each, a "Fund" and
collectively, the "Funds"). Currently, shares of the Information Technologies
Fund are not being offered.
FBR Fund Advisers, Inc. (the "Adviser") serves as the investment
adviser to the Funds. The Adviser was organized as a Delaware corporation on
September 30, 1996 and is registered as an investment adviser under the
Investment Advisers Act of 1940. Friedman, Billings, Ramsey & Co., Inc. (the
"Distributor" or "FBR"), a registered broker-dealer, is the Funds' principal
underwriter. The principal business address of the Adviser and the Distributor
is 1001 Nineteenth Street North, Arlington, Virginia 22209. The Funds'
administrator is Bear Stearns Funds Management Inc., a wholly owned subsidiary
of The Bear Stearns Companies Inc., located at 245 Park Avenue, New York, New
York 10167.
VOTING INFORMATION
The presence in person or by proxy of the holders of one-third of the
shares outstanding and entitled to vote as of the record date is required to
constitute a quorum at the Meeting. In the event that a quorum is not present at
the Meeting, or if a quorum is present at the Meeting but sufficient votes to
approve any of the proposals are not received, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies. Any adjournment will require the affirmative vote of a majority of
the shares cast upon the question of adjourning the Meeting. The persons named
as proxies will vote those proxies which they are entitled to vote FOR any
proposal in favor of the adjournment and will vote those proxies required to be
voted AGAINST any proposal against the adjournment. A shareholder vote may be
taken on one or more of the proposals in this proxy statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
<PAGE>
Abstentions and broker non-votes will be included for purposes of
determining whether a quorum is present at the Meeting, but will be treated as
votes not cast and, therefore, will not be counted for purposes of determining
whether matters to be voted upon at the Meeting have been approved.
The individuals named as proxies on the enclosed proxy cards will vote
in accordance with your direction as indicated thereon, if your proxy card is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you give no voting instructions, your shares will be voted
FOR the nominees named herein for the Board of Trustees of the Trust and FOR the
ratification of the selection of independent public accountants. If any nominee
for the Board should withdraw or otherwise become unavailable for election, your
shares will be voted in favor of such other nominees as management may
recommend. You may revoke any proxy card by submitting another proxy or by
letter or telegram revoking the initial proxy. To be effective, your revocation
must be received by the Trust prior to the Meeting and must indicate your name
and account number. In addition, if you attend the Meeting in person you may, if
you wish, vote by ballot at that Meeting, thereby canceling any proxy previously
given.
The Board of Trustees has fixed the close of business on May 7, 1997 as
the record date (the "Record Date") for the determination of shareholders
entitled to notice of, and to vote at, the Meeting and at any adjournment
thereof. Shareholders on the Record Date will be entitled to one vote for each
share held. The shares of all Funds will be voted together on Proposals I and
II, the Election of Trustees and the Selection of Independent Public
Accountants. As of May 7, 1997, the Funds had outstanding shares as follows:
FUND SHARES OUTSTANDING
---- ------------------
Financial Services Fund 705,469
Small Cap Financial Fund 572,154
Growth Value Fund 158,830
Information Technologies Fund 0
Audited financial statements with respect to the Trust's initial
capitalization are contained in the Funds' Statement of Additional Information,
which is available without charge upon request by writing to The FBR Family of
Funds, Potomac Tower, 1001 Nineteenth Street North, Arlington, Virginia 22209 or
by calling 1-888-888-0025.
Each full share of each Fund outstanding is entitled to one vote, and
each fractional share of each Fund outstanding is entitled to a proportionate
share of one vote, with respect to each matter to be voted upon by the
shareholders of the Funds. Information about the vote necessary with respect to
each proposal is discussed below in connection with the proposal.
------------------------------------
PROPOSAL 1 - ELECTION OF TRUSTEES
In accordance with the Trust's Trust Instrument and the Investment
Company Act of 1940, as amended (the "1940 Act"), the Board of Trustees has
nominated six persons for election as Trustees. The Trust is not required to
hold annual meetings of shareholders for the election of Trustees. The Trust,
however, is required in certain circumstances to call a meeting of shareholders
(i) at such time as less than a majority of the Trustees holding office have
been elected by shareholders, and (ii) to fill vacancies on the Board of
Trustees if less than two-thirds of the Trustees have been elected by
shareholders. Two of the Trust's current Trustees (Messrs. Ramsey and
-3-
<PAGE>
Ordan) have indicated a desire to resign from the Trust's Board of Trustees,
making it necessary for the Trustees to call a shareholders meeting to fill
these vacancies. The Trust's Nominating Committee considered various candidates
for Trustees and determined to recommend to the full Board Messrs. Brugel,
Fowler and Willner as nominees for election to the Board of Trustees. At a
meeting held on April 22, 1997, the full Board determined to expand the size of
the Board of Trustees from five to six, including four independent Trustees.
The persons named on the accompanying proxy card(s) intend, in the
absence of contrary instructions, to vote all proxies in favor of the election
of the nominees listed below as Trustees to serve until their successors are
duly elected and qualified. The nominees have consented to stand for election
and to serve if elected. If any of the nominees should be unable to serve, an
event not now anticipated, the proxies will be voted for such persons, if any,
as shall be designated by the Board of Trustees to replace such nominee. The
Trustees recommend that shareholders vote in favor of the election of the
nominees listed below.
INFORMATION CONCERNING NOMINEES
The following table sets forth certain information concerning the
nominees for election as Trustees of the Trust. With the Exception of Messrs.
Brugel, Fowler and Willner, each of the nominees currently serves as a Trustee
of the Trust and has served as a Trustee since commencement of the Trust's
operations. Messrs. Mark S. Ordan and W. Russell Ramsey currently serve as
Trustees of the Trust, but do not stand for reelection at the meeting. Unless
otherwise noted, the nominees have engaged in the principal occupation or
employment listed in the following table for more than five years, but not
necessarily in the same capacity. The nominees for election as Trustees are as
follows:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
PRESENT OFFICE WITH THE TRUST, IF ANY; OWNED AND % OF
PRINCIPAL OCCUPATION FOR PAST FIVE YEARS TRUSTEE TOTAL OUTSTANDING
NAME AND ADDRESS AND OTHER DIRECTORSHIPS AGE SINCE ON MAY 7, 1997 (1)
- ---------------- ----------------------- --- ----- -------------------
<S> <C> <C> <C> <C>
Eric F. Billings* Chairman, Trustee, President, Chief 44 1996 3,813.883 (0.67%)
Potomac Tower Financial Officer and Treasurer of the Small Cap Financial Fund
1001 Nineteenth Street North Trust; Vice Chairman and Director,
Arlington, Virginia 22209 Friedman, Billings & Ramsey Co., Inc., 3,796.507 (0.54%)
FBR Fund Advisers, Inc., Friedman, Financial Services
Billings, Ramsey Investment Management, Fund
Inc. and FBR Offshore Management, Inc.
Thomas D. Eckert None; President, Mid-Atlantic Region, 49 1996 2,057.613 (0.36%)
Pulte Home North Pulte Home East, an operating company of Small Cap Financial Fund
2100 Reston Parkway, Ste 450 the Pulte Home Corporation.
Reston, Virginia 20191 2,044.154 (0.29%)
Financial Services
Fund
Patrick J. Keeley Trustee; Partner in the law firm of 48 1996 0
Fulbright & Jaworski, L.L.P. Fulbright & Jaworski, L.L.P.
801 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
PRESENT OFFICE WITH THE TRUST, IF ANY; OWNED AND % OF
PRINCIPAL OCCUPATION FOR PAST FIVE YEARS TRUSTEE TOTAL OUTSTANDING
NAME AND ADDRESS AND OTHER DIRECTORSHIPS AGE SINCE ON MAY 7, 1997 (1)
- ---------------- ----------------------- --- ----- -------------------
<S> <C> <C> <C> <C>
C. Eric Brugel* None; Managing Director, Friedman, 34 N/A 52.603 (.01%)
Potomac Tower Billings, Ramsey & Co., Inc. Financial Services
1001 Nineteenth Street North Fund
Arlington, VA 22209
46.440 (.01%)
Small Cap Financial Fund
164.188 (.10%)
Growth Value Fund
Michael A. Willner None; President, Catalyst Advisers, Inc. 40 N/A 0
11521 Potomac Road from September 1996 to Present;
Lorton, VA 22079 President, Federal Filings, Inc. from
July 1986 to July 1995.
F. David Fowler None; Dean, The George Washington 63 N/A 0
9450 Newbridge Drive University School of Business and Public
Potomac, MD 20854 Management; Partner, KPMG Peat Marwick
from October 1969 to June 1992.
<FN>
- ------------------------
(1) The information as to beneficial ownership is based on statements
furnished to the Trust by the Trustees and nominees.
* Messrs. Billings and Brugel are deemed to be "interested persons" of
the Trust under the 1940 Act because of their affiliation with FBR Fund
Advisers, Inc. and its affiliates, as shown above.
</FN>
</TABLE>
RESPONSIBILITIES OF THE BOARD--BOARD AND COMMITTEE MEETINGS
The Board of Trustees is responsible for the general oversight of the
Funds' business. The Trust is managed by the Trustees in accordance with the
laws of the State of Delaware. Of the five current Trustees, three are not
"interested persons" of the Trust within the meaning of that term under the 1940
Act. The Trustees appoint the officers of the Trust to actively supervise its
day-to-day operations.
The Board of Trustees presently has an audit committee, a valuation
committee and a nominating committee. The current members of each committee are
Messrs. Eckert, Keeley, and Ordan. The function of the audit committee is to
recommend independent public accountants and review and report on accounting and
financial matters. The function of the valuation committee is to consider any
valuation issues related to securities held by a Fund or a Fund's net asset
value, and to report to the full Board of Trustees. The function of the
nominating committee is to consider and recommend nominees to fill vacancies on
the Board or any committee of the Board.
During the period ended December 31, 1996, there was one meeting of the
Board of Trustees and no meetings of the audit committee, the valuation
committee or the nominating committee.
-5-
<PAGE>
EXECUTIVE OFFICERS
In addition to Mr. Billings, the following persons are Executive
Officers of the Trust:
<TABLE>
<CAPTION>
PRESENT OFFICE SHARES BENEFICIALLY
WITH THE TRUST AND OWNED AND % OF
PRINCIPAL OCCUPATION OFFICER TOTAL OUTSTANDING
NAME AND ADDRESS FOR PAST FIVE YEARS AGE SINCE ON MAY 7, 1997 (1)
- ---------------- ------------------- --- ----- ------------------
<S> <C> <C> <C> <C>
W. Russell Ramsey Trustee, Vice President and Secretary of the 36 1996 0
Potomac Tower Trust; President and Director, FBR Fund
1001 Nineteenth Street North Advisers, Inc., Friedman, Billings, Ramsey &
Arlington, VA 22209 Co., Inc., Friedman Billings, Ramsey
Investment Management, Inc. and FBR Offshore
Management, Inc.
Frank J. Maresca Assistant Treasurer of the Trust; Managing 38 1996 0
245 Park Avenue Director of Bear, Stearns & Co. Inc. since
New York, NY 10167 September 1994; Executive Vice President of
BSFM since March 1992; Vice President of Bear,
Stearns & Co. Inc. from March 1992 to
September 1993.
Vincent L. Pereira Assistant Secretary of the Trust; Associate 31 1996 0
245 Park Avenue Director of Bear, Stearns & Co. Inc. since
New York, NY 10167 September 1995 and Vice President of BSFM
since May 1993; Vice President of Bear,
Stearns & Co. Inc. from May 1993 to September
1995; Assistant Vice President of Mitchell
Hutchins from October 1992 to May 1993; Senior
Relationship Manager of Mitchell Hutchins from
June 1988 to October 1992.
<FN>
- ---------------------
(1) The information as to beneficial ownership is based on statements
furnished by the executive officers.
</FN>
</TABLE>
COMPENSATION OF OFFICERS AND TRUSTEES
The officers of the Trust receive no compensation directly from the
Trust for performing the duties of their offices. Effective February 25, 1997,
each Independent Trustee receives an annual retainer of $5,000 and a fee of
$1,000 for each regular meeting and $500 for each committee meeting attended,
plus expenses, and $250 for each telephonic meeting.
-6-
<PAGE>
The following table sets forth the estimated aggregate compensation
(not including expense reimbursement) to be paid by the Trust to each Trustee
for the current fiscal year:
PENSION OR RETIREMENT TOTAL COMPENSATION
AGGREGATE BENEFITS ACCRUED FROM FUND
COMPENSATION AS PART OF COMPLEX
NAME OF TRUSTEE FROM TRUST TRUST EXPENSES TO TRUSTEES
- --------------- ------------ --------------------- ------------------
Eric F. Billings 0 0 0
Thomas D. Eckert $9,387 0 $9,387
Patrick J. Keeley $9,387 0 $9,387
Mark S. Ordan $3,565 0 $3,565
W. Russell Ramsey 0 0 0
C. Eric Brugel* 0 0 0
Michael A. Willner* $5,336 0 $5,336
David Fowler* $5,336 0 $5,336
- -----------------
* Nominee for election to the Board of Trustees
REQUIRED VOTE
Election of the listed nominees for Trustee requires the affirmative
vote of a plurality of the votes cast at the Meeting in person or by proxy,
provided a quorum is present.
------------------------------------
PROPOSAL 2: SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
At a meeting of the Board of Trustees held on December 12, 1996, the
Trustees, including a majority of Trustees who are not "interested persons"
selected Arthur Andersen L.L.P. to act as independent public accountants for the
Trust for the fiscal period ending October 31, 1997. Audit services to be
performed by Arthur Andersen L.L.P. for the current fiscal year include
examination of the financial statements of the Funds, review of filings with the
Securities and Exchange Commission and preparation of tax returns. Arthur
Andersen L.L.P. are independent accountants and have advised the Trust that they
have no direct financial interest or material indirect financial interest in the
Trust or its Funds. Representatives of Arthur Andersen L.L.P. are not expected
to be present at the Meeting, but have been given the opportunity to make a
statement if they so desire, and will be available should any matter arise
requiring their presence.
The persons named in the accompanying proxy will vote FOR ratification
of the selection of Arthur Andersen L.L.P. as independent public accountants
unless contrary instructions are given.
REQUIRED VOTE
Approval of Proposal 2 requires a majority of the votes cast with
respect to Proposal 2 at the Meeting, provided a quorum is present.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN L.L.P. AS INDEPENDENT PUBLIC
ACCOUNTANTS.
-7-
<PAGE>
OTHER MATTERS
No business other than as set forth herein is expected to come before
the Meeting, but should any other matter requiring a vote of shareholders arise,
including any question as to an adjournment of the Meeting, the persons named in
the enclosed proxy will vote thereon according to their best judgment in the
interests of the Funds.
PRINCIPAL SHAREHOLDERS
As of the record date, May 7, 1997, to the knowledge of the management
of the Trust, only the following persons owned of record or beneficially more
than 5% of the outstanding shares of each Fund:
<TABLE>
<CAPTION>
GROWTH VALUE FUND
NAME AND ADDRESS PERCENTAGE OF SHARES OUTSTANDING NUMBER OF SHARES
- ---------------- -------------------------------- ----------------
<S> <C> <C>
Edgar E. Sharp 5.1% 8,097.166
Trustee Edgar E. Sharp Living Trust
P.O. Box 8338
Longboat Key, FL 34228
Bear, Stearns Securities Corp.* 20.8% 32,975.653
1 Metrotech Center North
Brooklyn, NY 11201-3859
Charles Schwab & Co. Inc.* 8.3% 13,131.188
ATTN: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
FINANCIAL SERVICES FUND
NAME AND ADDRESS PERCENTAGE OF SHARES OUTSTANDING NUMBER OF SHARES
- ---------------- -------------------------------- ----------------
NFSC* 6.5% 45,558.087
64 Eisenhower Dr.
Middletown, NY 10940
Endeavor Capital Partners LP 10.8% 75,301.205
555 Madison Ave., 22nd Floor
New York, NY 10022
Charter Michigan Bancorp, Inc. 5.9% 41,425.021
13606 Michigan Ave., 2nd Floor
Dearborn, MI 48126
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
SMALL CAP FINANCIAL FUND
NAME AND ADDRESS PERCENTAGE OF SHARES OUTSTANDING NUMBER OF SHARES
- ---------------- -------------------------------- ----------------
<S> <C> <C>
The Northern Trust Co.* 5.6% 32,156.048
P.O. Box 92956
Chicago, IL 60675
Bear, Stearns Securities Corp.* 11.2% 63,741.274
1 Metrotech Center North
Brooklyn, NY 11201-3859
NFSC*
64 Eisenhower Dr. 8.1% 45,836.516
Middletown, NY 10940
Charter Michigan Bancorp, Inc. 6.9% 39,463.299
13606 Michigan Ave., 2nd Floor
Dearborn, MI 48126
<FN>
- -------------------
* Bear, Stearns Securities Corp., Charles Schwab and Co. Inc., NFSC, and
the Northern Trust Co. hold shares as nominees for the benefit of their
respective clients.
</FN>
</TABLE>
-9-
<PAGE>
EXPENSES
The cost of solicitation of proxies will be borne by the Trust.
Solicitation will be made by mail, and may be made by Trustees, officers, and
employees, personally or by telephone or telegram. Proxy cards and material also
will be distributed through brokers, custodians, nominees and other like parties
to beneficial owners of the Funds' shares, and the Trust expects to reimburse
such parties for their costs and expenses.
SHAREHOLDER PROPOSALS
As a general matter, the Trust does not hold regular annual or other
meetings of shareholders. Any shareholder who wishes to submit proposals to be
considered at a special meeting of the Trust's Shareholders should send the
proposals to the Trust at Potomac Tower, 1001 Nineteenth Street North,
Arlington, Virginia 22209, so as to be received a reasonable time before the
proxy solicitation for that meeting is made. Shareholder proposals that are
submitted in a timely manner will not necessarily be included in the Trust's
proxy materials. Inclusion of such proposals is subject to limitations under the
federal securities laws.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
By order of the Board of Trustees,
W. RUSSELL RAMSEY, Secretary
May 14, 1997
- --------------------------------------------------------------------------------
IT IS IMPORTANT THAT YOU EXECUTE AND RETURN ALL OF YOUR PROXIES PROMPTLY.
- --------------------------------------------------------------------------------
-10-
<PAGE>
PROXY THE FBR FAMILY OF FUNDS PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES
Special Meeting of Shareholders - June 18, 1997
The undersigned hereby appoints C. Eric Brugel, Robert Smith and
Nicholas Nichols and each of them, the proxies of the undersigned, with the
power of substitution to each of them, to vote all shares of The FBR Family of
Funds (the "Trust") which the undersigned is entitled to vote at the Special
Meeting of Shareholders of the Trust to be held at the Trust's offices, Potomac
Tower, 1001 Nineteenth Street North, Arlington, Virginia 22209, on June 18, 1997
at 2:00 P.M., and at any adjournments thereof. Unless otherwise specified in the
squares provided, the undersigned's vote will be cast FOR each numbered item
listed below.
1. The election of Trustees:
/ / FOR all nominees listed below (except as marked to the contrary
below)
/ / WITHHOLD AUTHORITY to vote for all nominees listed below
Nominees: Eric F. Billings, Thomas D. Eckert, Patrick J. Keeley, C. Eric
Brugel, Michael A. Willner, and David Fowler
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- -------------------------------------
- -------------------------------------
2. Ratification of the selection of Arthur Andersen L.L.P. as the Trust's
independent public accountants;
/ / FOR / / AGAINST / / ABSTAIN
The proxies are authorized to vote in their discretion on any other business
which may properly come before the meeting and any adjournments thereof.
Please sign exactly as your name or names appear.
When signing as attorney, executor, administrator,
<PAGE>
trustee or guardian, please give your full title
as such.
---------------------------------
(Signature of Shareholder)
---------------------------------
(Signature of joint owner, if any)
Date_______________, 1997
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES