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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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<PAGE> PAGE 10
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<PAGE> PAGE 11
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<PAGE> PAGE 12
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<PAGE> PAGE 13
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<PAGE> PAGE 14
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<PAGE> PAGE 15
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<PAGE> PAGE 16
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<PAGE> PAGE 17
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<PAGE> PAGE 18
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<PAGE> PAGE 19
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<PAGE> PAGE 20
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<PAGE> PAGE 21
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<PAGE> PAGE 22
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028 F040700 132624
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<PAGE> PAGE 23
028 H000700 0
037 000700 N
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041 000700 N
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042 D000700 0
042 E000700 0
042 F000700 0
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050 000700 N
051 000700 N
052 000700 N
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<PAGE> PAGE 24
056 000700 N
057 000700 N
058 A000700 N
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064 A000700 Y
064 B000700 N
066 A000700 N
067 000700 N
068 A000700 N
068 B000700 N
069 000700 N
070 A010700 Y
070 A020700 Y
070 B010700 N
070 B020700 N
070 C010700 N
070 C020700 N
070 D010700 N
070 D020700 N
070 E010700 N
070 E020700 N
070 F010700 N
070 F020700 N
070 G010700 N
070 G020700 N
070 H010700 N
070 H020700 N
070 I010700 N
<PAGE> PAGE 25
070 I020700 N
070 J010700 Y
070 J020700 N
070 K010700 Y
070 K020700 N
070 L010700 N
070 L020700 N
070 M010700 N
070 M020700 N
070 N010700 Y
070 N020700 N
070 O010700 Y
070 O020700 N
070 P010700 N
070 P020700 N
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070 Q020700 N
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<PAGE> PAGE 26
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<PAGE> PAGE 27
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<PAGE> PAGE 28
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056 000800 N
057 000800 N
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<PAGE> PAGE 29
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070 E010800 N
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070 F020800 Y
070 G010800 Y
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070 H020800 Y
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<PAGE> PAGE 30
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<PAGE> PAGE 31
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SIGNATURE TIMOTHY P. HAGEN
TITLE FINANCIAL OFFICER
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<CIK> 0001040587
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<CIK> 0001040587
<NAME> Potomac Funds
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> Potomac Funds
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<NAME> Potomac Small Cap Plus Fund
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</TABLE>
To the Board of Trustees and Shareholders of
Potomac Funds
In planning and performing our audit of the financial statements and
financial highlights of Potomac Funds (being comprised of the U.S. Plus
Fund, the U.S./Short Fund, the OTC Plus Fund, the OTC/Short Fund, the
Small Cap Plus Fund and the U.S. Government Money Market Fund, hereafter
referred to as the "Funds") for the year ended August 31, 1999, we
considered the Funds' internal control, including control activities for
safeguarding securities, in order to determine our auditing procedures
for the purpose of expressing our opinion on the financial statements and
financial highlights and to comply with the requirements of Form N-SAR,
not to provide assurance on internal control.
The management of the Funds is responsible for establishing and
maintaining internal control. In fulfilling this responsibility,
estimates and judgments by management are required to assess the expected
benefits and related costs of control activities. Generally, control
activities that are relevant to an audit pertain to the entity's
objective of preparing financial statements and financial highlights for
external purposes that are fairly presented in conformity with generally
accepted accounting principles. Those controls include the safeguarding
of assets against unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, error or fraud may
occur and not be detected. Also, projection of any evaluation of internal
control to future periods is subject to the risk that it may become
inadequate because of changes in conditions or that the effectiveness of
the design and operation may deteriorate.
Our consideration of internal control would not necessarily disclose all
matters in internal control that might be material weaknesses under
standards established by the American Institute of Certified Public
Accountants. A material weakness is a condition in which the design or
operation of any specific internal control component does not reduce to a
relatively low level the risk that misstatements caused by error or fraud
in amounts that would be material in relation to the financial statements
and financial highlights being audited may occur and not be detected
within a timely period by employees in the normal course of performing
their assigned functions. However, we noted no matters involving internal
control and its operation, including control activities for safeguarding
securities, that we consider to be material weaknesses as defined above
as of August 31, 1999.
This report is intended solely for the information and use of management
and the Board of Trustees of Potomac Funds and the Securities and
Exchange Commission.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
October 28, 1999
