UNITEDSTATES

SECURITIES AND EXCHANGE COMMISSION WASHINGTON,D.C. 20549

FORM 10-Q

(X) QUARTERLY REPORT UNDERSECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

For the Quarter endedSeptember 30, 2006

Commission File Number000-50735

SMITH BARNEY POTOMACFUTURES FUND L.P.

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|  |  |
|  |

(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

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|--|
|  |  |
|  |

(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

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SMITH BARNEY POTOMACFUTURES FUND L.P.

FORM 10-Q

INDEX

|                               |  |  |        |  |  |                                                                                                                                  |  |  |                         |
|-------------------------------|--|--|--------|--|--|----------------------------------------------------------------------------------------------------------------------------------|--|--|-------------------------|
|                          |  |  |   |  |  |                                                                                                                             |  |  | PageNumber              |
| PARTI - FinancialInformation: |  |  |   |
|                          |  |  | Item1. |  |  | FinancialStatements:                                                                                                             |  |  |                    |
|                          |  |  |   |  |  | Statements ofFinancial Conditionat September 30, 2006 and December 31,2005(unaudited).                                           |  |  | 3                       |
|                          |  |  |   |  |  | Statementsof Income and Expensesand Partners' Capital for the three andnine months ended September 30, 2006 and 2005(unaudited). |  |  | 4                       |
|                          |  |  |   |  |  | Statementsof Cash Flows for thethree and nine months ended September 30, 2006and2005(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

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PART I

Item 1.Financial Statements

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

|                                                                                                                                          |  |  |                  |   |             |                  |  |  |  |   |             |  |
|------------------------------------------------------------------------------------------------------------------------------------------|--|--|------------------|---|-------------|------------------|--|--|--|---|-------------|--|
|                                                                                                                                     |  |  | September30,2006 |   |             | December 31,2005 |
| Assets:                                                                                                                                  |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Investmentin Master, at fair value                                                                                                       |  |  |                  | $ | 238,844,639 |                  |  |  |  | $ | 231,467,408 |  |
| Cash                                                                                                                                     |  |  |                  |   | 16,774      |                  |  |  |  |   | 12,705      |  |
|                                                                                                                                     |  |  |                  | $ | 238,861,413 |                  |  |  |  | $ | 231,480,113 |  |
| Liabilities and Partners'Capital:                                                                                                        |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Liabilities:                                                                                                                             |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Accruedexpenses:                                                                                                                         |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Brokeragecommissions                                                                                                                     |  |  |                  | $ | 1,293,833   |                  |  |  |  | $ | 1,277,897   |  |
| Management fees                                                                                                                          |  |  |                  |   | 395,934     |                  |  |  |  |   | 391,002     |  |
| Other                                                                                                                                    |  |  |                  |   | 6,909       |                  |  |  |  |   | 15,656      |  |
| RedemptionsPayable                                                                                                                       |  |  |                  |   | 4,745,938   |                  |  |  |  |   | 1,878,905   |  |
|                                                                                                                                     |  |  |                  |   | 6,442,614   |                  |  |  |  |   | 3,563,460   |  |
| Partners'Capital:                                                                                                                        |  |  |                  |   |        |                  |  |  |  |   |        |  |
| General Partner 729.3902Unit equivalents outstanding in 2006 and2005                                                                     |  |  |                  |   | 1,232,028   |                  |  |  |  |   | 1,325,594   |  |
| LimitedPartners 136,868.2340 and 124,678.9436 Redeemable Units of LimitedPartnership Interest outstanding in 2006 and 2005,respectively. |  |  |                  |   | 231,186,771 |                  |  |  |  |   | 226,591,059 |  |
|                                                                                                                                     |  |  |                  |   | 232,418,799 |                  |  |  |  |   | 227,916,653 |  |
|                                                                                                                                     |  |  |                  | $ | 238,861,413 |                  |  |  |  | $ | 231,480,113 |  |
|                                                                                                                                          |

Seeaccompanying Notes to Financial Statements.

3

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

|                                                                                                                                 |  |  |                                |   |             |                              |  |  |      |   |             |      |  |  |  |   |             |   |  |  |  |   |             |   |
|---------------------------------------------------------------------------------------------------------------------------------|--|--|--------------------------------|---|-------------|------------------------------|--|--|------|---|-------------|------|--|--|--|---|-------------|---|--|--|--|---|-------------|---|
|                                                                                                                            |  |  | ThreeMonths EndedSeptember 30, |   |             | Nine MonthsEndedSeptember30, |
|                                                                                                                            |  |  | 2006                           |   |             | 2005                         |  |  | 2006 |   |             | 2005 |
| Income:                                                                                                                         |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Realizedgains (losses) on closed positions allocated fromMaster                                                                 |  |  |                                | $ | (5,078,356  | )                            |  |  |      | $ | 3,588,457   |      |  |  |  | $ | (14,462,853 | ) |  |  |  | $ | 11,020,269  |   |
| Changein unrealized gains (losses) on open positions allocated fromMaster                                                       |  |  |                                |   | (2,145,404  | )                            |  |  |      |   | (4,227,748  | )    |  |  |  |   | 6,192,021   |   |  |  |  |   | 6,361,320   |   |
| Interestincome allocated fromMaster                                                                                             |  |  |                                |   | 2,410,070   |                              |  |  |      |   | 1,276,209   |      |  |  |  |   | 6,938,001   |   |  |  |  |   | 3,017,874   |   |
| Expensesallocated fromMaster                                                                                                    |  |  |                                |   | (90,158     | )                            |  |  |      |   | (88,312     | )    |  |  |  |   | (211,634    | ) |  |  |  |   | (255,946    | ) |
|                                                                                                                            |  |  |                                |   | (4,903,848  | )                            |  |  |      |   | 548,606     |      |  |  |  |   | (1,544,465  | ) |  |  |  |   | 20,143,517  |   |
| Expenses:                                                                                                                       |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Brokeragecommissions                                                                                                            |  |  |                                |   | 4,007,969   |                              |  |  |      |   | 3,362,977   |      |  |  |  |   | 12,295,215  |   |  |  |  |   | 9,140,631   |   |
| Managementfees                                                                                                                  |  |  |                                |   | 1,226,351   |                              |  |  |      |   | 1,028,711   |      |  |  |  |   | 3,761,038   |   |  |  |  |   | 2,796,119   |   |
| Incentivefees                                                                                                                   |  |  |                                |   | —     |                              |  |  |      |   | —     |      |  |  |  |   | 1,237,713   |   |  |  |  |   | —     |   |
| Other                                                                                                                           |  |  |                                |   | 37,659      |                              |  |  |      |   | 22,593      |      |  |  |  |   | 102,771     |   |  |  |  |   | 87,953      |   |
|                                                                                                                            |  |  |                                |   | 5,271,979   |                              |  |  |      |   | 4,414,281   |      |  |  |  |   | 17,396,737  |   |  |  |  |   | 12,024,703  |   |
|     Netincome(loss)                                                                                         |  |  |                                |   | (10,175,827 | )                            |  |  |      |   | (3,865,675  | )    |  |  |  |   | (18,941,202 | ) |  |  |  |   | 8,118,814   |   |
| Additions— LimitedPartners                                                                                                |  |  |                                |   | 1,140,807   |                              |  |  |      |   | 26,262,000  |      |  |  |  |   | 49,479,807  |   |  |  |  |   | 68,522,000  |   |
| Redemptions— LimitedPartners                                                                                              |  |  |                                |   | (9,178,862  | )                            |  |  |      |   | (23,829,172 | )    |  |  |  |   | (26,036,459 | ) |  |  |  |   | (33,427,294 | ) |
|     Netincrease (decrease) in Partners'Capital                                                              |  |  |                                |   | (18,213,882 | )                            |  |  |      |   | (1,432,847  | )    |  |  |  |   | 4,502,146   |   |  |  |  |   | 43,213,520  |   |
| Partners'Capital, beginning ofperiod                                                                                            |  |  |                                |   | 250,632,681 |                              |  |  |      |   | 199,329,012 |      |  |  |  |   | 227,916,653 |   |  |  |  |   | 154,682,645 |   |
| Partners'Capital, end ofperiod                                                                                                  |  |  |                                | $ | 232,418,799 |                              |  |  |      | $ | 197,896,165 |      |  |  |  | $ | 232,418,799 |   |  |  |  | $ | 197,896,165 |   |
| NetAsset Value per Redeemable Unit (137,597.6242 and 112,047.6835 Unitsoutstanding at September 30, 2006 and 2005,respectively) |  |  |                                | $ | 1,689.12    |                              |  |  |      | $ | 1,766.18    |      |  |  |  | $ | 1,689.12    |   |  |  |  | $ | 1,766.18    |   |
| Netincome (loss) per Redeemable Unit of Limited Partnership Interest andGeneral Partner Unitequivalent                          |  |  |                                | $ | (72.26      | )                            |  |  |      | $ | (35.78      | )    |  |  |  | $ | (128.28     | ) |  |  |  | $ | 66.39       |   |
|                                                                                                                                 |

Seeaccompanying Notes to Financial Statements

4

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

|                                                                                                 |  |  |                                |   |             |                              |  |  |      |   |             |      |  |  |  |   |             |   |  |  |  |   |              |   |
|-------------------------------------------------------------------------------------------------|--|--|--------------------------------|---|-------------|------------------------------|--|--|------|---|-------------|------|--|--|--|---|-------------|---|--|--|--|---|--------------|---|
|                                                                                            |  |  | ThreeMonths EndedSeptember 30, |   |             | Nine MonthsEndedSeptember30, |
|                                                                                            |  |  | 2006                           |   |             | 2005                         |  |  | 2006 |   |             | 2005 |
| Cash flows from operatingactivities:                                                            |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Net income(loss)                                                                                |  |  |                                | $ | (10,175,827 | )                            |  |  |      | $ | (3,865,675  | )    |  |  |  | $ | (18,941,202 | ) |  |  |  | $ | 8,118,814    |   |
| Adjustmentsto reconcile net income (loss) to net cash provided by (used in)operatingactivities: |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Changesin operating assets andliabilities:                                                      |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |
| Purchaseof Investment inMaster                                                                  |  |  |                                |   | (1,140,807  | )                            |  |  |      |   | (26,262,000 | )    |  |  |  |   | (49,479,807 | ) |  |  |  |   | (221,621,653 | ) |
| ProceedsFrom sale of Investment inMaster                                                        |  |  |                                |   | 11,357,415  |                              |  |  |      |   | 14,843,748  |      |  |  |  |   | 33,620,110  |   |  |  |  |   | 27,784,658   |   |
| Unrealized(appreciation) depreciation on Investment inMaster                                    |  |  |                                |   | 7,313,918   |                              |  |  |      |   | 727,603     |      |  |  |  |   | 8,482,466   |   |  |  |  |   | (18,710,124  | ) |
| (Increase)decrease in restrictedcash                                                            |  |  |                                |   | —     |                              |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | 19,775,170   |   |
| (Increase)decrease in net unrealized appreciation on open futurespositions                      |  |  |                                |   | —     |                              |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | 2,504,531    |   |
| (Increase)decrease in unrealized appreciation on open forwardcontracts                          |  |  |                                |   | —     |                              |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | 9,444,675    |   |
| (Increase)decrease in interestreceivable                                                        |  |  |                                |   | —     |                              |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | 205,283      |   |
| Increase(decrease) in unrealized depreciation on open forwardcontracts                          |  |  |                                |   | —     |                              |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  |   | (10,366,214  | ) |
| Accruedexpenses:                                                                                |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Increase(decrease) in brokeragecommissions                                                      |  |  |                                |   | (94,972     | )                            |  |  |      |   | 56,903      |      |  |  |  |   | 15,936      |   |  |  |  |   | 261,051      |   |
| Increase(decrease) in managementfees                                                            |  |  |                                |   | (29,018     | )                            |  |  |      |   | 17,491      |      |  |  |  |   | 4,932       |   |  |  |  |   | 80,001       |   |
| Increase(decrease) inother                                                                      |  |  |                                |   | (27,856     | )                            |  |  |      |   | (46,116     | )    |  |  |  |   | (8,747      | ) |  |  |  |   | (36,039      | ) |
| Netcash provided by (used in) operatingactivities                                               |  |  |                                |   | 7,202,853   |                              |  |  |      |   | (14,528,046 | )    |  |  |  |   | (26,306,312 | ) |  |  |  |   | (182,559,847 | ) |
| Cashflows from financingactivities:                                                             |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Proceedsfrom additions — LimitedPartners                                                  |  |  |                                |   | 1,140,807   |                              |  |  |      |   | 26,262,000  |      |  |  |  |   | 49,479,807  |   |  |  |  |   | 68,522,000   |   |
| Paymentsfor redemptions — LimitedPartners                                                 |  |  |                                |   | (8,346,456  | )                            |  |  |      |   | (11,773,472 | )    |  |  |  |   | (23,169,426 | ) |  |  |  |   | (23,235,326  | ) |
| Netcash provided by (used in) financingactivities                                               |  |  |                                |   | (7,205,649  | )                            |  |  |      |   | 14,488,528  |      |  |  |  |   | 26,310,381  |   |  |  |  |   | 45,286,674   |   |
| Netchange in unrestrictedcash                                                                   |  |  |                                |   | (2,796      | )                            |  |  |      |   | (39,518     | )    |  |  |  |   | 4,069       |   |  |  |  |   | (137,273,173 | ) |
| Unrestrictedcash, at beginning ofperiod                                                         |  |  |                                |   | 19,570      |                              |  |  |      |   | 72,169      |      |  |  |  |   | 12,705      |   |  |  |  |   | 137,305,824  |   |
| Unrestrictedcash, at end ofperiod                                                               |  |  |                                | $ | 16,774      |                              |  |  |      | $ | 32,651      |      |  |  |  | $ | 16,774      |   |  |  |  | $ | 32,651       |   |
| NonCash FinancingActivities:                                                                    |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |         |   |
| Contributionsof open commodity futures and forwardspositions                                    |  |  |                                |   | —     |                              |  |  |      |   | —     |      |  |  |  |   | —     |   |  |  |  | $ | (1,582,992   | ) |
|                                                                                                 |

Seeaccompanying Notes to FinancialStatements

5

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

1.    General:

SmithBarney Potomac Futures Fund L.P. (the‘‘Partnership’’) is a limited partnership whichwas organized on March 14, 1997 under the partnership laws of the Stateof 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 also the general partner of the Master. Individual andpooled accounts currently managed by the Advisor, including thePartnership, are permitted to be limited partners of the Master. TheGeneral Partner and the Advisor believe that trading through thismaster/feeder structure promotes efficiency and economy in the tradingprocess. Expenses to investors as a result of the investment in theMaster are approximately the same and redemption rights are notaffected.

As of September 30, 2006, the Partnership ownedapproximately 75.0% of the Master. The Partnership intends tocontinue to invest substantially all of its assets in the Master. Theperformance of the Partnership is directly affected by the performanceof the Master. The Master's Statement of Financial Condition,Statement of Income and Expenses and Partners' Capital, CondensedSchedule of Investments and Statement of Cash Flows are includedherein.

The accompanying financial statements are unaudited but,in the opinion of management, include all adjustments, consisting onlyof normal recurring adjustments, necessary for a fair presentation ofthe Partnership's financial condition at September 30, 2006 andDecember 31, 2005 and the results of its operations and cash flows forthe three and nine months ended September 30, 2006 and 2005. Thesefinancial statements present the results of interim periods and do notinclude all disclosures normally provided in annual financialstatements. You should read these financial statements together withthe financial statements and notes included in the Partnership'sAnnual Report on Form 10-K filed with the Securities and ExchangeCommission for the year ended December 31, 2005.

Due to thenature of commodity trading, the results of operations for the interimperiods presented should not be considered indicative of the resultsthat may be expected for the entire year.

The Master'sStatement of Financial Condition and Condensed Schedule of Investmentsas of September 30, 2006 and Statement of Income and Expenses andPartners' Capital and Statement of Cash Flows for the three andnine months ended September 30, 2006 and 2005 are presentedbelow:

6

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

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

|                                                                                                 |  |  |                  |   |             |                  |  |  |  |   |             |  |
|-------------------------------------------------------------------------------------------------|--|--|------------------|---|-------------|------------------|--|--|--|---|-------------|--|
|                                                                                            |  |  | September30,2006 |   |             | December 31,2005 |
|                                                                                            |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Assets:                                                                                         |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Equityin commodity futures tradingaccount:                                                      |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Cash (restricted$31,601,141 and $42,476,193 in 2006 and 2005,respectively)                      |  |  |                  | $ | 319,948,379 |                  |  |  |  | $ | 337,483,460 |  |
| Unrealized appreciation on open forwardcontracts                                                |  |  |                  |   | 10,714,468  |                  |  |  |  |   | 9,103,088   |  |
|                                                                                            |  |  |                  |   | 330,662,847 |                  |  |  |  |   | 346,586,548 |  |
| Interestreceivable                                                                              |  |  |                  |   | 992,865     |                  |  |  |  |   | 779,766     |  |
|                                                                                            |  |  |                  |   | 331,655,712 |                  |  |  |  |   | 347,366,314 |  |
| Liabilities andPartners'Capital:                                                                |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Liabilities:                                                                                    |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Commodityoptions written at fair value (premium received $42,583 in2006)                        |  |  |                  | $ | 27,935      |                  |  |  |  | $ | —     |  |
| Netunrealized depreciation on open futurespositions                                             |  |  |                  |   | 3,482,429   |                  |  |  |  |   | 607,801     |  |
| Unrealized depreciation on open forwardcontracts                                                |  |  |                  |   | 9,468,111   |                  |  |  |  |   | 19,546,499  |  |
| Accruedexpenses:                                                                                |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Other                                                                                           |  |  |                  |   | 3,865       |                  |  |  |  |   | 41,475      |  |
| Distributionpayable                                                                             |  |  |                  |   | 992,865     |                  |  |  |  |   | 779,766     |  |
|                                                                                            |  |  |                  |   | 13,975,205  |                  |  |  |  |   | 20,975,541  |  |
| Partners'Capital:                                                                               |  |  |                  |   |        |                  |  |  |  |   |        |  |
| Partners'Capital, 287,914.4047 and 286,601.7201 Units outstanding in 2006 and2005, respectively |  |  |                  |   | 317,680,507 |                  |  |  |  |   | 326,390,773 |  |
|                                                                                            |  |  |                  | $ | 331,655,712 |                  |  |  |  | $ | 347,366,314 |  |
|                                                                                                 |

7

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

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

|                                                   |  |  |           |   |            |                       |  |  |  |  |        |    |
|---------------------------------------------------|--|--|-----------|---|------------|-----------------------|--|--|--|--|--------|----|
| Futures ContractsPurchased                        |  |  | FairValue |   |            | % of Partners'Capital |
| Energy                                            |  |  |           | $ | (6,189,385 | )                     |  |  |  |  | (1.95  | )% |
| Interest RatesNon-U.S.                            |  |  |           |   | 165,561    |                       |  |  |  |  | 0.05   |    |
| InterestRates U.S.                                |  |  |           |   | 808,212    |                       |  |  |  |  | 0.25   |    |
| Indices                                           |  |  |           |   | 2,707,163  |                       |  |  |  |  | 0.85   |    |
| Metals                                            |  |  |           |   | (199,020   | )                     |  |  |  |  | (0.06  | )  |
| Total futures contractspurchased                  |  |  |           |   | (2,707,469 | )                     |  |  |  |  | (0.86  | )  |
| Futures ContractsSold                             |  |  |           |   |       |                       |  |  |  |  |   |    |
| Energy                                            |  |  |           |   | 34,400     |                       |  |  |  |  | 0.01   |    |
| Interest RatesNon-U.S.                            |  |  |           |   | (446,985   | )                     |  |  |  |  | (0.14  | )  |
| InterestRatesU.S.                                 |  |  |           |   | (362,375   | )                     |  |  |  |  | (0.11  | )  |
| Total futures contractssold                       |  |  |           |   | (774,960   | )                     |  |  |  |  | (0.24  | )  |
| Unrealized Appreciationon ForwardContracts        |  |  |           |   |       |                       |  |  |  |  |   |    |
| Currencies                                        |  |  |           |   | 10,645,740 |                       |  |  |  |  | 3.35   |    |
| Metals                                            |  |  |           |   | 68,728     |                       |  |  |  |  | 0.02   |    |
| Total unrealized appreciation on forwardcontracts |  |  |           |   | 10,714,468 |                       |  |  |  |  | 3.37   |    |
| Unrealized Depreciationon ForwardContracts        |  |  |           |   |       |                       |  |  |  |  |   |    |
| Currencies                                        |  |  |           |   | (9,155,844 | )                     |  |  |  |  | (2.88  | )  |
| Metals                                            |  |  |           |   | (312,267   | )                     |  |  |  |  | (0.10  | )  |
| Total unrealized depreciation on forwardcontracts |  |  |           |   | (9,468,111 | )                     |  |  |  |  | (2.98  | )  |
| OptionsWritten                                    |  |  |           |   |       |                       |  |  |  |  |   |    |
| Currencies                                        |  |  |           |   | (27,935    | )                     |  |  |  |  | (0.00  | )* |
| Total fair value                                  |  |  |           | $ | (2,264,007 | )                     |  |  |  |  | (0.71  | )% |
|                                                   |

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

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

8

----

SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements September 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

----

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

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

|                                                                                                          |  |  |                                 |   |             |                              |  |  |      |   |             |      |  |  |  |   |             |   |  |  |  |   |             |   |
|----------------------------------------------------------------------------------------------------------|--|--|---------------------------------|---|-------------|------------------------------|--|--|------|---|-------------|------|--|--|--|---|-------------|---|--|--|--|---|-------------|---|
|                                                                                                     |  |  | ThreeMonths Ended September 30, |   |             | Nine MonthsEndedSeptember30, |
|                                                                                                     |  |  | 2006                            |   |             | 2005                         |  |  | 2006 |   |             | 2005 |
| Income:                                                                                                  |  |  |                                 |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Netgains (losses) on trading of commodityinterests:                                                      |  |  |                                 |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Realizedgains (losses) on closed positions and foreign currencies                                        |  |  |                                 | $ | (6,770,868  | )                            |  |  |      | $ | 5,311,076   |      |  |  |  | $ | (19,402,409 | ) |  |  |  | $ | 15,639,594  |   |
| Change in unrealized gains(losses) on openpositions                                                      |  |  |                                 |   | (2,866,718  | )                            |  |  |      |   | (6,402,778  | )    |  |  |  |   | 8,829,788   |   |  |  |  |   | 9,984,111   |   |
|                                                                                                     |  |  |                                 |   | (9,637,586  | )                            |  |  |      |   | (1,091,702  | )    |  |  |  |   | (10,572,621 | ) |  |  |  |   | 25,623,705  |   |
| InterestIncome                                                                                           |  |  |                                 |   | 3,221,079   |                              |  |  |      |   | 1,876,868   |      |  |  |  |   | 9,387,441   |   |  |  |  |   | 4,624,236   |   |
|                                                                                                     |  |  |                                 |   | (6,416,507  | )                            |  |  |      |   | 785,166     |      |  |  |  |   | (1,185,180  | ) |  |  |  |   | 30,247,941  |   |
| Expenses:                                                                                                |  |  |                                 |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Commissionsincluding clearing fees of $28,924 $55,256, $124,216 and $140,919,respectively                |  |  |                                 |   | 114,071     |                              |  |  |      |   | 115,196     |      |  |  |  |   | 267,489     |   |  |  |  |   | 352,345     |   |
| Other                                                                                                    |  |  |                                 |   | 6,181       |                              |  |  |      |   | 13,801      |      |  |  |  |   | 18,344      |   |  |  |  |   | 40,651      |   |
|                                                                                                     |  |  |                                 |   | 120,252     |                              |  |  |      |   | 128,997     |      |  |  |  |   | 285,833     |   |  |  |  |   | 392,996     |   |
| Net income(loss)                                                                                         |  |  |                                 |   | (6,536,759  | )                            |  |  |      |   | 656,169     |      |  |  |  |   | (1,471,013  | ) |  |  |  |   | 29,854,945  |   |
| Additions— Limited Partners                                                                        |  |  |                                 |   | 1,140,807   |                              |  |  |      |   | 26,262,000  |      |  |  |  |   | 49,944,807  |   |  |  |  |   | 333,375,300 |   |
| Redemptions— LimitedPartners                                                                       |  |  |                                 |   | (14,614,900 | )                            |  |  |      |   | (18,325,803 | )    |  |  |  |   | (47,796,619 | ) |  |  |  |   | (51,241,927 | ) |
| Distribution of Interest to FeederFunds                                                                  |  |  |                                 |   | (3,221,079  | )                            |  |  |      |   | (1,876,868  | )    |  |  |  |   | (9,387,441  | ) |  |  |  |   | (4,624,236  | ) |
| Net increase (decrease) in Partners'Capital                                                              |  |  |                                 |   | (23,231,931 | )                            |  |  |      |   | 6,715,498   |      |  |  |  |   | (8,710,266  | ) |  |  |  |   | 307,364,082 |   |
| Partners' Capital, beginning ofperiod                                                                    |  |  |                                 |   | 340,912,438 |                              |  |  |      |   | 300,648,584 |      |  |  |  |   | 326,390,773 |   |  |  |  |   | —     |   |
| Partners' Capital, end ofperiod                                                                          |  |  |                                 | $ | 317,680,507 |                              |  |  |      | $ | 307,364,082 |      |  |  |  | $ | 317,680,507 |   |  |  |  | $ | 307,364,082 |   |
| Net Asset Value per Unit (287,914.4047and 281,865.7281 Units outstanding in September 30, 2006 and 2005) |  |  |                                 | $ | 1,103.39    |                              |  |  |      | $ | 1,090.46    |      |  |  |  | $ | 1,103.39    |   |  |  |  | $ | 1,090.46    |   |
| Net income (loss) per Unit ofPartners' Interest                                                          |  |  |                                 | $ | (22.81      | )                            |  |  |      | $ | 1.63        |      |  |  |  | $ | (3.67       | ) |  |  |  | $ | 106.96      |   |
|                                                                                                          |

10

----

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

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

|                                                                                                  |  |  |                                |   |             |                              |  |  |      |   |             |      |  |  |  |   |             |   |  |  |  |   |             |   |
|--------------------------------------------------------------------------------------------------|--|--|--------------------------------|---|-------------|------------------------------|--|--|------|---|-------------|------|--|--|--|---|-------------|---|--|--|--|---|-------------|---|
|                                                                                             |  |  | ThreeMonths EndedSeptember 30, |   |             | Nine MonthsEndedSeptember30, |
|                                                                                             |  |  | 2006                           |   |             | 2005                         |  |  | 2006 |   |             | 2005 |
| Cashflows from operatingactivities:                                                              |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Net income(loss)                                                                                 |  |  |                                | $ | (6,536,759  | )                            |  |  |      | $ | 656,169     |      |  |  |  | $ | (1,471,013  | ) |  |  |  | $ | 29,854,945  |   |
| Adjustments to reconcile net income (loss) tonet cash provided by (used in) operatingactivities: |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Changesin operating assets andliabilities:                                                       |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| (Increase)decrease in restricted cash                                                            |  |  |                                |   | (11,932,879 | )                            |  |  |      |   | 4,360,575   |      |  |  |  |   | 10,875,052  |   |  |  |  |   | (31,248,760 | ) |
| (Increase) decrease in net unrealized appreciation onopen futures positions                      |  |  |                                |   | 3,692,895   |                              |  |  |      |   | 2,714,432   |      |  |  |  |   | —     |   |  |  |  |   | (1,925,354  | ) |
| (Increase)decrease in unrealized appreciation on open forwardcontracts                           |  |  |                                |   | (3,738,393  | )                            |  |  |      |   | (11,541,057 | )    |  |  |  |   | (1,611,380  | ) |  |  |  |   | (9,929,970  | ) |
| (Increase) decrease in interestreceivable                                                        |  |  |                                |   | 74,381      |                              |  |  |      |   | (115,068    | )    |  |  |  |   | (213,099    | ) |  |  |  |   | (630,990    | ) |
| Increase (decrease) in commodity options written atfair value                                    |  |  |                                |   | (74,627     | )                            |  |  |      |   | —     |      |  |  |  |   | 27,935      |   |  |  |  |   | —     |   |
| Increase (decrease) in netunrealized depreciation on open futurespositions                       |  |  |                                |   | 3,482,429   |                              |  |  |      |   | —     |      |  |  |  |   | 2,874,628   |   |  |  |  |   | —     |   |
| Increase (decrease) inunrealized depreciation on open forwardcontracts                           |  |  |                                |   | (552,786    | )                            |  |  |      |   | 15,229,403  |      |  |  |  |   | (10,078,388 | ) |  |  |  |   | 1,871,213   |   |
| Accruedexpenses:                                                                                 |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Increase(decrease) inother                                                                       |  |  |                                |   | (3,185      | )                            |  |  |      |   | 825         |      |  |  |  |   | (37,610     | ) |  |  |  |   | 27,675      |   |
| Net cashprovided by (used in) operatingactivities                                                |  |  |                                |   | (15,588,924 | )                            |  |  |      |   | 11,305,279  |      |  |  |  |   | 366,125     |   |  |  |  |   | (11,981,241 | ) |
| Cash flows from financingactivities:                                                             |  |  |                                |   |        |                              |  |  |      |   |        |      |  |  |  |   |        |   |  |  |  |   |        |   |
| Proceeds from additions                                                                          |  |  |                                |   | 1,140,807   |                              |  |  |      |   | 26,262,000  |      |  |  |  |   | 49,944,807  |   |  |  |  |   | 330,508,441 |   |
| Payments for redemptions                                                                         |  |  |                                |   | (14,614,900 | )                            |  |  |      |   | (18,325,803 | )    |  |  |  |   | (47,796,619 | ) |  |  |  |   | (51,241,927 | ) |
| Distribution of interest to feederfunds                                                          |  |  |                                |   | (3,295,460  | )                            |  |  |      |   | (1,761,800  | )    |  |  |  |   | (9,174,342  | ) |  |  |  |   | (3,993,246  | ) |
| Net cash provided by (used in) financingactivities                                               |  |  |                                |   | (16,769,553 | )                            |  |  |      |   | 6,174,397   |      |  |  |  |   | (7,026,154  | ) |  |  |  |   | 275,273,268 |   |
| Net change incash                                                                                |  |  |                                |   | (32,358,477 | )                            |  |  |      |   | 17,479,676  |      |  |  |  |   | (6,660,029  | ) |  |  |  |   | 263,292,027 |   |
| Unrestricted cash, at beginning ofperiod                                                         |  |  |                                |   | 320,705,715 |                              |  |  |      |   | 245,812,351 |      |  |  |  |   | 295,007,267 |   |  |  |  |   | —     |   |
| Unrestricted cash, at end of period                                                              |  |  |                                | $ | 288,347,238 |                              |  |  |      | $ | 263,292,027 |      |  |  |  | $ | 288,347,238 |   |  |  |  | $ | 263,292,027 |   |
| Non cash financingactivities:Contribution of open commodity futures and forwardspositions        |  |  |                                | $ | —     |                              |  |  |      | $ | —     |      |  |  |  | $ | —     |   |  |  |  | $ | 2,866,859   |   |
|                                                                                                  |

11

----

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

2.    Financial Highlights:

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

|                                                                  |  |  |                                |   |          |                              |  |  |      |   |          |      |  |  |  |   |          |   |  |  |  |   |          |   |
|------------------------------------------------------------------|--|--|--------------------------------|---|----------|------------------------------|--|--|------|---|----------|------|--|--|--|---|----------|---|--|--|--|---|----------|---|
|                                                             |  |  | ThreeMonths EndedSeptember 30, |   |          | Nine MonthsEndedSeptember30, |
|                                                             |  |  | 2006                           |   |          | 2005                         |  |  | 2006 |   |          | 2005 |
| Net realized and unrealized gains (losses) allocated fromMaster* |  |  |                                | $ | (80.32   | )                            |  |  |      | $ | (37.65   | )    |  |  |  | $ | (140.97  | ) |  |  |  | $ | 65.55    |   |
| Interest income allocated from Master                            |  |  |                                |   | 17.01    |                              |  |  |      |   | 11.05    |      |  |  |  |   | 49.59    |   |  |  |  |   | 27.28    |   |
| Expenses**                                                       |  |  |                                |   | (8.95    | )                            |  |  |      |   | (9.18    | )    |  |  |  |   | (36.90   | ) |  |  |  |   | (26.44   | ) |
| Increase (decrease) for theperiod                                |  |  |                                |   | (72.26   | )                            |  |  |      |   | (35.78   | )    |  |  |  |   | (128.28  | ) |  |  |  |   | 66.39    |   |
| Net Asset Value per Redeemable Unit, beginning ofperiod          |  |  |                                |   | 1,761.38 |                              |  |  |      |   | 1,801.96 |      |  |  |  |   | 1,817.40 |   |  |  |  |   | 1,699.79 |   |
| Net Asset Value perRedeemable Unit, end ofperiod                 |  |  |                                | $ | 1,689.12 |                              |  |  |      | $ | 1,766.18 |      |  |  |  | $ | 1,689.12 |   |  |  |  | $ | 1,766.18 |   |
|                                                                  |

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

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

|                                             |  |  |                                |  |         |                               |  |  |      |  |         |      |  |  |  |  |        |    |  |  |  |  |         |    |
|---------------------------------------------|--|--|--------------------------------|--|---------|-------------------------------|--|--|------|--|---------|------|--|--|--|--|--------|----|--|--|--|--|---------|----|
|                                        |  |  | ThreeMonths EndedSeptember 30, |  |         | Nine MonthsEndedSeptember 30, |
|                                        |  |  | 2006                           |  |         | 2005                          |  |  | 2006 |  |         | 2005 |
| Ratioto average netassets:***               |  |  |                                |  |    |                               |  |  |      |  |    |      |  |  |  |  |   |    |  |  |  |  |    |    |
| Net investmentloss before incentivefees**** |  |  |                                |  | (4.8    | )%                            |  |  |      |  | (6.5    | )%   |  |  |  |  | (5.1   | )% |  |  |  |  | (6.9    | )% |
| Operatingexpenses                           |  |  |                                |  | 8.7     | %                             |  |  |      |  | 9.1     | %    |  |  |  |  | 9.0    | %  |  |  |  |  | 9.2     | %  |
| Incentivefees                               |  |  |                                |  | — |                               |  |  |      |  | — |      |  |  |  |  | 0.5    |    |  |  |  |  | — |    |
| Totalexpenses                               |  |  |                                |  | 8.7     | %                             |  |  |      |  | 9.1     | %    |  |  |  |  | 9.5    | %  |  |  |  |  | 9.2     | %  |
| Totalreturn:                                |  |  |                                |  |    |                               |  |  |      |  |    |      |  |  |  |  |   |    |  |  |  |  |    |    |
| Total return beforeincentivefees            |  |  |                                |  | (4.1    | )%                            |  |  |      |  | (2.0    | )%   |  |  |  |  | (6.6   | )% |  |  |  |  | 3.9     | %  |
| Incentivefees                               |  |  |                                |  | — |                               |  |  |      |  | — |      |  |  |  |  | (0.5   | )  |  |  |  |  | — |    |
| Totalreturn after incentivefees             |  |  |                                |  | (4.1    | )%                            |  |  |      |  | (2.0    | )%   |  |  |  |  | (7.1   | )% |  |  |  |  | 3.9     | %  |
|                                             |

|     |                                       |
|-----|---------------------------------------|
| *** | 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

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

Financial Highlights of theMaster:

|                                              |  |  |                                |   |          |                              |  |  |      |   |          |      |  |  |  |   |          |   |  |  |  |   |          |   |
|----------------------------------------------|--|--|--------------------------------|---|----------|------------------------------|--|--|------|---|----------|------|--|--|--|---|----------|---|--|--|--|---|----------|---|
|                                         |  |  | ThreeMonths EndedSeptember 30, |   |          | Nine MonthsEndedSeptember30, |
|                                         |  |  | 2006                           |   |          | 2005                         |  |  | 2006 |   |          | 2005 |
| Net realized and unrealized gains(losses)*   |  |  |                                | $ | (33.84   | )                            |  |  |      | $ | (5.09    | )    |  |  |  | $ | (35.39   | ) |  |  |  | $ | 90.60    |   |
| Interest income                              |  |  |                                |   | 11.04    |                              |  |  |      |   | 6.77     |      |  |  |  |   | 31.77    |   |  |  |  |   | 16.50    |   |
| Expenses**                                   |  |  |                                |   | (0.01    | )                            |  |  |      |   | (0.05    | )    |  |  |  |   | (0.05    | ) |  |  |  |   | (0.14    | ) |
| Increase (decrease) for theperiod            |  |  |                                |   | (22.81   | )                            |  |  |      |   | 1.63     |      |  |  |  |   | (3.67    | ) |  |  |  |   | 106.96   |   |
| Distributions                                |  |  |                                |   | (11.04   | )                            |  |  |      |   | (6.77    | )    |  |  |  |   | (31.77   | ) |  |  |  |   | (16.50   | ) |
| Net Asset Value per Unit, beginning ofperiod |  |  |                                |   | 1,137.24 |                              |  |  |      |   | 1,095.60 |      |  |  |  |   | 1,138.83 |   |  |  |  |   | 1,000.00 |   |
| Net Asset Value perUnit, end of period       |  |  |                                | $ | 1,103.39 |                              |  |  |      | $ | 1,090.46 |      |  |  |  | $ | 1,103.39 |   |  |  |  | $ | 1,090.46 |   |
|                                              |

|   |                               |
|---|-------------------------------|
| * | Includes brokeragecommissions |

|    |                               |
|----|-------------------------------|
| ** | Excludes brokeragecommissions |

|                                 |  |  |  |  |        |    |  |  |  |  |        |   |  |  |  |  |        |    |  |  |  |  |        |   |
|---------------------------------|--|--|--|--|--------|----|--|--|--|--|--------|---|--|--|--|--|--------|----|--|--|--|--|--------|---|
| Ratiosto average net assets:*** |  |  |  |  |   |    |  |  |  |  |   |   |  |  |  |  |   |    |  |  |  |  |   |   |
| Net investment gain****         |  |  |  |  | 3.7    | %  |  |  |  |  | 2.3    | % |  |  |  |  | 3.6    | %  |  |  |  |  | 1.9    | % |
| Operatingexpense                |  |  |  |  | 0.1    | %  |  |  |  |  | 0.2    | % |  |  |  |  | 0.1    | %  |  |  |  |  | 0.2    | % |
| Totalreturn                     |  |  |  |  | (2.0   | )% |  |  |  |  | 0.1    | % |  |  |  |  | (0.3   | )% |  |  |  |  | 10.7   | % |
|                                 |

|     |            |
|-----|------------|
| *** | 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 are held for tradingpurposes. The average fair values of these interests during the nineand twelve months ended September 30, 2006 and December 31, 2005, basedon a monthly calculation, were $(16,178) and $11,094,108, respectively.The fair values of these commodity interests, including options writtenthereon, if applicable, at September 30, 2006 and December 31, 2005,were $(2,264,007) and $(11,051,212), respectively. Fair values forexchange traded commodity futures and options are based on quotedmarket prices for those futures and options. Fair values for all otherfinancial instruments for which market quotations are not readilyavailable are based on calculations approved by the GeneralPartner.

13

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SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements September 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—tradedinstruments because of the greater risk of default by the counterpartyto an OTC contract.

Market risk is the potential for changes inthe value of the financial instruments traded by the Partnership/Masterdue to market changes, including interest and foreign exchange ratemovements and fluctuations in commodity or security prices. Market riskis directly impacted by the volatility and liquidity in the markets inwhich the related underlying assets are traded by the Master.

Credit risk is the possibility that a loss may occur due to thefailure of a counterparty to perform according to the terms of acontract. Credit risk with respect to exchange-traded instruments isreduced to the extent that an exchange or clearing organization acts asa counterparty to the transactions. ThePartnership's/Master's risk of loss in the event ofcounterparty default is typically limited to the amounts recognized asunrealized appreciation in the statements of financial condition andnot represented by the contract or notional amounts of the instruments.The Partnership, through its investment in the Master, has credit riskand concentration risk because the sole counterparty or broker withrespect to the Master's assets is CGM.

The General Partnermonitors and controls the Partnership's/Master's riskexposure on a daily basis through financial, credit and risk managementmonitoring systems, and accordingly believes that it has effectiveprocedures for evaluating and limiting the credit and market risks towhich the Partnership/Master is subject. These monitoring systems allowthe General Partner to statistically analyze actual trading resultswith risk-adjusted performance indicators and correlation statistics.In addition, 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 September 30,2006. However, due to the nature of thePartnership's/Master's business, these instruments may notbe held to maturity.

14

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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 third 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 nine months endedSeptember 30, 2006, Partnership capital increased 2% from$227,916,653 to $232,418,799. This increase was attributable to theadditional sales of 26,843.2424 Redeemable Units of Limited PartnershipInterest totaling $49,479,807, which was partially offset by a net lossfrom operations of $18,941,202, coupled with the redemption of14,653.9520 Redeemable Units of Limited Partnership Interest totaling$26,036,459. Future redemptions can impact the amount of fundsavailable for investment in commodity contract positions in subsequentperiods.

The Master's capital consists of thecapital contributions of the partners as increased or decreased byrealized and/or unrealized gains or losses on commodity futurestrading, expenses, interest income, redemptions of Units anddistributions of profits, if any.

For the nine months endedSeptember 30, 2006, the Master's capital decreased 2.7%from $326,390,773 to $317,680,507. This decrease was attributable to anet loss from operations of $1,471,013 coupled with the redemption of41,396.2058 Units totaling $47,796,619 and distribution of interesttotaling $9,387,441 to the limited partners of the Master, which waspartially offset by the additional sales of 42,708.8904 units totaling$49,944,807. Future redemptions can impact the amount of fundsavailable for investments in commodity contract positions in subsequentperiods.

Critical Accounting Policies

The preparation of financial statements in conformity withU.S. generally accepted accounting principles requires management tomake estimates and assumptions that affect the reported amounts ofassets and liabilities, disclosures of contingent assets andliabilities at the date of the financial statements and reportedamounts of revenues and expenses during the reporting period. Actualresults could differ from these estimates.

Allcommodity interests of the Master (including derivative financialinstruments and derivative commodity instruments) are used for tradingpurposes. The commodity interests are recorded on trade date and opencontracts are recorded in the statements of financial condition at fairvalue on the last business day of the period, which represents marketvalue for those commodity interests for which market quotations arereadily available or other measures of fair value deemed appropriate bymanagement of the General Partner for those commodity interests andforeign currencies for which market quotations are not readilyavailable. Investments in commodity interests denominated in foreigncurrencies are translated into U.S. dollars at the exchange ratesprevailing 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 Master agrees to receive or deliver afixed quantity of foreign currency for an agreed-upon price on anagreed future date. Foreign currency contracts are valued daily, andthe Master's net equity therein, representing unrealized gain orloss on the 

15

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contracts as measured by the differencebetween the forward foreign exchange rates at the dates of entry intothe contracts and the forward rates at the reporting date, is includedin the statements of financial condition. Realized gains (losses) andchanges in unrealized values on foreign currency contracts arerecognized in the period in which the contract is closed or the changesoccur and are included in the Statements of Income and Expenses andPartners' Capital.

Results ofOperations

During the Partnership's thirdquarter of 2006 the net asset value per Redeemable unit decreased4.1% from $1,761.38 to $1,689.12 compared to a decrease of2% in the third quarter of 2005. The Partnership experienced anet trading loss before brokerage commissions and related fees in thethird quarter of 2006 of $7,223,760. Losses were primarily attributableto the Master's trading of commodity futures in energy, U.S. andnon-U.S. interest rates and metals and were partially offset by gainsin currencies and indices. The Partnership experienced a net tradingloss before brokerage commissions and related fees in the third quarterof 2005 of $639,291. Losses were primarily attributable to the tradingof commodity futures in currencies, U.S. and non-U.S. interest ratesand were partially offset by gains in energy, metals and indices.

The third quarter presented a challenging investment landscape forthe Fund due to a number of price trend reversals in both the financialand commodity markets. Gains earned in currency and equity indices wereoffset by losses in energy and the fixed income markets.

Thefund posted gains from trading in Japanese Yen as the dollarstrengthened on speculation that Japan's central bank wouldrefrain from raising interest rates again this year. Buoyant globalequity markets were also beneficial for the fund as falling bond yieldsand energy prices supported global equity valuations.

Losseswere taken in energy, metals, and the fixed income markets, renderingthe Fund negative for the quarter. In the energy markets, losses wereaccumulated due to steeply declining prices of oil and refined productssuch as unleaded gasoline. The drop in prices was driven by the lack ofhurricane activity, a further easing of geopolitical tensions, andadequate physical supplies amid the warmer-than-normal autumn season.The Fund also suffered losses in the fixed income markets as theslowing housing market and deteriorating consumer spending furtherstrengthened the perception that U.S. monetary policy had changedcourse.

During the Partnership's nine months endedSeptember 30, 2006 the net asset value per Redeemable unit decreased7.1% from $1,817.40 to $1,689.12 as compared to an increase of3.9% for the nine months ended September 30, 2005. ThePartnership experienced a net trading loss before brokerage commissionsand related fees for the nine months ended September 30, 2006 of$8,270,832. Losses were primarily attributable to the Master'strading of commodity futures in currencies, energy and non-U.S.interest rates, and were partially offset by gains in U.S. interestrates, indices and metals. The Partnership experienced a net tradinggain before brokerage commissions and related fees during the ninemonths ended September 30, 2005 of $17,381,589. Gains were primarilyattributable to the trading of commodity futures in currencies, energy,non-U.S. interest rates, metals and indices and were partially offsetby losses in U.S. interest rates.

Commodity futures markets arehighly volatile. The potential for broad and rapid price fluctuationsincreases the risks involved in commodity trading, but also increasesthe possibility of profit. The profitability of the Partnership (andthe Master) depends on the existence of major price trends and theability of the Advisor to correctly identify those price trends. Pricetrends are influenced by, among other things, changing supply anddemand relationships, weather, governmental, agricultural, commercialand trade programs and policies, national and international politicaland economic 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 

16

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the Master's assets in cash and/orplace all of the Master's assets in 90-day Treasury bills and paythe Partnership 80% of the interest earned on the Treasury billspurchased. CGM will retain 20% of any interest earned onTreasury bills. Interest income allocated from the Master for the threeand nine months ended September 30, 2006 increased by $1,133,861 and$3,920,127, respectively, as compared to the corresponding periods in2005. The increase in interest income is primarily due to higher netassets and higher interest rates during the three and nine months endedSeptember 30, 2006 as compared to the corresponding periods in2005.

Brokerage commissions are calculated on thePartnership's adjusted net asset value on the last day of eachmonth and are affected by trading performance, additions andredemptions. Accordingly, they must be analyzed in relation to thefluctuations in the monthly net asset values. Commissions for the threeand nine months ended September 30, 2006 increased by $644,992 and$3,154,584, respectively, as compared to the corresponding periods in2005. The increase in brokerage commissions and fees is due to highernet assets during the three and nine months ended September 30, 2006 ascompared to the corresponding periods in 2005.

Management feesare calculated as a percentage of the Partnership's net assetvalue as of the end of each month and are affected by tradingperformance, additions and redemptions. Management fees for the threeand nine months ended September 30, 2006 increased by $197,640 and$964,919, respectively, as compared to the corresponding periods in2005. The increase in management fees is due to higher net assetsduring the three and nine months ended  September 30, 2006 ascompared to the corresponding periods in 2005.

Incentive feesare based on the new trading profits generated by the Advisor at theend of the quarter as defined in the advisory agreements between thePartnership, the General Partner and the Advisor. Trading performancefor the three and nine months ended September 30, 2006 resulted inincentive fees of $0 and $1,237,713, respectively. There were noincentive fees earned for the three and nine months endedSeptember  30, 2005.

17

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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 ofSeptember 30, 2006 and the highest, lowest and average values duringthe three months ended September 30, 2006. All open position tradingrisk exposures of the Master have been included in calculating thefigures set forth below. As of September 30, 2006, the Master'stotal capitalization was $317,680,507. There have been no materialchanges in the trading Value at Risk information previously disclosedin the Partnership's Annual Report on Form 10-K for the yearended December 31, 2005.

September 30,2006(Unaudited)

|                        |  |  |              |   |            |                          |  |  |                                      |  |        |                 |  |  |                      |   |            |  |  |  |  |   |           |  |  |  |  |   |           |  |
|------------------------|--|--|--------------|---|------------|--------------------------|--|--|--------------------------------------|--|--------|-----------------|--|--|----------------------|---|------------|--|--|--|--|---|-----------|--|--|--|--|---|-----------|--|
|                   |  |  |         |   |            |                     |  |  | ThreeMonths ended September 30, 2006 |
| Market Sector          |  |  | Value atRisk |   |            | % of TotalCapitalization |  |  | HighValue at Risk                    |  |        | LowValue atRisk |  |  | AverageValue atRisk* |
| Currencies:            |  |  |              |   |       |                          |  |  |                                      |  |   |                 |  |  |                      |   |       |  |  |  |  |   |      |  |  |  |  |   |      |  |
| —OTC             |  |  |              | $ | 13,041,103 |                          |  |  |                                      |  | 4.10   | %               |  |  |                      | $ | 13,613,647 |  |  |  |  | $ | 5,183,428 |  |  |  |  | $ | 8,546,131 |  |
| Energy                 |  |  |              |   | 3,834,100  |                          |  |  |                                      |  | 1.21   | %               |  |  |                      |   | 6,296,700  |  |  |  |  |   | 2,756,800 |  |  |  |  |   | 4,744,467 |  |
| Interest RatesU.S.     |  |  |              |   | 410,829    |                          |  |  |                                      |  | 0.13   | %               |  |  |                      |   | 1,620,310  |  |  |  |  |   | 199,533   |  |  |  |  |   | 629,917   |  |
| Interest RatesNon-U.S. |  |  |              |   | 1,842,983  |                          |  |  |                                      |  | 0.58   | %               |  |  |                      |   | 4,243,379  |  |  |  |  |   | 1,754,068 |  |  |  |  |   | 2,321,761 |  |
| Metals:                |  |  |              |   |       |                          |  |  |                                      |  |   |                 |  |  |                      |   |       |  |  |  |  |   |      |  |  |  |  |   |      |  |
| —Exchange Traded |  |  |              |   | 225,500    |                          |  |  |                                      |  | 0.07   | %               |  |  |                      |   | 225,500    |  |  |  |  |   | 129,000   |  |  |  |  |   | 183,383   |  |
| —OTC             |  |  |              |   | 1,160,142  |                          |  |  |                                      |  | 0.37   | %               |  |  |                      |   | 1,212,500  |  |  |  |  |   | 805,520   |  |  |  |  |   | 986,106   |  |
| Indices                |  |  |              |   | 9,569,298  |                          |  |  |                                      |  | 3.01   | %               |  |  |                      |   | 9,569,298  |  |  |  |  |   | 1,935,462 |  |  |  |  |   | 5,920,076 |  |
| Total                  |  |  |              | $ | 30,083,955 |                          |  |  |                                      |  | 9.47   | %               |  |  |                      |   |       |  |  |  |  |   |      |  |  |  |  |   |      |  |
|                        |

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

18

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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

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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 quarters ended March 31, 2006 and June 30,2006.

Enron Corp.

In light of the settlement of thesecurities class action (Newby, et al. v. Enron Corp., et al.),the plaintiffs have agreed to dismiss the following lawsuits againstCitigroup and its affiliates: California Public Employees'Retirement System v. Banc of America Securities LLC, et al., HeadwatersCapital LLC v. Lay et al., and Variable Annuity Life Ins. Co. v.Credit Suisse First Boston Corp., et al. Plaintiffs in two othercases, which are not part of the Newby class, have alsovoluntarily dismissed their claims against Citigroup and itsaffiliates: Steiner v. Enron Corp., et al. and Town of NewHartford v. Lay, et al.

Research

On August 17,2006, the United States District Court for the Southern District of NewYork approved the class action settlement of Citigroup and itsaffiliates in In Re Salomon Analyst AT&T Litigation, and onSeptember 29, 2006 that same court approved the class actionsettlements in In Re Salomon Analyst Level 3 Litigation, In ReSalomon Analyst XO Litigation and In Re Salomon Analyst WilliamsLitigation. 

On September 14, 2006, Citigroup and itsaffiliates settled all claims in Sturm, et al. v. Citigroup, etal. The settlement was covered by existing reserves.

OnOctober 6, 2006, the United States Court of Appeals granted a review ofthe district court's decision certifying a plaintiff class inIn Re Salomon Analyst Metromedia Litigation.

AdelphiaCommunications Corporation

Defendant banks in In Re AdelphiaCommunications Corporation Securities and Derivative Litigation,including the Citigroup Parties, have entered into settlementagreements with the Los Angeles County Employees Retirement Associationand with The Division of Investment of the New Jersey Department ofTreasury. The Citigroup Parties' share of the settlement wascovered by existing reserves.

Item 1A.    Risk Factors

There are no material changes from the risk factors set forth underPart I, Item 1A. ‘‘Risk Factors’’ in our AnnualReport on Form 10-K for the fiscal year ended December 31,2005.

Item 2.    Unregistered Sales of EquitySecurities and Use of Proceeds

For the three months endedSeptember 30, 2006, there were additional sales of 649.4945 RedeemableUnits of Limited Partnership totaling $1,140,807. The Redeemable Unitswere issued in reliance upon applicable exemptions from registrationunder Section 4(2) of the Securities Act of 1933, as amended, andSection 506 of Regulation D promulgated thereunder.

Proceedsfrom the sale of additional Redeemable Units are used in the trading ofcommodity interests including futures contracts, options and forwardscontracts.

20

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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 |
| July 1, 2006 -July31,2006           |  |  |                                    |  | 1,104.5235 |                           |  |  |                                                                                | $ | 1,754.21 |                                                                                                   |  |  |  |  | N/A |   |  |  |  |  | N/A |   |
| August1, 2006 -August 31,2006       |  |  |                                    |  | 1,430.9970 |                           |  |  |                                                                                | $ | 1,743.79 |                                                                                                   |  |  |  |  | N/A |   |  |  |  |  | N/A |   |
| September1, 2006 -September 30,2006 |  |  |                                    |  | 2,809.7102 |                           |  |  |                                                                                | $ | 1,689.12 |                                                                                                   |  |  |  |  | N/A |   |  |  |  |  | N/A |   |
|                                |  |  |                                    |  | 5,345.2307 |                           |  |  |                                                                                | $ | 1,729.04 |                                                                                                   |  |  |  |  | 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

Theexhibits 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).

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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:   November 14,2006 |
| By:                                     |  |  | /s/Jennifer Magro         Jennifer Magro ChiefFinancial Officer and Director |
| Date: November 14,2006                  |
|                                         |

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