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Previous: MORTGAGE PARTICIPATION SECURITIES SERIES 1997 NAMC1, 8-K, 1999-11-10 |
Next: ADKINS M DOUGLAS, SC 13G, 1999-11-10 |
<PAGE>
ANNUAL REPORT
AUGUST 31, 1999
POTOMAC FUNDS
----------------
----------------
Dear Shareholders:
The fiscal year started off--auspiciously enough--following the second largest
point loss in the history of the Dow Jones Industrial Average-TM- on
August 31st, 1998. Sharp losses also occurred on the Nasdaq 100 Index-TM- and
the Standard & Poor's 500 Index-TM-. The economic crisis, which began in Asia
and spread to Russia, threatened to engulf emerging markets in Latin America. On
the domestic front, the Monica Lewinsky scandal and the near-collapse of a hedge
fund, Long-Term Capital Management, provided investors with yet additional
unwelcome distractions.
Sensing the threat to continued U.S. economic growth, the Federal Reserve
instituted three successive rate cuts beginning in late September of 1998. A
rash of mergers and acquisitions led by Exxon and Mobil, AOL and Netscape, and
Deutsch Bank's purchase of Banker's Trust capped a year of corporate
consolidations, adding fuel to the ensuing market rebound. All of the three
major domestic equity markets responded by soaring to new highs during the
fourth quarter. The Dow Jones Industrial Average closed 1998 up 18.13% for the
year. The S&P 500 Index returned 28.58%, and the tech-heavy Nasdaq 100 Index
finished the year up a whopping 85.48%.
The first quarter of 1999 witnessed an extension of the previous year's themes.
Despite the impeachment trial of the President and ongoing international
economic turmoil, particularly in Brazil, the increasingly volatile equity
markets surged into record territory, taking their cues from the robust U.S.
economy. The markets seemed poised to move even higher when Federal Reserve
Chairman Alan Greenspan testified before Congress on February 23rd.
In his testimony, Mr. Greenspan raised concerns about high stock valuations and
suggested that the next interest rate move might be up, not down. After taking a
little more than a week to digest the Fed Chairman's cautionary comments, the
markets resumed their upward trek. The Dow Jones Industrial Average closed above
the 10,000 level for the first time on March 29th and above the 11,000 mark just
five weeks later. The Nasdaq 100 Index topped off at 2,459.48 on July 16, a
level not be be revisited until briefly in late August. The broader equity
markets, the S&P 500 and the Russell 2000-TM- indices, also peaked in mid-July;
the S&P 500 Index at 1,418.78 on July 16th, and the Russell 2000 Index at 465.80
a day earlier. Since that time, the specter of rising interest rates and fears
about the potential impact of Year 2000 computer problems dampened the
enthusiasm of the markets and July marked the beginning of a sell-off which
lasted through the end of the fiscal year and beyond.
During the fiscal year ended August 31, 1999, each of the Potomac Funds
generally performed in line with expectations. As one would expect in a rising
market, the plus funds were excellent performers and the short funds suffered.
We look forward to continued strong markets subsequent to year-end and expect
our funds to continue to perform as designed.
We thank you for using the Potomac Funds and look forward to serving you in the
future.
Sincerely,
<TABLE>
<S> <C> <C>
[SIGNATURE] [SIGNATURE] [SIGNATURE]
James Terry Apple Philip Harding Thomas Mulrooney
Chief Investment Officer Senior Vice President Chief Operating Officer
</TABLE>
<PAGE>
U.S. PLUS FUND
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OCTOBER 20, 1997 - AUGUST 31, 1999
<S> <C> <C>
S&P 500 INDEX(1) U.S. PLUS FUND
10/20/97 $10,000.00 $10,000.00
10/21/97 $10,174.44 $10,190.00
10/22/97 $10,134.78 $10,200.00
10/23/97 $9,948.51 $9,980.00
10/24/97 $9,853.81 $9,790.00
10/27/97 $9,177.28 $9,580.00
10/28/97 $9,646.72 $9,590.00
10/29/97 $9,618.57 $9,760.00
10/30/97 $9,456.58 $9,490.00
10/31/97 $9,571.06 $9,620.00
11/03/97 $9,826.08 $10,050.00
11/04/97 $9,844.60 $9,990.00
11/05/97 $9,865.53 $10,030.00
11/06/97 $9,816.03 $9,730.00
11/07/97 $9,705.95 $9,620.00
11/10/97 $9,639.18 $9,550.00
11/11/97 $9,666.91 $9,560.00
11/12/97 $9,480.44 $9,260.00
11/13/97 $9,592.41 $9,430.00
11/14/97 $9,714.74 $9,620.00
11/17/97 $9,901.53 $9,910.00
11/18/97 $9,818.13 $9,790.00
11/19/97 $9,884.68 $9,870.00
11/20/97 $10,035.27 $10,110.00
11/21/97 $10,078.27 $10,220.00
11/24/97 $9,906.45 $9,910.00
11/25/97 $9,949.87 $9,940.00
11/26/97 $9,958.46 $9,990.00
11/28/97 $9,997.80 $9,990.00
12/01/97 $10,200.50 $10,380.00
12/02/97 $10,168.16 $10,310.00
12/03/97 $10,221.43 $10,350.00
12/04/97 $10,183.02 $10,340.00
12/05/97 $10,294.89 $10,490.00
12/08/97 $10,280.03 $10,460.00
12/09/97 $10,211.07 $10,370.00
12/10/97 $10,148.39 $10,230.00
12/11/97 $9,992.99 $9,990.00
12/12/97 $9,976.77 $10,020.00
12/15/97 $10,081.41 $10,140.00
12/16/97 $10,130.07 $10,240.00
12/17/97 $10,103.91 $10,150.00
12/18/97 $9,996.76 $9,990.00
12/19/97 $9,907.60 $9,877.50
12/22/97 $9,980.01 $9,967.66
12/23/97 $9,827.54 $9,687.16
12/24/97 $9,760.26 $9,647.09
12/26/97 $9,799.60 $9,707.20
12/29/97 $9,976.45 $10,007.73
12/30/97 $10,159.37 $10,218.11
12/31/97 $10,155.08 $10,218.11
1/02/98 $10,203.33 $10,308.26
1/05/98 $10,224.57 $10,348.34
1/06/98 $10,114.80 $10,097.89
1/07/98 $10,087.80 $10,147.98
1/08/98 $10,004.60 $9,947.63
1/09/98 $9,707.83 $9,456.76
1/12/98 $9,828.38 $9,707.20
1/13/98 $9,963.48 $9,917.57
1/14/98 $10,024.38 $9,977.68
1/15/98 $9,948.93 $9,847.45
1/16/98 $10,061.74 $10,057.82
1/20/98 $10,240.58 $10,318.28
1/21/98 $10,159.06 $10,168.02
1/22/98 $10,077.75 $10,027.77
1/23/98 $10,020.72 $10,007.73
1/26/98 $10,014.02 $9,997.71
1/27/98 $10,140.33 $10,158.00
1/28/98 $10,228.65 $10,298.25
1/29/98 $10,312.68 $10,368.37
1/30/98 $10,258.16 $10,388.41
2/02/98 $10,477.81 $10,648.87
2/03/98 $10,527.31 $10,749.05
2/04/98 $10,536.73 $10,739.03
2/05/98 $10,501.56 $10,739.03
2/06/98 $10,594.91 $10,879.28
2/09/98 $10,576.91 $10,829.19
2/10/98 $10,663.45 $10,969.44
2/11/98 $10,673.92 $10,969.44
2/12/98 $10,717.13 $11,019.53
2/13/98 $10,674.75 $10,949.40
2/17/98 $10,702.69 $11,029.54
2/18/98 $10,800.22 $11,159.77
2/19/98 $10,760.46 $11,089.65
2/20/98 $10,822.51 $11,189.83
2/23/98 $10,863.64 $11,259.95
2/24/98 $10,784.32 $11,139.74
2/25/98 $10,913.45 $11,330.08
2/26/98 $10,973.83 $11,430.25
2/27/98 $10,980.84 $11,410.22
3/02/98 $10,963.68 $11,400.20
3/03/98 $11,008.88 $11,490.36
3/04/98 $10,959.81 $11,370.15
3/05/98 $10,831.30 $11,219.88
3/06/98 $11,047.29 $11,520.41
3/09/98 $11,011.92 $11,470.32
3/10/98 $11,136.87 $11,650.64
3/11/98 $11,181.03 $11,710.75
3/12/98 $11,196.20 $11,780.87
3/13/98 $11,182.49 $11,730.79
3/16/98 $11,294.04 $11,911.10
3/17/98 $11,306.39 $11,951.18
3/18/98 $11,359.45 $12,001.26
3/19/98 $11,403.61 $12,071.39
3/20/98 $11,502.18 $12,231.67
3/23/98 $11,464.40 $12,181.58
3/24/98 $11,570.10 $12,331.85
3/25/98 $11,531.17 $12,271.74
3/26/98 $11,519.34 $12,231.67
3/27/98 $11,463.25 $12,171.57
3/30/98 $11,443.48 $12,151.53
3/31/98 $11,529.28 $12,231.67
4/01/98 $11,596.26 $12,351.89
4/02/98 $11,720.37 $12,572.28
4/03/98 $11,748.52 $12,632.38
4/06/98 $11,734.70 $12,512.17
4/07/98 $11,610.91 $12,371.92
4/08/98 $11,528.24 $12,261.73
4/09/98 $11,622.63 $12,391.96
4/13/98 $11,612.37 $12,351.89
4/14/98 $11,675.79 $12,482.12
4/15/98 $11,713.15 $12,532.21
4/16/98 $11,596.47 $12,321.83
4/17/98 $11,748.73 $12,582.29
4/20/98 $11,758.46 $12,552.24
4/21/98 $11,790.06 $12,662.44
4/22/98 $11,830.56 $12,682.47
4/23/98 $11,715.87 $12,512.17
4/24/98 $11,593.64 $12,291.78
4/27/98 $11,370.12 $11,971.21
4/28/98 $11,355.16 $11,921.12
4/29/98 $11,454.78 $12,021.30
4/30/98 $11,633.93 $12,381.94
5/01/98 $11,730.73 $12,552.24
5/04/98 $11,741.92 $12,522.19
5/05/98 $11,673.17 $12,391.96
5/06/98 $11,562.46 $12,181.58
5/07/98 $11,460.11 $12,051.35
5/08/98 $11,596.15 $12,331.85
5/11/98 $11,580.46 $12,281.76
5/12/98 $11,676.21 $12,442.05
5/13/98 $11,708.33 $12,472.10
5/14/98 $11,692.74 $12,401.97
5/15/98 $11,602.33 $12,291.78
5/18/98 $11,571.88 $12,221.66
5/19/98 $11,610.59 $12,341.87
5/20/98 $11,710.43 $12,482.12
5/21/98 $11,664.17 $12,391.96
5/22/98 $11,620.54 $12,321.83
5/26/98 $11,448.39 $11,991.25
5/27/98 $11,429.66 $12,041.34
5/28/98 $11,485.86 $12,111.46
5/29/98 $11,414.91 $11,951.18
6/01/98 $11,416.58 $12,021.30
6/02/98 $11,440.02 $12,021.30
6/03/98 $11,330.25 $11,740.80
6/04/98 $11,456.87 $12,061.37
6/05/98 $11,656.01 $12,381.94
6/08/98 $11,675.47 $12,371.92
6/09/98 $11,703.62 $12,422.01
6/10/98 $11,639.48 $12,311.81
6/11/98 $11,454.25 $11,961.19
6/12/98 $11,498.83 $12,101.44
6/15/98 $11,270.39 $11,670.68
6/16/98 $11,381.11 $11,901.09
6/17/98 $11,585.37 $12,261.73
6/18/98 $11,577.63 $12,201.62
6/19/98 $11,517.77 $12,111.46
6/22/98 $11,544.88 $12,181.58
6/23/98 $11,714.93 $12,391.96
6/24/98 $11,855.05 $12,652.42
6/25/98 $11,817.37 $12,622.37
6/26/98 $11,858.39 $12,692.49
6/29/98 $11,913.75 $12,762.61
6/30/98 $11,865.09 $12,622.37
7/01/98 $12,019.13 $12,842.76
7/02/98 $11,996.74 $12,882.83
7/06/98 $12,110.69 $13,083.18
7/07/98 $12,082.96 $13,043.11
7/08/98 $12,205.50 $13,173.34
7/09/98 $12,123.77 $13,053.13
7/10/98 $12,184.15 $13,133.27
7/13/98 $12,193.15 $13,153.31
7/14/98 $12,322.81 $13,363.68
7/15/98 $12,293.82 $13,323.61
7/16/98 $12,389.89 $13,453.84
7/17/98 $12,418.77 $13,493.91
7/20/98 $12,391.04 $13,493.91
7/21/98 $12,191.90 $13,143.29
7/22/98 $12,181.54 $13,133.27
7/23/98 $11,926.94 $12,732.56
7/24/98 $11,937.92 $12,722.54
7/27/98 $12,005.63 $12,822.72
7/28/98 $11,827.42 $12,532.21
7/29/98 $11,774.78 $12,432.03
7/30/98 $11,960.42 $12,712.52
7/31/98 $11,727.27 $12,331.85
8/03/98 $11,641.15 $12,241.69
8/04/98 $11,219.22 $11,520.41
8/05/98 $11,316.65 $11,760.84
8/06/98 $11,402.45 $11,830.96
8/07/98 $11,400.57 $11,871.03
8/10/98 $11,334.54 $11,690.71
8/11/98 $11,186.36 $11,410.22
8/12/98 $11,345.84 $11,700.73
8/13/98 $11,248.42 $11,480.34
8/14/98 $11,121.17 $11,219.88
8/17/98 $11,340.09 $11,580.52
8/18/98 $11,523.53 $11,911.10
8/19/98 $11,490.67 $11,851.00
8/20/98 $11,423.07 $11,730.79
8/21/98 $11,314.03 $11,610.57
8/24/98 $11,386.86 $11,700.73
8/25/98 $11,436.26 $11,730.79
8/26/98 $11,345.53 $11,610.57
8/27/98 $10,910.20 $10,789.12
8/28/98 $10,748.53 $10,678.92
8/31/98 $10,017.48 $9,777.32
9/01/98 $10,404.24 $10,208.09
9/02/98 $10,364.79 $10,087.87
9/03/98 $10,278.88 $10,017.75
9/04/98 $10,191.29 $9,867.48
9/08/98 $10,710.02 $10,638.85
9/09/98 $10,529.40 $10,268.19
9/10/98 $10,257.22 $9,747.27
9/11/98 $10,559.33 $10,408.44
9/14/98 $10,775.53 $10,658.89
9/15/98 $10,858.82 $10,759.06
9/16/98 $10,940.45 $10,939.38
9/17/98 $10,661.99 $10,488.58
9/18/98 $10,674.75 $10,508.62
9/21/98 $10,714.52 $10,508.62
9/22/98 $10,774.58 $10,638.85
9/23/98 $11,156.12 $11,229.90
9/24/98 $10,911.56 $10,859.24
9/25/98 $10,932.81 $10,809.15
9/28/98 $10,974.04 $10,999.49
9/29/98 $10,977.49 $10,909.33
9/30/98 $10,642.52 $10,428.48
10/01/98 $10,322.10 $9,957.64
10/02/98 $10,491.73 $10,228.12
10/05/98 $10,344.81 $9,947.63
10/06/98 $10,303.26 $9,937.61
10/07/98 $10,157.70 $9,707.20
10/08/98 $10,040.08 $9,566.95
10/09/98 $10,301.17 $9,897.54
10/12/98 $10,440.56 $10,097.89
10/13/98 $10,410.10 $10,067.84
10/14/98 $10,522.39 $10,188.05
10/15/98 $10,961.48 $10,989.47
10/16/98 $11,054.93 $11,029.54
10/19/98 $11,117.40 $11,079.63
10/20/98 $11,133.52 $11,149.76
10/21/98 $11,196.20 $11,129.72
10/22/98 $11,285.78 $11,350.11
10/23/98 $11,204.05 $11,149.76
10/26/98 $11,221.31 $11,259.95
10/27/98 $11,148.27 $11,159.77
10/28/98 $11,177.05 $11,119.70
10/29/98 $11,363.74 $11,490.36
10/30/98 $11,497.05 $11,640.63
11/02/98 $11,632.36 $11,881.05
11/03/98 $11,624.41 $11,800.91
11/04/98 $11,706.35 $11,951.18
11/05/98 $11,865.20 $12,221.66
11/06/98 $11,940.12 $12,321.83
11/09/98 $11,827.00 $12,151.53
11/10/98 $11,806.70 $12,021.30
11/11/98 $11,730.41 $11,981.23
11/12/98 $11,696.09 $11,931.14
11/13/98 $11,780.12 $12,091.42
11/16/98 $11,886.23 $12,241.69
11/17/98 $11,922.44 $12,271.74
11/18/98 $11,976.43 $12,361.90
11/19/98 $12,061.51 $12,512.17
11/20/98 $12,175.99 $12,662.44
11/23/98 $12,434.05 $13,093.20
11/24/98 $12,379.42 $12,962.97
11/25/98 $12,420.02 $12,952.95
11/27/98 $12,476.74 $13,093.20
11/30/98 $12,176.83 $12,582.29
12/01/98 $12,298.74 $12,762.61
12/02/98 $12,256.57 $12,732.56
12/03/98 $12,035.66 $12,411.99
12/04/98 $12,314.02 $12,852.77
12/07/98 $12,428.71 $13,013.06
12/08/98 $12,362.57 $12,912.88
12/09/98 $12,384.65 $12,952.95
12/10/98 $12,191.38 $12,652.42
12/11/98 $12,206.44 $12,602.33
12/14/98 $11,942.11 $12,279.19
12/15/98 $12,168.46 $12,602.33
12/16/98 $12,159.14 $12,602.33
12/17/98 $12,347.92 $12,895.17
12/18/98 $12,432.16 $12,975.96
12/21/98 $12,587.14 $13,258.70
12/22/98 $12,594.78 $13,278.90
12/23/98 $12,856.08 $13,713.11
12/24/98 $12,832.33 $13,672.72
12/28/98 $12,824.16 $13,571.74
12/29/98 $12,994.95 $13,915.07
12/30/98 $12,891.56 $13,723.21
12/31/98 $12,863.30 $13,753.50
1/04/99 $12,851.48 $13,682.82
1/05/99 $13,026.03 $13,915.07
1/06/99 $13,314.43 $14,349.29
1/07/99 $13,287.11 $14,308.89
1/08/99 $13,343.20 $14,460.36
1/11/99 $13,225.90 $14,238.21
1/12/99 $12,970.88 $13,844.39
1/13/99 $12,917.40 $13,662.62
1/14/99 $12,684.99 $13,339.48
1/15/99 $13,010.12 $13,803.99
1/19/99 $13,101.58 $13,965.56
1/20/99 $13,149.93 $14,157.42
1/21/99 $12,925.36 $13,591.93
1/22/99 $12,821.02 $13,551.54
1/25/99 $12,913.01 $13,723.21
1/26/99 $13,104.82 $14,096.84
1/27/99 $13,009.18 $13,814.09
1/28/99 $13,241.49 $14,167.52
1/29/99 $13,390.82 $14,389.68
2/01/99 $13,321.33 $14,288.70
2/02/99 $13,206.12 $14,117.03
2/03/99 $13,311.60 $14,339.19
2/04/99 $13,064.85 $13,975.66
2/05/99 $12,969.73 $13,753.50
2/08/99 $13,015.46 $13,814.09
2/09/99 $12,726.32 $13,349.58
2/10/99 $12,803.86 $13,460.66
2/11/99 $13,122.93 $14,076.64
2/12/99 $12,872.72 $13,682.82
2/16/99 $12,995.57 $13,753.50
2/17/99 $12,808.89 $13,531.35
2/18/99 $12,947.54 $13,682.82
2/19/99 $12,967.53 $13,763.60
2/22/99 $13,312.33 $14,288.70
2/23/99 $13,302.29 $14,298.80
2/24/99 $13,116.33 $13,915.07
2/25/99 $13,028.54 $13,733.31
2/26/99 $12,958.53 $13,632.33
3/01/99 $12,935.82 $13,682.82
3/02/99 $12,824.27 $13,531.35
3/03/99 $12,847.29 $13,612.13
3/04/99 $13,045.49 $13,874.68
3/05/99 $13,347.18 $14,359.38
3/08/99 $13,423.15 $14,430.07
3/09/99 $13,392.91 $14,379.58
3/10/99 $13,466.16 $14,531.05
3/11/99 $13,579.60 $14,793.60
3/12/99 $13,547.26 $14,581.54
3/15/99 $13,679.85 $14,833.99
3/16/99 $13,670.43 $14,823.89
3/17/99 $13,581.06 $14,712.82
3/18/99 $13,777.06 $15,035.95
3/19/99 $13,596.45 $14,672.42
3/22/99 $13,572.59 $14,702.72
3/23/99 $13,207.69 $14,036.25
3/24/99 $13,275.19 $14,157.42
3/25/99 $13,499.13 $14,561.34
3/26/99 $13,423.89 $14,450.27
3/29/99 $13,710.30 $14,793.60
3/30/99 $13,611.72 $14,773.40
3/31/99 $13,461.24 $14,430.07
4/01/99 $13,538.16 $14,571.44
4/05/99 $13,824.89 $15,076.34
4/06/99 $13,791.09 $15,025.85
4/07/99 $13,885.27 $15,167.23
4/08/99 $14,064.11 $15,460.07
4/09/99 $14,109.84 $15,510.56
4/12/99 $14,217.41 $15,742.81
4/13/99 $14,125.22 $15,581.24
4/14/99 $13,901.49 $15,187.42
4/15/99 $13,842.99 $15,076.34
4/16/99 $13,802.70 $14,914.78
4/19/99 $13,493.79 $14,561.34
4/20/99 $13,668.44 $14,773.40
4/21/99 $13,981.85 $15,409.58
4/22/99 $14,219.50 $15,702.42
4/23/99 $14,198.78 $15,641.83
4/26/99 $14,232.17 $15,742.81
4/27/99 $14,261.05 $15,833.70
4/28/99 $14,136.63 $15,530.75
4/29/99 $14,052.07 $15,328.79
4/30/99 $13,972.02 $15,167.23
5/03/99 $14,175.55 $15,550.95
5/04/99 $13,938.74 $15,268.21
5/05/99 $14,098.95 $15,419.68
5/06/99 $13,939.26 $15,258.11
5/07/99 $14,074.78 $15,409.58
5/10/99 $14,025.60 $15,338.89
5/11/99 $14,185.81 $15,540.85
5/12/99 $14,273.61 $15,722.62
5/13/99 $14,310.86 $15,823.60
5/14/99 $13,999.44 $15,227.81
5/17/99 $14,017.12 $15,258.11
5/18/99 $13,952.55 $15,248.01
5/19/99 $14,066.72 $15,389.38
5/20/99 $14,010.21 $15,248.01
5/21/99 $13,920.85 $15,116.74
5/24/99 $13,673.47 $14,733.01
5/25/99 $13,440.63 $14,278.60
5/26/99 $13,653.69 $14,611.83
5/27/99 $13,409.34 $14,298.80
5/28/99 $13,623.13 $14,520.95
6/01/99 $13,543.81 $14,470.46
6/02/99 $13,549.57 $14,480.56
6/03/99 $13,599.06 $14,621.93
6/04/99 $13,894.27 $15,035.95
6/07/99 $13,965.11 $15,096.54
6/08/99 $13,785.23 $14,894.58
6/09/99 $13,798.93 $14,864.29
6/10/99 $13,633.39 $14,662.33
6/11/99 $13,537.32 $14,470.46
6/14/99 $13,541.09 $14,490.66
6/15/99 $13,616.02 $14,652.23
6/16/99 $13,922.10 $15,046.05
6/17/99 $14,021.41 $15,258.11
6/18/99 $14,052.18 $15,248.01
6/21/99 $14,116.64 $15,328.79
6/22/99 $13,979.34 $15,157.13
6/23/99 $13,949.83 $15,046.05
6/24/99 $13,769.01 $14,874.38
6/25/99 $13,764.09 $14,813.80
6/28/99 $13,931.94 $15,076.34
6/29/99 $14,142.28 $15,288.40
6/30/99 $14,364.75 $15,702.42
7/01/99 $14,451.08 $15,884.19
7/02/99 $14,558.45 $16,116.44
7/06/99 $14,526.01 $16,086.15
7/07/99 $14,607.00 $16,116.44
7/08/99 $14,591.94 $16,126.54
7/09/99 $14,684.65 $16,278.01
7/12/99 $14,640.91 $16,187.13
7/13/99 $14,582.94 $16,096.24
7/14/99 $14,631.18 $16,207.32
7/15/99 $14,751.00 $16,378.99
7/16/99 $14,846.85 $16,510.26
7/19/99 $14,730.38 $16,348.69
7/20/99 $14,410.69 $15,823.60
7/21/99 $14,433.61 $15,793.30
7/22/99 $14,241.90 $15,490.36
7/23/99 $14,199.73 $15,409.58
7/26/99 $14,103.66 $15,268.21
7/27/99 $14,261.47 $15,439.87
7/28/99 $14,288.26 $15,510.56
7/29/99 $14,033.24 $15,187.42
7/30/99 $13,904.42 $14,894.58
8/02/99 $13,897.41 $14,955.17
8/03/99 $13,835.98 $14,844.09
8/04/99 $13,659.65 $14,520.95
8/05/99 $13,747.34 $14,722.91
8/06/99 $13,606.91 $14,480.56
8/09/99 $13,580.85 $14,430.07
8/10/99 $13,409.55 $14,197.82
8/11/99 $13,624.07 $14,450.27
8/12/99 $13,584.62 $14,440.17
8/13/99 $13,893.53 $14,924.87
8/16/99 $13,925.87 $15,025.85
8/17/99 $14,065.99 $15,167.23
8/18/99 $13,947.53 $14,955.17
8/19/99 $13,850.73 $14,823.89
8/20/99 $13,986.98 $15,046.05
8/23/99 $14,234.05 $15,470.17
8/24/99 $14,268.37 $15,550.95
8/25/99 $14,459.77 $15,773.11
8/26/99 $14,252.78 $15,500.46
8/27/99 $14,109.00 $15,227.81
8/30/99 $13,855.23 $14,793.60
8/31/99 $13,817.46 $14,702.72
1 year Since Inception(2)
U.S. Plus Fund 50.38% 22.82%
S&P 500 Index (1) 37.90% 18.82%
</TABLE>
The U.S. Plus Fund invests in S&P futures contracts and options contracts to
achieve its objective of 150% of the performance of the S&P 500 Index. The U.S.
Plus Fund appreciated 50.38% during the 1999 fiscal year as the broad-based
S&P 500 Index continued to reflect the nation's optimism regarding the economy
and the second budget surplus in the last two years. The Index hit an all time
high of 1,418.78 on July 16th, but like most of the other indices, the S&P 500
Index sold off through the fiscal year end.
U.S./SHORT FUND
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NOVEMBER 7, 1997 - AUGUST 31, 1999
<S> <C> <C>
S&P 500 INDEX(1) U.S./SHORT FUND
11/07/97 $10,000.00 $10,000.00
11/10/97 $9,931.21 $10,140.00
11/11/97 $9,959.78 $10,030.00
11/12/97 $9,767.66 $10,080.00
11/13/97 $9,883.02 $9,800.00
11/14/97 $10,009.06 $9,580.00
11/17/97 $10,201.51 $9,460.00
11/18/97 $10,115.58 $9,410.00
11/19/97 $10,184.15 $9,370.00
11/20/97 $10,339.30 $9,300.00
11/21/97 $10,383.61 $9,300.00
11/24/97 $10,206.57 $9,330.00
11/25/97 $10,251.32 $9,310.00
11/26/97 $10,260.16 $9,290.00
11/28/97 $10,300.70 $9,270.00
12/01/97 $10,509.54 $9,230.00
12/02/97 $10,476.22 $9,220.00
12/03/97 $10,531.10 $9,220.00
12/04/97 $10,491.53 $9,230.00
12/05/97 $10,606.79 $9,140.00
12/08/97 $10,591.48 $9,160.00
12/09/97 $10,520.43 $9,210.00
12/10/97 $10,455.84 $9,300.00
12/11/97 $10,295.74 $9,430.00
12/12/97 $10,279.03 $9,420.00
12/15/97 $10,386.84 $9,350.00
12/16/97 $10,436.98 $9,290.00
12/17/97 $10,410.02 $9,340.00
12/18/97 $10,299.62 $9,440.00
12/19/97 $10,207.76 $9,510.00
12/22/97 $10,282.37 $9,460.00
12/23/97 $10,125.28 $9,630.00
12/24/97 $10,055.96 $9,660.00
12/26/97 $10,096.49 $9,620.00
12/29/97 $10,278.70 $9,440.00
12/30/97 $10,467.16 $9,310.00
12/31/97 $10,462.74 $9,420.00
1/02/98 $10,512.45 $9,370.00
1/05/98 $10,534.33 $9,350.00
1/06/98 $10,421.24 $9,500.00
1/07/98 $10,393.42 $9,470.00
1/08/98 $10,307.71 $9,600.00
1/09/98 $10,001.94 $9,910.00
1/12/98 $10,126.14 $9,740.00
1/13/98 $10,265.33 $9,600.00
1/14/98 $10,328.08 $9,560.00
1/15/98 $10,250.35 $9,460.00
1/16/98 $10,366.57 $9,340.00
1/20/98 $10,550.83 $9,180.00
1/21/98 $10,466.84 $9,280.00
1/22/98 $10,383.07 $9,370.00
1/23/98 $10,324.31 $9,390.00
1/26/98 $10,317.41 $9,400.00
1/27/98 $10,447.54 $9,310.00
1/28/98 $10,538.54 $9,220.00
1/29/98 $10,625.11 $9,160.00
1/30/98 $10,568.94 $9,150.00
2/02/98 $10,795.25 $9,000.00
2/03/98 $10,846.24 $8,940.00
2/04/98 $10,855.95 $8,950.00
2/05/98 $10,819.72 $8,950.00
2/06/98 $10,915.89 $8,870.00
2/09/98 $10,897.35 $8,910.00
2/10/98 $10,986.51 $8,830.00
2/11/98 $10,997.29 $8,830.00
2/12/98 $11,041.82 $8,810.00
2/13/98 $10,998.16 $8,830.00
2/17/98 $11,026.94 $8,790.00
2/18/98 $11,127.43 $8,720.00
2/19/98 $11,086.46 $8,760.00
2/20/98 $11,150.39 $8,690.00
2/23/98 $11,192.76 $8,660.00
2/24/98 $11,111.04 $8,720.00
2/25/98 $11,244.08 $8,620.00
2/26/98 $11,306.29 $8,570.00
2/27/98 $11,313.52 $8,580.00
3/02/98 $11,295.84 $8,580.00
3/03/98 $11,342.41 $8,540.00
3/04/98 $11,291.85 $8,600.00
3/05/98 $11,159.45 $8,680.00
3/06/98 $11,381.98 $8,530.00
3/09/98 $11,345.54 $8,540.00
3/10/98 $11,474.27 $8,450.00
3/11/98 $11,519.77 $8,420.00
3/12/98 $11,535.40 $8,390.00
3/13/98 $11,521.28 $8,420.00
3/16/98 $11,636.21 $8,340.00
3/17/98 $11,648.93 $8,320.00
3/18/98 $11,703.59 $8,290.00
3/19/98 $11,749.09 $8,270.00
3/20/98 $11,850.65 $8,200.00
3/23/98 $11,811.73 $8,230.00
3/24/98 $11,920.63 $8,140.00
3/25/98 $11,880.52 $8,170.00
3/26/98 $11,868.34 $8,190.00
3/27/98 $11,810.55 $8,220.00
3/30/98 $11,790.17 $8,230.00
3/31/98 $11,878.58 $8,190.00
4/01/98 $11,947.58 $8,140.00
4/02/98 $12,075.45 $8,050.00
4/03/98 $12,104.45 $8,010.00
4/06/98 $12,090.22 $8,070.00
4/07/98 $11,962.67 $8,130.00
4/08/98 $11,877.50 $8,180.00
4/09/98 $11,974.75 $8,130.00
4/13/98 $11,964.18 $8,140.00
4/14/98 $12,029.52 $8,060.00
4/15/98 $12,068.01 $8,040.00
4/16/98 $11,947.80 $8,050.00
4/17/98 $12,104.67 $7,920.00
4/20/98 $12,114.69 $7,930.00
4/21/98 $12,147.25 $7,890.00
4/22/98 $12,188.98 $7,870.00
4/23/98 $12,070.81 $7,950.00
4/24/98 $11,944.88 $8,040.00
4/27/98 $11,714.59 $8,180.00
4/28/98 $11,699.17 $8,200.00
4/29/98 $11,801.81 $8,150.00
4/30/98 $11,986.39 $7,990.00
5/01/98 $12,086.12 $7,920.00
5/04/98 $12,097.66 $7,930.00
5/05/98 $12,026.82 $7,990.00
5/06/98 $11,912.76 $8,090.00
5/07/98 $11,807.31 $8,150.00
5/08/98 $11,947.47 $8,020.00
5/11/98 $11,931.30 $8,050.00
5/12/98 $12,029.95 $7,980.00
5/13/98 $12,063.05 $7,970.00
5/14/98 $12,046.99 $8,000.00
5/15/98 $11,953.83 $8,050.00
5/18/98 $11,922.46 $8,080.00
5/19/98 $11,962.35 $8,030.00
5/20/98 $12,065.21 $7,960.00
5/21/98 $12,017.55 $8,010.00
5/22/98 $11,972.59 $8,040.00
5/26/98 $11,795.24 $8,180.00
5/27/98 $11,775.94 $8,170.00
5/28/98 $11,833.83 $8,140.00
5/29/98 $11,760.74 $8,200.00
6/01/98 $11,762.46 $8,180.00
6/02/98 $11,786.61 $8,180.00
6/03/98 $11,673.51 $8,310.00
6/04/98 $11,803.97 $8,160.00
6/05/98 $12,009.14 $8,010.00
6/08/98 $12,029.20 $8,010.00
6/09/98 $12,058.20 $7,990.00
6/10/98 $11,992.11 $8,030.00
6/11/98 $11,801.27 $8,200.00
6/12/98 $11,847.20 $8,140.00
6/15/98 $11,611.84 $8,340.00
6/16/98 $11,725.91 $8,230.00
6/17/98 $11,936.37 $8,070.00
6/18/98 $11,928.39 $8,090.00
6/19/98 $11,866.72 $8,140.00
6/22/98 $11,894.64 $8,110.00
6/23/98 $12,069.84 $8,000.00
6/24/98 $12,214.21 $7,890.00
6/25/98 $12,175.39 $7,910.00
6/26/98 $12,217.66 $7,880.00
6/29/98 $12,274.69 $7,860.00
6/30/98 $12,224.56 $7,910.00
7/01/98 $12,383.26 $7,820.00
7/02/98 $12,360.19 $7,820.00
7/06/98 $12,477.60 $7,740.00
7/07/98 $12,449.03 $7,750.00
7/08/98 $12,575.28 $7,700.00
7/09/98 $12,491.08 $7,750.00
7/10/98 $12,553.29 $7,710.00
7/13/98 $12,562.56 $7,720.00
7/14/98 $12,696.14 $7,650.00
7/15/98 $12,666.28 $7,630.00
7/16/98 $12,765.25 $7,580.00
7/17/98 $12,795.01 $7,550.00
7/20/98 $12,766.44 $7,560.00
7/21/98 $12,561.27 $7,710.00
7/22/98 $12,550.59 $7,710.00
7/23/98 $12,288.28 $7,950.00
7/24/98 $12,299.60 $7,950.00
7/27/98 $12,369.35 $7,910.00
7/28/98 $12,185.74 $8,040.00
7/29/98 $12,131.51 $8,060.00
7/30/98 $12,322.78 $7,940.00
7/31/98 $12,082.57 $8,110.00
8/03/98 $11,993.83 $8,140.00
8/04/98 $11,559.12 $8,440.00
8/05/98 $11,659.50 $8,370.00
8/06/98 $11,747.91 $8,320.00
8/07/98 $11,745.97 $8,310.00
8/10/98 $11,677.93 $8,360.00
8/11/98 $11,525.27 $8,510.00
8/12/98 $11,689.58 $8,390.00
8/13/98 $11,589.20 $8,440.00
8/14/98 $11,458.10 $8,550.00
8/17/98 $11,683.65 $8,380.00
8/18/98 $11,872.65 $8,220.00
8/19/98 $11,838.79 $8,240.00
8/20/98 $11,769.15 $8,290.00
8/21/98 $11,656.80 $8,350.00
8/24/98 $11,731.84 $8,310.00
8/25/98 $11,782.73 $8,280.00
8/26/98 $11,689.25 $8,350.00
8/27/98 $11,240.74 $8,730.00
8/28/98 $11,074.17 $8,790.00
8/31/98 $10,320.97 $9,460.00
9/01/98 $10,719.45 $9,000.00
9/02/98 $10,678.81 $9,080.00
9/03/98 $10,590.29 $9,120.00
9/04/98 $10,500.05 $9,210.00
9/08/98 $11,034.49 $8,730.00
9/09/98 $10,848.40 $8,940.00
9/10/98 $10,567.97 $9,200.00
9/11/98 $10,879.24 $8,830.00
9/14/98 $11,101.98 $8,670.00
9/15/98 $11,187.80 $8,620.00
9/16/98 $11,271.90 $8,530.00
9/17/98 $10,985.00 $8,750.00
9/18/98 $10,998.16 $8,750.00
9/21/98 $11,039.13 $8,740.00
9/22/98 $11,101.01 $8,670.00
9/23/98 $11,494.11 $8,350.00
9/24/98 $11,242.14 $8,540.00
9/25/98 $11,264.03 $8,560.00
9/28/98 $11,306.51 $8,480.00
9/29/98 $11,310.07 $8,520.00
9/30/98 $10,964.95 $8,780.00
10/01/98 $10,634.82 $9,050.00
10/02/98 $10,809.59 $8,880.00
10/05/98 $10,658.21 $9,040.00
10/06/98 $10,615.41 $9,050.00
10/07/98 $10,465.44 $9,190.00
10/08/98 $10,344.26 $9,280.00
10/09/98 $10,613.26 $9,060.00
10/12/98 $10,756.87 $8,930.00
10/13/98 $10,725.49 $8,950.00
10/14/98 $10,841.18 $8,880.00
10/15/98 $11,293.57 $8,420.00
10/16/98 $11,389.85 $8,410.00
10/19/98 $11,454.22 $8,410.00
10/20/98 $11,470.82 $8,370.00
10/21/98 $11,535.40 $8,370.00
10/22/98 $11,627.69 $8,260.00
10/23/98 $11,543.49 $8,360.00
10/26/98 $11,561.28 $8,310.00
10/27/98 $11,486.02 $8,350.00
10/28/98 $11,515.67 $8,370.00
10/29/98 $11,708.01 $8,180.00
10/30/98 $11,845.37 $8,120.00
11/02/98 $11,984.78 $7,990.00
11/03/98 $11,976.58 $8,040.00
11/04/98 $12,061.00 $7,990.00
11/05/98 $12,224.67 $7,860.00
11/06/98 $12,301.86 $7,820.00
11/09/98 $12,185.31 $7,900.00
11/10/98 $12,164.40 $7,950.00
11/11/98 $12,085.80 $7,970.00
11/12/98 $12,050.44 $7,990.00
11/13/98 $12,137.01 $7,920.00
11/16/98 $12,246.34 $7,860.00
11/17/98 $12,283.64 $7,850.00
11/18/98 $12,339.27 $7,810.00
11/19/98 $12,426.93 $7,750.00
11/20/98 $12,544.88 $7,690.00
11/23/98 $12,810.75 $7,510.00
11/24/98 $12,754.47 $7,560.00
11/25/98 $12,796.30 $7,560.00
11/27/98 $12,854.74 $7,510.00
11/30/98 $12,545.74 $7,710.00
12/01/98 $12,671.35 $7,630.00
12/02/98 $12,627.90 $7,650.00
12/03/98 $12,400.30 $7,780.00
12/04/98 $12,687.09 $7,600.00
12/07/98 $12,805.25 $7,550.00
12/08/98 $12,737.11 $7,580.00
12/09/98 $12,759.86 $7,560.00
12/10/98 $12,560.73 $7,680.00
12/11/98 $12,576.25 $7,700.00
12/14/98 $12,303.91 $7,936.30
12/15/98 $12,537.12 $7,694.59
12/16/98 $12,527.52 $7,704.66
12/17/98 $12,722.02 $7,593.87
12/18/98 $12,808.81 $7,543.52
12/21/98 $12,968.49 $7,422.66
12/22/98 $12,976.36 $7,412.59
12/23/98 $13,245.57 $7,251.44
12/24/98 $13,221.10 $7,271.59
12/28/98 $13,212.69 $7,301.80
12/29/98 $13,388.64 $7,180.94
12/30/98 $13,282.12 $7,261.52
12/31/98 $13,253.01 $7,241.37
1/04/99 $13,240.83 $7,281.66
1/05/99 $13,420.66 $7,211.16
1/06/99 $13,717.80 $7,070.16
1/07/99 $13,689.66 $7,090.30
1/08/99 $13,747.45 $7,029.87
1/11/99 $13,626.59 $7,110.44
1/12/99 $13,363.85 $7,231.30
1/13/99 $13,308.75 $7,301.80
1/14/99 $13,069.29 $7,422.66
1/15/99 $13,404.28 $7,241.37
1/19/99 $13,498.51 $7,180.94
1/20/99 $13,548.32 $7,120.52
1/21/99 $13,316.95 $7,311.87
1/22/99 $13,209.45 $7,321.94
1/25/99 $13,304.22 $7,261.52
1/26/99 $13,501.85 $7,130.59
1/27/99 $13,403.31 $7,221.23
1/28/99 $13,642.66 $7,120.52
1/29/99 $13,796.51 $7,029.87
2/01/99 $13,724.92 $7,080.23
2/02/99 $13,606.21 $7,090.30
2/03/99 $13,714.89 $7,039.94
2/04/99 $13,460.66 $7,160.80
2/05/99 $13,362.66 $7,251.44
2/08/99 $13,409.77 $7,221.23
2/09/99 $13,111.88 $7,392.44
2/10/99 $13,191.77 $7,352.16
2/11/99 $13,520.50 $7,130.59
2/12/99 $13,262.71 $7,332.02
2/16/99 $13,389.29 $7,311.87
2/17/99 $13,196.95 $7,382.37
2/18/99 $13,339.80 $7,332.02
2/19/99 $13,360.39 $7,291.73
2/22/99 $13,715.65 $7,090.30
2/23/99 $13,705.30 $7,090.30
2/24/99 $13,513.71 $7,201.09
2/25/99 $13,423.25 $7,271.59
2/26/99 $13,351.12 $7,301.80
3/01/99 $13,327.73 $7,281.66
3/02/99 $13,212.80 $7,342.09
3/03/99 $13,236.51 $7,332.02
3/04/99 $13,440.72 $7,231.30
3/05/99 $13,751.55 $7,060.09
3/08/99 $13,829.82 $7,019.80
3/09/99 $13,798.66 $7,039.94
3/10/99 $13,874.14 $6,989.59
3/11/99 $13,991.01 $6,898.94
3/12/99 $13,957.69 $6,989.59
3/15/99 $14,094.30 $6,909.01
3/16/99 $14,084.59 $6,909.01
3/17/99 $13,992.52 $6,949.30
3/18/99 $14,194.46 $6,858.66
3/19/99 $14,008.37 $6,959.37
3/22/99 $13,983.78 $6,949.30
3/23/99 $13,607.83 $7,150.73
3/24/99 $13,677.37 $7,110.44
3/25/99 $13,908.10 $6,979.51
3/26/99 $13,830.58 $7,019.80
3/29/99 $14,125.67 $6,909.01
3/30/99 $14,024.11 $6,909.01
3/31/99 $13,869.07 $7,029.87
4/01/99 $13,948.31 $6,969.44
4/05/99 $14,243.73 $6,818.37
4/06/99 $14,208.90 $6,838.51
4/07/99 $14,305.94 $6,798.23
4/08/99 $14,490.19 $6,707.59
4/09/99 $14,537.31 $6,687.44
4/12/99 $14,648.14 $6,627.01
4/13/99 $14,553.16 $6,677.37
4/14/99 $14,322.65 $6,778.09
4/15/99 $14,262.38 $6,818.37
4/16/99 $14,220.87 $6,858.66
4/19/99 $13,902.60 $6,969.44
4/20/99 $14,082.54 $6,898.94
4/21/99 $14,405.45 $6,697.51
4/22/99 $14,650.30 $6,606.87
4/23/99 $14,628.95 $6,627.01
4/26/99 $14,663.35 $6,596.80
4/27/99 $14,693.10 $6,576.66
4/28/99 $14,564.91 $6,657.23
4/29/99 $14,477.79 $6,717.66
4/30/99 $14,395.32 $6,768.01
5/03/99 $14,605.02 $6,667.30
5/04/99 $14,361.03 $6,747.87
5/05/99 $14,526.10 $6,697.51
5/06/99 $14,361.57 $6,747.87
5/07/99 $14,501.19 $6,707.59
5/10/99 $14,450.52 $6,727.73
5/11/99 $14,615.58 $6,687.44
5/12/99 $14,706.04 $6,627.01
5/13/99 $14,744.42 $6,616.94
5/14/99 $14,423.56 $6,808.30
5/17/99 $14,441.78 $6,808.30
5/18/99 $14,375.26 $6,798.23
5/19/99 $14,492.89 $6,757.94
5/20/99 $14,434.67 $6,788.16
5/21/99 $14,342.60 $6,818.37
5/24/99 $14,087.72 $6,909.01
5/25/99 $13,847.83 $7,060.09
5/26/99 $14,067.34 $6,959.37
5/27/99 $13,815.59 $7,050.02
5/28/99 $14,035.86 $6,989.59
6/01/99 $13,954.14 $6,999.66
6/02/99 $13,960.07 $6,999.66
6/03/99 $14,011.06 $6,949.30
6/04/99 $14,315.21 $6,808.30
6/07/99 $14,388.20 $6,796.21
6/08/99 $14,202.87 $6,850.60
6/09/99 $14,216.99 $6,870.74
6/10/99 $14,046.42 $6,933.19
6/11/99 $13,947.45 $6,993.61
6/14/99 $13,951.33 $6,993.61
6/15/99 $14,028.53 $6,943.26
6/16/99 $14,343.89 $6,820.39
6/17/99 $14,446.21 $6,761.97
6/18/99 $14,477.90 $6,755.93
6/21/99 $14,544.32 $6,741.83
6/22/99 $14,402.86 $6,794.20
6/23/99 $14,372.46 $6,828.44
6/24/99 $14,186.15 $6,876.79
6/25/99 $14,181.09 $6,898.94
6/28/99 $14,354.02 $6,820.39
6/29/99 $14,570.73 $6,757.94
6/30/99 $14,799.95 $6,633.06
7/01/99 $14,888.90 $6,578.67
7/02/99 $14,999.51 $6,514.21
7/06/99 $14,966.09 $6,526.30
7/07/99 $15,049.54 $6,522.27
7/08/99 $15,034.02 $6,520.26
7/09/99 $15,129.54 $6,479.97
7/12/99 $15,084.47 $6,502.13
7/13/99 $15,024.74 $6,530.33
7/14/99 $15,074.45 $6,504.14
7/15/99 $15,197.90 $6,459.83
7/16/99 $15,296.65 $6,423.57
7/19/99 $15,176.66 $6,467.89
7/20/99 $14,847.28 $6,606.87
7/21/99 $14,870.89 $6,616.94
7/22/99 $14,673.37 $6,703.56
7/23/99 $14,629.92 $6,729.74
7/26/99 $14,530.95 $6,770.03
7/27/99 $14,693.53 $6,725.71
7/28/99 $14,721.14 $6,705.57
7/29/99 $14,458.39 $6,798.23
7/30/99 $14,325.67 $6,888.87
8/02/99 $14,318.44 $6,868.73
8/03/99 $14,255.16 $6,907.00
8/04/99 $14,073.49 $7,007.71
8/05/99 $14,163.84 $6,945.27
8/06/99 $14,019.15 $7,017.79
8/09/99 $13,992.30 $7,035.91
8/10/99 $13,815.81 $7,106.42
8/11/99 $14,036.83 $7,023.83
8/12/99 $13,996.18 $7,029.87
8/13/99 $14,314.46 $6,870.74
8/16/99 $14,347.77 $6,838.51
8/17/99 $14,492.14 $6,796.21
8/18/99 $14,370.09 $6,860.67
8/19/99 $14,270.36 $6,900.96
8/20/99 $14,410.73 $6,832.47
8/23/99 $14,665.29 $6,705.57
8/24/99 $14,700.65 $6,681.40
8/25/99 $14,897.85 $6,614.93
8/26/99 $14,684.59 $6,691.47
8/27/99 $14,536.45 $6,768.01
8/30/99 $14,274.99 $6,894.91
8/31/99 $14,236.07 $6,927.14
1 year Since Inception(2)
U.S./Short Fund (26.77%) (18.36%)
S&P 500 Index(1) 37.90% 21.55%
</TABLE>
The Potomac U.S./Short Fund seeks to inversely correlate to the performance of
the S&P 500 Index. To achieve its objective, the Fund held short positions in
S&P 500 futures contracts, Standard & Poor's Depository Receipts ("SPDRS"), and
options on the S&P 500 Index. For the fiscal year ended August 31, 1999, the
U.S./Short Fund posted a return of (26.77%). During the same period, the
S&P 500 Index had a return of 37.90%. The U.S./Short Fund did not precisely
achieve its goal of inversely correlating to the S&P 500 Index--to the advantage
of the shareholders--because of a negative compounding effect resulting from
inversely tracking a trending index.
(1)RETURN DOES NOT INCLUDE CONTINUOUS REINVESTMENT OF DIVIDENDS.
(2)AVERAGE ANNUAL RATE OF RETURN.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
2
<PAGE>
OTC PLUS FUND
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OCTOBER 20, 1997 AUGUST 31, 1999
<S> <C> <C>
NASDAQ 100 INDEX(1) OTC PLUS FUND
10/20/97 $10,000.00 $10,000.00
10/21/97 $10,204.92 $10,050.00
10/22/97 $10,096.12 $9,930.00
10/23/97 $9,875.03 $9,800.00
10/24/97 $9,715.97 $9,690.00
10/27/97 $8,994.72 $9,590.00
10/28/97 $9,619.76 $9,710.00
10/29/97 $9,462.53 $9,550.00
10/30/97 $9,195.50 $9,260.00
10/31/97 $9,369.35 $9,490.00
11/03/97 $9,655.13 $9,710.00
11/04/97 $9,626.65 $9,710.00
11/05/97 $9,620.22 $9,720.00
11/06/97 $9,503.06 $9,560.00
11/07/97 $9,449.30 $9,500.00
11/10/97 $9,295.11 $9,410.00
11/11/97 $9,289.78 $9,400.00
11/12/97 $9,006.57 $9,010.00
11/13/97 $9,237.31 $9,310.00
11/14/97 $9,444.98 $9,560.00
11/17/97 $9,645.76 $9,820.00
11/18/97 $9,522.72 $9,650.00
11/19/97 $9,548.54 $9,660.00
11/20/97 $9,763.29 $9,950.00
11/21/97 $9,709.07 $9,880.00
11/24/97 $9,466.76 $9,570.00
11/25/97 $9,538.80 $9,660.00
11/26/97 $9,595.59 $9,740.00
11/28/97 $9,653.20 $9,810.00
12/01/97 $9,917.11 $10,150.00
12/02/97 $9,667.54 $9,830.00
12/03/97 $9,755.30 $9,940.00
12/04/97 $9,673.88 $9,830.00
12/05/97 $9,834.78 $10,040.00
12/08/97 $9,951.02 $10,180.00
12/09/97 $9,654.67 $9,810.00
12/10/97 $9,494.23 $9,610.00
12/11/97 $9,206.34 $9,110.00
12/12/97 $8,991.41 $8,840.00
12/15/97 $9,045.53 $8,870.00
12/16/97 $9,164.35 $9,030.00
12/17/97 $9,038.64 $8,870.00
12/18/97 $8,883.71 $8,670.00
12/19/97 $8,912.47 $8,720.00
12/22/97 $8,965.68 $8,750.00
12/23/97 $8,725.66 $8,460.00
12/24/97 $8,628.44 $8,340.00
12/26/97 $8,767.01 $8,510.00
12/29/97 $8,991.78 $8,790.00
12/30/97 $9,174.91 $9,020.00
12/31/97 $9,104.53 $8,920.00
1/02/98 $9,264.69 $9,100.00
1/05/98 $9,349.14 $9,200.00
1/06/98 $9,246.86 $9,080.00
1/07/98 $9,108.11 $8,910.00
1/08/98 $9,138.89 $8,950.00
1/09/98 $8,786.49 $8,510.00
1/12/98 $8,924.14 $8,670.00
1/13/98 $9,143.58 $8,940.00
1/14/98 $9,155.71 $8,940.00
1/15/98 $9,148.45 $8,920.00
1/16/98 $9,243.00 $9,050.00
1/20/98 $9,436.07 $9,290.00
1/21/98 $9,432.76 $9,280.00
1/22/98 $9,378.64 $9,220.00
1/23/98 $9,413.92 $9,270.00
1/26/98 $9,339.77 $9,160.00
1/27/98 $9,517.67 $9,400.00
1/28/98 $9,770.00 $9,710.00
1/29/98 $9,823.11 $9,770.00
1/30/98 $9,842.68 $9,800.00
2/02/98 $10,117.07 $10,140.00
2/03/98 $10,211.44 $10,250.00
2/04/98 $10,332.55 $10,410.00
2/05/98 $10,244.52 $10,280.00
2/06/98 $10,423.34 $10,500.00
2/09/98 $10,316.75 $10,370.00
2/10/98 $10,473.60 $10,570.00
2/11/98 $10,464.60 $10,560.00
2/12/98 $10,519.64 $10,630.00
2/13/98 $10,445.12 $10,520.00
2/17/98 $10,371.05 $10,440.00
2/18/98 $10,482.33 $10,570.00
2/19/98 $10,629.45 $10,760.00
2/20/98 $10,656.83 $10,800.00
2/23/98 $10,893.91 $11,100.00
2/24/98 $10,773.26 $10,950.00
2/25/98 $11,030.46 $11,280.00
2/26/98 $11,090.93 $11,350.00
2/27/98 $10,972.94 $11,190.00
3/02/98 $10,820.95 $11,000.00
3/03/98 $10,803.77 $10,980.00
3/04/98 $10,841.90 $11,020.00
3/05/98 $10,354.51 $10,390.00
3/06/98 $10,687.89 $10,790.00
3/09/98 $10,368.67 $10,380.00
3/10/98 $10,554.65 $10,610.00
3/11/98 $10,602.99 $10,660.00
3/12/98 $10,689.36 $10,770.00
3/13/98 $10,744.68 $10,840.00
3/16/98 $10,844.66 $10,970.00
3/17/98 $10,731.82 $10,830.00
3/18/98 $10,815.62 $10,930.00
3/19/98 $10,899.70 $11,030.00
3/20/98 $10,745.97 $10,830.00
3/23/98 $10,835.56 $10,950.00
3/24/98 $11,006.75 $11,170.00
3/25/98 $11,163.06 $11,360.00
3/26/98 $11,191.73 $11,400.00
3/27/98 $11,133.84 $11,320.00
3/30/98 $11,087.89 $11,260.00
3/31/98 $11,216.72 $11,420.00
4/01/98 $11,287.94 $11,510.00
4/02/98 $11,304.20 $11,530.00
4/03/98 $11,336.18 $11,570.00
4/06/98 $11,076.22 $11,230.00
4/07/98 $10,862.67 $10,960.00
4/08/98 $10,944.73 $11,060.00
4/09/98 $10,998.39 $11,130.00
4/13/98 $11,054.17 $11,200.00
4/14/98 $11,147.44 $11,310.00
4/15/98 $11,315.05 $11,520.00
4/16/98 $11,279.85 $11,480.00
4/17/98 $11,314.04 $11,520.00
4/20/98 $11,514.91 $11,780.00
4/21/98 $11,667.36 $11,980.00
4/22/98 $11,862.16 $12,230.00
4/23/98 $11,565.17 $11,840.00
4/24/98 $11,487.62 $11,730.00
4/27/98 $11,211.12 $11,370.00
4/28/98 $11,233.63 $11,400.00
4/29/98 $11,390.40 $11,600.00
4/30/98 $11,469.06 $11,700.00
5/01/98 $11,500.39 $11,730.00
5/04/98 $11,539.81 $11,780.00
5/05/98 $11,461.25 $11,670.00
5/06/98 $11,415.12 $11,610.00
5/07/98 $11,235.29 $11,400.00
5/08/98 $11,523.36 $11,760.00
5/11/98 $11,373.03 $11,570.00
5/12/98 $11,545.23 $11,800.00
5/13/98 $11,606.52 $11,880.00
5/14/98 $11,634.28 $11,910.00
5/15/98 $11,481.64 $11,710.00
5/18/98 $11,417.41 $11,630.00
5/19/98 $11,537.70 $11,780.00
5/20/98 $11,373.77 $11,570.00
5/21/98 $11,244.66 $11,390.00
5/22/98 $11,156.72 $11,280.00
5/26/98 $11,027.98 $11,120.00
5/27/98 $11,113.81 $11,230.00
5/28/98 $11,163.15 $11,290.00
5/29/98 $10,954.01 $11,010.00
6/01/98 $10,710.31 $10,710.00
6/02/98 $10,908.80 $10,950.00
6/03/98 $10,695.89 $10,660.00
6/04/98 $10,982.68 $11,040.00
6/05/98 $11,088.44 $11,170.00
6/08/98 $11,091.39 $11,170.00
6/09/98 $11,242.64 $11,350.00
6/10/98 $11,020.45 $11,070.00
6/11/98 $10,890.05 $10,910.00
6/12/98 $10,907.33 $10,940.00
6/15/98 $10,784.01 $10,790.00
6/16/98 $11,127.04 $11,210.00
6/17/98 $11,248.15 $11,360.00
6/18/98 $11,278.02 $11,400.00
6/19/98 $11,391.78 $11,550.00
6/22/98 $11,614.33 $11,840.00
6/23/98 $11,967.75 $12,290.00
6/24/98 $12,232.12 $12,620.00
6/25/98 $12,050.54 $12,380.00
6/26/98 $12,138.20 $12,500.00
6/29/98 $12,310.68 $12,720.00
6/30/98 $12,288.90 $12,690.00
7/01/98 $12,461.66 $12,920.00
7/02/98 $12,244.70 $12,630.00
7/06/98 $12,337.05 $12,750.00
7/07/98 $12,371.42 $12,790.00
7/08/98 $12,661.06 $13,180.00
7/09/98 $12,710.50 $13,240.00
7/10/98 $12,783.00 $13,340.00
7/13/98 $13,053.80 $13,700.00
7/14/98 $13,031.29 $13,670.00
7/15/98 $13,320.28 $14,050.00
7/16/98 $13,348.22 $14,080.00
7/17/98 $13,452.52 $14,220.00
7/20/98 $13,470.16 $14,220.00
7/21/98 $13,157.73 $13,800.00
7/22/98 $13,145.69 $13,800.00
7/23/98 $12,917.99 $13,500.00
7/24/98 $12,943.72 $13,530.00
7/27/98 $13,107.01 $13,750.00
7/28/98 $12,802.94 $13,340.00
7/29/98 $12,681.64 $13,180.00
7/30/98 $13,067.31 $13,690.00
7/31/98 $12,655.73 $13,150.00
8/03/98 $12,574.68 $13,040.00
8/04/98 $12,104.20 $12,440.00
8/05/98 $12,220.54 $12,590.00
8/06/98 $12,551.07 $13,020.00
8/07/98 $12,534.53 $12,990.00
8/10/98 $12,523.59 $12,970.00
8/11/98 $12,222.65 $12,590.00
8/12/98 $12,448.06 $12,880.00
8/13/98 $12,298.55 $12,690.00
8/14/98 $12,221.82 $12,580.00
8/17/98 $12,568.71 $13,050.00
8/18/98 $12,876.09 $13,440.00
8/19/98 $12,848.70 $13,390.00
8/20/98 $12,848.15 $13,410.00
8/21/98 $12,632.85 $13,130.00
8/24/98 $12,597.47 $13,070.00
8/25/98 $12,757.64 $13,300.00
8/26/98 $12,626.23 $13,130.00
8/27/98 $12,058.63 $12,400.00
8/28/98 $11,624.53 $11,830.00
8/31/98 $10,478.66 $10,410.00
9/01/98 $11,165.27 $11,240.00
9/02/98 $11,223.89 $11,300.00
9/03/98 $11,109.21 $11,170.00
9/04/98 $11,076.59 $11,110.00
9/08/98 $11,821.46 $12,060.00
9/09/98 $11,594.49 $11,760.00
9/10/98 $11,351.90 $11,450.00
9/11/98 $11,855.73 $12,090.00
9/14/98 $12,021.41 $12,300.00
9/15/98 $12,168.07 $12,470.00
9/16/98 $12,234.78 $12,550.00
9/17/98 $11,870.34 $12,070.00
9/18/98 $11,952.22 $12,180.00
9/21/98 $12,200.32 $12,500.00
9/22/98 $12,278.34 $12,590.00
9/23/98 $12,815.53 $13,290.00
9/24/98 $12,464.60 $12,820.00
9/25/98 $12,773.63 $13,240.00
9/28/98 $12,710.77 $13,140.00
9/29/98 $12,725.84 $13,180.00
9/30/98 $12,363.70 $12,700.00
10/01/98 $11,704.48 $11,840.00
10/02/98 $11,729.29 $11,890.00
10/05/98 $11,097.45 $11,070.00
10/06/98 $10,887.57 $10,840.00
10/07/98 $10,577.44 $10,440.00
10/08/98 $10,373.35 $10,200.00
10/09/98 $11,007.31 $11,000.00
10/12/98 $11,425.68 $11,500.00
10/13/98 $11,090.28 $11,060.00
10/14/98 $11,354.65 $11,400.00
10/15/98 $11,942.66 $12,140.00
10/16/98 $11,889.82 $12,050.00
10/19/98 $12,039.24 $12,250.00
10/20/98 $11,791.68 $11,910.00
10/21/98 $12,240.29 $12,490.00
10/22/98 $12,452.93 $12,780.00
10/23/98 $12,318.86 $12,580.00
10/26/98 $12,579.19 $12,930.00
10/27/98 $12,435.93 $12,730.00
10/28/98 $12,680.54 $13,060.00
10/29/98 $12,830.69 $13,240.00
10/30/98 $12,869.47 $13,280.00
11/02/98 $13,037.35 $13,490.00
11/03/98 $12,880.59 $13,270.00
11/04/98 $13,177.12 $13,670.00
11/05/98 $13,251.00 $13,770.00
11/06/98 $13,400.78 $13,970.00
11/09/98 $13,486.15 $14,080.00
11/10/98 $13,576.66 $14,180.00
11/11/98 $13,606.34 $14,260.00
11/12/98 $13,476.13 $14,070.00
11/13/98 $13,464.00 $14,050.00
11/16/98 $13,559.38 $14,170.00
11/17/98 $13,770.27 $14,450.00
11/18/98 $13,920.42 $14,640.00
11/19/98 $14,127.73 $14,900.00
11/20/98 $14,189.94 $14,990.00
11/23/98 $14,601.98 $15,540.00
11/24/98 $14,526.35 $15,430.00
11/25/98 $14,688.54 $15,650.00
11/27/98 $14,963.01 $16,020.00
11/30/98 $14,316.20 $15,140.00
12/01/98 $15,001.42 $16,080.00
12/02/98 $14,877.92 $15,900.00
12/03/98 $14,461.57 $15,350.00
12/04/98 $14,978.27 $16,040.00
12/07/98 $15,409.05 $16,600.00
12/08/98 $15,328.83 $16,490.00
12/09/98 $15,487.07 $16,700.00
12/10/98 $15,187.32 $16,300.00
12/11/98 $15,391.78 $16,570.00
12/14/98 $14,831.98 $15,877.98
12/15/98 $15,288.58 $16,430.00
12/16/98 $15,219.66 $16,339.67
12/17/98 $15,526.12 $16,741.13
12/18/98 $15,943.03 $17,303.18
12/21/98 $16,423.62 $17,985.68
12/22/98 $16,244.61 $17,734.76
12/23/98 $16,714.54 $18,427.29
12/24/98 $16,595.82 $18,216.52
12/28/98 $16,760.76 $18,417.25
12/29/98 $16,754.51 $18,397.18
12/30/98 $16,641.12 $18,116.15
12/31/98 $16,871.22 $18,216.52
1/04/99 $17,040.11 $18,497.55
1/05/99 $17,486.79 $19,129.85
1/06/99 $18,046.86 $19,882.60
1/07/99 $18,068.92 $19,912.71
1/08/99 $18,136.09 $20,003.04
1/11/99 $18,379.78 $20,344.29
1/12/99 $17,824.49 $19,581.50
1/13/99 $17,906.82 $19,681.87
1/14/99 $17,515.46 $19,139.89
1/15/99 $18,209.23 $20,093.37
1/19/99 $18,687.89 $20,735.72
1/20/99 $18,687.89 $20,745.76
1/21/99 $18,026.74 $19,782.24
1/22/99 $18,049.25 $19,832.42
1/25/99 $18,352.03 $20,274.03
1/26/99 $18,949.69 $21,087.00
1/27/99 $18,657.11 $20,675.50
1/28/99 $19,339.22 $21,608.91
1/29/99 $19,546.89 $21,889.93
2/01/99 $19,581.25 $21,930.08
2/02/99 $19,101.22 $21,257.62
2/03/99 $19,480.27 $21,779.53
2/04/99 $18,632.30 $20,605.24
2/05/99 $18,274.20 $20,083.34
2/08/99 $18,693.87 $20,665.46
2/09/99 $17,783.87 $19,400.84
2/10/99 $17,865.20 $19,511.25
2/11/99 $18,788.70 $20,765.83
2/12/99 $17,997.70 $19,671.83
2/16/99 $17,959.94 $19,601.58
2/17/99 $17,379.92 $18,838.79
2/18/99 $17,515.18 $18,999.38
2/19/99 $17,751.16 $19,310.51
2/22/99 $18,343.03 $20,123.48
2/23/99 $18,637.54 $20,494.84
2/24/99 $18,278.34 $20,033.15
2/25/99 $18,142.80 $19,812.35
2/26/99 $17,691.52 $19,220.18
3/01/99 $17,805.65 $19,370.73
3/02/99 $17,355.02 $18,748.46
3/03/99 $17,457.48 $18,878.94
3/04/99 $17,762.74 $19,260.33
3/05/99 $18,101.26 $19,762.16
3/08/99 $18,691.02 $20,545.02
3/09/99 $18,640.66 $20,474.77
3/10/99 $18,732.00 $20,625.32
3/11/99 $18,780.24 $20,675.50
3/12/99 $18,460.46 $20,213.81
3/15/99 $18,932.60 $20,866.20
3/16/99 $19,051.78 $21,026.78
3/17/99 $18,970.82 $20,926.42
3/18/99 $19,322.49 $21,398.14
3/19/99 $18,871.49 $20,735.72
3/22/99 $18,627.52 $20,414.55
3/23/99 $18,022.61 $19,581.50
3/24/99 $18,502.64 $20,243.92
3/25/99 $19,144.04 $21,117.11
3/26/99 $18,996.55 $20,906.34
3/29/99 $19,707.42 $21,879.90
3/30/99 $19,533.10 $21,639.02
3/31/99 $19,355.75 $21,398.14
4/01/99 $19,720.93 $21,889.93
4/05/99 $20,396.42 $22,833.38
4/06/99 $20,388.97 $22,823.34
4/07/99 $20,145.10 $22,482.10
4/08/99 $20,443.37 $22,893.60
4/09/99 $20,514.31 $22,993.97
4/12/99 $20,392.46 $22,813.31
4/13/99 $19,988.05 $22,271.33
4/14/99 $19,330.39 $21,337.92
4/15/99 $19,626.10 $21,749.42
4/16/99 $19,172.62 $21,046.86
4/19/99 $18,082.61 $19,601.58
4/20/99 $18,656.38 $20,374.40
4/21/99 $19,350.52 $21,368.03
4/22/99 $20,064.23 $22,311.47
4/23/99 $20,311.88 $22,652.72
4/26/99 $20,773.35 $23,295.06
4/27/99 $20,280.54 $22,622.61
4/28/99 $19,760.53 $21,859.82
4/29/99 $19,474.29 $21,458.36
4/30/99 $19,631.43 $21,729.35
5/03/99 $19,645.76 $21,709.27
5/04/99 $19,274.52 $21,197.40
5/05/99 $19,809.51 $21,950.15
5/06/99 $19,100.67 $20,966.56
5/07/99 $19,459.96 $21,448.32
5/10/99 $19,616.36 $21,659.09
5/11/99 $19,994.03 $22,160.92
5/12/99 $20,378.41 $22,682.83
5/13/99 $20,023.71 $22,201.07
5/14/99 $19,528.14 $21,518.58
5/17/99 $19,993.02 $22,140.85
5/18/99 $19,841.58 $21,950.15
5/19/99 $20,089.13 $22,291.40
5/20/99 $19,664.14 $21,679.16
5/21/99 $19,429.36 $21,347.95
5/24/99 $18,934.90 $20,665.46
5/25/99 $18,369.31 $19,892.64
5/26/99 $18,865.52 $20,555.06
5/27/99 $18,838.41 $20,534.99
5/28/99 $19,202.39 $21,016.75
6/01/99 $18,615.12 $20,243.92
6/02/99 $19,063.08 $20,826.05
6/03/99 $18,657.48 $20,294.11
6/04/99 $19,383.50 $21,257.62
6/07/99 $19,781.21 $21,799.60
6/08/99 $19,175.28 $20,966.56
6/09/99 $19,623.06 $21,558.72
6/10/99 $19,276.73 $21,117.11
6/11/99 $18,950.52 $20,685.54
6/14/99 $18,643.88 $20,253.96
6/15/99 $18,912.66 $20,605.24
6/16/99 $19,917.21 $21,970.23
6/17/99 $20,131.68 $22,261.29
6/18/99 $20,266.11 $22,441.95
6/21/99 $20,846.86 $23,234.84
6/22/99 $20,306.82 $22,492.13
6/23/99 $20,577.35 $22,853.45
6/24/99 $20,076.91 $22,170.96
6/25/99 $20,085.09 $22,170.96
6/28/99 $20,619.71 $22,883.56
6/29/99 $20,951.62 $23,345.25
6/30/99 $21,105.17 $23,586.13
7/01/99 $21,339.95 $23,907.30
7/02/99 $21,574.82 $24,248.55
7/06/99 $21,417.23 $24,027.74
7/07/99 $21,508.57 $24,128.11
7/08/99 $21,820.17 $24,549.65
7/09/99 $21,989.62 $24,800.56
7/12/99 $21,908.94 $24,670.09
7/13/99 $21,811.72 $24,539.61
7/14/99 $22,210.43 $25,111.70
7/15/99 $22,322.72 $25,252.21
7/16/99 $22,600.32 $25,643.64
7/19/99 $22,279.99 $25,202.03
7/20/99 $21,404.27 $23,967.52
7/21/99 $21,719.55 $24,358.95
7/22/99 $20,968.71 $23,355.28
7/23/99 $21,153.41 $23,566.05
7/26/99 $20,523.87 $22,712.94
7/27/99 $21,215.53 $23,616.24
7/28/99 $21,445.26 $23,987.59
7/29/99 $20,795.41 $23,084.30
7/30/99 $20,867.72 $23,164.59
8/02/99 $20,811.49 $23,084.30
8/03/99 $20,575.97 $22,763.12
8/04/99 $20,255.73 $22,311.47
8/05/99 $20,512.11 $22,642.68
8/06/99 $20,327.59 $22,401.80
8/09/99 $20,102.09 $22,080.63
8/10/99 $19,883.02 $21,779.53
8/11/99 $20,600.05 $22,753.09
8/12/99 $20,347.62 $22,401.80
8/13/99 $21,199.72 $23,576.09
8/16/99 $21,255.04 $23,666.42
8/17/99 $21,478.25 $23,957.48
8/18/99 $21,294.65 $23,706.57
8/19/99 $20,939.95 $23,214.77
8/20/99 $21,273.33 $23,696.53
8/23/99 $21,923.92 $24,599.83
8/24/99 $22,098.05 $24,820.64
8/25/99 $22,613.55 $25,553.31
8/26/99 $22,212.73 $24,991.26
8/27/99 $22,077.37 $24,770.45
8/30/99 $21,749.41 $24,328.84
8/31/99 $22,025.00 $24,690.16
1 year Since Inception(2)
OTC Plus Fund 137.18% 61.94%
NASDAQ 100 Index(1) 110.36% 52.37%
</TABLE>
The OTC Plus Fund is designed to return 125% of the Nasdaq 100 Index (NDX). This
is done by investing in all 100 stocks in the NDX, as well as options contracts
and futures contracts on the NDX to leverage the Fund's performance to the 125%
level. The NDX is comprised of the 100 largest capitalized stocks in the Nasdaq
Composite Index exclusive of financial and utility companies. Resulting from a
heavy concentration in technology stocks such as Intel, Microsoft and Cisco, the
OTC Plus Fund performed outstanding during the fiscal year, returning 137.18%.
The newly emerging internet industry was a big winner for the Fund with the
addition of such names as Amazon.com, At Home and Lycos. The Fund hit an all
time high of $25.55 on July 16th, but declined to the end of the fiscal year.
OTC/SHORT FUND
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OCTOBER 16, 1997 - AUGUST 31, 1999
<S> <C> <C>
NASDAQ 100 INDEX(1) OTC/SHORT FUND
10/16/97 $10,000.00 $10,000.00
10/17/97 $9,779.33 $10,410.00
10/20/97 $9,898.76 $10,110.00
10/21/97 $10,101.60 $9,720.00
10/22/97 $9,993.91 $9,740.00
10/23/97 $9,775.06 $9,950.00
10/24/97 $9,617.60 $10,170.00
10/27/97 $8,903.65 $10,940.00
10/28/97 $9,522.37 $10,260.00
10/29/97 $9,366.73 $10,430.00
10/30/97 $9,102.40 $10,720.00
10/31/97 $9,274.50 $10,520.00
11/03/97 $9,557.39 $10,200.00
11/04/97 $9,529.19 $10,220.00
11/05/97 $9,522.82 $10,190.00
11/06/97 $9,406.85 $10,290.00
11/07/97 $9,353.64 $10,390.00
11/10/97 $9,201.00 $10,560.00
11/11/97 $9,195.73 $10,570.00
11/12/97 $8,915.39 $10,890.00
11/13/97 $9,143.79 $10,620.00
11/14/97 $9,349.36 $10,380.00
11/17/97 $9,548.11 $10,150.00
11/18/97 $9,426.31 $10,290.00
11/19/97 $9,451.87 $10,260.00
11/20/97 $9,664.45 $10,020.00
11/21/97 $9,610.78 $10,080.00
11/24/97 $9,370.92 $10,450.00
11/25/97 $9,442.23 $10,360.00
11/26/97 $9,498.44 $10,300.00
11/28/97 $9,555.48 $10,210.00
12/01/97 $9,816.71 $10,040.00
12/02/97 $9,569.67 $10,290.00
12/03/97 $9,656.53 $10,190.00
12/04/97 $9,575.94 $10,270.00
12/05/97 $9,735.21 $10,120.00
12/08/97 $9,850.28 $9,990.00
12/09/97 $9,556.93 $10,280.00
12/10/97 $9,398.12 $10,470.00
12/11/97 $9,113.14 $10,690.00
12/12/97 $8,900.38 $10,890.00
12/15/97 $8,953.96 $10,870.00
12/16/97 $9,071.57 $10,750.00
12/17/97 $8,947.13 $10,900.00
12/18/97 $8,793.77 $11,080.00
12/19/97 $8,822.25 $11,050.00
12/22/97 $8,874.91 $10,980.00
12/23/97 $8,637.32 $11,280.00
12/24/97 $8,541.09 $11,400.00
12/26/97 $8,678.26 $11,220.00
12/29/97 $8,900.74 $10,900.00
12/30/97 $9,082.03 $10,660.00
12/31/97 $9,012.35 $10,710.00
1/02/98 $9,170.90 $10,590.00
1/05/98 $9,254.49 $10,540.00
1/06/98 $9,153.25 $10,600.00
1/07/98 $9,015.90 $10,740.00
1/08/98 $9,046.37 $10,740.00
1/09/98 $8,697.54 $11,130.00
1/12/98 $8,833.80 $10,940.00
1/13/98 $9,051.01 $10,660.00
1/14/98 $9,063.02 $10,750.00
1/15/98 $9,055.83 $10,750.00
1/16/98 $9,149.43 $10,660.00
1/20/98 $9,340.54 $10,440.00
1/21/98 $9,337.26 $10,370.00
1/22/98 $9,283.69 $10,420.00
1/23/98 $9,318.62 $10,370.00
1/26/98 $9,245.21 $10,450.00
1/27/98 $9,421.31 $10,240.00
1/28/98 $9,671.09 $9,970.00
1/29/98 $9,723.66 $9,920.00
1/30/98 $9,743.04 $9,890.00
2/02/98 $10,014.64 $9,620.00
2/03/98 $10,108.06 $9,530.00
2/04/98 $10,227.95 $9,420.00
2/05/98 $10,140.81 $8,900.00
2/06/98 $10,317.82 $8,740.00
2/09/98 $10,212.30 $8,840.00
2/10/98 $10,367.57 $8,700.00
2/11/98 $10,358.66 $8,710.00
2/12/98 $10,413.14 $8,660.00
2/13/98 $10,339.37 $8,740.00
2/17/98 $10,266.06 $8,800.00
2/18/98 $10,376.21 $8,700.00
2/19/98 $10,521.84 $8,588.00
2/20/98 $10,548.95 $8,620.00
2/23/98 $10,783.62 $8,440.00
2/24/98 $10,664.19 $8,520.00
2/25/98 $10,918.79 $8,330.00
2/26/98 $10,978.64 $8,250.00
2/27/98 $10,861.85 $8,340.00
3/02/98 $10,711.40 $8,460.00
3/03/98 $10,694.39 $8,470.00
3/04/98 $10,732.14 $8,440.00
3/05/98 $10,249.69 $8,830.00
3/06/98 $10,579.69 $8,550.00
3/09/98 $10,263.69 $8,810.00
3/10/98 $10,447.80 $8,650.00
3/11/98 $10,495.64 $8,620.00
3/12/98 $10,581.15 $8,540.00
3/13/98 $10,635.90 $8,500.00
3/16/98 $10,734.87 $8,420.00
3/17/98 $10,623.17 $8,510.00
3/18/98 $10,706.13 $8,440.00
3/19/98 $10,789.35 $8,370.00
3/20/98 $10,637.18 $8,500.00
3/23/98 $10,725.86 $8,420.00
3/24/98 $10,895.32 $8,290.00
3/25/98 $11,050.05 $8,170.00
3/26/98 $11,078.43 $8,150.00
3/27/98 $11,021.12 $8,190.00
3/30/98 $10,975.64 $8,220.00
3/31/98 $11,103.17 $8,150.00
4/01/98 $11,173.66 $8,100.00
4/02/98 $11,189.76 $8,090.00
4/03/98 $11,221.42 $8,070.00
4/06/98 $10,964.09 $8,260.00
4/07/98 $10,752.70 $8,420.00
4/08/98 $10,833.92 $8,350.00
4/09/98 $10,887.05 $8,300.00
4/13/98 $10,942.26 $8,260.00
4/14/98 $11,034.58 $8,190.00
4/15/98 $11,200.49 $8,060.00
4/16/98 $11,165.66 $8,090.00
4/17/98 $11,199.49 $8,070.00
4/20/98 $11,398.33 $7,920.00
4/21/98 $11,549.24 $7,810.00
4/22/98 $11,742.07 $7,670.00
4/23/98 $11,448.09 $7,860.00
4/24/98 $11,371.32 $7,920.00
4/27/98 $11,097.62 $8,110.00
4/28/98 $11,119.90 $8,100.00
4/29/98 $11,275.08 $7,990.00
4/30/98 $11,352.94 $7,940.00
5/01/98 $11,383.96 $7,920.00
5/04/98 $11,422.98 $7,890.00
5/05/98 $11,345.21 $7,950.00
5/06/98 $11,299.55 $7,980.00
5/07/98 $11,121.54 $8,110.00
5/08/98 $11,406.70 $7,900.00
5/11/98 $11,257.89 $8,000.00
5/12/98 $11,428.35 $7,870.00
5/13/98 $11,489.02 $7,830.00
5/14/98 $11,516.49 $7,810.00
5/15/98 $11,365.41 $7,910.00
5/18/98 $11,301.82 $7,950.00
5/19/98 $11,420.89 $7,870.00
5/20/98 $11,258.62 $7,980.00
5/21/98 $11,130.82 $8,070.00
5/22/98 $11,043.77 $8,140.00
5/26/98 $10,916.33 $8,230.00
5/27/98 $11,001.29 $8,160.00
5/28/98 $11,050.14 $8,130.00
5/29/98 $10,843.11 $8,290.00
6/01/98 $10,601.88 $8,470.00
6/02/98 $10,798.36 $8,310.00
6/03/98 $10,587.60 $8,480.00
6/04/98 $10,871.49 $8,250.00
6/05/98 $10,976.19 $8,160.00
6/08/98 $10,979.10 $8,170.00
6/09/98 $11,128.82 $8,060.00
6/10/98 $10,908.88 $8,220.00
6/11/98 $10,779.80 $8,310.00
6/12/98 $10,796.90 $8,300.00
6/15/98 $10,674.83 $8,390.00
6/16/98 $11,014.39 $8,120.00
6/17/98 $11,134.28 $8,030.00
6/18/98 $11,163.84 $8,010.00
6/19/98 $11,276.45 $7,930.00
6/22/98 $11,496.75 $7,760.00
6/23/98 $11,846.59 $7,520.00
6/24/98 $12,108.28 $7,360.00
6/25/98 $11,928.54 $7,470.00
6/26/98 $12,015.32 $7,420.00
6/29/98 $12,186.05 $7,310.00
6/30/98 $12,164.49 $7,320.00
7/01/98 $12,335.50 $7,210.00
7/02/98 $12,120.74 $7,340.00
7/06/98 $12,212.16 $7,280.00
7/07/98 $12,246.18 $7,260.00
7/08/98 $12,532.88 $7,080.00
7/09/98 $12,581.82 $7,050.00
7/10/98 $12,653.59 $7,010.00
7/13/98 $12,921.65 $6,850.00
7/14/98 $12,899.36 $6,860.00
7/15/98 $13,185.43 $6,700.00
7/16/98 $13,213.08 $6,690.00
7/17/98 $13,316.32 $6,630.00
7/20/98 $13,333.79 $6,640.00
7/21/98 $13,024.52 $6,800.00
7/22/98 $13,012.61 $6,800.00
7/23/98 $12,787.21 $6,920.00
7/24/98 $12,812.68 $6,900.00
7/27/98 $12,974.31 $6,820.00
7/28/98 $12,673.32 $6,980.00
7/29/98 $12,553.26 $7,050.00
7/30/98 $12,935.02 $6,830.00
7/31/98 $12,527.61 $7,060.00
8/03/98 $12,447.38 $7,100.00
8/04/98 $11,981.66 $7,400.00
8/05/98 $12,096.82 $7,330.00
8/06/98 $12,424.00 $7,120.00
8/07/98 $12,407.63 $7,140.00
8/10/98 $12,396.81 $7,150.00
8/11/98 $12,098.91 $7,320.00
8/12/98 $12,322.04 $7,190.00
8/13/98 $12,174.04 $7,270.00
8/14/98 $12,098.09 $7,320.00
8/17/98 $12,441.47 $7,110.00
8/18/98 $12,745.73 $6,930.00
8/19/98 $12,718.62 $6,950.00
8/20/98 $12,718.08 $6,940.00
8/21/98 $12,504.96 $7,060.00
8/24/98 $12,469.94 $7,080.00
8/25/98 $12,628.48 $6,990.00
8/26/98 $12,498.41 $7,050.00
8/27/98 $11,936.55 $7,370.00
8/28/98 $11,506.85 $7,630.00
8/31/98 $10,372.57 $8,380.00
9/01/98 $11,052.23 $7,830.00
9/02/98 $11,110.26 $7,800.00
9/03/98 $10,996.74 $7,870.00
9/04/98 $10,964.45 $7,900.00
9/08/98 $11,701.78 $7,370.00
9/09/98 $11,477.11 $7,510.00
9/10/98 $11,236.97 $7,670.00
9/11/98 $11,735.71 $7,330.00
9/14/98 $11,899.71 $7,230.00
9/15/98 $12,044.88 $7,150.00
9/16/98 $12,110.92 $7,110.00
9/17/98 $11,750.17 $7,330.00
9/18/98 $11,831.21 $7,280.00
9/21/98 $12,076.81 $7,130.00
9/22/98 $12,154.03 $7,080.00
9/23/98 $12,685.79 $6,770.00
9/24/98 $12,338.41 $6,960.00
9/25/98 $12,644.31 $6,790.00
9/28/98 $12,582.09 $6,810.00
9/29/98 $12,597.01 $6,800.00
9/30/98 $12,238.53 $6,990.00
10/01/98 $11,585.98 $7,360.00
10/02/98 $11,610.54 $7,350.00
10/05/98 $10,985.10 $7,750.00
10/06/98 $10,777.35 $7,900.00
10/07/98 $10,470.36 $8,120.00
10/08/98 $10,268.33 $8,270.00
10/09/98 $10,895.87 $7,760.00
10/12/98 $11,310.01 $7,460.00
10/13/98 $10,978.01 $7,680.00
10/14/98 $11,239.70 $7,500.00
10/15/98 $11,821.75 $7,120.00
10/16/98 $11,769.45 $7,150.00
10/19/98 $11,917.35 $7,060.00
10/20/98 $11,672.31 $7,210.00
10/21/98 $12,116.38 $6,930.00
10/22/98 $12,326.86 $6,810.00
10/23/98 $12,194.15 $6,890.00
10/26/98 $12,451.84 $6,740.00
10/27/98 $12,310.03 $6,820.00
10/28/98 $12,552.17 $6,690.00
10/29/98 $12,700.80 $6,610.00
10/30/98 $12,739.18 $6,590.00
11/02/98 $12,905.37 $6,510.00
11/03/98 $12,750.19 $6,590.00
11/04/98 $13,043.72 $6,440.00
11/05/98 $13,116.85 $6,400.00
11/06/98 $13,265.11 $6,320.00
11/09/98 $13,349.62 $6,280.00
11/10/98 $13,439.21 $6,250.00
11/11/98 $13,468.59 $6,220.00
11/12/98 $13,339.70 $6,280.00
11/13/98 $13,327.69 $6,290.00
11/16/98 $13,422.11 $6,240.00
11/17/98 $13,630.87 $6,140.00
11/18/98 $13,779.49 $6,090.00
11/19/98 $13,984.70 $5,990.00
11/20/98 $14,046.28 $5,960.00
11/23/98 $14,454.15 $5,790.00
11/24/98 $14,379.29 $5,810.00
11/25/98 $14,539.83 $5,760.00
11/27/98 $14,811.53 $5,650.00
11/30/98 $14,171.26 $5,920.00
12/01/98 $14,849.55 $5,620.00
12/02/98 $14,727.30 $5,670.00
12/03/98 $14,315.16 $5,830.00
12/04/98 $14,826.63 $5,620.00
12/07/98 $15,253.05 $5,460.00
12/08/98 $15,173.64 $5,490.00
12/09/98 $15,330.28 $5,430.00
12/10/98 $15,033.56 $5,540.00
12/11/98 $15,235.95 $5,460.00
12/14/98 $14,681.82 $5,675.27
12/15/98 $15,133.80 $5,495.11
12/16/98 $15,065.58 $5,515.12
12/17/98 $15,368.94 $5,405.02
12/18/98 $15,781.62 $5,254.88
12/21/98 $16,257.35 $5,084.72
12/22/98 $16,080.15 $5,154.79
12/23/98 $16,545.33 $4,994.64
12/24/98 $16,427.81 $5,034.68
12/28/98 $16,591.08 $4,994.64
12/29/98 $16,584.89 $4,994.64
12/30/98 $16,472.65 $5,054.70
12/31/98 $16,700.41 $5,034.68
1/04/99 $16,867.60 $4,974.62
1/05/99 $17,309.76 $4,824.48
1/06/99 $17,864.16 $4,654.32
1/07/99 $17,885.99 $4,654.32
1/08/99 $17,952.48 $4,634.31
1/11/99 $18,193.71 $4,564.24
1/12/99 $17,644.04 $4,704.37
1/13/99 $17,725.54 $4,674.34
1/14/99 $17,338.14 $4,784.45
1/15/99 $18,024.89 $4,604.28
1/19/99 $18,498.70 $4,444.13
1/20/99 $18,498.70 $4,424.11
1/21/99 $17,844.24 $4,584.26
1/22/99 $17,866.52 $4,594.27
1/25/99 $18,166.24 $4,504.19
1/26/99 $18,757.84 $4,334.03
1/27/99 $18,468.23 $4,394.08
1/28/99 $19,143.43 $4,223.92
1/29/99 $19,349.00 $4,183.89
2/01/99 $19,383.02 $4,173.88
2/02/99 $18,907.84 $4,273.97
2/03/99 $19,283.05 $4,193.90
2/04/99 $18,443.67 $4,364.05
2/05/99 $18,089.20 $4,464.15
2/08/99 $18,504.61 $4,354.05
2/09/99 $17,603.83 $4,564.24
2/10/99 $17,684.33 $4,554.23
2/11/99 $18,598.48 $4,324.02
2/12/99 $17,815.50 $4,504.19
2/16/99 $17,778.11 $4,514.19
2/17/99 $17,203.97 $4,664.33
2/18/99 $17,337.86 $4,624.30
2/19/99 $17,571.45 $4,564.24
2/22/99 $18,157.33 $4,414.10
2/23/99 $18,448.85 $4,344.04
2/24/99 $18,093.29 $4,424.11
2/25/99 $17,959.12 $4,454.14
2/26/99 $17,512.42 $4,564.24
3/01/99 $17,625.39 $4,534.21
3/02/99 $17,179.32 $4,644.32
3/03/99 $17,280.74 $4,624.30
3/04/99 $17,582.91 $4,544.22
3/05/99 $17,918.01 $4,454.14
3/08/99 $18,501.79 $4,304.00
3/09/99 $18,451.95 $4,304.00
3/10/99 $18,542.36 $4,283.98
3/11/99 $18,590.11 $4,263.96
3/12/99 $18,273.57 $4,344.04
3/15/99 $18,740.93 $4,233.93
3/16/99 $18,858.90 $4,213.92
3/17/99 $18,778.77 $4,223.92
3/18/99 $19,126.87 $4,143.85
3/19/99 $18,680.44 $4,243.94
3/22/99 $18,438.94 $4,293.99
3/23/99 $17,840.15 $4,434.12
3/24/99 $18,315.32 $4,314.01
3/25/99 $18,950.23 $4,153.86
3/26/99 $18,804.24 $4,183.89
3/29/99 $19,507.90 $4,033.75
3/30/99 $19,335.35 $4,063.78
3/31/99 $19,159.80 $4,093.80
4/01/99 $19,521.27 $4,023.74
4/05/99 $20,189.92 $3,883.61
4/06/99 $20,182.56 $3,883.61
4/07/99 $19,941.15 $3,933.65
4/08/99 $20,236.41 $3,883.61
4/09/99 $20,306.63 $3,863.59
4/12/99 $20,186.01 $3,893.62
4/13/99 $19,785.70 $3,963.68
4/14/99 $19,134.69 $4,093.80
4/15/99 $19,427.41 $4,033.75
4/16/99 $18,978.51 $4,133.84
4/19/99 $17,899.54 $4,364.05
4/20/99 $18,467.50 $4,223.92
4/21/99 $19,154.62 $4,063.78
4/22/99 $19,861.10 $3,903.63
4/23/99 $20,106.24 $3,853.58
4/26/99 $20,563.04 $3,773.51
4/27/99 $20,075.22 $3,853.58
4/28/99 $19,560.48 $3,963.68
4/29/99 $19,277.14 $4,013.73
4/30/99 $19,432.68 $3,983.70
5/03/99 $19,446.87 $3,983.70
5/04/99 $19,079.39 $4,053.77
5/05/99 $19,608.96 $3,943.66
5/06/99 $18,907.29 $4,083.79
5/07/99 $19,262.95 $4,013.73
5/10/99 $19,417.76 $3,983.70
5/11/99 $19,791.61 $3,903.63
5/12/99 $20,172.10 $3,823.55
5/13/99 $19,820.99 $3,893.62
5/14/99 $19,330.44 $3,983.70
5/17/99 $19,790.61 $3,893.62
5/18/99 $19,640.71 $3,913.64
5/19/99 $19,885.75 $3,863.59
5/20/99 $19,465.06 $3,953.67
5/21/99 $19,232.66 $4,003.72
5/24/99 $18,743.20 $4,103.81
5/25/99 $18,183.34 $4,223.92
5/26/99 $18,674.53 $4,113.82
5/27/99 $18,647.69 $4,123.83
5/28/99 $19,007.99 $4,043.76
6/01/99 $18,426.66 $4,163.87
6/02/99 $18,870.09 $4,063.78
6/03/99 $18,468.59 $4,143.85
6/04/99 $19,187.27 $3,993.71
6/07/99 $19,580.95 $3,909.63
6/08/99 $18,981.15 $4,017.73
6/09/99 $19,424.40 $3,921.64
6/10/99 $19,081.57 $3,993.71
6/11/99 $18,758.66 $4,061.77
6/14/99 $18,455.13 $4,125.83
6/15/99 $18,721.19 $4,067.78
6/16/99 $19,715.57 $3,847.57
6/17/99 $19,927.87 $3,803.53
6/18/99 $20,060.94 $3,777.51
6/21/99 $20,635.81 $3,667.41
6/22/99 $20,101.24 $3,765.50
6/23/99 $20,369.03 $3,713.45
6/24/99 $19,873.66 $3,803.53
6/25/99 $19,881.75 $3,801.53
6/28/99 $20,410.96 $3,699.44
6/29/99 $20,739.51 $3,639.38
6/30/99 $20,891.50 $3,617.36
7/01/99 $21,123.91 $3,575.32
7/02/99 $21,356.40 $3,539.29
7/06/99 $21,200.40 $3,561.31
7/07/99 $21,290.82 $3,535.28
7/08/99 $21,599.27 $3,475.23
7/09/99 $21,767.00 $3,455.21
7/12/99 $21,687.13 $3,469.22
7/13/99 $21,590.90 $3,487.24
7/14/99 $21,985.57 $3,421.18
7/15/99 $22,096.73 $3,405.16
7/16/99 $22,371.52 $3,359.12
7/19/99 $22,054.43 $3,413.17
7/20/99 $21,187.58 $3,533.28
7/21/99 $21,499.66 $3,481.23
7/22/99 $20,756.43 $3,601.35
7/23/99 $20,939.26 $3,571.32
7/26/99 $20,316.09 $3,679.42
7/27/99 $21,000.75 $3,549.30
7/28/99 $21,228.15 $3,511.26
7/29/99 $20,584.88 $3,617.36
7/30/99 $20,656.46 $3,611.36
8/02/99 $20,600.79 $3,621.36
8/03/99 $20,367.66 $3,661.40
8/04/99 $20,050.67 $3,723.46
8/05/99 $20,304.44 $3,677.42
8/06/99 $20,121.80 $3,711.45
8/09/99 $19,898.58 $3,753.49
8/10/99 $19,681.73 $3,793.52
8/11/99 $20,391.49 $3,659.40
8/12/99 $20,141.63 $3,707.44
8/13/99 $20,985.10 $3,553.30
8/16/99 $21,039.86 $3,537.29
8/17/99 $21,260.80 $3,509.26
8/18/99 $21,079.06 $3,539.29
8/19/99 $20,727.96 $3,595.34
8/20/99 $21,057.96 $3,537.29
8/23/99 $21,701.96 $3,429.19
8/24/99 $21,874.33 $3,401.16
8/25/99 $22,384.62 $3,327.09
8/26/99 $21,987.85 $3,387.15
8/27/99 $21,853.86 $3,411.17
8/30/99 $21,529.22 $3,461.22
8/31/99 $21,802.02 $3,415.17
1 year Since Inception(2)
OTC/Short Fund (59.25%) (43.43%)
NASDAQ 100 Index(1) 110.36% 51.17%
</TABLE>
The Potomac OTC/Short Fund seeks to provide investment results that inversely
correlate to the performance of the Nasdaq 100 Index. In order to achieve its
objective, the Fund engaged in short sales of stock from all 100 companies
comprising the Nasdaq 100 Index. For liquidity purposes, the Fund--from time to
time--held a small percentage of the portfolio in Nasdaq 100 Index futures
positions as well. For the fiscal year ended August 31, 1999, the OTC/Short Fund
posted a total return of (59.25%). During the same period, the Nasdaq 100 Index
had a return of 110.36%. The OTC/Short Fund did not precisely achieve its goal
of inversely correlating to the Nasdaq 100 Index--to the advantage of the
shareholders--because of a negative compounding effect resulting from inversely
tracking a trending index.
(1)RETURN DOES NOT INCLUDE CONTINUOUS REINVESTMENT OF DIVIDENDS.
(2)AVERAGE ANNUAL RATE OF RETURN.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
3
<PAGE>
SMALL CAP PLUS FUND
- --------------------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FEBRUARY 22, 1999 - AUGUST 31, 1999
<S> <C> <C>
SMALL CAP
RUSSELL 2000 INDEX(1) PLUS FUND
2/19/99 $10,000.00 $10,000.00
2/22/99 10,140.71 10,170.00
2/23/99 10,171.04 10,220.00
2/24/99 10,075.45 10,030.00
2/25/99 10,009.94 9,960.00
2/26/99 9,998.98 9,880.00
3/01/99 10,053.28 10,000.00
3/02/99 10,054.30 10,010.00
3/03/99 9,991.08 9,950.00
3/04/99 10,043.84 10,070.00
3/05/99 10,145.55 10,170.00
3/08/99 10,197.81 10,250.00
3/09/99 10,175.89 10,110.00
3/10/99 10,224.83 10,210.00
3/11/99 10,223.81 10,200.00
3/12/99 10,154.98 10,060.00
3/15/99 10,217.69 10,140.00
3/16/99 10,175.12 10,090.00
3/17/99 10,156.26 10,120.00
3/18/99 10,184.81 10,160.00
3/19/99 10,109.10 9,910.00
3/22/99 10,022.94 9,810.00
3/23/99 9,772.37 9,660.00
3/24/99 9,798.62 9,760.00
3/25/99 10,017.59 10,110.00
3/26/99 10,041.30 10,160.00
3/29/99 10,190.16 10,360.00
3/30/99 10,165.18 10,310.00
3/31/99 10,135.87 10,170.00
4/01/99 10,164.16 10,290.00
4/05/99 10,254.65 10,410.00
4/06/99 10,223.81 10,360.00
4/07/99 10,139.43 10,160.00
4/08/99 10,193.48 10,330.00
4/09/99 10,345.65 10,570.00
4/12/99 10,510.32 10,830.00
4/13/99 10,635.74 10,980.00
4/14/99 10,639.56 10,970.00
4/15/99 10,649.25 10,990.00
4/16/99 10,746.37 11,040.00
4/19/99 10,513.38 10,720.00
4/20/99 10,587.31 10,810.00
4/21/99 10,873.57 11,250.00
4/22/99 10,931.69 11,270.00
4/23/99 11,005.10 11,290.00
4/26/99 11,087.69 11,510.00
4/27/99 11,092.53 11,500.00
4/28/99 11,050.98 11,430.00
4/29/99 11,033.65 11,310.00
4/30/99 11,032.63 11,290.00
5/03/99 11,044.61 11,470.00
5/04/99 11,027.02 11,300.00
5/05/99 11,069.84 11,390.00
5/06/99 11,047.16 11,340.00
5/07/99 11,116.75 11,500.00
5/10/99 11,263.06 11,750.00
5/11/99 11,389.50 11,870.00
5/12/99 11,451.95 11,910.00
5/13/99 11,492.23 11,960.00
5/14/99 11,295.69 11,590.00
5/17/99 11,250.32 11,640.00
5/18/99 11,278.36 11,710.00
5/19/99 11,372.42 11,870.00
5/20/99 11,420.34 11,910.00
5/21/99 11,448.89 11,960.00
5/24/99 11,225.85 11,540.00
5/25/99 11,074.43 11,380.00
5/26/99 11,098.90 11,390.00
5/27/99 11,035.43 11,380.00
5/28/99 11,182.26 11,570.00
6/01/99 11,151.16 11,560.00
6/02/99 11,132.81 11,420.00
6/03/99 11,113.43 11,400.00
6/04/99 11,275.30 11,620.00
6/07/99 11,385.42 11,820.00
6/08/99 11,311.75 11,640.00
6/09/99 11,348.20 11,750.00
6/10/99 11,273.77 11,620.00
6/11/99 11,165.18 11,440.00
6/14/99 11,000.00 11,270.00
6/15/99 11,063.22 11,340.00
6/16/99 11,246.50 11,590.00
6/17/99 11,302.07 11,620.00
6/18/99 11,344.63 11,730.00
6/21/99 11,456.54 11,890.00
6/22/99 11,402.75 11,840.00
6/23/99 11,395.36 11,720.00
6/24/99 11,296.46 11,650.00
6/25/99 11,295.18 11,640.00
6/28/99 11,435.38 11,870.00
6/29/99 11,574.82 11,990.00
6/30/99 11,666.58 12,130.00
7/01/99 11,583.48 12,030.00
7/02/99 11,636.76 12,120.00
7/06/99 11,637.78 12,110.00
7/07/99 11,539.38 11,880.00
7/08/99 11,591.89 11,960.00
7/09/99 11,674.23 12,100.00
7/12/99 11,707.88 12,110.00
7/13/99 11,677.54 12,050.00
7/14/99 11,762.94 12,260.00
7/15/99 11,873.57 12,380.00
7/16/99 11,859.80 12,330.00
7/19/99 11,760.64 12,190.00
7/20/99 11,561.31 11,880.00
7/21/99 11,588.84 11,930.00
7/22/99 11,508.79 11,800.00
7/23/99 11,429.52 11,690.00
7/26/99 11,289.06 11,530.00
7/27/99 11,381.09 11,660.00
7/28/99 11,384.40 11,710.00
7/29/99 11,256.18 11,480.00
7/30/99 11,337.50 11,570.00
8/02/99 11,282.95 11,540.00
8/03/99 11,121.08 11,330.00
8/04/99 10,953.35 11,110.00
8/05/99 10,954.63 11,190.00
8/06/99 10,911.04 11,100.00
8/09/99 10,856.23 11,000.00
8/10/99 10,777.98 10,890.00
8/11/99 10,914.86 11,070.00
8/12/99 10,930.92 11,110.00
8/13/99 11,064.24 11,250.00
8/16/99 11,058.37 11,260.00
8/17/99 11,113.94 11,380.00
8/18/99 11,040.02 11,210.00
8/19/99 11,031.61 11,220.00
8/20/99 11,072.65 11,360.00
8/23/99 11,145.81 11,430.00
8/24/99 11,142.49 11,370.00
8/25/99 11,161.36 11,440.00
8/26/99 11,114.45 11,340.00
8/27/99 11,023.45 11,210.00
8/30/99 10,893.70 11,030.00
8/31/99 10,905.68 11,100.00
2/22/99 - 8/31/99(2)
Small Cap Plus Fund 11.00%
Russell 2000 Index(1) 10.91%
</TABLE>
The Small Cap Plus Fund is designed to return 125% of the Russell 2000 Index.
Russell futures contracts and options contracts are used to achieve the
leveraged exposure necessary to meet this objective. The Fund made its debut on
February 22, 1999 at $10.00 per share. The timing was great as the Russell 2000
rose over 19% from the first day of operations until mid July when it topped
out. Even though the Russell 2000 did not make a new all time high in July like
most averages it nevertheless experienced a powerful rally. Since inception
through fiscal year end, the Small Cap Plus Fund has appreciated 11.00%.
(1)RETURN DOES NOT INCLUDE CONTINUOUS REINVESTMENT OF DIVIDENDS.
(2)NOT ANNUALIZED.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
4
<PAGE>
U.S. PLUS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Shares Value
<C> <S> <C>
COMMON STOCKS - 77.71%*
96,937 Standard & Poor's
Depository Receipts
Trust $ 12,801,743
------------
TOTAL COMMON STOCKS
(Cost $13,120,634) 12,801,743
------------
Face Amount
U.S. TREASURY OBLIGATIONS - 2.43%*
$404,188 U.S. Treasury Bill
4.71%, 11/18/99 400,063
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $400,054) 400,063
------------
TOTAL INVESTMENTS -
80.14%*
(Cost $13,520,688) $ 13,201,806
============
</TABLE>
U.S. PLUS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF FUTURES CONTRACTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
<C> <S> <C>
Unrealized
Loss
Contracts
FUTURES CONTRACTS PURCHASED
39 S&P 500 Index Futures
Contracts Expiring
September 1999
(Underlying Face
Amount at Market
Value $12,868,050) $ (107,376)
============
</TABLE>
* Calculated as a percentage of net assets.
See notes to the financial statements.
5
<PAGE>
U.S./SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Face Amount Value
<C> <S> <C>
U.S TREASURY OBLIGATIONS - 122.38%*
$5,431,272 U.S. Treasury Bill
4.71%, 11/18/99 $ 5,375,845
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $5,375,728) 5,375,845
------------
TOTAL
INVESTMENTS -122.38%*
(Cost $5,375,728) $ 5,375,845
============
</TABLE>
U.S./SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF SECURITIES SOLD SHORT
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Shares Value
<C> <S> <C>
21,050 Standard & Poor's
Depository Receipts
Trust $ 2,779,916
------------
TOTAL SECURITIES SOLD
SHORT
(Proceeds $2,820,762) $ 2,779,916
============
</TABLE>
* Calculated as a percentage of net assets.
See notes to the financial statements.
6
<PAGE>
U.S./SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF SHORT FUTURES CONTRACTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Unrealized
Contracts Gain
<C> <S> <C>
SHORT FUTURES CONTRACTS
4 S&P 500 Index Futures
Contracts Expiring
September 1999
(Underlying Face
Amount at Market
Value $1,319,800) $ 6,228
============
</TABLE>
See notes to the financial statements.
7
<PAGE>
OTC PLUS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Shares Value
<C> <S> <C>
COMMON STOCKS - 95.51%*
117,103 Microsoft Corporation** $10,839,346
77,321 Intel Corporation 6,354,820
75,733 Cisco Systems, Inc.** 5,135,644
44,062 MCI WorldCom, Inc.** 3,337,697
61,289 Dell Computer
Corporation** 2,991,669
12,775 QUALCOMM Incorporated** 2,455,195
22,402 Sun
Microsystems, Inc.** 1,780,959
26,842 Nextel
Communications, Inc.
- Class A** 1,551,803
39,883 Oracle Corporation** 1,455,730
15,642 Amgen Inc.** 1,301,219
8,241 Yahoo! Inc.** 1,215,548
15,026 Immunex Corporation** 1,011,438
14,980 Apple Computer, Inc.** 977,445
13,588 Xilinx, Inc.** 950,311
12,185 Biogen, Inc.** 935,199
15,644 Level 3
Communications, Inc.** 934,729
7,380 Amazon.com, Inc.** 917,887
12,624 Applied
Materials, Inc.** 897,093
14,846 Tellabs, Inc.** 884,265
8,226 JDS Uniphase
Corporation 872,470
13,580 Linear Technology
Corporation 854,691
12,521 Maxim Integrated
Products, Inc.** 842,820
18,493 Altera Corporation** 779,018
22,564 Comcast Corporation -
Special Class A 736,150
25,585 Qwest Communications
International Inc.** 735,569
8,374 CMGI Inc. ** 702,893
17,336 At Home Corporation -
Series A** 695,607
11,203 VERITAS Software
Corporation** 663,778
11,960 BMC Software, Inc.** 643,597
26,644 Novell, Inc.** 631,130
7,654 Costco Wholesale
Corporation ** 572,136
5,580 NTL Incorporated ** 547,886
16,925 Chiron Corporation** 543,716
Shares Value
<C> <S> <C>
16,627 Telefonaktiebolaget LM
Ericsson - ADR $ 541,417
7,206 Conexant Systems, Inc.
** 517,931
13,477 PanAmSat Corporation** 497,807
7,071 Siebel Systems, Inc. ** 485,689
5,200 Intuit Inc.** 465,725
8,851 Cintas Corporation 454,720
15,008 Compuware Corporation** 453,054
15,340 Paychex, Inc. 451,571
7,086 KLA-Tencor
Corporation** 445,089
20,397 Staples, Inc.** 443,635
9,837 USA Networks, Inc.** 441,435
4,783 VISX, Incorporated ** 432,862
11,182 ADC Telecommunications,
Inc.** 414,433
3,966 Adobe Systems
Incorporated 395,113
6,842 Citrix Systems, Inc.** 389,994
6,839 Genzyme Corporation
(General Division)** 385,976
16,640 Starbucks Corporation** 380,640
10,831 CIENA Corporation ** 380,439
10,132 Concord EFS, Inc.** 376,150
4,797 Comverse
Technology, Inc.** 374,127
5,465 Vitesse Semiconductor
Corporation** 371,620
10,376 Quintiles Transational
Corp.** 371,591
10,007 Biomet, Inc. 357,750
12,535 Bed Bath & Beyond
Inc.** 344,712
24,495 Parametric Technology
Corporation** 342,930
5,811 PACCAR Inc. 320,331
22,548 PeopleSoft, Inc.** 318,490
7,813 Lycos, Inc. ** 317,403
10,225 Fiserv, Inc.** 315,058
5,413 Synopsys, Inc.** 302,790
4,031 Sanmina Corporation** 302,325
12,122 3Com Corporation 300,777
14,175 Smurfit-Stone Container
Corporation** 300,333
16,708 American Power
Conversion
Corporation** 293,434
4,093 Electronic Arts Inc.** 280,882
</TABLE>
See notes to the financial statements.
8
<PAGE>
OTC PLUS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Shares Value
<C> <S> <C>
COMMON STOCKS - 95.51%* (Continued)
4,562 Centocor, Inc.** $ 273,150
7,994 McLeodUSA
Incorporated** 266,800
5,915 Adaptec, Inc.** 230,685
7,078 Sigma-Aldrich
Corporation 228,266
5,409 CNET, Inc. ** 203,176
5,020 Atmel Corporation** 197,349
2,771 PacifiCare Health
Systems, Inc. ** 166,260
2,793 Electronics for
Imaging, Inc.** 163,740
9,536 Network
Associates, Inc.** 160,920
2,901 Microchip Technology
Incorporated** 158,830
4,945 Molex Incorporated 158,549
1,555 Reuters Group PLC - ADR 137,132
4,607 Northwest Airlines
Corporation** 135,906
3,744 Dollar Tree
Stores, Inc.** 123,552
5,322 COMAIR Holdings, Inc. 112,427
2,956 Tech Data Corporation** 109,557
13,436 Food Lion, Inc. -
Class B ** 108,328
4,826 Apollo Group, Inc. -
Class A** 105,870
4,209 Herman Miller, Inc. 99,175
2,343 Ross Stores, Inc. 97,527
1,866 Fastenal Company 93,533
3,238 Lincare Holdings Inc.** 85,402
3,286 Autodesk, Inc. 75,578
4,115 Andrew Corporation** 72,012
4,182 Worthington
Industries, Inc. 62,730
5,179 Micron
Electronics, Inc.** 50,172
2,229 First Health Group
Corp.** 48,063
2,854 Cambridge Technology
Partners, Inc.** 39,063
4,254 Corporate
Express, Inc.** 37,887
2,855 CBRL Group, Inc. 37,472
2,820 Rexall Sundown, Inc.** 35,250
6,205 Stewart
Enterprises, Inc. -
Class A 33,546
977 Genzyme Surgical
Products** 6,350
Shares Value
<C> <S> <C>
538 Momentum Business
Applications, Inc.** $ 4,136
192 Genzyme Molecular
Oncology** 864
-----------
TOTAL COMMON STOCKS
(Cost $48,578,821) 73,236,948
-----------
Face Amount
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - 4.24%*
$ 3,289,077 U.S. Treasury Bill,
4.71%, Due 11/18/99 3,255,512
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $3,255,440) 3,255,512
-----------
Contracts
<C> <S> <C>
CALL OPTIONS PURCHASED - 1.63%*
97 Nasdaq Index Expiring
September 1999 at
2300 1,251,300
-----------
TOTAL CALL OPTIONS
(Cost $956,985) 1,251,300
-----------
TOTAL
INVESTMENTS-101.38%*
(Cost $52,791,246) $77,743,760
===========
</TABLE>
* Calculated as a percentage of net assets.
** Non-income producing security.
See notes to the financial statements.
9
<PAGE>
OTC PLUS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF OPTIONS WRITTEN
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Contracts Value
<C> <S> <C>
WRITTEN OPTION CONTRACTS
97 Nasdaq Index - Put
Expiring
September 1999 at
2300 $ 310,400
------------
TOTAL OPTIONS WRITTEN
(Premiums received
$827,187) $ 310,400
============
</TABLE>
See notes to the financial statements.
10
<PAGE>
OTC/SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Face Amount Value
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - 57.77%*
$6,340,694 U.S. Treasury Bill 4.71%,
11/18/99 $6,275,987
----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $6,275,850) 6,275,987
----------
TOTAL INVESTMENTS -
57.77%*
(Cost $6,275,850) $6,275,987
==========
</TABLE>
* Calculated as a percentage of net assets.
See notes to the financial statements.
11
<PAGE>
OTC/SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF SECURITIES SOLD SHORT
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Shares Value
<C> <S> <C>
13,380 Microsoft Corporation $1,238,486
8,850 Intel Corporation 727,359
8,693 Cisco Systems, Inc. 589,494
5,098 MCI WorldCom, Inc. 386,173
7,120 Dell Computer Corporation 347,545
1,467 QUALCOMM Incorporated 281,939
2,563 Sun Microsystems, Inc. 203,759
3,078 Nextel
Communications, Inc. -
Class A 177,947
4,572 Oracle Corporation 166,878
1,818 Amgen Inc. 151,235
942 Yahoo! Inc. 138,945
1,702 Immunex Corporation 114,566
1,709 Apple Computer, Inc. 111,512
1,560 Xilinx, Inc. 109,103
1,403 Biogen, Inc. 107,680
1,795 Level 3
Communications, Inc. 107,251
1,470 Applied Materials, Inc. 104,462
833 Amazon.com, Inc. 103,604
1,692 Tellabs, Inc. 100,780
1,558 Linear Technology
Corporation 98,057
1,440 Maxim Integrated
Products, Inc. 96,930
867 JDS Uniphase Corporation 91,956
2,125 Altera Corporation 89,516
2,973 Qwest Communications
International Inc. 85,474
2,614 Comcast Corporation -
Special Class A 85,282
951 CMGI Inc. 79,825
1,985 At Home Corporation -
Series A 79,648
1,303 VERITAS Software
Corporation 77,203
1,368 BMC Software, Inc. 73,615
3,059 Novell, Inc. 72,460
881 Costco Wholesale
Corporation 65,855
644 NTL Incorporated 63,233
1,912 Telefonaktiebolaget LM
Ericsson - ADR 62,259
1,935 Chiron Corporation 62,162
812 Conexant Systems, Inc. 58,362
1,532 PanAmSat Corporation 56,588
812 Siebel Systems, Inc. 55,774
Shares Value
<C> <S> <C>
597 Intuit Inc. $ 53,469
1,778 Paychex, Inc. 52,340
1,729 Compuware Corporation 52,194
1,014 Cintas Corporation 52,094
2,378 Staples, Inc. 51,722
814 KLA-Tencor Corporation 51,129
1,131 USA Networks, Inc. 50,754
552 VISX, Incorporated 49,956
1,288 ADC Telecommunications,
Inc. 47,736
455 Adobe Systems
Incorporated 45,329
790 Citrix Systems, Inc. 45,030
788 Genzyme Corporation
(General Division) 44,473
1,926 Starbucks Corporation 44,057
1,243 CIENA Corporation 43,660
1,171 Concord EFS, Inc. 43,473
553 Comverse
Technology, Inc. 43,134
1,198 Quintiles Transational
Corp. 42,903
627 Vitesse Semiconductor
Corporation 42,636
1,153 Biomet, Inc. 41,220
1,430 Bed Bath & Beyond Inc. 39,325
2,802 Parametric Technology
Corporation 39,228
668 PACCAR Inc. 36,823
524 Clear Channel
Communications, Inc. 36,713
2,591 PeopleSoft, Inc. 36,598
1,175 Fiserv, Inc. 36,205
883 Lycos, Inc. 35,872
626 Synopsys, Inc. 35,017
464 Sanmina Corporation 34,800
1,399 3Com Corporation 34,713
1,608 Smurfit-Stone Container
Corporation 34,069
1,922 American Power Conversion
Corporation 33,755
470 Electronic Arts Inc. 32,254
525 Centocor, Inc. 31,434
921 McLeodUSA Incorporated 30,738
676 Adaptec, Inc. 26,364
808 Sigma-Aldrich Corporation 26,058
616 CNET, Inc. 23,138
572 Atmel Corporation 22,487
320 PacifiCare Health
Systems, Inc. 19,200
</TABLE>
See notes to the financial statements.
12
<PAGE>
OTC/SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF SECURITIES SOLD SHORT (CONTINUED)
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Shares Value
<C> <S> <C>
322 Electronics for
Imaging, Inc. $ 18,877
1,093 Network Associates, Inc. 18,444
570 Molex Incorporated 18,276
325 Microchip Technology
Incorporated 17,794
528 Northwest Airlines
Corporation 15,576
176 Reuters Group PLC - ADR 15,521
426 Dollar Tree Stores, Inc. 14,058
611 COMAIR Holdings, Inc. 12,907
338 Tech Data Corporation 12,527
1,551 Food Lion, Inc. -
Class B 12,505
557 Apollo Group, Inc. -
Class A 12,219
478 Herman Miller, Inc. 11,263
270 Ross Stores, Inc. 11,239
215 Fastenal Company 10,777
372 Lincare Holdings Inc. 9,812
377 Autodesk, Inc. 8,671
475 Andrew Corporation 8,312
Shares Value
<C> <S> <C>
483 Worthington
Industries, Inc. $ 7,245
600 Micron Electronics, Inc. 5,813
257 First Health Group Corp. 5,542
329 Cambridge Technology
Partners, Inc. 4,503
489 Corporate Express, Inc. 4,355
326 CBRL Group, Inc. 4,279
325 Rexall Sundown, Inc. 4,063
704 Stewart
Enterprises, Inc. -
Class A 3,806
97 Genzyme Surgical Products 631
21 Genzyme Molecular
Oncology 95
4 Momentum Business
Applications, Inc. 31
----------
TOTAL SECURITIES SOLD
SHORT (Proceeds
$8,739,435) $8,434,158
==========
</TABLE>
OTC/SHORT FUND
- --------------------------------------------------------------------------------
SCHEDULE OF SHORT FUTURES CONTRACTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Unrealized
Contracts Loss
<C> <S> <C>
SHORT FUTURES CONTRACTS
8 NASDAQ 100 Index Futures
Contracts Expiring
September 1999
(Underlying Face Amount
at Market Value
$1,914,400) $ (22,136)
==========
</TABLE>
See notes to the financial statements.
13
<PAGE>
SMALL CAP PLUS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Face Amount Value
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - 71.45%*
$5,077,607 U.S. Treasury Bill
4.71%, 11/18/99 $ 5,025,790
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $5,025,680) 5,025,790
------------
Contracts
CALL OPTIONS PURCHASED - 0.32%*
94 Russell 2000 Index
Expiring September
1999 at 440 22,325
------------
TOTAL CALL OPTIONS
PURCHASED
(Cost $63,958) 22,325
------------
TOTAL INVESTMENTS -
71.77%*
(Cost $5,089,638) $ 5,048,115
============
</TABLE>
* Calculated as a percentage of net assets.
See notes to the financial statements.
14
<PAGE>
SMALL CAP PLUS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF OPTIONS WRITTEN
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
<C> <S> <C>
Value
Contracts
WRITTEN OPTION CONTRACTS
94 Russell 2000 Index -
Put Expiring
September 1999
at 440 $ 135,125
------------
TOTAL OPTIONS WRITTEN
(Premiums received
$109,314) $ 135,125
============
</TABLE>
SMALL CAP PLUS FUND
- --------------------------------------------------------------------------------
SCHEDULE OF FUTURES CONTRACTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Unrealized
Contracts Loss
<C> <S> <C>
FUTURE CONTRACTS PURCHASED
19 Russell 2000 Index
Futures Contracts
Expiring
September 1999
(Underlying Face
Amount at Market
Value $4,069,800) $ (86,811)
============
</TABLE>
See notes to the financial statements.
15
<PAGE>
U.S. GOVERNMENT MONEY MARKET FUND
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
August 31, 1999
<TABLE>
Face Amount Value
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - 109.79%*
$55,707,163 U.S. Treasury Bill
4.72%, Due 11/18/99 $ 55,137,464
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $55,137,464) 55,137,464
------------
TOTAL INVESTMENTS -
109.79%
(Cost $55,137,464) $ 55,137,464
============
</TABLE>
* Calculated as a percentage of net assets.
See notes to the financial statements.
16
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
AUGUST 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potomac Funds
U.S. Plus U.S./Short OTC Plus
Fund Fund Fund
-------------- -------------- --------------
<S> <C> <C> <C>
Assets:
Investments, at market value (Note 2).............. $13,201,806 $5,375,845 $77,743,760
Cash............................................... 39,160 24,320 134,419
Receivable for Fund shares sold.................... 3,496,538 6,612 4,375,169
Receivable from broker............................. -- 21,655 --
Deposit at broker.................................. 431,250 4,386,985 --
Dividends receivable............................... -- -- 4,707
Organization costs, net of accumulated amortization
(Note 1)......................................... 9,785 9,939 9,785
Other assets....................................... 32,084 15,630 10,413
----------- ---------- -----------
Total assets................................... 17,210,623 9,840,986 82,278,253
----------- ---------- -----------
Liabilities:
Securities sold short, at value (Proceeds of $0,
$2,820,762, $0).................................. -- 2,779,916 --
Written options, at value (Premiums received of $0,
$0, $827,187).................................... -- -- 310,400
Payable for investments purchased.................. -- -- 4,539,151
Payable for Fund shares redeemed................... 604,963 2,626,652 401,191
Payable to Investment Adviser...................... 32,508 26,226 161,914
Payable to broker.................................. 35,722 -- --
Accrued expenses and other liabilities............. 64,561 15,341 183,210
----------- ---------- -----------
Total liabilities.............................. 737,754 5,448,135 5,595,866
----------- ---------- -----------
Net assets......................................... $16,472,869 $4,392,851 $76,682,387
=========== ========== ===========
Net assets consist of:
Capital stock...................................... $16,791,751 $7,130,071 $63,004,292
Accumulated undistributed net investment income.... -- 5,552 --
Accumulated undistributed net realized gain (loss)
on investments sold, securities sold short,
written option contracts expired or closed, and
futures.......................................... 107,376 (2,789,963) (11,791,206)
Net unrealized appreciation (depreciation) on:
Investments...................................... (318,882) 117 24,952,514
Short positions.................................. -- 40,846 --
Written options.................................. -- -- 516,787
Futures.......................................... (107,376) 6,228 --
----------- ---------- -----------
Total Net Assets............................... $16,472,869 $4,392,851 $76,682,387
=========== ========== ===========
Shares outstanding
(unlimited shares of beneficial interest
authorized, no par value)........................ 1,131,434 127,750 3,116,886
Net Asset Value, Redemption Price and Offering
Price Per Share.................................. $ 14.56 $ 34.39 $ 24.60
=========== ========== ===========
Cost of Investments................................ $13,520,688 $5,375,728 $52,791,246
=========== ========== ===========
</TABLE>
See notes to the financial statements.
17
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
AUGUST 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potomac Funds U.S. Government
OTC/Short Small Cap Plus Money Market
Fund Fund Fund
-------------- -------------- ---------------
<S> <C> <C> <C>
Assets:
Investments, at market value (Note 2).............. $ 6,275,987 $5,048,115 $55,137,464
Cash............................................... 39,229 17,451 7,880
Receivable for Fund shares sold.................... 4,363,878 2,486,704 --
Receivable for investments sold.................... -- -- 1,311,377
Receivable from broker............................. -- 19,842 --
Deposit at broker.................................. 10,988,045 103,500 --
Organization costs, net of accumulated amortization
(Note 1)......................................... 9,751 -- 9,785
Other assets....................................... 64,681 18,958 8,702
----------- ---------- -----------
Total assets................................... 21,741,571 7,694,570 56,475,208
----------- ---------- -----------
Liabilities:
Securities sold short, at value (Proceeds of
$8,739,435, $0, $0).............................. 8,434,158 -- --
Written options, at value (Premiums received of $0,
$109,314, $0).................................... -- 135,125 --
Payable for investments purchased.................. -- 1,213 --
Payable for Fund shares redeemed................... 2,385,392 159,691 6,114,638
Payable to Investment Adviser...................... 29,736 241,021 36,357
Payable to broker.................................. 9,764 -- --
Dividends payable.................................. -- -- 1,063
Accrued expenses and other liabilities............. 19,070 123,898 100,417
----------- ---------- -----------
Total liabilities.............................. 10,878,120 660,948 6,252,475
----------- ---------- -----------
Net assets......................................... $10,863,451 $7,033,622 $50,222,733
=========== ========== ===========
Net assets consist of:
Capital stock...................................... $20,534,891 $9,018,326 $50,218,541
Accumulated undistributed net investment income.... -- 27,597 4,192
Accumulated undistributed net realized gain (loss)
on investments sold, securities sold short,
written option contracts expired or closed, and
futures.......................................... (9,954,718) (1,858,156) --
Net unrealized appreciation (depreciation) on:
Investments...................................... 137 (41,523) --
Short positions.................................. 305,277 -- --
Written options.................................. -- (25,811) --
Futures.......................................... (22,136) (86,811) --
----------- ---------- -----------
Total Net Assets............................... $10,863,451 $7,033,622 $50,222,733
=========== ========== ===========
Shares outstanding
(unlimited shares of beneficial interest
authorized, no par value)........................ 636,636 633,851 50,222,733
Net Asset Value, Redemption Price and Offering
Price Per Share.................................. $ 17.06 $ 11.10 $ 1.00
=========== ========== ===========
Cost of Investments................................ $ 6,275,850 $5,089,638 $55,137,464
=========== ========== ===========
</TABLE>
See notes to the financial statements.
18
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potomac Funds
U.S. Plus U.S./Short OTC Plus
Fund Fund Fund
-------------- -------------- --------------
<S> <C> <C> <C>
Investment income:
Dividend income (net of withholding tax of $937 for
the OTC Plus Fund)............................... $ 31,385 $ -- $ 55,301
Interest income.................................... 899,704 257,993 139,391
----------- ----------- -----------
Total investment income........................ 931,089 257,993 194,692
----------- ----------- -----------
Expenses:
Investment advisory fees........................... 181,865 56,190 433,383
Distribution expenses.............................. -- -- 45,604
Administration fees................................ 26,960 7,255 59,691
Shareholder servicing and accounting costs......... 58,315 15,781 130,133
Custody fees....................................... 35,225 9,940 73,758
Federal and state registration..................... 21,694 15,041 25,223
Professional fees.................................. 28,715 7,525 65,960
Amortization of organizational expenses............ 3,121 3,121 3,121
Reports to shareholders............................ 6,822 1,798 15,194
Directors' fees and expenses....................... 1,266 331 2,963
Other.............................................. 5,295 1,398 11,735
----------- ----------- -----------
Total expenses before waiver and reimbursement
of expenses.................................. 369,278 118,380 866,765
Less: Waiver of expenses and reimbursement from
Adviser...................................... (5,548) (16,045) --
----------- ----------- -----------
Net expenses................................... 363,730 102,335 866,765
----------- ----------- -----------
Net investment income (loss)....................... 567,359 155,658 (672,073)
----------- ----------- -----------
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) on:
Investments...................................... 396,651 (562) (3,676,719)
Short positions.................................. -- (553,321) --
Written option contracts expired or closed....... 1,980,529 (103,517) 4,663,498
Futures.......................................... 1,923,923 (1,195,991) (86,088)
----------- ----------- -----------
4,301,103 (1,853,391) 900,691
----------- ----------- -----------
Change in unrealized appreciation (depreciation)
on:
Investments...................................... (312,782) (339,871) 24,530,005
Short positions.................................. -- 40,846 --
Written options.................................. 16,130 (62,236) 767,225
Futures.......................................... (26,742) (528,432) --
----------- ----------- -----------
(323,394) (889,693) 25,297,230
----------- ----------- -----------
Net realized and unrealized gain (loss) on
investments.................................. 3,977,709 (2,743,084) 26,197,921
----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations.................................. $ 4,545,068 $(2,587,426) $25,525,848
=========== =========== ===========
</TABLE>
See notes to the financial statements.
19
<PAGE>
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
YEAR ENDED AUGUST 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potomac Funds
Small Cap Plus
Fund U.S. Government
OTC/Short FEBRUARY 22, 1999(1) Money Market
FUND TO AUGUST 31, 1999 FUND
-------------- -------------------- ---------------
<S> <C> <C> <C>
Investment income:
Dividend income.................................... $ -- $ 659 $ --
Interest income.................................... 227,007 1,284,663 1,185,905
----------- ----------- ----------
Total investment income........................ 227,007 1,285,322 1,185,905
----------- ----------- ----------
Expenses:
Investment advisory fees........................... 59,599 212,714 121,561
Distribution expenses.............................. -- 39,748 --
Administration fees................................ 7,534 25,554 24,140
Shareholder servicing and accounting costs......... 16,352 53,311 52,889
Custody fees....................................... 10,007 24,454 28,463
Federal and state registration..................... 15,905 12,296 23,500
Professional fees.................................. 7,633 29,059 25,960
Organizational expenses............................ 3,121 16,509 3,121
Reports to shareholders............................ 1,772 5,912 5,659
Directors' fees and expenses....................... 341 1,396 1,203
Other.............................................. 1,373 4,474 4,334
----------- ----------- ----------
Total expenses before waiver and reimbursement
of expenses and dividends on short
positions.................................... 123,637 425,427 290,830
Less: Waiver of expenses and reimbursement from
Adviser...................................... (14,372) (861) (50,746)
----------- ----------- ----------
Net expenses before dividends on short
positions.................................... 109,265 424,566 240,084
Dividends on short positions (net of
withholding tax of $242 for the OTC/Short
Fund)........................................ 5,699 -- --
----------- ----------- ----------
Total expenses................................. 114,964 424,566 240,084
----------- ----------- ----------
Net investment income (loss)....................... 112,043 860,756 945,821
----------- ----------- ----------
Realized and unrealized gain (loss) on investments:
Net realized gain (loss) on:
Investments...................................... (56,805) (961,510) --
Short positions.................................. (3,995,089) -- --
Written option contracts expired or closed....... (32,075) 516,194 --
Futures.......................................... (220,119) (1,412,840) --
----------- ----------- ----------
(4,304,088) (1,858,156) --
----------- ----------- ----------
Change in unrealized appreciation (depreciation)
on:
Investments...................................... (419) (41,523) --
Short positions.................................. (3,244,555) -- --
Written options.................................. -- (25,811) --
Futures.......................................... (22,136) (86,811) --
----------- ----------- ----------
(3,267,110) (154,145) --
----------- ----------- ----------
Net realized and unrealized gain (loss) on
investments.................................. (7,571,198) (2,012,301) --
----------- ----------- ----------
Net increase (decrease) in net assets resulting
from operations.................................. $(7,459,155) $(1,151,545) $ 945,821
=========== =========== ==========
</TABLE>
(1)COMMENCEMENT OF OPERATIONS.
See notes to the financial statements.
20
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potomac Funds
U.S. Plus U.S. Plus U.S./Short U.S./Short
Fund Fund Fund Fund
YEAR ENDED OCTOBER 20, 1997(1) YEAR ENDED NOVEMBER 7, 1997(1)
AUGUST 31, 1999 TO AUGUST 31, 1998 AUGUST 31, 1999 TO AUGUST 31, 1998
--------------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss)..... $ 567,359 $ 351,252 $ 155,658 $ 53,111
Net realized gain (loss) on
investments sold, securities
sold short, written option
contracts expired or closed and
futures........................ 4,301,103 1,449,351 (1,853,391) (403,411)
Change in unrealized appreciation
(depreciation) on investments,
short positions, written
options and futures............ (323,394) (102,864) (889,693) 936,884
------------- ------------- ------------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 4,545,068 1,697,739 (2,587,426) 586,584
------------- ------------- ------------- ------------
Distributions to shareholders:
Net investment income............ -- (35,123) -- --
Net realized gains............... (189,978) -- (26,273) --
------------- ------------- ------------- ------------
Total distributions.......... (189,978) (35,123) (26,273) --
------------- ------------- ------------- ------------
Capital share transactions:
Proceeds from shares sold........ 432,183,904 141,274,188 288,090,128 89,542,327
Proceeds from shares issued to
holders in reinvestment of
dividends...................... 187,759 34,225 25,407 --
Cost of shares redeemed.......... (420,720,881) (142,504,032) (288,877,637) (82,360,259)
------------- ------------- ------------- ------------
Net increase (decrease) in
net assets resulting from
capital share
transactions............... 11,650,782 (1,195,619) (762,102) 7,182,068
------------- ------------- ------------- ------------
Total increase (decrease) in net
assets......................... 16,005,872 466,997 (3,375,801) 7,768,652
------------- ------------- ------------- ------------
Net assets:
Beginning of period.............. 466,997 -- 7,768,652 --
------------- ------------- ------------- ------------
End of period (including
undistributed net investment
income of $0, $15,745, $5,552
and $4,928, respectively)...... $ 16,472,869 $ 466,997 $ 4,392,851 $ 7,768,652
============= ============= ============= ============
</TABLE>
(1)COMMENCEMENT OF OPERATIONS.
See notes to the financial statements.
21
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potomac Funds
OTC Plus OTC Plus OTC/Short OTC/Short
Fund Fund Fund Fund
YEAR ENDED OCTOBER 20, 1997(1) YEAR ENDED OCTOBER 16, 1997(1)
AUGUST 31, 1999 TO AUGUST 31, 1998 AUGUST 31, 1999 TO AUGUST 31, 1998
---------------- ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss)..... $ (672,073) $ (101,815) $ 112,043 $ 78,647
Net realized gain (loss) on
investments sold, securities
sold short, written option
contracts expired or closed and
futures........................ 900,691 2,282,566 (4,304,088) (5,381,857)
Change in unrealized appreciation
(depreciation) on investments,
short positions, written
options and futures............ 25,297,230 172,071 (3,267,110) 3,550,388
------------- ------------- ------------- -------------
Net increase (decrease) in
net assets resulting from
operations................. 25,525,848 2,352,822 (7,459,155) (1,752,822)
------------- ------------- ------------- -------------
Distributions to shareholders:
Net investment income............ -- -- -- --
Net realized gains............... (171,078) -- (7,355) --
------------- ------------- ------------- -------------
Total distributions.......... (171,078) -- (7,355) --
------------- ------------- ------------- -------------
Capital share transactions:
Proceeds from shares sold........ 754,327,170 325,380,424 269,273,210 301,561,469
Proceeds from shares issued to
holders in reinvestment of
dividends...................... 161,537 -- 6,530 --
Cost of shares redeemed.......... (710,841,636) (320,052,700) (270,118,317) (280,640,109)
------------- ------------- ------------- -------------
Net increase (decrease) in
net assets resulting from
capital share
transactions............... 43,647,071 5,327,724 (838,577) 20,921,360
------------- ------------- ------------- -------------
Total increase (decrease) in net
assets......................... 69,001,841 7,680,546 (8,305,087) 19,168,538
------------- ------------- ------------- -------------
Net assets:
Beginning of period.............. 7,680,546 -- 19,168,538 --
------------- ------------- ------------- -------------
End of period (including
undistributed net investment
income of $0, $0, $0 and
$11,388, respectively)......... $ 76,682,387 $ 7,680,546 $ 10,863,451 $ 19,168,538
============= ============= ============= =============
</TABLE>
(1)COMMENCEMENT OF OPERATIONS.
See notes to the financial statements.
22
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Potomac Funds U.S. Government U.S. Government
Small Cap Plus Money Market Money Market
Fund Fund Fund
FEBRUARY 22, 1999(1) YEAR ENDED OCTOBER 20, 1997(1)
TO AUGUST 31, 1999 AUGUST 31, 1999 TO AUGUST 31, 1998
-------------------- --------------- -------------------
<S> <C> <C> <C>
Operations:
Net investment income (loss)....................... $ 860,756 $ 945,821 $ 149,746
Net realized gain (loss) on investments sold,
securities sold short, written option contracts
expired or closed and futures.................... (1,858,156) -- --
Change in unrealized appreciation (depreciation) on
investments, short positions, written options and
futures.......................................... (154,145) -- --
------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations.............................. (1,151,545) 945,821 149,746
------------- ------------- -------------
Distributions to shareholders:
Net investment income.............................. -- (945,821) (149,746)
Net realized gains................................. -- -- --
------------- ------------- -------------
Total distributions............................ -- (945,821) (149,746)
------------- ------------- -------------
Capital share transactions:
Proceeds from shares sold.......................... 561,864,955 849,108,149 198,593,087
Proceeds from shares issued to holders in
reinvestment of dividends........................ -- 729,062 69,908
Cost of shares redeemed............................ (553,679,788) (808,984,862) (189,292,611)
------------- ------------- -------------
Net increase (decrease) in net assets resulting
from capital share transactions.............. 8,185,167 40,852,349 9,370,384
------------- ------------- -------------
Total increase (decrease) in net assets............ 7,033,622 40,852,349 9,370,384
------------- ------------- -------------
Net assets:
Beginning of period................................ -- 9,370,384 --
------------- ------------- -------------
End of period (including undistributed net
investment income of $27,597, $4,192 and $17,771,
respectively).................................... $ 7,033,622 $ 50,222,733 $ 9,370,384
============= ============= =============
</TABLE>
(1)COMMENCEMENT OF OPERATIONS.
See notes to the financial statements.
23
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For a fund share outstanding throughout the period
Potomac Funds
U.S. Plus U.S. Plus U.S./Short(6) U.S./Short(6)
Fund Fund Fund Fund
YEAR ENDED OCTOBER 20, 1997(1) YEAR ENDED NOVEMBER 7, 1997(1)
AUGUST 31, 1999 TO AUGUST 31, 1998 AUGUST 31, 1999 TO AUGUST 31, 1998
--------------- ------------------- --------------- -------------------
<S> <C> <C> <C> <C>
Per share data:
Net asset value,
beginning of period............ $ 9.76 $ 10.00 $ 47.30 $ 50.00
----------- -------- ---------- ----------
Income (loss) from investment
operations:
Net investment income
(loss)(4)...................... 0.31 0.36 1.05 1.15
Net realized and unrealized gain
(loss) on investments(7)....... 4.59 (0.58) (13.91) (3.85)
----------- -------- ---------- ----------
Total from investment
operations................. 4.90 (0.22) (12.86) (2.70)
----------- -------- ---------- ----------
Less distributions:
Dividends from net investment
income......................... -- (0.02) -- --
Distributions from realized
gains.......................... (0.10) -- (0.05) --
----------- -------- ---------- ----------
Total distributions.......... (0.10) (0.02) (0.05) --
----------- -------- ---------- ----------
Net asset value, end of period... $ 14.56 $ 9.76 $ 34.39 $ 47.30
=========== ======== ========== ==========
Total return..................... 50.38% (2.23%)(2) (26.77%) (5.40%)(2)
Supplemental data and ratios:
Net assets, end of period........ $16,472,869 $466,997 $4,392,851 $7,768,652
Ratio of net expenses to average
net assets:
Before expense reimbursement... 1.52% 2.52%(3) 1.90% 5.29%(3)
After expense reimbursement.... 1.50% 1.50%(3) 1.64% 1.57%(3)
Ratio of net investment income
(loss) to average net assets:
Before expense reimbursement... 2.32% 2.68%(3) 2.23% (0.46%)(3)
After expense reimbursement.... 2.34% 3.70%(3) 2.49% 3.26%(3)
Portfolio turnover rate(5)....... 0.00% 0.00% 0.00% 0.00%
</TABLE>
(1)COMMENCEMENT OF OPERATIONS.
(2)NOT ANNUALIZED.
(3)ANNUALIZED.
(4)NET INVESTMENT INCOME (LOSS) PER SHARE REPRESENTS NET INVESTMENT INCOME
(LOSS) DIVIDED BY THE DAILY AVERAGE SHARES OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD.
(5)PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR. INVESTMENTS IN OPTIONS,
FUTURES CONTRACTS AND REPURCHASE AGREEMENTS ARE DEEMED SHORT-TERM SECURITIES.
(6)THE PER SHARE DATA REFLECTS A 1 FOR 5 REVERSE STOCK SPLIT WHICH OCCURRED ON
JUNE 7, 1999.
(7)THE AMOUNTS SHOWN MAY NOT CORRELATE WITH AGGREGATE GAINS AND LOSSES OF
PORTFOLIO SECURITIES DUE TO THE TIMING OF SUBSCRIPTIONS AND REDEMPTIONS OF FUND
SHARES.
See notes to the financial statements.
24
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For a fund share outstanding throughout the period
Potomac Funds
OTC Plus OTC Plus OTC/Short(9) OTC/Short(9)
Fund Fund Fund Fund
YEAR ENDED OCTOBER 20, 1997(1) YEAR ENDED OCTOBER 16, 1997(1)
AUGUST 31, 1999 TO AUGUST 31, 1998 AUGUST 31, 1999 TO AUGUST 31, 1998
---------------- ------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Per share data:
Net asset value,
beginning of period............ $ 10.41 $ 10.00 $ 41.90 $ 50.00
----------- ---------- ----------- -----------
Income (loss) from investment
operations:
Net investment income
(loss)(4)...................... (0.23) (0.11) 0.39(8) 0.45(8)
Net realized and unrealized gain
(loss) on investments(10)...... 14.48 0.52 (25.22) (8.55)
----------- ---------- ----------- -----------
Total from investment
operations................. 14.25 0.41 (24.83) (8.10)
----------- ---------- ----------- -----------
Less distributions:
Dividends from net investment
income......................... -- -- -- --
Distributions from realized
gains.......................... (0.06) -- (0.01) --
----------- ---------- ----------- -----------
Total distributions.......... (0.06) -- (0.01) --
----------- ---------- ----------- -----------
Net asset value, end of period... $ 24.60 $ 10.41 $ 17.06 $ 41.90
=========== ========== =========== ===========
Total return..................... 137.18% 4.10%(2) (59.25%) (16.20%)(2)
Supplemental data and ratios:
Net assets, end of period........ $76,682,387 $7,680,546 $10,863,451 $19,168,538
Ratio of net expenses to average
net assets:
Before expense reimbursement... 1.50% 3.21%(3) 1.87% 3.70%(3)
After expense reimbursement.... 1.50% 1.50%(3) 1.65%(6) 1.64%(3,6)
Ratio of net investment income
(loss) to average net assets:
Before expense reimbursement... (1.16%) (2.84%)(3) 1.47% (0.74%)(3)
After expense reimbursement.... (1.16%) (1.13%)(3) 1.69%(7) 1.32%(3,7)
Portfolio turnover rate(5)....... 1,000.39% 2,324.63% 3,048.52% 3,346.25%
</TABLE>
(1)COMMENCEMENT OF OPERATIONS.
(2)NOT ANNUALIZED.
(3)ANNUALIZED.
(4)NET INVESTMENT INCOME (LOSS) PER SHARE REPRESENTS NET INVESTMENT INCOME
(LOSS) DIVIDED BY THE DAILY AVERAGE SHARES OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD.
(5)PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR. INVESTMENTS IN OPTIONS,
FUTURES CONTRACTS AND REPURCHASE AGREEMENTS ARE DEEMED SHORT-TERM SECURITIES.
(6)THE OPERATING EXPENSE RATIO EXCLUDED DIVIDENDS ON SHORT POSITIONS. THE RATIO
INCLUDING DIVIDENDS ON SHORT POSITIONS FOR THE YEAR ENDED AUGUST 31, 1999 AND
THE PERIOD ENDED AUGUST 31, 1998 WAS 1.74% AND 1.78%, RESPECTIVELY.
(7)THE NET INVESTMENT INCOME RATIO INCLUDED DIVIDENDS ON SHORT POSITIONS. THE
RATIO EXCLUDING DIVIDENDS ON SHORT POSITIONS FOR THE YEAR ENDED AUGUST 31, 1999
AND THE PERIOD ENDED AUGUST 31, 1998 WAS 1.78% AND 1.46%, RESPECTIVELY.
(8)NET INVESTMENT INCOME BEFORE DIVIDENDS ON SHORT POSITIONS FOR THE YEAR ENDED
AUGUST 31, 1999 AND THE PERIOD ENDED AUGUST 31, 1998 WAS $0.41 AND $0.50,
RESPECTIVELY.
(9)THE PER SHARE DATA REFLECTS A 1 FOR 5 REVERSE STOCK SPLIT WHICH OCCURRED ON
JUNE 7, 1999.
(10)THE AMOUNTS SHOWN MAY NOT CORRELATE WITH AGGREGATE GAINS AND LOSSES OF
PORTFOLIO SECURITIES DUE TO THE TIMING OF SUBSCRIPTIONS AND REDEMPTIONS OF FUND
SHARES.
See notes to the financial statements.
25
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For a fund share outstanding throughout the period
Potomac Funds U.S. Government U.S. Government
Small Cap Plus Money Market Money Market
Fund Fund Fund
FEBRUARY 22, 1999(1) YEAR ENDED OCTOBER 20, 1997(1)
TO AUGUST 31, 1999 AUGUST 31, 1999 TO AUGUST 31, 1998
-------------------- ---------------- -------------------
<S> <C> <C> <C>
Per share data:
Net asset value,
beginning of period.............................. $ 10.00 $ 1.00 $ 1.00
---------- ----------- ----------
Income (loss) from investment operations:
Net investment income (loss)(4).................... 0.18 0.04 0.04
Net realized and unrealized gain (loss) on
investments(6)................................... 0.92 -- --
---------- ----------- ----------
Total from investment operations............... 1.10 0.04 0.04
---------- ----------- ----------
Less distributions:
Dividends from net investment income............... -- (0.04) (0.04)
Distributions from realized gains.................. -- -- --
---------- ----------- ----------
Total distributions............................ -- (0.04) (0.04)
---------- ----------- ----------
Net asset value, end of period..................... $ 11.10 $ 1.00 $ 1.00
========== =========== ==========
Total return....................................... 11.00%(2) 3.89% 3.89%(2)
Supplemental data and ratios:
Net assets, end of period.......................... $7,033,622 $50,222,733 $9,370,384
Ratio of net expenses to average net assets:
Before expense reimbursement..................... 1.50%(3) 1.20% 3.70%(3)
After expense reimbursement...................... 1.50%(3) 0.99% 1.00%(3)
Ratio of net investment income (loss) to average
net assets:
Before expense reimbursement..................... 3.03%(3) 3.68% 1.66%(3)
After expense reimbursement...................... 3.03%(3) 3.89% 4.36%(3)
Portfolio turnover rate(5)......................... 0.00% N/A N/A
</TABLE>
(1)COMMENCEMENT OF OPERATIONS.
(2)NOT ANNUALIZED.
(3)ANNUALIZED.
(4)NET INVESTMENT INCOME (LOSS) PER SHARE REPRESENTS NET INVESTMENT INCOME
(LOSS) DIVIDED BY THE DAILY AVERAGE SHARES OF BENEFICIAL INTEREST OUTSTANDING
THROUGHOUT EACH PERIOD.
(5)PORTFOLIO TURNOVER RATIO IS CALCULATED WITHOUT REGARD TO SHORT-TERM
SECURITIES HAVING A MATURITY OF LESS THAN ONE YEAR. INVESTMENTS IN OPTIONS,
FUTURES CONTRACTS AND REPURCHASE AGREEMENTS ARE DEEMED SHORT-TERM SECURITIES.
(6)THE AMOUNTS SHOWN MAY NOT CORRELATE WITH AGGREGATE GAINS AND LOSSES OF
PORTFOLIO SECURITIES DUE TO THE TIMING OF SUBSCRIPTIONS AND REDEMPTIONS OF FUND
SHARES.
See notes to the financial statements.
26
<PAGE>
POTOMAC FUNDS
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
August 31, 1999
1. ORGANIZATION
Potomac Funds (the "Trust") was organized as a Massachusetts Business Trust on
June 6, 1997 and is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as an open-end management investment company issuing
its shares in series, each series representing a distinct portfolio with its own
investment objective and policies. The series presently authorized are the U.S.
Plus Fund, U.S./Short Fund, OTC Plus Fund, OTC/Short Fund, Small Cap Plus Fund
and the U.S. Government Money Market Fund (each a "Fund" and collectively, the
"Funds"). Each Fund (other than the U.S. Government Money Market Fund) is a
"non-diversified" series of the Trust pursuant to the 1940 Act. The U.S. Plus
Fund, OTC Plus Fund and U.S. Government Money Market Fund commenced operations
on October 20, 1997; the U.S./Short Fund commenced operations on November 7,
1997; the OTC/Short Fund commenced operations on October 16, 1997 and the Small
Cap Plus Fund commenced operations on February 22, 1999.
The objective of the U.S. Plus Fund is to provide investment returns that
correspond to 150% of the performance of the Standard & Poor's 500 Index (the
"S&P 500 Index"). The objective of the U.S./Short Fund is to provide investment
returns that inversely correlate to the performance of the S&P 500 Index. The
objective of the OTC Plus Fund is to provide investment returns that correspond
to 125% of the performance of the Nasdaq 100 Index ("Nasdaq Index"). The
objective of the OTC/Short Fund is to provide investment returns that inversely
correlate to the performance of the Nasdaq Index. The objective of the Small Cap
Plus Fund is to provide investment returns that correspond to 125% of the
performance of the Russell 2000 Index. The objective of the U.S. Government
Money Market Fund is to provide security of principal, current income and
liquidity by investing primarily in money market instruments issued or
guaranteed, as to principal and interest, by the U.S. government, its agencies
or instrumentalities.
Costs incurred by the Trust in connection with the organization, registration
and the initial public offering of shares, aggregating $15,607 for each Fund
(other than the Small Cap Plus Fund), are being deferred and amortized over the
period of benefit, but not to exceed sixty months from the Fund's commencement
of operations. These costs were advanced by the Adviser and will be reimbursed
by the Trust. The proceeds of any redemption of the initial shares by the
original shareholder will be reduced by a pro rata portion of any then
unamortized organizational expenses in the same proportion as the number of
initial shares being redeemed bears to the number of initial shares outstanding
at the time of redemption. Costs incurred by the Trust in connection with the
organization, registration and the initial public offering of shares of the
Small Cap Plus Fund were expensed as incurred.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
a) INVESTMENT VALUATION - Securities that are listed on a securities exchange
are valued at the last quoted sales price on the day the valuation is made.
Price information on listed stocks is taken from the exchange where the security
is primarily traded. If no sale is reported at that time, the mean of the last
bid and asked price is used. When market quotations for options and futures
positions held by a Fund are readily available, those positions will be valued
based upon such quotations. Other securities for which no quotations are readily
available or for which the Adviser has reason
27
<PAGE>
to question the validity of quotations received are valued at fair value as
determined in good faith under the supervision of the Board of Trustees.
Instruments with a remaining maturity of 60 days or less are valued at amortized
cost, which approximates market value.
b) REPURCHASE AGREEMENTS - Each Fund may enter into repurchase agreements with
banks that are members of the Federal Reserve System or securities dealers who
are members of a national securities exchange or are primary dealers in U.S.
Government Securities. In connection with transactions in repurchase agreements,
it is the Trust's policy that the Fund receive, as collateral, securities whose
market value, including accrued interest, at all times will be at least equal to
100% of the amount invested by the Fund in each repurchase agreement. If the
seller defaults, and the value of the collateral declines, realization of the
collateral by the Fund may be delayed or limited.
c) WRITTEN OPTION ACCOUNTING - Each Fund, other than the U.S. Government Money
Market Fund, may write (sell) options. When a Fund writes an option, an amount
equal to the premium received is entered in the Fund's accounting records as an
asset and equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current value of the option written. When an
option expires, or if the Fund enters into a closing purchase transaction, the
Fund realizes a gain (or loss if the cost of a closing purchase transaction
exceeds the premium received when the option was sold). As collateral for
uncovered written options, the Fund is required under the 1940 Act to maintain
assets consisting of cash, cash equivalents or liquid securities. This
collateral is required to be adjusted daily to reflect the market value of the
purchase obligation for put options or the market value of the instrument
underlying the contract, but not less than the strike price, for call options.
d) STOCK INDEX FUTURES CONTRACTS AND OPTIONS ON FUTURESCONTRACTS - Each Fund,
other than the U.S. Government Money Market Fund, may purchase and sell stock
index futures contracts and options on such futures contracts. Upon entering
into a contract, the Fund deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Fund agrees to receive from or pay to the broker
an amount of cash equal to the daily fluctuation in value of the contract. Such
receipts or payments are known as variation margin and are recorded by the Fund
as unrealized gains and losses. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed. As collateral
for futures contracts, the Fund is required under the 1940 Act to maintain
assets consisting of cash, cash equivalents or liquid securities. This
collateral is required to be adjusted daily to reflect the market value of the
purchase obligation for long futures contracts or the market value of the
instrument underlying the contract, but not less than the market price at which
the futures contract was established, for short futures contracts.
e) SHORT POSITIONS - The U.S./Short Fund and OTC/Short Fund may engage in short
sale transactions. For financial statement purposes, an amount equal to the
settlement amount is included in the Statement of Assets and Liabilities as an
asset and an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current value of the short position. Subsequent
fluctuations in the market prices of securities sold, but not yet purchased, may
require purchasing the securities at prices which may differ from the market
value reflected on the Statement of Assets and Liabilities. The Fund is liable
for any dividends payable on securities while those securities are in a short
position. As collateral for its short positions, the Fund is required under the
1940 Act to maintain assets consisting of cash, cash equivalents or liquid
securities equal to the market value of the securities sold short, but not less
than the market value of such securities at the time they were sold short. This
collateral is required to be adjusted daily.
f) RISKS OF OPTIONS, FUTURES CONTRACTS, OPTIONS ON FUTURES CONTRACTS AND SHORT
POSITIONS - The risks inherent in the use of options, futures contracts, options
on futures contracts and short positions include 1) adverse changes in the value
of such instruments; 2) imperfect correlation between the price of options and
futures contracts and options thereon and movements in the price of the
underlying securities, index or futures contracts; 3) the possible absence of a
liquid secondary market for any particular instrument at any time; 4) the
possible need to defer closing out certain
28
<PAGE>
positions to avoid adverse tax consequences; and 5) the possible nonperformance
by the counterparty under the terms of the contract. The Fund has designated all
its cash, cash equivalents and liquid securities as collateral for written
options, futures contracts and short positions.
g) FEDERAL INCOME TAXES - Each Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment company
and to make the requisite distributions of income and capital gains to its
shareholders sufficient to relieve it from all or substantially all federal
income taxes.
h) INCOME AND EXPENSES - Dividend income is recognized on the ex-dividend date,
and interest income is recognized on an accrual basis. The Funds are charged for
those expenses that are directly attributable to each portfolio, such as
advisory fees and registration costs. Expenses that are not directly
attributable to a portfolio are allocated among the Trust's portfolios in
proportion to their respective net assets.
i) DISTRIBUTIONS TO SHAREHOLDERS - Each Fund, other than the U.S. Government
Money Market Fund, intends to distribute to its shareholders at least annually
any net investment income and net realized capital gains. The U.S. Government
Money Market Fund ordinarily will declare dividends from net investment income
on a daily basis and distribute those dividends monthly. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are due
primarily to post-October losses which may not be recognized until the first day
of the following fiscal year, wash sale losses, which are deferred for tax
purposes, and unrealized gains or losses on open Section 1256 contracts which
are realized, for tax purposes, at August 31, 1999. Certain Funds also utilized
earnings and profits distributed to shareholders on redemption of shares as part
of the dividends paid deduction.
j) USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
k) OTHER - Investment and shareholder transactions are recorded on trade date.
The Funds determine the gain or loss realized from the investment transactions
by comparing the original cost of the security lot sold with the net sales
proceeds. Generally accepted accounting principles require that permanent
financial reporting and tax differences be reclassified in the capital accounts.
3. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds for the period ended August 31, 1999, were
as follows:
<TABLE>
<CAPTION>
U.S. Plus Fund U.S./Short Fund* OTC Plus Fund
--------------- ----------------- ---------------
<S> <C> <C> <C>
Shares sold 32,907,642 7,727,880 42,031,207
Shares issued to holders in
reinvestment of dividends 15,022 668 9,821
Shares redeemed (31,839,083) (7,765,009) (39,661,678)
--------------- ----------------- ---------------
Net increase (decrease) 1,083,581 (36,461) 2,379,350
=============== ================= ===============
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
U.S. Government
Small Cap Money Market
OTC/Short Fund* Plus Fund Fund
---------------- ----------- -----------------
<S> <C> <C> <C>
Shares sold 10,933,064 49,645,812 849,108,149
Shares issued to holders in reinvestment
of dividends 238 -- 729,062
Shares redeemed (10,754,038) (49,011,961) (808,984,862)
---------------- ----------- -----------------
Net increase (decrease) 179,264 633,851 40,852,349
================ =========== =================
</TABLE>
Transactions in shares of the Funds for the period ended August 31, 1998, were
as follows:
<TABLE>
<CAPTION>
OTC Plus
U.S. Plus Fund U.S./Short Fund* Fund
--------------- ----------------- --------------
<S> <C> <C> <C>
Shares sold 12,380,102 2,126,244 28,545,895
Shares issued to holders in
reinvestment of dividends 3,471 -- --
Shares redeemed (12,335,720) (1,962,033) (27,808,359)
--------------- ----------------- --------------
Net increase (decrease) 47,853 164,211 737,536
=============== ================= ==============
</TABLE>
<TABLE>
<CAPTION>
U.S. Government
Money Market
OTC/Short Fund* Fund
---------------- -----------------
<S> <C> <C>
Shares sold 7,046,626 198,593,087
Shares issued to holders in reinvestment of dividends -- 69,908
Shares redeemed (6,589,254) (189,292,611)
---------------- -----------------
Net increase (decrease) 457,372 9,370,384
================ =================
</TABLE>
* Capital share transactions restated to reflect a 1 for 5 reverse stock split
which occurred on June 7, 1999.
30
<PAGE>
4. INVESTMENT TRANSACTIONS
During the period ended August 31, 1999, the aggregate purchases and sales of
investments (excluding short-term investments, options and futures contracts)
were:
<TABLE>
<CAPTION>
U.S. Plus Fund U.S./Short Fund OTC Plus Fund
-------------- --------------- -------------
<S> <C> <C> <C>
Purchases $ 13,120,634 $ 2,820,762 $ 577,416,186
Sales $ -- $ -- $ 531,546,925
</TABLE>
<TABLE>
<CAPTION>
U.S. Government
Small Cap Money Market
OTC/Short Fund Plus Fund Fund
-------------- ----------- ---------------
<S> <C> <C> <C>
Purchases $ 199,085,949 $13,367,159 $ --
Sales $ 216,767,251 $13,361,408 $ --
</TABLE>
During the period ended August 31, 1999, the following Funds wrote the following
options:
<TABLE>
<CAPTION>
U.S. Plus Fund U.S./Short Fund
---------------------------- ----------------------------
Number of Premium Number of Premium
contracts amount contracts amount
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Outstanding at beginning of period 1 $ 7,245 31 $ 66,111
Options written 1,557 4,525,639 398 993,062
Options terminated (1,558) (4,532,884) (429) (1,059,173)
---------- ----------- ---------- -----------
Outstanding at end of period -- $ -- -- $ --
========== =========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
OTC Plus Fund OTC/Short Fund
----------------------------- --------------------------
Number of Premium Number of Premium
contracts amount contracts amount
---------- ------------ ---------- ---------
<S> <C> <C> <C> <C>
Outstanding at beginning of period 21 $ 112,562 -- $ --
Options written 2,055 11,914,997 35 328,549
Options terminated (1,979) (11,200,372) (35) (328,549)
---------- ------------ ---------- ---------
Outstanding at end of period 97 $ 827,187 -- $ --
========== ============ ========== =========
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Small Cap Plus Fund
----------------------------
Number of Premium
contracts amount
---------- -----------
<S> <C> <C>
Outstanding at beginning of period -- $ --
Options written 6,986 5,282,634
Options terminated (6,892) (5,173,320)
---------- -----------
Outstanding at end of period 94 $ 109,314
========== ===========
</TABLE>
Transactions in futures contracts for the period ended August 31, 1999, for the
following Funds were as follows:
<TABLE>
<CAPTION>
U.S. Plus Fund OTC Plus Fund
----------------------------------- -----------------------------------
Number of Aggregate face Number of Aggregate face
contracts value of contracts contracts value of contracts
---------- ------------------ ---------- ------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of
period 2 $ 557,634 -- $ --
Contracts opened 1,733 536,224,730 30 6,153,135
Contracts closed (1,696) (523,806,938) (30) (6,153,135)
---------- ----------------- ---------- -----------------
Outstanding at end of
period 39 $ 12,975,426 -- $ --
========== ================= ========== =================
</TABLE>
<TABLE>
<CAPTION>
Small Cap Plus Fund
-----------------------------------
Number of Aggregate face
contracts value of contracts
---------- ------------------
<S> <C> <C>
Outstanding at beginning of period -- $ --
Contracts opened 2,241 489,025,793
Contracts closed (2,222) (484,869,182)
---------- -----------------
Outstanding at end of period 19 $ 4,156,611
========== =================
</TABLE>
Transactions in short futures contracts for the period ended August 31, 1999,
for the following Funds were as follows:
<TABLE>
<CAPTION>
U.S./Short Fund OTC/Short Fund
----------------------------------- -----------------------------------
Number of Aggregate face Number of Aggregate face
contracts value of contracts contracts value of contracts
---------- ------------------ ---------- ------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of
period 20 $ 5,304,660 -- $ --
Contracts opened 746 223,467,581 82 17,731,191
Contracts closed (762) (227,446,213) (74) (15,838,927)
---------- ----------------- ---------- -----------------
Outstanding at end of
period 4 $ 1,326,028 8 $ 1,892,264
========== ================= ========== =================
</TABLE>
32
<PAGE>
At August 31, 1999, gross unrealized appreciation and depreciation of
investments for tax purposes were as follows:
<TABLE>
<CAPTION>
U.S. Plus Fund U.S./Short Fund OTC Plus Fund
-------------- --------------- --------------
<S> <C> <C> <C>
Appreciation $ 9 $ 117 $ 14,034,259
(Depreciation) (318,891) -- (356,164)
-------------- --------------- --------------
Net unrealized appreciation
(depreciation) on investments $ (318,882) $ 117 $ 13,678,095
============== =============== ==============
</TABLE>
<TABLE>
<CAPTION>
U.S. Government
Small Cap Money Market
OTC/Short Fund Plus Fund Fund
-------------- ---------- ----------------
<S> <C> <C> <C>
Appreciation $ 137 $ 110 $ --
(Depreciation) -- -- --
-------------- ---------- ----------------
Net unrealized appreciation (depreciation)
on investments $ 137 $ 110 $ --
============== ========== ================
</TABLE>
At August 31, 1999, the cost of investments for federal income tax purposes was
$13,520,688, $5,375,728, $64,065,665, $6,275,850, $5,048,005 and $55,137,464 for
the U.S. Plus Fund, U.S./Short Fund, OTC Plus Fund,
OTC/Short Fund, Small Cap Plus Fund and U.S. Government Money Market Fund,
respectively.
At August 31, 1999, the U.S./Short Fund deferred post-October losses of
$1,587,682 and the OTC/Short Fund deferred post-October losses of $720,093.
These amounts may be used to offset future capital gains.
At August 31, 1999, the U.S./Short Fund had accumulated net realized capital
loss carryovers of $1,196,053 expiring in 2007. The Small Cap Plus Fund had
accumulated net realized capital loss carryovers of $2,012,411 expiring in 2007.
To the extent that the Funds realize future net capital gains, those gains will
be offset by any unused capital loss carryover.
5. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have entered into an investment advisory agreement with Rafferty Asset
Management, LLC ("Adviser"). The Adviser receives a fee, computed daily and
payable monthly, at the annual rates presented below as applied to each Fund's
daily net assets. The Adviser has contractually agreed to pay all operating
expenses, through August 31, 2000, in excess of the annual cap on expenses
presented below as applied to each Fund's daily net assets. The Adviser may
recover from the Funds the expenses paid in excess of the annual cap on expenses
for the three previous years, as long as the recovery does not cause any Fund to
exceed such annual cap on expenses. For the period ended August 31, 1999, the
Adviser paid the following expenses by Fund:
<TABLE>
<CAPTION>
U.S. Plus Fund U.S./Short Fund OTC Plus Fund
-------------- --------------- -------------
<S> <C> <C> <C>
Annual Advisory rate 0.75% 0.90% 0.75%
Annual cap on expenses 1.50% 1.65% 1.50%
Expenses paid in excess of annual cap on
expenses--1999 $ 5,548 $ 16,045 $ --
Expenses paid in excess of annual cap on
expenses--1998 $ 96,923 $ 60,726 $ 154,869
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
U.S. Government
Small Cap Money Market
OTC/Short Fund Plus Fund Fund
-------------- --------- ---------------
<S> <C> <C> <C>
Annual Advisory rate 0.90% 0.75% 0.50%
Annual cap on expenses 1.65% 1.50% 1.00%
Expenses paid in excess of annual cap on
expenses--1999 $ 14,372 $ 861 $ 50,746
Expenses paid in excess of annual cap on
expenses--1998 $ 123,475 $ -- $ 92,798
</TABLE>
The Trust has adopted a plan pursuant to Rule 12b-1 under the 1940 Act (the
"12b-1 Plan") for each Fund of the Trust, which authorizes it to pay Rafferty
Capital Markets, Inc. (the "Distributor"), an affiliate of the Adviser, a
distribution and shareholder servicing fee of up to 1.00% of each Fund's average
daily net assets for services to existing Fund shareholders and distribution of
Fund shares. During the period ended August 31, 1999, the OTC Plus Fund and
Small Cap Plus Fund incurred expenses of $45,604 and $39,748, respectively,
pursuant to the 12b-1 Plan.
6. INCOME TAX INFORMATION (Unaudited)
The Funds hereby designate the following amounts as long-term capital gain
distributions for purposes of the dividends paid deduction.
<TABLE>
<S> <C>
U.S. Plus $ 2,616,585
U.S./Short 22,274
OTC Plus 3,370,825
OTC/Short 952
</TABLE>
The amounts above include $2,472,202 and $3,260,604 of earnings and profits
distributed to shareholders on redemptions for the U.S. Plus Fund and OTC Plus
Fund, respectively.
34
<PAGE>
POTOMAC FUNDS
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
Potomac Funds
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, of options written, of futures contracts, of short
futures contracts and of securities sold short, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Potomac U.S.
Plus Fund, the Potomac U.S./Short Fund, the Potomac OTC Plus Fund, the Potomac
OTC/ Short Fund, the Potomac Small Cap Plus Fund, and the Potomac U.S.
Government Money Market Fund (constituting Potomac Funds, hereafter referred to
as the "Funds") at August 31, 1999, the results of each of their operations, the
changes in each of their net assets and the financial highlights for each of the
periods indicated, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
August 31, 1999 by correspondence with the custodian and brokers and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 28, 1999
35
<PAGE>
Investment Adviser
Rafferty Asset Management, LLC
1311 Mamaroneck Avenue
White Plains, NY 10605
Administrator, Transfer Agent, Dividend
Paying Agent & Shareholder Servicing Agent
Firstar Mutual Fund Services, LLC
P.O. Box 1993
Milwaukee, WI 53201-1993
Custodian
Firstar Bank Milwaukee, N.A.
615 East Michigan Street
Milwaukee, WI 53202
Counsel
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036-1800
Independent Accountants
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue
Milwaukee, WI 53202
This report has been prepared for shareholders and may be distributed to others
only if preceded or accompanied by a current prospectus.
A N N U A L
R E P O R T
August 31, 1999
[LOGO]
100 South Royal Street
Alexandria, Virginia 22314
1311 Mamaroneck Avenue
White Plains, NY 10605
(800) 851-0511
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