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Potomac Funds

The Potomac Funds were launched in late 1997.The basic goal was to create innovative investment funds to serve areas of the market neglected by the mainstream financial community. The specific plan was to offer leveraged long index funds and short index funds designed to appeal to sophisticated investors engaged in active management of mutual fund portfolios.

Potomac has been consistently innovative in an attempt to respond to changes in the markets. They have been first in a number of offerings. Their long and short index funds can be used on their own to make long investments to hedge or as part of paired long/short strategies.

The Directional Funds, one of the additional categories represent a slight departure from long and short index funds index funds because the funds do not track a particular index. Like index funds they invest consistent with fundamental, articulated assumption about the investment arena in which the fund is focused. The Dynamic HY Bond Fund, which provides long exposure to the high yield bond market opened in July of 2004 and was the first of their directional funds. The Commodity Bull Fund which seeks to profit from rising commodity prices was the second of the directional funds to market opening in February 2005. The Real Estate Short Fund and the Dollar Bear Fund fall into the category of Directional Funds.

The Sub-Advised Funds second among the additional categories are perhaps the best evidence of their commitment to innovation and to their clients. The Sub-Advisor is generally a wrap manager who uses their funds as a part of their overall investment program. The Sub-Advised Fund allows the wrap manager to implement strategies otherwise unavailable to it and also generally leads to reduced fees to clients of the Sub-Advisor.

Traditional equity index funds are premised on the belief that equity exposure is best sought by investments in categories embodied by indexes rather through the analysis of, and investment in, individual equities. Although the Potomac Plus Funds share the basic premise of traditional index funds, the Potomac Plus Funds are not traditional index funds. Each Potomac Plus Fund attempts to magnify the daily return of it’s’ target index by a specific percentage, except for the Commodity Bull fund which invests in a broad based commodity portfolio.

Potomac’s enhanced indexing strategy produces economically leveraged investment results, creating expected returns greater than those of the target index when the target gains, and losses greater than those of the target index when the target index declines.

They are committed to their clients and make every effort to provide the level of service required to develop long-term relationships with our shareholders.

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