Table of Contents

FORM10-Q

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.20549

(X) QUARTERLY REPORT UNDER SECTION 13 or 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934

OR ( ) TRANSITION REPORTUNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

For the Quarter ended June 30, 2006

Commission File Number 000-50735

SMITH BARNEY POTOMAC FUTURES FUND L.P.

|  |
|--|
|  |  |
|  |

(Exact name ofregistrant as specified in its charter)

|                                |  |  |                     |
|--------------------------------|--|--|---------------------|
| NewYork                        |  |  | 13-3937275          |
| (State or other jurisdictionof |  |  | (I.R.S. Employer    |
| incorporation ororganization)  |  |  | Identification No.) |
|                                |

c/oCitigroup Managed Futures LLC 731 Lexington Avenue - 25th Fl.New York, New York10022

|  |
|--|
|  |  |
|  |

(Address and ZipCode of principal executive offices)

(212)559-2011

|  |
|--|
|  |  |
|  |

(Registrant'stelephone number, including area code)

Indicate by checkmark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subjectto such filing requirements for the past 90 days.

YesX     No    

Indicate by checkmark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of‘‘accelerated filer and large acceleratedfiler’’ in Rule 12b-2 of the Exchange Act (checkone):

Large accelerated filer          Acceleratedfiler          Non Accelerated filer X 

Indicate by check mark whether theregistrant is a shell company (as defined in rule 12b-2 of the ExchangeAct).

Yes         NoX

----

Table of Contents

SMITH BARNEY POTOMACFUTURES FUND L.P.

FORM 10-Q

INDEX

|                               |  |  |        |  |  |                                                                                                                            |  |  |                             |
|-------------------------------|--|--|--------|--|--|----------------------------------------------------------------------------------------------------------------------------|--|--|-----------------------------|
|                          |  |  |   |  |  |                                                                                                                       |  |  | PageNumber                  |
| PARTI - FinancialInformation: |  |  |   |
|                          |  |  | Item1. |  |  | FinancialStatements:                                                                                                       |  |  |                        |
|                          |  |  |   |  |  | Statements ofFinancial Conditionat June 30, 2006 and December 31,2005(unaudited).                                          |  |  | 3                           |
|                          |  |  |   |  |  | Statementsof Income and Expensesand Partners' Capital for the three andsix months ended June 30, 2006 and 2005(unaudited). |  |  | 4                           |
|                          |  |  |   |  |  | Statementsof Cash Flows for thethree and six months ended June 30, 2006 and2005(unaudited).                                |  |  | 5                           |
|                          |  |  |   |  |  | Notesto Financial Statements, including the Financial Statements of CMFCampbell Master FundL.P.(unaudited).                |  |  | 6 – 14  |
|                          |  |  | Item2. |  |  | Management's Discussion andAnalysis of FinancialConditionand Results ofOperations                                          |  |  | 15 – 17 |
|                          |  |  | Item3. |  |  | Quantitative and QualitativeDisclosures about MarketRisk                                                                   |  |  | 18                          |
|                          |  |  | Item4. |  |  | Controls andProcedures.                                                                                                    |  |  | 19                          |
| PARTII - OtherInformation     |  |  | 20     |
|                               |

2

----

Table of Contents

PART I

Item 1.Financial Statements

Smith Barney Potomac Futures FundL.P.Statements of Financial Condition(Unaudited)

|                                                                                                                                          |  |  |             |   |             |                  |  |  |  |   |             |  |
|------------------------------------------------------------------------------------------------------------------------------------------|--|--|-------------|---|-------------|------------------|--|--|--|---|-------------|--|
|                                                                                                                                     |  |  | June30,2006 |   |             | December 31,2005 |
| Assets:                                                                                                                                  |  |  |             |   |        |                  |  |  |  |   |        |  |
| Investmentin Master, at fair value                                                                                                       |  |  |             | $ | 256,375,165 |                  |  |  |  | $ | 231,467,408 |  |
| Cash                                                                                                                                     |  |  |             |   | 19,570      |                  |  |  |  |   | 12,705      |  |
|                                                                                                                                     |  |  |             | $ | 256,394,735 |                  |  |  |  | $ | 231,480,113 |  |
| Liabilities and Partners'Capital:                                                                                                        |  |  |             |   |        |                  |  |  |  |   |        |  |
| Liabilities:                                                                                                                             |  |  |             |   |        |                  |  |  |  |   |        |  |
| Accruedexpenses:                                                                                                                         |  |  |             |   |        |                  |  |  |  |   |        |  |
| Brokeragecommissions                                                                                                                     |  |  |             | $ | 1,388,805   |                  |  |  |  | $ | 1,277,897   |  |
| Management fees                                                                                                                          |  |  |             |   | 424,952     |                  |  |  |  |   | 391,002     |  |
| Other                                                                                                                                    |  |  |             |   | 34,765      |                  |  |  |  |   | 15,656      |  |
| RedemptionsPayable                                                                                                                       |  |  |             |   | 3,913,532   |                  |  |  |  |   | 1,878,905   |  |
|                                                                                                                                     |  |  |             |   | 5,762,054   |                  |  |  |  |   | 3,563,460   |  |
| Partners'Capital:                                                                                                                        |  |  |             |   |        |                  |  |  |  |   |        |  |
| General Partner 729.3902Unit equivalent outstanding in 2006 and 2005                                                                     |  |  |             |   | 1,284,733   |                  |  |  |  |   | 1,325,594   |  |
| Limited Partners 141,563.9702 and124,678.9436 Redeemable Units of Limited Partnership Interestoutstanding in 2006 and 2005,respectively. |  |  |             |   | 249,347,948 |                  |  |  |  |   | 226,591,059 |  |
|                                                                                                                                     |  |  |             |   | 250,632,681 |                  |  |  |  |   | 227,916,653 |  |
|                                                                                                                                     |  |  |             | $ | 256,394,735 |                  |  |  |  | $ | 231,480,113 |  |
|                                                                                                                                          |

See accompanyingNotes to Financial Statements.

3

----

Table of Contents

Smith Barney Potomac Futures FundL.P.Statements of Income and Expenses and Partners'Capital(Unaudited)

|                                                                                                                            |  |  |                           |   |             |                         |  |  |      |   |             |      |  |  |  |   |             |   |  |  |  |   |             |   |
|----------------------------------------------------------------------------------------------------------------------------|--|--|---------------------------|---|-------------|-------------------------|--|--|------|---|-------------|------|--|--|--|---|-------------|---|--|--|--|---|-------------|---|
|                                                                                                                       |  |  | ThreeMonths EndedJune 30, |   |             | Six Months EndedJune30, |
|                                                                                                                       |  |  | 2006                      |   |             | 2005                    |  |  | 2006 |   |             | 2005 |
| Income:                                                                                                                    |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Realizedgains (losses) on closed positions allocated from Master                                                           |  |  |                           | $ | (5,764,106  | )                       |  |  |      | $ | 13,147,431  |      |  |  |  | $ | (9,384,497  | ) |  |  |  | $ | 7,431,813   |   |
| Change in unrealized gains (losses) on open positionsallocated from Master                                                 |  |  |                           |   | (10,109,825 | )                       |  |  |      |   | 11,227,417  |      |  |  |  |   | 8,337,425   |   |  |  |  |   | 12,172,061  |   |
| Interest income allocated from Master                                                                                      |  |  |                           |   | 2,451,243   |                         |  |  |      |   | 959,721     |      |  |  |  |   | 4,527,931   |   |  |  |  |   | 1,741,665   |   |
| Expenses allocated fromMaster                                                                                              |  |  |                           |   | (50,332     | )                       |  |  |      |   | (81,853     | )    |  |  |  |   | (121,476    | ) |  |  |  |   | (167,634    | ) |
| Netgains (losses) on trading of commodityinterest:                                                                         |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Change in unrealized gains (losses) onopenpositions                                                                        |  |  |                           |   | —     |                         |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | (1,582,992  | ) |
|                                                                                                                       |  |  |                           |   | (13,473,020 | )                       |  |  |      |   | 25,252,716  |      |  |  |  |   | 3,359,383   |   |  |  |  |   | 19,594,913  |   |
| Expenses:                                                                                                                  |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Brokeragecommissions                                                                                                       |  |  |                           |   | 4,231,810   |                         |  |  |      |   | 3,049,211   |      |  |  |  |   | 8,287,246   |   |  |  |  |   | 5,777,653   |   |
| Management fees                                                                                                            |  |  |                           |   | 1,294,768   |                         |  |  |      |   | 933,342     |      |  |  |  |   | 2,534,687   |   |  |  |  |   | 1,767,408   |   |
| Incentive fees                                                                                                             |  |  |                           |   | —     |                         |  |  |      |   | —     |      |  |  |  |   | 1,237,713   |   |  |  |  |   | —     |   |
| Other                                                                                                                      |  |  |                           |   | 33,995      |                         |  |  |      |   | 42,386      |      |  |  |  |   | 65,112      |   |  |  |  |   | 65,363      |   |
|                                                                                                                       |  |  |                           |   | 5,560,573   |                         |  |  |      |   | 4,024,939   |      |  |  |  |   | 12,124,758  |   |  |  |  |   | 7,610,424   |   |
| Netincome (loss)                                                                                                           |  |  |                           |   | (19,033,593 | )                       |  |  |      |   | 21,227,777  |      |  |  |  |   | (8,765,375  | ) |  |  |  |   | 11,984,489  |   |
| Additions— Limited Partners                                                                                          |  |  |                           |   | 23,253,000  |                         |  |  |      |   | 15,343,000  |      |  |  |  |   | 48,339,000  |   |  |  |  |   | 42,260,000  |   |
| Redemptions— LimitedPartners                                                                                         |  |  |                           |   | (9,582,457  | )                       |  |  |      |   | (6,215,912  | )    |  |  |  |   | (16,857,597 | ) |  |  |  |   | (9,598,122  | ) |
| Netincrease (decrease) in Partners' Capital                                                                                |  |  |                           |   | (5,363,050  | )                       |  |  |      |   | 30,354,865  |      |  |  |  |   | 22,716,028  |   |  |  |  |   | 44,646,367  |   |
| Partners'Capital, beginning ofperiod                                                                                       |  |  |                           |   | 255,995,731 |                         |  |  |      |   | 168,974,147 |      |  |  |  |   | 227,916,653 |   |  |  |  |   | 154,682,645 |   |
| Partners'Capital, end of period                                                                                            |  |  |                           | $ | 250,632,681 |                         |  |  |      | $ | 199,329,012 |      |  |  |  | $ | 250,632,681 |   |  |  |  | $ | 199,329,012 |   |
| Netasset value per Redeemable Unit (142,293.3604 and 110,617.8983 Unitsoutstanding at June 30, 2006 and 2005,respectively) |  |  |                           | $ | 1,761.38    |                         |  |  |      | $ | 1,801.96    |      |  |  |  | $ | 1,761.38    |   |  |  |  | $ | 1,801.96    |   |
| Netincome (loss) per Redeemable Unit of LimitedPartnership                                                                 |  |  |                           | $ | (131.87     | )                       |  |  |      | $ | 191.90      |      |  |  |  | $ | (56.02      | ) |  |  |  | $ | 102.17      |   |
|                                                                                                                            |

Seeaccompanying Notes to Financial Statements

4

----

Table of Contents

Smith Barney Potomac Futures FundL.P.Statements of Cash Flows(Unaudited)

|                                                                                                  |  |  |                           |   |             |                         |  |  |      |   |             |      |  |  |  |   |             |   |  |  |  |   |              |   |
|--------------------------------------------------------------------------------------------------|--|--|---------------------------|---|-------------|-------------------------|--|--|------|---|-------------|------|--|--|--|---|-------------|---|--|--|--|---|--------------|---|
|                                                                                             |  |  | ThreeMonths EndedJune 30, |   |             | Six Months EndedJune30, |
|                                                                                             |  |  | 2006                      |   |             | 2005                    |  |  | 2006 |   |             | 2005 |
| Cash flows from operatingactivities:                                                             |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Net income(loss)                                                                                 |  |  |                           | $ | (19,033,593 | )                       |  |  |      | $ | 21,227,777  |      |  |  |  | $ | (8,765,375  | ) |  |  |  | $ | 11,984,489   |   |
| Adjustments to reconcile net income (loss) tonet cash provided by (used in) operatingactivities: |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Changesin operating assets andliabilities:                                                       |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Purchase ofInvestment inMaster                                                                   |  |  |                           |   | (23,253,000 | )                       |  |  |      |   | (15,343,000 | )    |  |  |  |   | (48,339,000 | ) |  |  |  |   | (196,942,646 | ) |
| Proceeds from Sale of Investment inMaster                                                        |  |  |                           |   | 11,716,475  |                         |  |  |      |   | 9,432,597   |      |  |  |  |   | 22,262,695  |   |  |  |  |   | 12,940,910   |   |
| Net unrealized (appreciation) depreciation on InvestmentinMaster                                 |  |  |                           |   | 15,924,263  |                         |  |  |      |   | (24,293,270 | )    |  |  |  |   | 1,168,548   |   |  |  |  |   | (17,854,734  | ) |
| (Increase) decrease in restrictedcash                                                            |  |  |                           |   | —     |                         |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | 19,775,170   |   |
| Net unrealized (appreciation) depreciation on openfuturespositions                               |  |  |                           |   | —     |                         |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | 2,504,531    |   |
| Unrealized appreciation on open forwardcontracts                                                 |  |  |                           |   | —     |                         |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | 9,444,675    |   |
| (Increase) decrease in interestreceivable                                                        |  |  |                           |   | —     |                         |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | 205,283      |   |
| Unrealized depreciation on open forwardcontracts                                                 |  |  |                           |   | —     |                         |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | (10,366,214  | ) |
| Accruedexpenses:                                                                                 |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Increase(decrease) in brokerage commissions                                                      |  |  |                           |   | (23,835     | )                       |  |  |      |   | 130,722     |      |  |  |  |   | 110,908     |   |  |  |  |   | 204,148      |   |
| Increase (decrease) in managementfees                                                            |  |  |                           |   | (7,274      | )                       |  |  |      |   | 40,086      |      |  |  |  |   | 33,950      |   |  |  |  |   | 62,510       |   |
| Increase (decrease) in incentivefees                                                             |  |  |                           |   | (1,237,713  | )                       |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | —      |   |
| Increase (decrease) inother                                                                      |  |  |                           |   | (12,008     | )                       |  |  |      |   | (12,901     | )    |  |  |  |   | 19,109      |   |  |  |  |   | 10,077       |   |
| Net cash provided by (used in) operatingactivities                                               |  |  |                           |   | (15,926,685 | )                       |  |  |      |   | (8,817,989  | )    |  |  |  |   | (33,509,165 | ) |  |  |  |   | (168,031,801 | ) |
| Cash flows from financingactivities:                                                             |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Proceeds fromadditions — Limited Partners                                                  |  |  |                           |   | 23,253,000  |                         |  |  |      |   | 15,343,000  |      |  |  |  |   | 48,339,000  |   |  |  |  |   | 42,260,000   |   |
| Payments for redemptions — LimitedPartners                                                 |  |  |                           |   | (7,338,883  | )                       |  |  |      |   | (6,535,765  | )    |  |  |  |   | (14,822,970 | ) |  |  |  |   | (11,461,854  | ) |
| Net cash provided by (used in) financingactivities                                               |  |  |                           |   | 15,914,117  |                         |  |  |      |   | 8,807,235   |      |  |  |  |   | 33,516,030  |   |  |  |  |   | 30,798,146   |   |
| Net change in cash                                                                               |  |  |                           |   | (12,568     | )                       |  |  |      |   | (10,754     | )    |  |  |  |   | 6,865       |   |  |  |  |   | (137,233,655 | ) |
| Cash, at beginning ofperiod                                                                      |  |  |                           |   | 32,138      |                         |  |  |      |   | 82,923      |      |  |  |  |   | 12,705      |   |  |  |  |   | 137,305,824  |   |
| Cash, at end ofperiod                                                                            |  |  |                           | $ | 19,570      |                         |  |  |      | $ | 72,169      |      |  |  |  | $ | 19,570      |   |  |  |  | $ | 72,169       |   |
| Non-CashFinancingActivities:                                                                     |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Contributionsof open commodity futures and forwardpositions                                      |  |  |                           | $ | —     |                         |  |  |      | $ | —     |      |  |  |  | $ | —     |   |  |  |  | $ | (1,582,992   | ) |
|                                                                                                  |

Seeaccompanying Notes to FinancialStatements

5

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

1.    General:

Smith Barney Potomac Futures Fund L.P.(the ‘‘Partnership’’) is a limited partnershipwhich was organized on March 14, 1997 under the partnership laws of theState of New York to engage in the speculative trading of a diversifiedportfolio of commodity interests including futures contracts, optionsand forward contracts. The commodity interests that are traded by thePartnership are volatile and involve a high degree of market risk. ThePartnership was authorized to sell an unlimited number of redeemableunits of Limited Partnership Interest (‘‘RedeemableUnits’’) during its initial offering period. ThePartnership continues to offer Redeemable Units.

CitigroupManaged Futures LLC acts as the general partner (the‘‘General Partner’’) of the Partnership. ThePartnership's commodity broker is Citigroup Global Markets Inc.(‘‘CGM’’). CGM is an affiliate of the GeneralPartner. The General Partner is wholly owned by Citigroup GlobalMarkets Holdings Inc. (‘‘CGMHI’’), which is thesole owner of CGM. CGMHI is a wholly owned subsidiary of CitigroupInc.

Effective January 1, 2005, the Partnership allocatedsubstantially all of its capital to the CMF Campbell Master Fund L.P.,(the ‘‘Master’’), a limited partnershiporganized under the partnership laws of the State of New York. ThePartnership purchased 173,788.6446 Units of the Master with cash equalto $172,205,653 and a contribution of open commodity futures andforward positions with a fair value of $1,582,992. The Master wasformed in order to permit accounts managed by Campbell & Company,Inc. (the ‘‘Advisor’’) using the FME LargePortfolio Program, the Advisor's proprietary trading program, toinvest together in one trading vehicle. The General Partner of thePartnership is the general partner of the Master. Individual and pooledaccounts currently managed by the Advisor, including the Partnership,are permitted to be limited partners of the Master. The General Partnerand the Advisor believe that trading through this master/feederstructure promotes efficiency and economy in the trading process.Expenses to investors as a result of the investment in the Master areapproximately the same and redemption rights are not affected.

Asof June 30, 2006, the Partnership owned approximately 75.0% ofthe Master. It is the Partnership's intention to continue toinvest substantially all of its assets in the Master. The performanceof the Partnership is directly affected by the performance of theMaster. The Master's Statement of Financial Condition, Statementof Income and Expenses and Partners' Capital, Condensed Scheduleof Investments and Statement of Cash Flows are included herein.

The accompanying financial statements are unaudited but, in theopinion of management, include all adjustments, consisting only ofnormal recurring adjustments, necessary for a fair presentation of thePartnership's financial condition at June 30, 2006 and December31, 2005 and the results of its operations and cash flows for the threeand six months ended June 30, 2006 and 2005. These financial statementspresent the results of interim periods and do not include alldisclosures normally provided in annual financial statements. Youshould read these financial statements together with the financialstatements and notes included in the Partnership's Annual Reporton Form 10-K filed with the Securities and Exchange Commission for theyear ended December 31, 2005.

Due to the nature of commoditytrading, the results of operations for the interim periods presentedshould not be considered indicative of the results that may be expectedfor the entire year.

The Master's Statement of FinancialCondition and Condensed Schedule of Investments as of June 30, 2006 andStatement of Income and Expenses and Partners' Capital andStatement of Cash Flows for the three and six months ended June 30,2006 and 2005 are presented below:

6

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

CMF Campbell Master Fund L.P.Statement of Financial Condition(Unaudited)

|                                                                                                 |  |  |             |   |             |                  |  |  |  |   |             |  |
|-------------------------------------------------------------------------------------------------|--|--|-------------|---|-------------|------------------|--|--|--|---|-------------|--|
|                                                                                            |  |  | June30,2006 |   |             | December 31,2005 |
|                                                                                            |  |  |             |   |        |                  |  |  |  |   |        |  |
| Assets:                                                                                         |  |  |             |   |        |                  |  |  |  |   |        |  |
| Equityin commodity futures tradingaccount:                                                      |  |  |             |   |        |                  |  |  |  |   |        |  |
| Cash (restricted$19,668,262 and $42,476,193 in 2006 and 2005,respectively)                      |  |  |             | $ | 340,373,977 |                  |  |  |  | $ | 337,483,460 |  |
| Net unrealized appreciation on open futurespositions                                            |  |  |             |   | 3,692,895   |                  |  |  |  |   | —     |  |
| Unrealized appreciation on open forwardcontracts                                                |  |  |             |   | 6,976,075   |                  |  |  |  |   | 9,103,088   |  |
|                                                                                            |  |  |             |   | 351,042,947 |                  |  |  |  |   | 346,586,548 |  |
| Interestreceivable                                                                              |  |  |             |   | 1,067,246   |                  |  |  |  |   | 779,766     |  |
|                                                                                            |  |  |             |   | 352,110,193 |                  |  |  |  |   | 347,366,314 |  |
| Liabilities andPartners'Capital:                                                                |  |  |             |   |        |                  |  |  |  |   |        |  |
| Liabilities:                                                                                    |  |  |             |   |        |                  |  |  |  |   |        |  |
| Commodityoptions written at fair value (premium received $99,584 in2006)                        |  |  |             | $ | 102,562     |                  |  |  |  | $ | —     |  |
| Netunrealized depreciation on open futures positions                                            |  |  |             |   | —     |                  |  |  |  |   | 607,801     |  |
| Unrealized depreciation on openforward contracts                                                |  |  |             |   | 10,020,897  |                  |  |  |  |   | 19,546,499  |  |
| Accruedexpenses:                                                                                |  |  |             |   |        |                  |  |  |  |   |        |  |
| Other                                                                                           |  |  |             |   | 7,050       |                  |  |  |  |   | 41,475      |  |
| Distributionpayable                                                                             |  |  |             |   | 1,067,246   |                  |  |  |  |   | 779,766     |  |
|                                                                                            |  |  |             |   | 11,197,755  |                  |  |  |  |   | 20,975,541  |  |
| Partners'Capital:                                                                               |  |  |             |   |        |                  |  |  |  |   |        |  |
| Partners'Capital, 299,771.6713 and 286,601.7201 Units outstanding in 2006 and2005, respectively |  |  |             |   | 340,912,438 |                  |  |  |  |   | 326,390,773 |  |
|                                                                                            |  |  |             | $ | 352,110,193 |                  |  |  |  | $ | 347,366,314 |  |
|                                                                                                 |

7

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

CMF Campbell Master Fund L.P.Condensed Schedule of Investments June 30,2006(Unaudited)

|                                                   |  |  |           |   |             |                       |  |  |  |  |        |   |
|---------------------------------------------------|--|--|-----------|---|-------------|-----------------------|--|--|--|--|--------|---|
| Futures ContractsPurchased                        |  |  | FairValue |   |             | % of Partners'Capital |
| Energy                                            |  |  |           | $ | 1,030,937   |                       |  |  |  |  | 0.30   | % |
| Interest RatesNon-U.S.                            |  |  |           |   | (586,848    | )                     |  |  |  |  | (0.17  | ) |
| Indices                                           |  |  |           |   | 39,875      |                       |  |  |  |  | 0.01   |   |
| Metals                                            |  |  |           |   | 634,827     |                       |  |  |  |  | 0.19   |   |
| Total futures contractspurchased                  |  |  |           |   | 1,118,791   |                       |  |  |  |  | 0.33   |   |
|                                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| FuturesContractsSold                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| Energy                                            |  |  |           |   | 146,410     |                       |  |  |  |  | 0.04   |   |
| Interest Rates Non-U.S.                           |  |  |           |   | 2,789,382   |                       |  |  |  |  | 0.82   |   |
| Interest Rates U.S.                               |  |  |           |   | 239,311     |                       |  |  |  |  | 0.07   |   |
| Indices                                           |  |  |           |   | (363,549    | )                     |  |  |  |  | (0.11  | ) |
| Metals                                            |  |  |           |   | (237,450    | )                     |  |  |  |  | (0.07  | ) |
| Total futures contractssold                       |  |  |           |   | 2,574,104   |                       |  |  |  |  | 0.75   |   |
|                                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| UnrealizedAppreciation on ForwardContracts        |  |  |           |   |        |                       |  |  |  |  |   |   |
|                                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| Currencies                                        |  |  |           |   | 6,718,724   |                       |  |  |  |  | 1.97   |   |
| Metals                                            |  |  |           |   | 257,351     |                       |  |  |  |  | 0.08   |   |
| Total unrealized appreciation on forwardcontracts |  |  |           |   | 6,976,075   |                       |  |  |  |  | 2.05   |   |
|                                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| UnrealizedDepreciation on ForwardContracts        |  |  |           |   |        |                       |  |  |  |  |   |   |
|                                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| Currencies                                        |  |  |           |   | (9,735,318  | )                     |  |  |  |  | (2.86  | ) |
| Metals                                            |  |  |           |   | (285,579    | )                     |  |  |  |  | (0.08  | ) |
| Total unrealized depreciation on forwardcontracts |  |  |           |   | (10,020,897 | )                     |  |  |  |  | (2.94  | ) |
|                                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| OptionsWritten                                    |  |  |           |   |        |                       |  |  |  |  |   |   |
|                                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| Currencies                                        |  |  |           |   | (102,562    | )                     |  |  |  |  | (0.03  | ) |
|                                              |  |  |           |   |        |                       |  |  |  |  |   |   |
| Total fairvalue                                   |  |  |           | $ | 545,511     |                       |  |  |  |  | 0.16   | % |
|                                                   |

|  |                                                                                   |
|--|-----------------------------------------------------------------------------------|
|  | Percentages are based onPartners' Capital of the Master unless otherwiseindicated |

8

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

CMF Campbell Master FundL.P.Condensed Schedule of InvestmentsDecember 31,2005(Unaudited)

|                                                   |  |  |           |   |             |                      |  |  |  |  |        |    |
|---------------------------------------------------|--|--|-----------|---|-------------|----------------------|--|--|--|--|--------|----|
|                                              |  |  | FairValue |   |             | % ofPartners'Capital |
| FuturesContractsPurchased                         |  |  |           |   |        |                      |  |  |  |  |   |    |
|                                              |  |  |           |   |        |                      |  |  |  |  |   |    |
| Energy                                            |  |  |           | $ | (2,956,926  | )                    |  |  |  |  | (0.90  | )% |
| Interest RatesNon-U.S.                            |  |  |           |   | 128,183     |                      |  |  |  |  | 0.04   |    |
| InterestRatesU.S.                                 |  |  |           |   | (22,312     | )                    |  |  |  |  | (0.01  | )  |
| Indices                                           |  |  |           |   | (193,762    | )                    |  |  |  |  | (0.06  | )  |
| Metals                                            |  |  |           |   | 73,100      |                      |  |  |  |  | 0.02   |    |
| Total futures contractspurchased                  |  |  |           |   | (2,971,717  | )                    |  |  |  |  | (0.91  | )  |
|                                              |  |  |           |   |        |                      |  |  |  |  |   |    |
| FuturesContractsSold                              |  |  |           |   |        |                      |  |  |  |  |   |    |
|                                              |  |  |           |   |        |                      |  |  |  |  |   |    |
| InterestRates Non-U.S.                            |  |  |           |   | 2,875,170   |                      |  |  |  |  | 0.88   |    |
| Interest RatesU.S.                                |  |  |           |   | (435,695    | )                    |  |  |  |  | (0.14  | )  |
| Indices                                           |  |  |           |   | (75,559     | )                    |  |  |  |  | (0.02  | )  |
| Totalfutures contracts sold                       |  |  |           |   | 2,363,916   |                      |  |  |  |  | 0.72   |    |
|                                              |  |  |           |   |        |                      |  |  |  |  |   |    |
| UnrealizedAppreciation on ForwardContracts        |  |  |           |   |        |                      |  |  |  |  |   |    |
|                                              |  |  |           |   |        |                      |  |  |  |  |   |    |
| Currencies                                        |  |  |           |   | 9,018,132   |                      |  |  |  |  | 2.76   |    |
| Metals                                            |  |  |           |   | 84,956      |                      |  |  |  |  | 0.03   |    |
| Total unrealized appreciation onforward contracts |  |  |           |   | 9,103,088   |                      |  |  |  |  | 2.79   |    |
|                                              |  |  |           |   |        |                      |  |  |  |  |   |    |
| UnrealizedDepreciation on ForwardContracts        |  |  |           |   |        |                      |  |  |  |  |   |    |
|                                              |  |  |           |   |        |                      |  |  |  |  |   |    |
| Currencies                                        |  |  |           |   | (19,539,120 | )                    |  |  |  |  | (5.99  | )  |
| Metals                                            |  |  |           |   | (7,379      | )                    |  |  |  |  | (0.00  | )* |
| Total unrealized depreciation on forwardcontracts |  |  |           |   | (19,546,499 | )                    |  |  |  |  | (5.99  | )  |
|                                              |  |  |           |   |        |                      |  |  |  |  |   |    |
| Totalfair value                                   |  |  |           | $ | (11,051,212 | )                    |  |  |  |  | (3.39  | )% |
|                                                   |

|  |                                                                                   |
|--|-----------------------------------------------------------------------------------|
|  | Percentagesare based on Partners' Capital of the Master unless otherwiseindicated |

|  |                   |
|--|-------------------|
|  | * Due to rounding |

9

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

CMF Campbell Master FundL.P.Statements of Income and Expenses and Partners'Capital(Unaudited)

|                                                                                                                  |  |  |                            |   |             |                         |  |  |      |   |             |      |  |  |  |   |             |   |  |  |  |   |             |   |
|------------------------------------------------------------------------------------------------------------------|--|--|----------------------------|---|-------------|-------------------------|--|--|------|---|-------------|------|--|--|--|---|-------------|---|--|--|--|---|-------------|---|
|                                                                                                             |  |  | ThreeMonths Ended June 30, |   |             | Six Months EndedJune30, |
|                                                                                                             |  |  | 2006                       |   |             | 2005                    |  |  | 2006 |   |             | 2005 |
| Income:                                                                                                          |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Netgains (losses) on trading of commodityinterests:                                                              |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Realized gains(losses) on closed positions and foreign currencies                                                |  |  |                            | $ | (7,644,567  | )                       |  |  |      | $ | 19,502,500  |      |  |  |  | $ | (12,631,342 | ) |  |  |  | $ | 10,328,518  |   |
| Change in unrealized gains (losses) on openpositions                                                             |  |  |                            |   | (13,667,663 | )                       |  |  |      |   | 17,579,466  |      |  |  |  |   | 11,696,307  |   |  |  |  |   | 16,386,889  |   |
|                                                                                                             |  |  |                            |   | (21,312,230 | )                       |  |  |      |   | 37,081,966  |      |  |  |  |   | (935,035    | ) |  |  |  |   | 26,715,407  |   |
|                                                                                                             |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Interestincome                                                                                                   |  |  |                            |   | 3,292,428   |                         |  |  |      |   | 1,481,454   |      |  |  |  |   | 6,166,362   |   |  |  |  |   | 2,747,368   |   |
|                                                                                                             |  |  |                            |   | (18,019,802 | )                       |  |  |      |   | 38,563,420  |      |  |  |  |   | 5,231,327   |   |  |  |  |   | 29,462,775  |   |
|                                                                                                             |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Expenses:                                                                                                        |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Commissionsincluding clearing fees of $42,566, $49,645, $45,242 and $85,463,respectively                         |  |  |                            |   | 61,189      |                         |  |  |      |   | 111,595     |      |  |  |  |   | 153,418     |   |  |  |  |   | 237,149     |   |
| Other                                                                                                            |  |  |                            |   | 6,115       |                         |  |  |      |   | 13,650      |      |  |  |  |   | 12,163      |   |  |  |  |   | 26,850      |   |
|                                                                                                             |  |  |                            |   | 67,304      |                         |  |  |      |   | 125,245     |      |  |  |  |   | 165,581     |   |  |  |  |   | 263,999     |   |
|                                                                                                             |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Net income(loss)                                                                                                 |  |  |                            |   | (18,087,106 | )                       |  |  |      |   | 38,438,175  |      |  |  |  |   | 5,065,746   |   |  |  |  |   | 29,198,776  |   |
| Additions — Limited Partners                                                                               |  |  |                            |   | 23,718,000  |                         |  |  |      |   | 15,343,000  |      |  |  |  |   | 48,804,000  |   |  |  |  |   | 307,113,300 |   |
| Redemptions — LimitedPartners                                                                              |  |  |                            |   | (17,135,309 | )                       |  |  |      |   | (25,505,076 | )    |  |  |  |   | (33,181,719 | ) |  |  |  |   | (32,916,124 | ) |
| Distribution of interest to FeederFunds                                                                          |  |  |                            |   | (3,292,428  | )                       |  |  |      |   | (1,481,454  | )    |  |  |  |   | (6,166,362  | ) |  |  |  |   | (2,747,368  | ) |
| Net increase (decrease) in Partners'Capital                                                                      |  |  |                            |   | (14,796,843 | )                       |  |  |      |   | 26,794,645  |      |  |  |  |   | 14,521,665  |   |  |  |  |   | 300,648,584 |   |
|                                                                                                             |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Partners' Capital,beginning of period                                                                            |  |  |                            |   | 355,709,281 |                         |  |  |      |   | 273,853,939 |      |  |  |  |   | 326,390,773 |   |  |  |  |   | —     |   |
|                                                                                                             |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Partners' Capital,end of period                                                                                  |  |  |                            | $ | 340,912,438 |                         |  |  |      | $ | 300,648,584 |      |  |  |  | $ | 340,912,438 |   |  |  |  | $ | 300,648,584 |   |
|                                                                                                             |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Net asset value per Unit(299,771.6713 and 274,415.1242 Units outstanding at June 30, 2006 and2005, respectively) |  |  |                            | $ | 1,137.24    |                         |  |  |      | $ | 1,095.60    |      |  |  |  | $ | 1,137.24    |   |  |  |  | $ | 1,095.60    |   |
|                                                                                                             |  |  |                            |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Net gain (loss) per Unitof Partners' Interest                                                                    |  |  |                            | $ | (59.66      | )                       |  |  |      | $ | 137.83      |      |  |  |  | $ | 19.14       |   |  |  |  | $ | 105.33      |   |
|                                                                                                                  |

10

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

CMF Campbell Master Fund L.P.Statement of Cash Flows (Unaudited)

|                                                                                                 |  |  |                           |   |             |                         |  |  |      |   |             |      |  |  |  |   |             |   |  |  |  |   |             |   |
|-------------------------------------------------------------------------------------------------|--|--|---------------------------|---|-------------|-------------------------|--|--|------|---|-------------|------|--|--|--|---|-------------|---|--|--|--|---|-------------|---|
|                                                                                            |  |  | ThreeMonths EndedJune 30, |   |             | Six Months EndedJune30, |
|                                                                                            |  |  | 2006                      |   |             | 2005                    |  |  | 2006 |   |             | 2005 |
| Cashflows from operatingactivities:                                                             |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Net income(loss)                                                                                |  |  |                           | $ | (18,087,106 | )                       |  |  |      | $ | 38,438,175  |      |  |  |  | $ | 5,065,746   |   |  |  |  | $ | 29,198,776  |   |
| Adjustmentsto reconcile net income (loss) to net cash provided by (used in)operatingactivities: |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Changesin operating assets andliabilities:                                                      |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| (Increase)decrease in restrictedcash                                                            |  |  |                           |   | 15,102,505  |                         |  |  |      |   | (3,783,924  | )    |  |  |  |   | 22,807,931  |   |  |  |  |   | (35,609,335 | ) |
| (Increase)decrease in net unrealized appreciation on open futurespositions                      |  |  |                           |   | 3,872,090   |                         |  |  |      |   | (3,875,002  | )    |  |  |  |   | (3,692,895  | ) |  |  |  |   | (4,639,786  | ) |
| (Increase)decrease in unrealized appreciation on open forwardcontracts                          |  |  |                           |   | 9,812,434   |                         |  |  |      |   | (6,184,387  | )    |  |  |  |   | 2,127,013   |   |  |  |  |   | 1,611,087   |   |
| (Increase)decrease in interestreceivable                                                        |  |  |                           |   | (20,541     | )                       |  |  |      |   | (19,265     | )    |  |  |  |   | (287,480    | ) |  |  |  |   | (515,922    | ) |
| Increase(decrease) in commodity options written at fair value                                   |  |  |                           |   | 73,425      |                         |  |  |      |   | —     |      |  |  |  |   | 102,562     |   |  |  |  |   | —     |   |
| Increase(decrease) in net unrealized depreciation on open futurespositions                      |  |  |                           |   | —     |                         |  |  |      |   | —     |      |  |  |  |   | (607,801    | ) |  |  |  |   | —     |   |
| Increase(decrease) in unrealized depreciation on open forwardcontracts                          |  |  |                           |   | (49,331     | )                       |  |  |      |   | (7,520,077  | )    |  |  |  |   | (9,525,602  | ) |  |  |  |   | (13,358,190 | ) |
| Accruedexpenses:                                                                                |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Increase(decrease) inother                                                                      |  |  |                           |   | (40,473     | )                       |  |  |      |   | 13,650      |      |  |  |  |   | (34,425     | ) |  |  |  |   | 26,850      |   |
| Netcash provided by (used in) operatingactivities                                               |  |  |                           |   | 10,663,003  |                         |  |  |      |   | 17,069,170  |      |  |  |  |   | 15,955,049  |   |  |  |  |   | (23,286,520 | ) |
| Cashflows from financingactivities:                                                             |  |  |                           |   |        |                         |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Proceeds fromadditions                                                                          |  |  |                           |   | 23,718,000  |                         |  |  |      |   | 15,343,000  |      |  |  |  |   | 48,804,000  |   |  |  |  |   | 304,246,441 |   |
| Paymentsforredemptions                                                                          |  |  |                           |   | (17,135,309 | )                       |  |  |      |   | (25,505,076 | )    |  |  |  |   | (33,181,719 | ) |  |  |  |   | (32,916,124 | ) |
| Distributionof interest to feederfunds                                                          |  |  |                           |   | (3,271,887  | )                       |  |  |      |   | (1,462,189  | )    |  |  |  |   | (5,878,882  | ) |  |  |  |   | (2,231,446  | ) |
| Netcash provided by (used in) financingactivities                                               |  |  |                           |   | 3,310,804   |                         |  |  |      |   | (11,624,265 | )    |  |  |  |   | 9,743,399   |   |  |  |  |   | 269,098,871 |   |
| Netchange incash                                                                                |  |  |                           |   | 13,973,807  |                         |  |  |      |   | 5,444,905   |      |  |  |  |   | 25,698,448  |   |  |  |  |   | 245,812,351 |   |
| Unrestrictedcash, at beginning ofperiod                                                         |  |  |                           |   | 306,731,908 |                         |  |  |      |   | 240,367,446 |      |  |  |  |   | 295,007,267 |   |  |  |  |   | —     |   |
| Unrestrictedcash, at end ofperiod                                                               |  |  |                           | $ | 320,705,715 |                         |  |  |      | $ | 245,812,351 |      |  |  |  | $ | 320,705,715 |   |  |  |  | $ | 245,812,351 |   |
| Noncash financing activities:Contribution of open commodity futuresand forwardspositions        |  |  |                           | $ | —     |                         |  |  |      | $ | —     |      |  |  |  | $ | —     |   |  |  |  | $ | 2,866,859   |   |
|                                                                                                 |

11

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

2.    Financial Highlights:

Changes in Net Asset Value per Redeemable Unit of LimitedPartnership Interest for the three and six months ended June 30, 2006and 2005 were asfollows:

|                                                  |  |  |                           |   |          |                         |  |  |      |   |          |      |  |  |  |   |          |   |  |  |  |   |          |   |
|--------------------------------------------------|--|--|---------------------------|---|----------|-------------------------|--|--|------|---|----------|------|--|--|--|---|----------|---|--|--|--|---|----------|---|
|                                             |  |  | ThreeMonths EndedJune 30, |   |          | Six Months EndedJune30, |
|                                             |  |  | 2006                      |   |          | 2005                    |  |  | 2006 |   |          | 2005 |
| Net realized and unrealized gains(losses)*       |  |  |                           | $ | (139.61  | )                       |  |  |      | $ | 192.12   |      |  |  |  | $ | (60.65   | ) |  |  |  | $ | 103.20   |   |
| Interest income allocated from Master            |  |  |                           |   | 16.99    |                         |  |  |      |   | 8.73     |      |  |  |  |   | 32.58    |   |  |  |  |   | 16.23    |   |
| Expenses**                                       |  |  |                           |   | (9.25    | )                       |  |  |      |   | (8.95    | )    |  |  |  |   | (27.95   | ) |  |  |  |   | (17.26   | ) |
| Increase (decrease) for the period               |  |  |                           |   | (131.87  | )                       |  |  |      |   | 191.90   |      |  |  |  |   | (56.02   | ) |  |  |  |   | 102.17   |   |
| Net Assetper Redeemable Unit, beginning ofperiod |  |  |                           |   | 1,893.25 |                         |  |  |      |   | 1,610.06 |      |  |  |  |   | 1,817.40 |   |  |  |  |   | 1,699.79 |   |
| NetAsset per Redeemable Unit, end ofperiod       |  |  |                           | $ | 1,761.38 |                         |  |  |      | $ | 1,801.96 |      |  |  |  | $ | 1,761.38 |   |  |  |  | $ | 1,801.96 |   |
|                                                  |

|   |                                                                                  |
|---|----------------------------------------------------------------------------------|
| * | IncludesPartnership brokerage commissions and expenses allocated from theMaster. |

|    |                                                                                   |
|----|-----------------------------------------------------------------------------------|
| ** | Excludes Partnershipbrokerage commissions and expenses allocated from the Master. |

|                                             |  |  |                           |  |         |                         |  |  |      |  |         |      |  |  |  |  |        |    |  |  |  |  |         |    |
|---------------------------------------------|--|--|---------------------------|--|---------|-------------------------|--|--|------|--|---------|------|--|--|--|--|--------|----|--|--|--|--|---------|----|
|                                        |  |  | ThreeMonths EndedJune 30, |  |         | Six Months EndedJune30, |
|                                        |  |  | 2006                      |  |         | 2005                    |  |  | 2006 |  |         | 2005 |
| Ratioto average netassets:***               |  |  |                           |  |    |                         |  |  |      |  |    |      |  |  |  |  |   |    |  |  |  |  |    |    |
| Net investmentloss before incentivefees**** |  |  |                           |  | (5.0    | )%                      |  |  |      |  | (7.1    | )%   |  |  |  |  | (5.3   | )% |  |  |  |  | (7.0    | )% |
| Operatingexpenses                           |  |  |                           |  | 8.8     | %                       |  |  |      |  | 9.2     | %    |  |  |  |  | 9.0    | %  |  |  |  |  | 9.1     | %  |
| Incentivefees                               |  |  |                           |  | — |                         |  |  |      |  | — |      |  |  |  |  | 0.5    | %  |  |  |  |  | — |    |
| Totalexpenses                               |  |  |                           |  | 8.8     | %                       |  |  |      |  | 9.2     | %    |  |  |  |  | 9.5    | %  |  |  |  |  | 9.1     | %  |
| Totalreturn:                                |  |  |                           |  |    |                         |  |  |      |  |    |      |  |  |  |  |   |    |  |  |  |  |    |    |
| Total return beforeincentivefees            |  |  |                           |  | (7.0    | )%                      |  |  |      |  | 11.9    | %    |  |  |  |  | (2.6   | )% |  |  |  |  | 6.0     | %  |
| Incentivefees                               |  |  |                           |  | — |                         |  |  |      |  | — |      |  |  |  |  | (0.5   | )% |  |  |  |  | — |    |
| Totalreturn after incentivefees             |  |  |                           |  | (7.0    | )%                      |  |  |      |  | 11.9    | %    |  |  |  |  | (3.1   | )% |  |  |  |  | 6.0     | %  |
|                                             |

|     |                                       |
|-----|---------------------------------------|
| *** | Annualized(other than incentive fees) |

|      |                                                                  |
|------|------------------------------------------------------------------|
| **** | Interest income less total expenses(exclusive of incentive fees) |

The above ratios mayvary for individual investors based on the timing of capitaltransactions during the period. Additionally, these ratios arecalculated for the Limited Partner class using the LimitedPartners' share of income, expenses and average net assets.

12

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

Financial Highlights of theMaster:

|                                             |  |  |                           |   |          |                        |  |  |      |   |          |      |  |  |  |   |          |   |  |  |  |   |          |   |
|---------------------------------------------|--|--|---------------------------|---|----------|------------------------|--|--|------|---|----------|------|--|--|--|---|----------|---|--|--|--|---|----------|---|
|                                        |  |  | ThreeMonths EndedJune 30, |   |          | Six MonthsEndedJune30, |
|                                        |  |  | 2006                      |   |          | 2005                   |  |  | 2006 |   |          | 2005 |
| Netrealized and unrealized gains(losses)*   |  |  |                           | $ | (70.54   | )                      |  |  |      | $ | 132.61   |      |  |  |  | $ | (1.55    | ) |  |  |  | $ | 95.69    |   |
| Interestincome                              |  |  |                           |   | 10.90    |                        |  |  |      |   | 5.27     |      |  |  |  |   | 20.73    |   |  |  |  |   | 9.73     |   |
| Expenses**                                  |  |  |                           |   | (0.02    | )                      |  |  |      |   | (0.05    | )    |  |  |  |   | (0.04    | ) |  |  |  |   | (0.09    | ) |
| Increase(decrease) for theperiod            |  |  |                           |   | (59.66   | )                      |  |  |      |   | 137.83   |      |  |  |  |   | 19.14    |   |  |  |  |   | 105.33   |   |
| Distributions                               |  |  |                           |   | (10.90   | )                      |  |  |      |   | (5.27    | )    |  |  |  |   | (20.73   | ) |  |  |  |   | (9.73    | ) |
| NetAsset Value per Unit, beginning ofperiod |  |  |                           |   | 1,207.80 |                        |  |  |      |   | 963.04   |      |  |  |  |   | 1,138.83 |   |  |  |  |   | 1,000.00 |   |
| NetAsset Value per Unit, end ofperiod       |  |  |                           | $ | 1,137.24 |                        |  |  |      | $ | 1,095.60 |      |  |  |  | $ | 1,137.24 |   |  |  |  | $ | 1,095.60 |   |
| *Includesbrokeragecommissions               |  |  |                           |   |     |                        |  |  |      |   |     |      |
| **Excludesbrokeragecommissions              |  |  |                           |   |     |                        |  |  |      |   |     |      |
| Ratiosto average net assets:***             |  |  |                           |   |     |                        |  |  |      |   |     |      |  |  |  |   |     |   |  |  |  |   |     |   |
| Net investment gain****                     |  |  |                           |   | 3.7      | %                      |  |  |      |   | 1.7      | %    |  |  |  |   | 3.6      | % |  |  |  |   | 2.5      | % |
| Operatingexpense                            |  |  |                           |   | 0.1      | %                      |  |  |      |   | 0.2      | %    |  |  |  |   | 0.1      | % |  |  |  |   | 0.2      | % |
| Totalreturn                                 |  |  |                           |   | (4.9     | )%                     |  |  |      |   | 14.3     | %    |  |  |  |   | 1.7      | % |  |  |  |   | 10.5     | % |
|                                             |

|     |            |
|-----|------------|
| *** | Annualized |

|      |                                    |
|------|------------------------------------|
| **** | Interestincome less total expenses |

|  |                                                                                                                 |
|--|-----------------------------------------------------------------------------------------------------------------|
|  | The above ratios may varyfor individual investors based on the timing of capital transactionsduring the period. |

3.    Trading Activities:

ThePartnership was formed for the purpose of trading contracts in avariety of commodity interests, including derivative financialinstruments and derivative commodity instruments. The results of thePartnership's trading activities are shown in the Statements ofIncome and Expenses and Partners' Capital and are discussed inItem 2, Management's Discussion and Analysis of FinancialCondition and Results of Operations.

The Customer Agreementbetween the Partnership and CGM and the Master and CGM gives thePartnership and the Master, respectively, the legal right to netunrealized gains and losses on open futures positions.

All ofthe commodity interests owned by the Master in 2006 (and owned by thePartnership in 2005) are held for trading purposes. The average fairvalues of these interests during the six and twelve months ended June30, 2006 and December 31, 2005, based on a monthly calculation, were$41,761 and $11,094,108, respectively. The fair values of thesecommodity interests, including options written thereon, if applicable,at June 30, 2006 and December 31, 2005, were $545,511 and$(11,051,212), respectively. Fair values for exchange traded commodityfutures and options are based on quoted market prices for those futuresand options. Fair values for all other financial instruments for whichmarket quotations are not readily available are based on calculationsapproved by the General Partner.

13

----

Table of Contents

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements June 30, 2006 (Unaudited)

4.    Financial Instrument Risks:

In the normal course of its business, the Partnership through itsinvestment in the Master, is party to financial instruments withoff-balance sheet risk, including derivative financial instruments andderivative commodity instruments. These financial instruments mayinclude forwards, futures and options, whose values are based upon anunderlying asset, index, or reference rate, and generally representfuture commitments to exchange currencies or cash flows, to purchase orsell other financial instruments at specific terms at specified futuredates, or, in the case of derivative commodity instruments, to have areasonable possibility to be settled in cash, through physical deliveryor with another financial instrument. These instruments may be tradedon an exchange or over-the-counter (‘‘OTC’’).Exchange-traded instruments are standardized and include futures andcertain option contracts. OTC contracts are negotiated betweencontracting parties and include forwards and certain options.

Each of these instruments is subject to various risks similar tothose related to the underlying financial instruments including marketand credit risk. In general, the risks associated with OTC contractsare greater than those associated with exchange-traded instrumentsbecause of the greater risk of default by the counterparty to an OTCcontract.

Market risk is the potential for changes in the valueof the financial instruments traded by the Partnership/Master due tomarket changes, including interest and foreign exchange rate movementsand fluctuations in commodity or security prices. Market risk isdirectly impacted by the volatility and liquidity in the markets inwhich the related underlying assets are traded.

Credit risk isthe possibility that a loss may occur due to the failure of acounterparty to perform according to the terms of a contract. Creditrisk with respect to exchange-traded instruments is reduced to theextent that an exchange or clearing organization acts as a counterpartyto the transactions. The Partnership's/Master's risk ofloss in the event of counterparty default is typically limited to theamounts recognized as unrealized appreciation in the statements offinancial condition and not represented by the contract or notionalamounts of the instruments. The Partnership, through its investment inthe Master, has credit risk and concentration risk because the solecounterparty or broker with respect to the Master's assets isCGM.

The General Partner monitors and controls thePartnership's/Master's risk exposure on a daily basisthrough financial, credit and risk management monitoring systems, andaccordingly believes that it has effective procedures for evaluatingand limiting the credit and market risks to which thePartnership/Master is subject. These monitoring systems allow theGeneral Partner to statistically analyze actual trading results withrisk-adjusted performance indicators and correlation statistics. Inaddition, on-line monitoring systems provide account analysis offutures, forward and option positions by sector, margin requirements,gain and loss transactions and collateral positions.

Themajority of these instruments mature within one year of June 30, 2006.However, due to the nature of the Partnership's/Master'sbusiness, these instruments may not be held tomaturity.

14

----

Table of Contents

Item2.    Management's Discussion and Analysis of FinancialCondition and Results of Operations.

Liquidity andCapital Resources

The Partnership does notengage in the sale of goods or services. Its only assets are itsinvestment in the Master and cash. The Master does not engage in thesale of goods or services. Because of the low margin deposits normallyrequired in commodity futures trading, relatively small price movementsmay result in substantial losses to the Partnership/Master. Whilesubstantial losses could lead to a substantial decrease in liquidity,no such losses occurred in the second quarter of 2006.

The Partnership's capital consists of capitalcontributions, as increased or decreased by its investment in theMaster, expenses, interest income, redemptions of Redeemable Units anddistributions of profits, if any.

For the six months ended June30, 2006, Partnership capital increased 10.0% from $227,916,653to $250,632,681. This increase was attributable to the additional salesof 26,193.7479 Redeemable Units of Limited Partnership Interesttotaling $48,339,000, which was partially offset by a net loss fromoperations of $8,765,375, coupled with the redemption of 9,308.7213Redeemable Units of Limited Partnership Interest totaling $16,857,597.Future redemptions can impact the amount of funds available forinvestment in commodity contract positions in subsequent periods.

The Master's capital consists of the capitalcontributions of the partners as increased or decreased by realizedand/or unrealized gains or losses on commodity futures trading,expenses, interest income, redemptions of Units and distributions ofprofits, if any.

For the six months ended June 30, 2006, theMaster's capital increased 4.4% from $326,390,773 to$340,912,438. This increase was attributable to a net gain fromoperations of $5,065,746 coupled with the additional sales of41,705.1956 units totaling $48,804,000, which was partially offset bythe redemption of 28,535.2444 Units totaling $33,181,719 anddistribution of interest totaling $6,166,362 to the limited partners ofthe Master. Future redemptions can impact the amount of funds availablefor investments in commodity contract positions in subsequentperiods.

Critical Accounting Policies

The preparation of financial statements in conformity withaccounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities, disclosures ofcontingent assets and liabilities at the date of the financialstatements and reported amounts of revenues and expenses during thereporting period. Actual results could differ from these estimates.

All commodity interests of the Master (including derivativefinancial instruments and derivative commodity instruments) are usedfor trading purposes. The commodity interests are recorded on tradedate and open contracts are recorded in the statements of financialcondition at fair value on the last business day of the period, whichrepresents market value for those commodity interests for which marketquotations are readily available or other measures of fair value deemedappropriate by management of the General Partner for those commodityinterests and foreign currencies for which market quotations are notreadily available. Investments in commodity interests denominated inforeign currencies are translated into U.S. dollars at the exchangerates prevailing on the last business day of the period. Realized gains(losses) and changes in unrealized values on open positions arerecognized in the period in which the contract is closed or the changesoccur and are included in net gains (losses) on trading of commodityinterests.

The value of the Partnership's investment in theMaster reflects the Partnership's proportional interest in thePartners' capital of the Master. All of the income and expensesand unrealized and realized gains and losses from the commoditytransactions of the Master are allocated pro rata among the investorsat the time of such determination.

Foreign currency contractsare those contracts where the Partnership/Master agrees to receive ordeliver a fixed quantity of foreign currency for an agreed-upon priceon an agreed future date. Foreign currency contracts are valued daily,and the Partnership's/Master's net equity therein,representing 

15

----

Table of Contents

unrealized gain or loss on the contracts asmeasured by the difference between the forward foreign exchange ratesat the dates of entry into the contracts and the forward rates at thereporting date, is included in the statements of financial condition.Realized gains (losses) and changes in unrealized values on foreigncurrency contracts are recognized in the period in which the contractis closed or the changes occur and are included in the Statements ofIncome and Expenses and Partners' Capital.

Resultsof Operations

During the Partnership's secondquarter of 2006 the net asset value per unit decreased 7.0% from$1,893.25 to $1,761.38 as compared to an increase of 11.9% inthe second quarter of 2005. The Partnership experienced a net tradingloss before brokerage commissions and related fees in the secondquarter of 2006 of $15,873,931. Losses were primarily attributable tothe trading of commodity futures in currencies and indices and werepartially offset by gains in energy, U.S. and non-U.S. interest ratesand metals. The Partnership experienced a net trading gain beforebrokerage commissions and related fees in the second quarter of 2005 of$24,374,848. Gains were primarily attributable to the trading ofcommodity futures in currencies and non-U.S. interest rates and werepartially offset by losses in energy, U.S. interest rates, metals andindices.

During the Partnership's six months ended June30, 2006 the net asset value per Redeemable unit decreased 3.1%from $1,817.40 to $1,761.38 as compared to an increase of 6.0%for the six months ended June 30, 2005. The Partnership experienced anet trading loss before brokerage commissions and related fees for thesix months ended June 30, 2006 of $1,047,072. Losses were primarilyattributable to the trading of commodity futures in currencies andnon-U.S. interest rates, and were partially offset by gains in energy,U.S. interest rates, indices and metals. The Partnership experienced anet trading gain before brokerage commissions and related fees duringthe six months ended June 30, 2005 of $19,603,874. Gains were primarilyattributable to the trading of commodity futures in currencies, energy,U.S. and non-U.S. interest rates and metals and were partially offsetby losses in indices.

The second quarter 2006 was challenging forthe Partnership's Advisor as both financial and commodity marketsentered a highly volatile period. Gains in interest rates, metals andenergy trading were not sufficient to offset substantial losses incurrency and stock index trading.

Energy trading was profitableas long positions were helped by rising petroleum prices supported bycontinuing geopolitical disturbance and short positions benefited fromdeteriorating fundamentals in natural gas. Trends in the metal sectorextended from the first quarter and remained strong for the first halfof the second quarter. The substantial gains accumulated from recordgold, silver and base metal price trends were more than enough to coverlosses during the metals correction in May. Trading in global fixedincome markets was also profitable as global rates continued to rise tocombat inflation pressure.

The lack of direction in the currencysector was a result of speculation relating to U.S. interest ratepolicy coupled global inflation concerns. Losses in the equity sectorwere attributable to global economic slowdown as most of the majorequity indices experienced a material correction in May after reachingmulti-year highs.

Commodity futures markets are highly volatile.The potential for broad and rapid price fluctuations increases therisks involved in commodity trading, but also increases the possibilityof profit. The profitability of the Partnership (and the Master)depends on the existence of major price trends and the ability of theAdvisor to correctly identify those price trends. Price trends areinfluenced by, among other things, changing supply and demandrelationships, weather, governmental, agricultural, commercial andtrade programs and policies, national and international political andeconomic events and changes in interest rates. To the extent thatmarket trends exist and the Advisor is able to identify them, thePartnership (and the Master) expects to increase capital throughoperations.

Interest income on 80% of thePartnership's daily average equity allocated to it by the Masterwas earned at a 30-day U.S. Treasury bill rate determined weekly by CGMbased on the average non-competitive yield on 3-month U.S. Treasurybills maturing in 30 days. CGM may continue to maintain theMaster's assets in cash and/or place all of the Master'sassets in 90-day Treasury bills and pay the Partnership 80% ofthe interest earned on the Treasury bills purchased. CGM will retain20% of any 

16

----

Table of Contents

interest earned on Treasury bills. Interestincome allocated from the Master for the three and six months endedJune 30, 2006 increased by $1,491,522 and $2,786,266, respectively ascompared to the corresponding periods in 2005. The increase in interestincome is primarily due to higher net assets and higher interest ratesduring the three and six months ended June 30, 2006 as compared to thecorresponding periods in 2005.

Brokerage commissions arecalculated on the Partnership's adjusted net asset value on thelast day of each month and are affected by trading performance,additions and redemptions. Accordingly, they must be analyzed inrelation to the fluctuations in the monthly net asset values.Commissions for the three and six months ended June 30, 2006 increasedby $1,182,599 and $2,509,593, respectively as compared to thecorresponding periods in 2005. The increase in brokerage commissionsand fees is due to higher net assets during the three and six monthsended June 30, 2006 as compared to the corresponding periods in2005.

Management fees are calculated as a percentage of thePartnership's net asset value as of the end of each month and areaffected by trading performance, additions and redemptions. Managementfees for the three and six months ended June 30, 2006 increased by$361,426 and $767,279, respectively as compared to the correspondingperiods in 2005. The increase in management fees is due to higher netassets during the three and six months ended  June 30, 2006 ascompared to the corresponding period in 2005.

Incentive fees arebased on the new trading profits generated by the Advisor at the end ofthe quarter as defined in the advisory agreements between thePartnership, the General Partner and the Advisor. Trading performancefor the three and six months ended June 30, 2006 resulted in incentivefees of $0 and $1,237,713, respectively. There were no incentive feesearned for the three and six months ended June  30,2005.

17

----

Table of Contents

Item. 3    Quantitative and QualitativeDisclosures about Market Risk

All of the Partnership'sassets are subject to the risk of trading loss through its investmentin the Master. The Master is a speculative commodity pool. The marketsensitive instruments held by it are acquired for speculative tradingpurposes, and all or substantially all of the Master's assets aresubject to the risk of trading loss. Unlike an operating company, therisk of market sensitive instruments is integral, not incidental, tothe Master's main line of business.

Market movementsresult in frequent changes in the fair market value of theMaster's open positions and, consequently, in its earnings andcash flow. The Master's market risk is influenced by a widevariety of factors, including the level and volatility of interestrates, exchange rates, equity price levels, the market value offinancial instruments and contracts, the diversification effects amongthe Master's open positions and the liquidity of the markets inwhich it trades.

The Master rapidly acquires and liquidates bothlong and short positions in a wide range of different markets.Consequently, it is not possible to predict how a particular futuremarket scenario will affect performance, and the Master's pastperformance is not necessarily indicative of its future results.

Value at Risk is a measure of the maximum amount which the Mastercould reasonably be expected to lose in a given market sector. However,the inherent uncertainty of the Master's speculative trading andthe recurrence in the markets traded by the Master of market movementsfar exceeding expectations could result in actual trading ornon-trading losses far beyond the indicated Value at Risk or theMaster's experience to date (i.e., ‘‘risk ofruin’’). In light of the foregoing as well as the risks anduncertainties intrinsic to all future projections, the inclusion of thequantification in this section should not be considered to constituteany assurance or representation that the Master's losses in anymarket sector will be limited to Value at Risk or by the Master'sattempts to manage its market risk.

Exchange maintenance marginrequirements have been used by the Master as the measure of its Valueat Risk. Maintenance margin requirements are set by exchanges to equalor exceed the maximum losses reasonably expected to be incurred in thefair value of any given contract in 95%-99% of anyone-day interval. Maintenance margin has been used rather than the moregenerally available initial margin, because initial margin includes acredit risk component, which is not relevant to Value at Risk.

The following table indicates the trading Value at Risk associatedwith the Master's open positions by market category as of June30, 2006 and the highest, lowest and average values during the threemonths ended June 30, 2006. All open position trading risk exposures ofthe Master have been included in calculating the figures set forthbelow. As of June 30, 2006, the Master's total capitalization was$340,912,438. There have been no material changes in the trading Valueat Risk information previously disclosed in the Partnership'sAnnual Report on Form 10-K for the year ended December 31, 2005.

June 30, 2006(Unaudited)

|                                  |  |  |              |   |            |                          |  |  |                                 |  |        |                 |  |  |                      |   |            |  |  |  |  |   |           |  |  |  |  |   |           |  |
|----------------------------------|--|--|--------------|---|------------|--------------------------|--|--|---------------------------------|--|--------|-----------------|--|--|----------------------|---|------------|--|--|--|--|---|-----------|--|--|--|--|---|-----------|--|
|                             |  |  |         |   |            |                     |  |  | ThreeMonths ended June 30, 2006 |
| Market Sector                    |  |  | Value atRisk |   |            | % of TotalCapitalization |  |  | HighValue at Risk               |  |        | LowValue atRisk |  |  | AverageValue atRisk* |
| Currencies:                      |  |  |              |   |       |                          |  |  |                                 |  |   |                 |  |  |                      |   |       |  |  |  |  |   |      |  |  |  |  |   |      |  |
| —OTC Traded Contracts      |  |  |              | $ | 6,224,029  |                          |  |  |                                 |  | 1.83   | %               |  |  |                      | $ | 16,376,992 |  |  |  |  | $ | 5,102,819 |  |  |  |  | $ | 8,637,465 |  |
| Energy                           |  |  |              |   | 3,042,575  |                          |  |  |                                 |  | 0.89   | %               |  |  |                      |   | 3,933,850  |  |  |  |  |   | 1,491,285 |  |  |  |  |   | 2,679,025 |  |
| Interest Rates U.S.              |  |  |              |   | 2,309,162  |                          |  |  |                                 |  | 0.68   | %               |  |  |                      |   | 6,692,051  |  |  |  |  |   | 2,309,162 |  |  |  |  |   | 4,649,329 |  |
| Interest RatesNon-U.S.           |  |  |              |   | 4,463,586  |                          |  |  |                                 |  | 1.31   | %               |  |  |                      |   | 7,579,057  |  |  |  |  |   | 2,772,722 |  |  |  |  |   | 5,654,588 |  |
| Metals                           |  |  |              |   |       |                          |  |  |                                 |  |   |                 |  |  |                      |   |       |  |  |  |  |   |      |  |  |  |  |   |      |  |
| —Exchange Traded Contracts |  |  |              |   | 174,150    |                          |  |  |                                 |  | 0.05   | %               |  |  |                      |   | 453,600    |  |  |  |  |   | —   |  |  |  |  |   | 306,450   |  |
| — OTC TradedContracts      |  |  |              |   | 1,212,500  |                          |  |  |                                 |  | 0.35   | %               |  |  |                      |   | 1,612,500  |  |  |  |  |   | 439,700   |  |  |  |  |   | 707,233   |  |
| Indices                          |  |  |              |   | 2,233,564  |                          |  |  |                                 |  | 0.66   | %               |  |  |                      |   | 7,293,805  |  |  |  |  |   | 1,883,142 |  |  |  |  |   | 3,871,154 |  |
| Total                            |  |  |              | $ | 19,659,566 |                          |  |  |                                 |  | 5.77   | %               |  |  |                      |   |       |  |  |  |  |   |      |  |  |  |  |   |      |  |
|                                  |

|  |                                      |
|--|--------------------------------------|
|  | *Average of Month-end Values at Risk |

18

----

Table of Contents

Item 4.    Controls and Procedures

The General Partner of the Partnership, with the participation ofthe General Partner's Chief Executive Officer and Chief FinancialOfficer, has evaluated the effectiveness of the design and operation ofits disclosure controls and procedures (as defined in Rules 13a-15(e)and 15d-15(e) of the Exchange Act) with respect to the Partnership asof the end of the period covered by the report, and based on thisevaluation, has concluded that these disclosure controls and proceduresare effective. There was no change in the Partnership's internalcontrol over financial reporting during the period covered by thisreport that has materially affected, or is reasonably likely tomaterially affect, the Partnership's internal control overfinancial reporting.

19

----

Table of Contents

PART II. OTHERINFORMATION

Item 1.    Legal Proceedings

Thefollowing information supplements and amends our discussion set forthunder Part I, Item 3 ‘‘Legal Proceedings’’ inthe Partnership's Annual Report on Form 10-K for the year endedDecember 31, 2005 and under Part II, Item I, ‘‘LegalProceedings’’ in the Partnership's Quarterly Reporton Form 10-Q for the quarter ended March 31, 2006.

EnronCorp.

 On May  24, 2006, the District Court gavefinal approval to Citigroup's settlement of the securities classaction (NEWBY, ET AL. V. ENRON CORP., ET AL.).

Research

 On May  12, 2006, the District Court preliminarilyapproved the class action settlements in IN RE SALOMON ANALYST LEVEL 3LITIGATION, IN RE SALOMON ANALYST XO LITIGATION, and IN RE SALOMONANALYST WILLIAMS LITIGATION.

 On May  18, 2006, theDistrict Court gave final approval to the settlement in NORMAN v.SALOMON SMITH BARNEY.

 On June  20, 2006, theDistrict Court certified the plaintiff class in IN RE SALOMON ANALYSTMETROMEDIA LITIGATION.

 On June  26, 2006, theUnited States Supreme Court granted plaintiffs' petition for awrit of certiorari, vacated the opinion of the United States Court ofAppeals for the Seventh Circuit in DISHER v. CITIGROUP GLOBALMARKETS  INC., and then remanded the case to the Seventh Circuitfor further proceedings in light of the Supreme Court's decisionin Kircher v. Putnam Funds Trust.

AdelphiaCommunications Corporation

 Without admitting anyliability, CGMI and numerous other financial institution defendantshave agreed to settle IN RE ADELPHIA COMMUNICATIONS CORPORATIONSECURITIES AND DERIVATIVE LITIGATION for a total of $250million, subject to final court approval. On June  15, 2006, thecourt granted its preliminary approval of the settlement and setNovember  10, 2006 for a final hearing. CGMI's share of thesettlement is covered by existing reserves.

Item 1A.    RiskFactors

There are no material changes from the risk factors setforth under Part I, Item 1A. ‘‘Risk Factors’’in our Annual Report on Form 10-K for the fiscal year ended December31, 2005.

Item 2.    Unregistered Sales of EquitySecurities and Use of Proceeds

For the three months ended June30, 2006, there were additional sales of 12,438.9132 Redeemable Unitsof Limited Partnership totaling $23,253,000. The Redeemable Units wereissued in reliance upon applicable exemptions from registration underSection 4(2) of the Securities Act of 1933, as amended, and Section 506of Regulation D promulgated thereunder.

Proceeds from the saleof additional Redeemable Units are used in the trading of commodityinterests including futures contracts, options and forwardscontracts.

20

----

Table of Contents

The following chart sets forththe purchases of Redeemable Units by thePartnership.

|                             |  |  |                                    |  |            |                                |  |  |                                                                                |   |          |                                                                                                        |  |  |  |  |     |  |  |  |  |  |     |  |
|-----------------------------|--|--|------------------------------------|--|------------|--------------------------------|--|--|--------------------------------------------------------------------------------|---|----------|--------------------------------------------------------------------------------------------------------|--|--|--|--|-----|--|--|--|--|--|-----|--|
| Period                      |  |  | (a)Total Number ofUnits Purchased* |  |            | (b) AveragePricePaid perUnit** |  |  | (c) Total Numberof UnitsPurchasedas Partof Publicly AnnouncedPlans or Programs |   |          | (d)Maximum Number(or ApproximateDollar Value) ofUnitsthatMay Yet BePurchased Under thePlans orPrograms |
| April 1, 2006 -April30,2006 |  |  |                                    |  | 1,547.4288 |                                |  |  |                                                                                | $ | 1,839.43 |                                                                                                        |  |  |  |  | N/A |  |  |  |  |  | N/A |  |
| May1, 2006 -May 31,2006     |  |  |                                    |  | 1,591.0854 |                                |  |  |                                                                                | $ | 1,773.97 |                                                                                                        |  |  |  |  | N/A |  |  |  |  |  | N/A |  |
| June1, 2006 -June 30,2006   |  |  |                                    |  | 2,221.8558 |                                |  |  |                                                                                | $ | 1,761.38 |                                                                                                        |  |  |  |  | N/A |  |  |  |  |  | N/A |  |
|                        |  |  |                                    |  | 5,360.3700 |                                |  |  |                                                                                | $ | 1,791.59 |                                                                                                        |  |  |  |  | N/A |  |  |  |  |  | N/A |  |
|                             |

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | *Generally, Limited Partners are permitted to redeem their RedeemableUnits as of the end of each month on 10 days' notice to theGeneral Partner. Under certain circumstances, the General Partner cancompel redemption but to date the General Partner has not exercisedthis right. Purchases of Redeemable Units by the Partnership reflectedin the chart above were made in the ordinary course of thePartnership's business in connection with effecting redemptionsfor Limited Partners. |

|  |                                                                                                                                           |
|--|-------------------------------------------------------------------------------------------------------------------------------------------|
|  | ** Redemptions ofRedeemable Units are effected as of the last day of each month at theNet Asset Value per Redeemable Unit as of that day. |

Item 3.    Defaults Upon Senior Securities –None

Item 4.    Submission of Matters to a Vote ofSecurity Holders – None

Item 5.    OtherInformation – None

Item 6.    Exhibits

The exhibits required to be filed by Item 601 of Regulation S-1 areincorporated herein by reference to the exhibit index of the AnnualReport on Form 10-K for the period ended December 31, 2005.

Exhibit - 31.1 - Rule 13a-14(a)/15d-14(a)Certification(Certification of President and Director)

Exhibit – 31.2 – Rule 13a-14(a)/15d-14(a)Certification(Certification of Chief Financial Officer andDirector)

Exhibit – 32.1 – Section 1350Certification(Certification of President and Director).

Exhibit – 32.2 – Section 1350Certification(Certification of Chief Financial Officer andDirector).

21

----

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.

|                                       |  |  |                                                                                                                                          |
|---------------------------------------|--|--|------------------------------------------------------------------------------------------------------------------------------------------|
| SMITHBARNEY POTOMAC FUTURES FUND L.P. |
| By:                                   |  |  | Citigroup ManagedFutures LLC (General Partner)                                                                                           |
| By:                                   |  |  | /s/ David J.Vogel David J. Vogel, President and Director                                                                                 |
| Date:   August 14,2006 |
| By:                                   |  |  | /s/Daniel R. McAuliffe, Jr.         Daniel R. McAuliffe,Jr. Chief Financial Officer and Director |
| Date: August 14,2006                  |
|                                       |

22

----