POTOMAC FUNDS
SUPPLEMENT DATED MAY 20, 1999 TO THE
PROSPECTUS DATED JANUARY 1, 1999
The following sentence replaces the second sentence (1) under the second
paragraph of the section titled "Prospectus Summary - The Potomac Funds" in the
Prospectus and (2) under the first paragraph of the section titled "Investment
Objectives and Policies - The Potomac U.S. Plus Fund" in the Prospectus:
In attempting to achieve its objective, the Fund may invest in
securities included in that index and in Standard & Poor's Depositary
Receipts, as well as enter into long positions in stock index futures
contracts, options on stock index futures contracts and options on
securities and on stock indices.
In addition, the following information is included before the section
titled "Investment Techniques and Other Investment Policies - Short Sales" in
the Prospectus:
STANDARD & POOR'S DEPOSITARY RECEIPTS ("SPDRS")
The U.S. Plus Fund may invest in SPDRs to the extent that such
investment would be consistent with the requirements of the Investment
Company Act of 1940. The Fund currently intends to invest a
substantial portion of its total assets in SPDRs.
SPDRs represent ownership in the SPDR(R) Trust, a unit investment
trust that holds a portfolio of common stocks designed to track the
price performance and dividend yield of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index"), and whose shares trade
on the American Stock Exchange. Fund shareholders will bear not only
the Fund's total operating expenses, but a portion of the operating
expenses of the SPDR(R) Trust as well. The value of SPDRs fluctuates
in relation to changes in the value of the underlying portfolio of
common stocks. However, the market price of SPDRs may not be
equivalent to the PRO RATA value of the S&P 500 Index. SPDRs are
subject to the risks of an investment in a broadly based portfolio of
common stocks.
