FORM10-Q

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.20549

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

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

For the Quarter ended September 30,2004

Commission File Number0-50735

SMITH BARNEY POTOMACFUTURES FUND L.P.

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(Exact name ofregistrant as specified in its charter)

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

c/oCitigroup Managed Futures LLC 399 Park Avenue - 7th Fl. NewYork, New York10022

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(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 an accelerated filer (as defined in rule12b-2 of the Exchange Act).

Yes        No X

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SMITH BARNEY POTOMACFUTURES FUND L.P.

FORM 10-Q

INDEX

|                               |  |        |    |                                                                                                                                  |  |            |                         |        |  |  |  |  |  |  |
|-------------------------------|--|--------|----|----------------------------------------------------------------------------------------------------------------------------------|--|------------|-------------------------|--------|--|--|--|--|--|--|
|                          |  |   |    |                                                                                                                             |  | PageNumber |
| PARTI - FinancialInformation: |  |
|                          |  | Item1. |    | FinancialStatements:                                                                                                             |  |       |                    |   |
|                          |  |   |    | Statements ofFinancial Conditionat September 30, 2004 and December 31,2003(unaudited).                                           |  |       | 3                       |   |
|                          |  |   |    | CondensedSchedules of Investmentsat September 30, 2004 and December 31,2003(unaudited).                                          |  |       | 4 – 5   |   |
|                          |  |   |    | Statementsof Income and Expensesand Partners' Capital for the threeand nine months ended September 30, 2004 and 2003(unaudited). |  |       | 6                       |   |
|                          |  |   |    | Statementsof Cash Flows for thethree and nine months ended September 30, 2004and2003(unaudited).                                 |  |       | 7                       |   |
|                          |  |   |    | Notesto FinancialStatements(unaudited).                                                                                          |  |       | 8 – 10  |   |
|                          |  | Item2. |    | Management's Discussion andAnalysis of FinancialConditionand Results ofOperations                                                |  |       | 11 – 13 |   |
|                          |  | Item3. |    | Quantitative and QualitativeDisclosures about MarketRisk                                                                         |  |       | 14 – 15 |   |
|                          |  | Item4. |    | Controls andProcedures.                                                                                                          |  |       | 16                      |   |
| PARTII - OtherInformation     |  |   | 17 |                                                                                                                             |
|                               |

2

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PART I

Item 1.Financial Statements

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

|                                                                                                                                        |  |                   |             |                  |  |        |             |        |  |  |
|----------------------------------------------------------------------------------------------------------------------------------------|--|-------------------|-------------|------------------|--|--------|-------------|--------|--|--|
|                                                                                                                                   |  | September30, 2004 |             | December 31,2003 |
| Assets:                                                                                                                                |  |              |        |             |  |   |        |   |
| Equityin commodity futures tradingaccount:                                                                                             |  |              |        |             |  |   |        |   |
| Cash(restricted $10,880,396 and $12,244,698 in 2004 and 2003,respectively)                                                             |  | $                 | 129,985,425 |             |  | $      | 99,381,393  |   |
| Netunrealized appreciation on open futurescontracts                                                                                    |  |              | 833,420     |             |  |   | 4,672,048   |   |
| Unrealizedappreciation on open forwardcontracts                                                                                        |  |              | 6,566,638   |             |  |   | —     |   |
|                                                                                                                                   |  |              | 137,385,483 |             |  |   | 104,053,441 |   |
| Interestreceivable                                                                                                                     |  |              | 129,979     |             |  |   | 59,064      |   |
|                                                                                                                                   |  | $                 | 137,515,462 |             |  | $      | 104,112,505 |   |
| Liabilitiesand Partners'Capital:                                                                                                       |  |              |        |             |  |   |        |   |
| Liabilities:                                                                                                                           |  |              |        |             |  |   |        |   |
| Unrealizeddepreciation on open forwardcontracts                                                                                        |  |              | 4,331,902   |             |  |   | —     |   |
| Accruedexpenses:                                                                                                                       |  |              |        |             |  |   |        |   |
|     Commissions                                                                                                    |  |              | 709,585     |             |  |   | 574,758     |   |
|     Managementfees                                                                                                 |  |              | 217,031     |             |  |   | 175,717     |   |
|     Incentivefees                                                                                                  |  |              | —     |             |  |   | 594,066     |   |
|     Otherfees                                                                                                      |  |              | 85,271      |             |  |   | 91,208      |   |
| RedemptionsPayable                                                                                                                     |  |              | 1,478,648   |             |  |   | 340,328     |   |
|                                                                                                                                   |  |              | 6,822,437   |             |  |   | 1,776,077   |   |
| Partners'Capital:                                                                                                                      |  |              |        |             |  |   |        |   |
| General Partner,729.3902 and 484.2302 Unit equivalents outstanding in 2004 and 2003,respectively                                       |  |              | 1,147,156   |             |  |   | 791,542     |   |
| LimitedPartners, 82,368.3202 and 62,120.5159 Redeemable Units of LimitedPartnership Interest outstanding in 2004 and 2003,respectively |  |              | 129,545,869 |             |  |   | 101,544,886 |   |
|                                                                                                                                   |  |              | 130,693,025 |             |  |   | 102,336,428 |   |
|                                                                                                                                   |  | $                 | 137,515,462 |             |  | $      | 104,112,505 |   |
|                                                                                                                                        |

SeeAccompanying Notes to Unaudited FinancialStatements.

3

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Smith Barney Potomac Futures FundL.P.Condensed Schedule of InvestmentsSeptember 30,2004(Unaudited)

|                                   |  |                                                    |  |           |            |         |  |  |  |  |
|-----------------------------------|--|----------------------------------------------------|--|-----------|------------|---------|--|--|--|--|
| Sector                            |  | Contract                                           |  | FairValue |
| Currencies                        |  |                                               |  |      |       |    |
|                              |  | Unrealizeddepreciation on forward contracts(3.03)% |  | $         | (3,966,042 | )  |
|                              |  | Unrealizedappreciation on forward contracts4.68%   |  |      | 6,117,555  |    |
| Total Currencies1.65%             |  |                                               |  |      | 2,151,513  |    |
|                              |  |                                               |  |      |       |    |
| Total Energy                      |  |                                               |  |      |       |    |
|                              |  | Futures contracts purchased0.03%                   |  |      | 34,171     |    |
|                              |  | Futurescontracts sold(0.19)%                       |  |      | (242,050   | )  |
| TotalEnergy(0.16)%                |  |                                               |  |      | (207,879   | )  |
|                              |  |                                               |  |      |       |    |
| TotalInterest Rates Non-U.S.      |  |                                               |  |      |       |    |
|                              |  | Futures contracts purchased0.97%                   |  |      | 1,263,480  |    |
|                              |  | Futurescontracts sold(0.00)%*                      |  |      | (1,821     | )  |
| TotalInterest Rates Non-U.S.0.97% |  |                                               |  |      | 1,261,659  |    |
|                              |  |                                               |  |      |       |    |
| Total Interest RatesU.S. 0.05%    |  | Futures contracts purchased0.05%                   |  |      | 65,768     |    |
|                              |  |                                               |  |      |       |    |
| Metals                            |  |                                               |  |      |       |    |
|                              |  | Unrealizeddepreciation on forward contracts(0.28)% |  |      | (365,860   | )  |
|                              |  | Unrealizedappreciation on forward contracts0.34%   |  |      | 449,083    |    |
| TotalMetals 0.06%                 |  |                                               |  |      | 83,223     |    |
|                              |  |                                               |  |      |       |    |
| Indices                           |  |                                               |  |      |       |    |
|                              |  | Futurescontracts purchased(0.22)%                  |  |      | (291,231   | )  |
|                              |  | Futurescontracts sold 0.00%*                       |  |      | 5,103      |    |
| Total Indices(0.22)%              |  |                                               |  |      | (286,128   | )  |
|                              |  |                                               |  |      |       |    |
| TotalFair Value 2.35%             |  |                                               |  | $         | 3,068,156  |    |
|                                   |

|                    |  |                           |           |                               |  |        |        |          |  |  |
|--------------------|--|---------------------------|-----------|-------------------------------|--|--------|--------|----------|--|--|
| CountryComposition |  | Investments at Fair Value |           | % ofInvestments at Fair Value |
| Canada             |  | $                         | (79       | )                        |  |   | (0.00) | %*  |
| Germany            |  |                      | 731,597   |                          |  |   | 23.84  |     |
| HongKong           |  |                      | (27,674   | )                        |  |   | (0.90  | )   |
| Japan              |  |                      | 97,013    |                          |  |   | 3.16   |     |
| Spain              |  |                      | (7,053    | )                        |  |   | (0.23  | )   |
| UnitedKingdom      |  |                      | 289,028   |                          |  |   | 9.42   |     |
| UnitedStates       |  |                      | 1,985,324 |                          |  |   | 64.71  |     |
|               |  | $                         | 3,068,156 |                          |  |   | 100.00 | %   |
|                    |

Percentagesare based on Partners' capital unless otherwise indicated

* Due to rounding

See AccompanyingNotes to Unaudited Financials Statements.

4

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Smith Barney Potomac Futures FundL.P.Condensed Schedule of InvestmentsDecember 31,2003(Unaudited)

|                                              |  |                                    |          |           |            |         |  |  |  |  |
|----------------------------------------------|--|------------------------------------|----------|-----------|------------|---------|--|--|--|--|
| Sector                                       |  | Contract                           |          | FairValue |
| Currencies                                   |  |                               |          |
|                                         |  | Futurescontracts purchased5.40%    |          | $         | 5,520,628  |    |
|                                         |  | Futurescontracts sold(2.40)%       |          |      | (2,454,608 | )  |
|     TotalCurrencies3.00% |  |                               |          |      | 3,066,020  |    |
|                                         |  |                               |          |      |       |    |
| TotalEnergy 0.50%                            |  | Futures contracts purchased0.50%   |          |      | 515,673    |    |
|                                         |  |                               |          |      |       |    |
| TotalInterest Rates U.S. (0.14)%             |  | Futures contracts purchased(0.14)% |          |      | (146,125   | )  |
|                                         |  |                               |          |      |       |    |
| InterestRates Non-U.S                        |  |                               |          |      |       |    |
|                                         |  | Futurescontracts purchased(0.06)%  |          |      | (57,653    | )  |
|                                         |  | Futurescontracts sold(0.11)%       |          |      | (117,205   | )  |
| TotalInterest Rates Non-U.S.(0.17)%          |  |                               | (174,858 | )    |
|                                         |  |                               |          |      |       |    |
| TotalIndices 1.38%                           |  | Futures contracts purchased1.38%   |          |      | 1,411,338  |    |
|                                         |  |                               |          |      |       |    |
| TotalFair Value4.57%                         |  |                               |          | $         | 4,672,048  |    |
|                                              |

|                    |  |                          |           |                             |  |        |        |         |  |  |
|--------------------|--|--------------------------|-----------|-----------------------------|--|--------|--------|---------|--|--|
| CountryComposition |  | Investmentsat Fair Value |           | % ofInvestmentsat FairValue |
| Canada             |  | $                        | 10,640    |                        |  |   | 0.23   | %  |
| Germany            |  |                     | 319,577   |                        |  |   | 6.84   |    |
| Japan              |  |                     | 240       |                        |  |   | 0.00   | *  |
| Spain              |  |                     | 88,872    |                        |  |   | 1.90   |    |
| UnitedKingdom      |  |                     | 254,985   |                        |  |   | 5.46   |    |
| UnitedStates       |  |                     | 3,997,734 |                        |  |   | 85.57  |    |
|               |  | $                        | 4,672,048 |                        |  |   | 100.00 | %  |
|                    |

Percentagesare based on Partners' capital unless otherwise indicated

* Due to rounding

See Accompanying Notesto Unaudited Financial Statements.

5

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

|                                                                                                                              |  |                                |             |                              |  |        |            |         |  |        |             |         |  |        |             |         |  |  |
|------------------------------------------------------------------------------------------------------------------------------|--|--------------------------------|-------------|------------------------------|--|--------|------------|---------|--|--------|-------------|---------|--|--------|-------------|---------|--|--|
|                                                                                                                         |  | ThreeMonths EndedSeptember 30, |             | Nine MonthsEndedSeptember30, |
|                                                                                                                         |  | 2004                           |             | 2003                         |  | 2004   |            | 2003    |
| Income:                                                                                                                      |  |
| Netgains (losses) on trading of commodityfutures:                                                                            |  |                           |        |                         |  |   |       |    |  |   |        |    |  |   |        |    |
| Realizedgains (losses) on closedpositions                                                                                    |  | $                              | (9,032,144  | )                       |  | $      | (3,668,277 | )  |  | $      | 6,182,786   |    |  | $      | 12,151,129  |    |
| Changein unrealized gains (losses) on openpositions                                                                          |  |                           | 6,036,118   |                         |  |   | 2,061,844  |    |  |   | (1,603,892  | )  |  |   | (662,630    | )  |
|                                                                                                                         |  |                           | (2,996,026  | )                       |  |   | (1,606,433 | )  |  |   | 4,578,894   |    |  |   | 11,488,499  |    |
| Interestincome                                                                                                               |  |                           | 355,813     |                         |  |   | 131,324    |    |  |   | 803,611     |    |  |   | 438,345     |    |
|                                                                                                                         |  |                           | (2,640,213  | )                       |  |   | (1,475,109 | )  |  |   | 5,382,505   |    |  |   | 11,926,844  |    |
| Expenses:                                                                                                                    |  |                           |        |                         |  |   |       |    |  |   |        |    |  |   |        |    |
| Brokeragecommissions including clearing fees of $23,343, $35,337, $109,647 and$107,405,respectively                          |  |                           | 2,216,715   |                         |  |   | 1,261,292  |    |  |   | 6,367,840   |    |  |   | 3,651,744   |    |
| Managementfees                                                                                                               |  |                           | 664,894     |                         |  |   | 370,214    |    |  |   | 1,896,142   |    |  |   | 1,072,636   |    |
| Incentivefees                                                                                                                |  |                           | —     |                         |  |   | —    |    |  |   | 3,973,895   |    |  |   | 1,731,702   |    |
| Other                                                                                                                        |  |                           | 11,703      |                         |  |   | 27,240     |    |  |   | 24,650      |    |  |   | 84,994      |    |
|                                                                                                                         |  |                           | 2,893,312   |                         |  |   | 1,658,746  |    |  |   | 12,262,527  |    |  |   | 6,541,076   |    |
| Netincome(loss)                                                                                                              |  |                           | (5,533,525  | )                       |  |   | (3,133,855 | )  |  |   | (6,880,022  | )  |  |   | 5,385,768   |    |
|                                                                                                                         |  |
| Additions– LimitedPartners                                                                                             |  |                           | 18,035,000  |                         |  |   | 14,231,000 |    |  |   | 53,663,000  |    |  |   | 33,105,000  |    |
| Additions– GeneralPartner                                                                                              |  |                           | —     |                         |  |   | —    |    |  |   | 410,000     |    |  |   | —     |    |
| Redemptions– LimitedPartners                                                                                           |  |                           | (5,387,167  | )                       |  |   | (5,678,621 | )  |  |   | (18,836,381 | )  |  |   | (20,902,710 | )  |
| Netincrease in Partners'capital                                                                                              |  |                           | 7,114,308   |                         |  |   | 5,418,524  |    |  |   | 28,356,597  |    |  |   | 17,588,058  |    |
| Partners'capital, beginning ofperiod                                                                                         |  |                           | 123,578,717 |                         |  |   | 67,032,192 |    |  |   | 102,336,428 |    |  |   | 54,862,658  |    |
| Partners'capital, end ofperiod                                                                                               |  | $                              | 130,693,025 |                         |  | $      | 72,450,716 |    |  | $      | 130,693,025 |    |  | $      | 72,450,716  |    |
| Netasset value per Redeemable Unit(83,097.7104 and 47,317.7817 Unitsoutstanding at September 30, 2004 and 2003,respectively) |  | $                              | 1,572.76    |                         |  | $      | 1,531.15   |    |  | $      | 1,572.76    |    |  | $      | 1,531.15    |    |
| Netincome (loss) per Redeemable Unit of Limited Partnership Interest andGeneral Partner Unitequivalent                       |  | $                              | (66.74      | )                       |  | $      | (65.75     | )  |  | $      | (61.88      | )  |  | $      | 136.87      |    |
|                                                                                                                              |

SeeAccompanying Notes to Unaudited Financial Statements

6

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

|                                                                                                                           |  |                                |             |                               |  |        |            |         |  |        |             |         |  |        |             |         |  |  |
|---------------------------------------------------------------------------------------------------------------------------|--|--------------------------------|-------------|-------------------------------|--|--------|------------|---------|--|--------|-------------|---------|--|--------|-------------|---------|--|--|
|                                                                                                                      |  | ThreeMonths EndedSeptember 30, |             | Nine MonthsEndedSeptember 30, |
|                                                                                                                      |  | 2004                           |             | 2003                          |  | 2004   |            | 2003    |
| Cashflows from operating activities:                                                                                      |  |
| Net income(loss)                                                                                                          |  | $                              | (5,533,525  | )                        |  | $      | (3,133,855 | )  |  | $      | (6,880,022  | )  |  | $      | 5,385,768   |    |
| Adjustmentsto reconcile net income (loss) to net cash provided by (used in)operatingactivities:                           |  |                           |        |                          |  |   |       |    |  |   |        |    |  |   |        |    |
| Changesin operating assets andliabilities:                                                                                |  |                           |        |                          |  |   |       |    |  |   |        |    |  |   |        |    |
| (Increase)decrease in net unrealized appreciation/depreciation on open futurespositions                                   |  |                           | (3,782,624  | )                        |  |   | (2,036,900 | )  |  |   | 3,838,628   |    |  |   | 673,466     |    |
| (Increase)decrease in unrealized appreciation on open forwardcontracts                                                    |  |                           | (6,566,546  | )                        |  |   | 22,488     |    |  |   | (6,566,638  | )  |  |   | 22,901      |    |
| (Increase)decrease in interestreceivable                                                                                  |  |                           | (44,818     | )                        |  |   | 4,958      |    |  |   | (70,915     | )  |  |   | (304        | )  |
|                                                                                                                      |  |                           |        |                          |  |   |       |    |  |   |        |    |  |
| Increase(decrease) in unrealized depreciation on open forwardcontracts                                                    |  |                           | 4,313,052   |                          |  |   | (47,432    | )  |  |   | 4,331,902   |    |  |   | (33,737     | )  |
| Accruedexpenses:                                                                                                          |  |                           |        |                          |  |   |       |    |  |   |        |    |  |   |        |    |
| Increase(decrease) in commissions                                                                                         |  |                           | 42,274      |                          |  |   | 3,488      |    |  |   | 134,827     |    |  |   | 90,223      |    |
| Increase(decrease) in management fees                                                                                     |  |                           | 12,924      |                          |  |   | 1,130      |    |  |   | 41,314      |    |  |   | 27,601      |    |
| Increase(decrease) in incentivefees                                                                                       |  |                           | —     |                          |  |   | (629,985   | )  |  |   | (594,066    | )  |  |   | —     |    |
| Increase(decrease) inother                                                                                                |  |                           | 8,704       |                          |  |   | (38,216    | )  |  |   | (5,937      | )  |  |   | 19,538      |    |
| Increase(decrease) in redemptionspayable                                                                                  |  |                           | 756,252     |                          |  |   | (4,101,911 | )  |  |   | 1,138,320   |    |  |   | 1,013,312   |    |
|     Netcash provided by (used in)         operatingactivities |  |                           | (10,794,307 | )                        |  |   | (9,956,235 | )  |  |   | (4,632,587  | )  |  |   | 7,198,768   |    |
| Cashflows from financing activities:                                                                                      |  |
| Proceedsfrom additions – LimitedPartners                                                                            |  |                           | 18,035,000  |                          |  |   | 14,231,000 |    |  |   | 53,663,000  |    |  |   | 33,105,000  |    |
| Proceedsfrom additions – GeneralPartner                                                                             |  |                           | —     |                          |  |   | —    |    |  |   | 410,000     |    |  |   | —     |    |
| Paymentsfor redemptions – LimitedPartners                                                                           |  |                           | (5,387,167  | )                        |  |   | (5,678,621 | )  |  |   | (18,836,381 | )  |  |   | (20,902,710 | )  |
| Netcash provided by (used in)     financingactivities                                                 |  |                           | 12,647,833  |                          |  |   | 8,552,379  |    |  |   | 35,236,619  |    |  |   | 12,202,290  |    |
| Netchange incash                                                                                                          |  |                           | 1,853,526   |                          |  |   | (1,403,856 | )  |  |   | 30,604,032  |    |  |   | 19,401,058  |    |
| Cash,at beginning ofperiod                                                                                                |  |                           | 128,131,899 |                          |  |   | 74,111,701 |    |  |   | 99,381,393  |    |  |   | 53,306,787  |    |
| Cash,at end ofperiod                                                                                                      |  | $                              | 129,985,425 |                          |  | $      | 72,707,845 |    |  | $      | 129,985,425 |    |  | $      | 72,707,845  |    |
|                                                                                                                           |

SeeAccompanying Notes to Unaudited FinancialStatements

7

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SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements September 30, 2004 (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, formerly Smith Barney Futures Management LLC, actsas the general partner (the "GeneralPartner") of the Partnership. The Partnership'scommodity broker is Citigroup Global Markets Inc.("CGM"), formerly Salomon Smith Barney Inc.CGM is an affiliate of the General Partner. The General Partner iswholly owned by Citigroup Global Markets Holdings Inc.("CGMHI"), formerly Salomon Smith BarneyHoldings Inc., which is the sole owner of CGM. CGMHI is a wholly ownedsubsidiary of Citigroup Inc. As of September 30, 2004, all tradingdecisions for the Partnership are made by Campbell & Company, Inc.(the "Advisor").

The accompanyingfinancial statements are unaudited but, in the opinion of management,include all adjustments, consisting only of normal recurringadjustments, necessary for a fair presentation of thePartnership's financial condition at September 30, 2004 andDecember 31, 2003 and the results of its operations and cash flows forthe three and nine months ended September 30, 2004 and 2003. 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'sRegistration Statement on Form 10-12G/A filed with the Securities andExchange Commission on June 1, 2004.

Due to the nature ofcommodity trading, the results of operations for the interim periodspresented should not be considered indicative of the results that maybe expected for the entire year.

2.    FinancialHighlights:

Changes in Net Asset Value per Redeemable Unit ofLimited Partnership Interest for the three and nine months endedSeptember 30, 2004 and 2003 were asfollows:

|                                                       |  |                                |          |                              |  |        |          |         |  |        |          |         |  |        |          |         |  |  |
|-------------------------------------------------------|--|--------------------------------|----------|------------------------------|--|--------|----------|---------|--|--------|----------|---------|--|--------|----------|---------|--|--|
|                                                  |  | ThreeMonths EndedSeptember 30, |          | Nine MonthsEndedSeptember30, |
|                                                  |  | 2004                           |          | 2003                         |  | 2004   |          | 2003    |
| Netrealized and unrealized gains(losses)*             |  | $                              | (62.83   | )                       |  | $      | (60.19   | )  |  | $      | 13.39    |    |  | $      | 193.83   |    |
| Interestincome                                        |  |                           | 4.31     |                         |  |   | 2.75     |    |  |   | 10.69    |    |  |   | 9.68     |    |
| Expenses**                                            |  |                           | (8.22    | )                       |  |   | (8.31    | )  |  |   | (85.96   | )  |  |   | (66.64   | )  |
| Increase(decrease) for theperiod                      |  |                           | (66.74   | )                       |  |   | (65.75   | )  |  |   | (61.88   | )  |  |   | 136.87   |    |
| NetAsset Value per Redeemable Unit,beginning ofperiod |  |                           | 1,639.50 |                         |  |   | 1,596.90 |    |  |   | 1,634.64 |    |  |   | 1,394.28 |    |
| NetAsset Value per Redeemable Unit,end ofperiod       |  | $                              | 1,572.76 |                         |  | $      | 1,531.15 |    |  | $      | 1,572.76 |    |  | $      | 1,531.15 |    |
|                                                       |

|   |                                |
|---|--------------------------------|
| * | Includesbrokerage commissions. |

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

8

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SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements September 30, 2004 (Unaudited) (Continued)

|                                             |  |                                |         |                              |  |        |         |          |  |        |        |          |  |        |        |          |  |  |
|---------------------------------------------|--|--------------------------------|---------|------------------------------|--|--------|---------|----------|--|--------|--------|----------|--|--------|--------|----------|--|--|
|                                        |  | ThreeMonths EndedSeptember 30, |         | Nine MonthsEndedSeptember30, |
|                                        |  | 2004                           |         | 2003                         |  | 2004   |         | 2003     |
| Ratioto average netassets:***               |  |                           |    |                         |  |   |    |     |  |   |   |     |  |   |   |     |
| Netinvestment loss before incentivefees**** |  |                           | (7.9    | )%                      |  |   | (8.6    | )%  |  |   | (8.2   | )%  |  |   | (8.7   | )%  |
| Operatingexpenses                           |  |                           | 9.0     | %                       |  |   | 9.4     | %   |  |   | 9.1    | %   |  |   | 9.6    | %   |
| Incentivefees                               |  |                           | — |                         |  |   | — |     |  |   | 3.3    | %   |  |   | 2.6    | %   |
| Totalexpenses                               |  |                           | 9.0     | %                       |  |   | 9.4     | %   |  |   | 12.4   | %   |  |   | 12.2   | %   |
| Totalreturn:                                |  |                           |    |                         |  |   |    |     |  |   |   |     |  |   |   |     |
| Totalreturn before incentivefees            |  |                           | (4.1    | )%                      |  |   | (4.1)   | %   |  |   | (0.9   | )%  |  |   | 12.4   | %   |
| Incentivefees                               |  |                           | — |                         |  |   | — |     |  |   | (2.9   | )%  |  |   | (2.6   | )%  |
| Totalreturn after incentivefees             |  |                           | (4.1    | )%                      |  |   | (4.1)   | %   |  |   | (3.8   | )%  |  |   | 9.8    | %   |
|                                             |

|     |                                       |
|-----|---------------------------------------|
| *** | 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.

3.    Trading Activities:

The Partnership was formed forthe purpose of trading contracts in a variety of commodity interests,including derivative financial instruments and derivative commodityinstruments. The results of the Partnership's trading activitiesare shown in the Statements of Income and Expenses and Partners'Capital and are discussed in Item 2, Management's Discussion andAnalysis of Financial Condition and Results of Operations.

TheCustomer Agreement between the Partnership and CGM gives thePartnership the legal right to net unrealized gains and losses on openfutures positions.

All of the commodity interests owned by thePartnership are held for trading purposes. The average fair values ofthese interests during the nine and twelve months ended September 30,2004 and December 31, 2003, based on a monthly calculation, were$1,971,687 and $3,373,573, respectively. The fair values of thesecommodity interests, including options thereon, if applicable, atSeptember 30, 2004 and December 31, 2003, were $3,068,156 and$4,672,048, respectively. Fair values for exchange traded commodityfutures and options are based on quoted market prices for those futuresand options. Fair values for all other financial instruments for whichmarket quotations are not readily available are based on calculationsapproved by the General Partner.

4.    Financial InstrumentRisks:

In the normal course of its business, the Partnership isparty to financial instruments with off-balance sheet risk, includingderivative financial instruments and derivative commodity instruments.These financial instruments may include forwards, futures and options,whose values are based upon an underlying asset, index, or referencerate, and generally represent future commitments to exchange currenciesor cash flows, to purchase or sell other financial instruments atspecific terms at specified future dates, or, in the case of derivativecommodity instruments, to have a reasonable possibility to be settledin cash, through physical delivery or with another financialinstrument. These instruments may be traded on an exchange orover-the-counter ("OTC"). Exchange-tradedinstruments are standardized and include 

9

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SmithBarney Potomac Futures Fund L.P. Notes to FinancialStatements September 30, 2004 (Unaudited) (Continued)

futures and certain option contracts. OTCcontracts are negotiated between contracting parties and includeforwards and certain options.

Each of these instruments issubject to various risks similar to those related to the underlyingfinancial instruments including market and credit risk. In general, therisks associated with OTC contracts are greater than those associatedwith exchange-traded instruments because of the greater risk of defaultby the counterparty to an OTC contract.

Market risk is thepotential for changes in the value of the financial instruments tradedby the Partnership due to market changes, including interest andforeign exchange rate movements and fluctuations in commodity orsecurity prices. Market risk is directly impacted by the volatility andliquidity in the markets in which the related underlying assets aretraded.

Credit risk is the possibility that a loss may occur dueto the failure 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. The Partnership's risk ofloss in the event of counterparty default is typically limited to theamounts recognized as unrealized appreciation in the statements offinancial condition and not represented by the contract or notionalamounts of the instruments. The Partnership has credit risk andconcentration risk because the sole counterparty or broker with respectto the Partnership's assets is CGM.

The General Partnermonitors and controls the Partnership's risk exposure on a dailybasis through financial, credit and risk management monitoring systems,and accordingly believes that it has effective procedures forevaluating and limiting the credit and market risks to which thePartnership is subject. These monitoring systems allow the GeneralPartner to statistically analyze actual trading results withrisk-adjusted performance indicators and correlation statistics. Inaddition, on-line monitoring systems provide account analysis offutures, forward and option positions by sector, margin requirements,gain and loss transactions and collateral positions.

Themajority of these instruments mature within one year of September 30,2004. However, due to the nature of the Partnership's business,these instruments may not be held tomaturity.

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

Liquidity andCapital Resources

The Partnership does not engage inthe sale of goods or services. Its only assets are its equity in itscommodity futures trading account, consisting of cash, net unrealizedappreciation (depreciation) on open futures and forward contracts andinterest receivable. Because of the low margin deposits normallyrequired in commodity futures trading, relatively small price movementsmay result in substantial losses to the Partnership. While substantiallosses could lead to a substantial decrease in liquidity, no suchlosses occurred in the third quarter of 2004.

ThePartnership's capital consists of capital contributions, asincreased or decreased by realized and/or unrealized gains or losses oncommodity futures trading and expenses, interest income, redemptions ofRedeemable Units and distributions of profits, if any.

For thenine months ended September 30, 2004, Partnership capital increased27.7% from $102,336,428 to $130,693,025. This increase wasattributable to sales of 31,139.4170 Redeemable Units of LimitedPartnership Interest totaling $53,663,000 and 245.1600 General PartnerUnit equivalents totaling $410,000, which was partially offset by thenet loss from operations of $6,880,022 coupled with the redemption of10,891.6127 Redeemable Units of Limited Partnership Interest totaling$18,836,381. Future redemptions can impact the amount of fundsavailable for investment in commodity contract positions in subsequentperiods.

Critical Accounting Policies

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

All commodity interests (including derivative financial instrumentsand derivative commodity instruments) are used for trading purposes.The commodity interests are recorded on trade date and open contractsare recorded in the statements of financial condition at fair value onthe last business day of the period, which represents market value forthose commodity interests for which market quotations are readilyavailable 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.

Foreign currency contracts are those contracts wherethe Partnership agrees to receive or deliver a fixed quantity offoreign currency for an agreed-upon price on an agreed future date.Foreign currency contracts are valued daily, and thePartnership's net equity therein, representing unrealized gain orloss on the contracts as measured by the difference between the forwardforeign exchange rates at the dates of entry into the contracts and theforward rates at the reporting date, is included in the statements offinancial condition. Realized gains (losses) and changes in unrealizedvalues on foreign currency contracts are recognized in the period inwhich the contract is closed or the changes occur and are included inthe Statements of Income and Expenses and Partners' capital.

Results of Operations

During thePartnership's third quarter of 2004 the net asset value perRedeemable unit decreased 4.1% from $1,639.50 to $1,572.76 ascompared to a decrease of 4.1% in the third quarter of 2003. ThePartnership experienced a net trading loss before brokerage commissionsand related fees in the third quarter of 2004 of $2,996,026. Losseswere primarily attributable to the trading of commodity futures incurrencies, energy, indices and metals and were partially offset bygains in U.S. and non-U.S. interest 

11

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rates. The Partnership experienced a nettrading loss before brokerage commissions and related fees in the thirdquarter of 2003 of $1,606,433. Losses were primarily attributable tothe trading of commodity futures in energy, U.S. and non-U.S. interestrates and metals and were partially offset by gains in currencies andindices.

During the Partnership's nine months endedSeptember 30, 2004 the net asset value per Redeemable unit decreased3.8% from $1,634.64 to $1,572.76 as compared to an increase of9.8% for the nine months ended September 30, 2003. ThePartnership experienced a net trading gain before brokerage commissionsand related fees during the nine months ended September 30, 2004 of$4,578,894. Gains were primarily attributable to the trading ofcommodity futures in energy and U.S. and non-U.S. interest rates andwere partially offset by losses in currencies, metals and indices. ThePartnership experienced a net trading gain before brokerage commissionsand related fees for the nine months ended September 30, 2003 of$11,488,499. Gains were primarily attributable to the trading ofcommodity futures in currencies, energy, U.S. interest rates andindices and were partially offset by losses in non-U.S. interest ratesand metals.

The third quarter of 2004 was characterized bycontinued difficult trading conditions for the Partnership'strend-following Advisor. The currency sector produced the greatestlosses as the European and Asian currencies were unable to sustain anysolid direction versus a weak U.S. dollar. These choppy marketconditions carried over to the U.S. interest rate markets as theFederal Reserve Bank tightened short-term rates in spite of persistentmarket-driven lower long-term interest rates. Trading nonetheless wasprofitable in both markets for the quarter. Trading in global stockmarket indices was unprofitable for the Partnership's Advisor asthe same lack of direction caused trends to be initiated and only ashort time later to be reversed. Trading in energy and metals was alsonegative for the period.

The overall expectation is for continueddirectionless financial markets until political, financial and economictrends become more evident. Such periods of listless market conditionsare typically not favorable to trend-following trading strategies.During such periods it is this Advisor's approach to temper riskexposure, be patient and over time attempt to deliver consistentreturns over time.

Commodity futures markets are highly volatile.The potential for broad and rapid price fluctuations increases therisks involved in commodity trading, but also increases the possibilityof profit. The profitability of the Partnership depends on theexistence of major price trends and the ability of the Advisor tocorrectly identify those price trends. Price trends are influenced by,among other things, changing supply and demand relationships, weather,governmental, agricultural, commercial and trade programs and policies,national and international political and economic events and changes ininterest rates. To the extent that market trends exist and the Advisoris able to identify them, the Partnership expects to increase capitalthrough operations.

Interest income on 80% of thePartnership's daily average equity maintained in cash was earnedat a 30-day U.S. Treasury bill rate determined weekly by CGM based onthe average non-competitive yield on 3-month U.S. Treasury billsmaturing in 30 days. CGM may continue to maintain thePartnership's assets in cash and/or place all of thePartnership's assets in 90-day Treasury bills and pay thePartnership 80% of the interest earned on the Treasury billspurchased. CGM will retain 20% of any interest earned onTreasury bills. Interest income for the three and nine months endedSeptember 30, 2004 increased by $224,489 and $365,266, respectively, ascompared to the corresponding periods in 2003. The increase in interestincome is primarily due to higher average net assets and higherinterest rates during the three and nine months ended September 30,2004 as compared to the corresponding periods in 2003.

Brokeragecommissions are calculated on the Partnership's adjusted netasset value on the last day of each month and are affected by tradingperformance, additions and redemptions. Accordingly, they must beanalyzed in relation to the fluctuations in the monthly net assetvalues. Commissions and fees for the three and nine months endedSeptember 30, 2004 increased by $955,423 and $2,716,096, respectively,as compared to the corresponding periods in 2003. The increase inbrokerage commissions and fees is due to higher average net assetsduring the three and nine months ended September 30, 2004 as comparedto the corresponding periods in 2003.

Management fees arecalculated as a percentage of the Partnership's net asset valueas of the end of each month and are affected by trading performance,additions and redemptions. Management fees for 

12

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the three and nine months ended September 30,2004 increased by $294,680 and $823,506, respectively, as compared tothe corresponding periods in 2003. The increase in management fees isdue to higher average net assets during the three and nine months endedSeptember 30, 2004 as compared to the corresponding periods in2003.

Incentive fees are based on the new trading profitsgenerated by the Advisor at the end of the quarter as defined in theadvisory agreements between the Partnership, the General Partner andthe Advisor. Trading performance for the three and nine months endedSeptember 30, 2004 resulted in incentive fees of $0 and $3,973,895,respectively. Trading performance for the three and nine months endedSeptember 30, 2003 resulted in incentive fees of $0 and $1,731,702,respectively.

13

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Item. 3    Quantitative and QualitativeDisclosures about Market Risk

The Partnership is a speculativecommodity pool. The market sensitive instruments held by it areacquired for speculative trading purposes, and all or substantially allof the Partnership's assets are subject to the risk of tradingloss. Unlike an operating company, the risk of market sensitiveinstruments is integral, not incidental, to the Partnership'smain line of business.

Market movements result in frequentchanges in the fair market value of the Partnership's openpositions and, consequently, in its earnings and cash flow. ThePartnership's market risk is influenced by a wide variety offactors, including the level and volatility of interest rates, exchangerates, equity price levels, the market value of financial instrumentsand contracts, the diversification effects among thePartnership's open positions and the liquidity of the markets inwhich it trades.

The Partnership rapidly acquires and liquidatesboth long 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 Partnership'spast performance is not necessarily indicative of its futureresults.

Value at Risk is a measure of the maximum amount whichthe Partnership could reasonably be expected to lose in a given marketsector. However, the inherent uncertainty of the Partnership'sspeculative trading and the recurrence in the markets traded by thePartnership of market movements far exceeding expectations could resultin actual trading or non-trading losses far beyond the indicated Valueat Risk or the Partnership's experience to date (i.e.,"risk of ruin"). In light of the foregoing aswell as the risks and uncertainties intrinsic to all futureprojections, the inclusion of the quantification in this section shouldnot be considered to constitute any assurance or representation thatthe Partnership's losses in any market sector will be limited toValue at Risk or by the Partnership's attempts to manage itsmarket risk.

Exchange maintenance margin requirements have beenused by the Partnership as the measure of its Value at Risk.Maintenance margin requirements are set by exchanges to equal or exceedthe maximum losses reasonably expected to be incurred in the fair valueof any given contract in 95%-99% of any one-day interval.Maintenance margin has been used rather than the more generallyavailable initial margin, because initial margin includes a credit riskcomponent, which is not relevant to Value atRisk.

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The following table indicates the tradingValue at Risk associated with the Partnership's open positions bymarket category as of September 30, 2004 and the highest, lowest andaverage values during the three months ended September 30, 2004. Allopen position trading risk exposures of the Partnership have beenincluded in calculating the figures set forth below. As of September30, 2004, the Partnership's total capitalization was$130,693,025. There has been no material change in the trading Value atRisk information previously disclosed in the Partnership'sRegistration Statement on Form 10-12G/A filed on June 1, 2004.

September 30, 2004(Unaudited)

|                       |  |              |            |                          |  |                                      |      |                 |  |                      |           |        |  |        |           |        |  |        |           |        |  |  |
|-----------------------|--|--------------|------------|--------------------------|--|--------------------------------------|------|-----------------|--|----------------------|-----------|--------|--|--------|-----------|--------|--|--------|-----------|--------|--|--|
|                  |  |         |            |                     |  | ThreeMonths Ended September 30, 2004 |
| Market Sector         |  | Value atRisk |            | % of TotalCapitalization |  | HighValue at Risk                    |      | LowValue atRisk |  | AverageValue atRisk* |
| Currencies:           |  |
| —OTC            |  | $            | 3,983,839  |                     |  |                                 | 3.05 | %          |  | $                    | 6,061,497 |   |  | $      | 3,112,876 |   |  | $      | 4,924,516 |   |
| Energy                |  |         | 129,000    |                     |  |                                 | 0.10 | %          |  |                 | 389,700   |   |  |   | 16,000    |   |  |   | 142,433   |   |
| InterestRatesU.S.     |  |         | 501,800    |                     |  |                                 | 0.38 | %          |  |                 | 513,200   |   |  |   | 11,475    |   |  |   | 331,517   |   |
| InterestRatesNon-U.S. |  |         | 3,580,691  |                     |  |                                 | 2.74 | %          |  |                 | 4,012,549 |   |  |   | 843,041   |   |  |   | 2,874,669 |   |
| Metals                |  |
| —OTC            |  |         | 290,300    |                     |  |                                 | 0.22 | %          |  |                 | 290,300   |   |  |   | 5,450     |   |  |   | 230,242   |   |
| Indices               |  |         | 2,029,862  |                     |  |                                 | 1.56 | %          |  |                 | 6,915,490 |   |  |   | 833,311   |   |  |   | 3,767,664 |   |
| Total                 |  | $            | 10,515,492 |                     |  |                                 | 8.05 | %          |  |                 |      |   |  |   |      |   |  |   |      |   |
|                       |

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

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Item 4.    Controls and Procedures

Based on their evaluation of the Partnership's disclosurecontrols and procedures as of September 30, 2004, the President andChief Financial Officer of the General Partner have concluded that suchcontrols and procedures are effective.

During thePartnership's last fiscal quarter, no changes occurred in thePartnership's internal control over financial reporting that havematerially affected, or are reasonably likely to materially affect, thePartnership's internal control over financialreporting.

16

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PART II. OTHERINFORMATION

Item 1.    Legal Proceedings

Thefollowing information supplements and amends our discussion set forthunder Item 8 "Legal Proceedings" in thePartnership's Registration Statement on Form 10-12 G/A filed onJune 1, 2004 and under Part II, Item 1. "LegalProceedings" in the Partnership's Quarterly Reporton Form 10-Q for the quarter ended June 30, 2004.

EnronCorp.

 A Citigroup affiliate, along with otherdefendants, settled all claims against it in IN RE NEWPOWER HOLDINGSSECURITIES LITIGATION, a class action brought on behalf of certaininvestors in NewPower securities. Citigroup reached this settlementagreement without admitting any wrongdoing. On September  13,2004, the United States District Court for the Southern District of NewYork preliminarily approved the settlement.

DynegyInc.

 On October  7, 2004, the United StatesDistrict Court for the Southern District of Texas granted the motion todismiss all claims against the Citigroup defendants in IN REDYNEGY  INC. SECURITIES LITIGATION. The District Court alsodenied lead plaintiff's request for leave to replead. The casewas a putative class action brought on behalf of purchasers of publiclytraded Dynegy debt and equity securities.

WorldCom,Inc.

 The United States Court of Appeals for the SecondCircuit has affirmed the orders of the United States District Court forthe Southern District of New York denying plaintiffs' motions toremand to state court a large group of WorldCom-related actions. OnSeptember  13, 2004, plaintiffs filed a petition for a writ ofcertiorari to the United States Supreme Court seeking review of theSecond Circuit's ruling.

 On September  17,2004, WEINSTEIN, ET AL. V. EBBERS, ET AL., a putative class actionagainst CGM and others brought on behalf of holders of WorldComsecurities asserting claims based on, among other things, CGM'sresearch reports concerning WorldCom, was dismissed with prejudice inits entirety by the United States District Court for the SouthernDistrict of New York. Plaintiffs have noticed an appeal of thedismissal to the United States Court of Appeals for the SecondCircuit.

 Citigroup and CGM, along with a number of otherdefendants, have settled RETIREMENT SYSTEMS OF ALABAMA, ET AL. V. J.P.MORGAN CHASE  & CO., ET AL., a WorldCom individual actionthat had been remanded to the Circuit Court of Montgomery County,Alabama. The settlement became final on September  30, 2004.

 On June  28, 2004, the United States District Court forthe Southern District of New York dismissed all claims under theSecurities Act of 1933 and certain claims under the Securities ExchangeAct of 1934 in IN RE TARGETS SECURITIES LITIGATION, a putative classaction against Citigroup and CGM and certain former employees, leavingonly claims under the 1934 Act for purchases of Targeted GrowthEnhanced Terms Securities With Respect to the Common Stock of MCIWorldCom,  Inc. ("TARGETS") afterJuly  30, 1999. On October  20, 2004, the parties signed aMemorandum of Understanding setting forth the terms of a settlement ofall remaining claims in this action. The settlement must be approved bythe Court.

On November 5, 2004, the United States District Courtfor the Southern District of New York approved the class settlementbetween plaintiffs and the Citigroup-related defendants in IN REWORLDCOM,  INC. SECURITIES LITIGATION. The Court's approvalis subject to possible appeal by plaintiffs.

Research

 Several individual actions have been filed against Citigroupand CGM relating to, among other things, research on QwestCommunications International,  Inc. alleging violations of stateand federal securities laws.

17

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Other

 On October13, 2004, the United States District Court for the Southern District ofNew York certified a class in various representative cases with respectto the allocation of shares for certain initial public offerings andrelated aftermarket transactions.

 An appeal of thedismissal granted to CGM in November  2003 with respect to theantitrust case relating to the allocation of shares for certain initialpublic offerings is scheduled to be argued in December  2004.

Item 2.    Unregistered Sales of Equity Securities and Use ofProceeds

For the three months ended September 30, 2004, therewere additional sales of 11,092.7253 Redeemable Units of LimitedPartnership totaling $18,035,000. The Redeemable Units were issued inreliance upon applicable exemptions from registration under Section4(2) of the Securities Act of 1933, as amended, and Section 502 ofRegulation D.

Proceeds from the sale of additional RedeemableUnits are used in the trading of commodity interests including futurescontracts, options and forwards contracts.

Thefollowing chart sets forth the purchases of Redeemable Units by thePartnership.

|                                     |  |                                               |            |                                           |  |                                                                                           |          |                                                                                                                    |  |        |     |        |  |        |     |        |  |  |
|-------------------------------------|--|-----------------------------------------------|------------|-------------------------------------------|--|-------------------------------------------------------------------------------------------|----------|--------------------------------------------------------------------------------------------------------------------|--|--------|-----|--------|--|--------|-----|--------|--|--|
| Period                              |  | (a)Total Numberof Shares(or Units) Purchased* |            | (b)AveragePrice Paid perShare (or Unit)** |  | (c) TotalNumberof Shares (or Units)Purchased as Partof PubliclyAnnouncedPlans or Programs |          | (d) Maximum Number(orApproximateDollar Value) of Shares(or Units) thatMay YetBePurchased Under thePlans orPrograms |
| July 1, 2004 -July31,2004           |  |                                          | 267.6492   |                                      |  | $                                                                                         | 1,623.28 |                                                                                                               |  |   | N/A |   |  |   | N/A |   |
| August1, 2004 -August 31,2004       |  |                                          | 2,163.2226 |                                      |  |                                                                                      | 1,605.96 |                                                                                                               |  |   | N/A |   |  |   | N/A |   |
| September1, 2004 -September 30,2004 |  |                                          | 940.1610   |                                      |  |                                                                                      | 1,572.76 |                                                                                                               |  |   | N/A |   |  |   | N/A |   |
| Total                               |  |                                          | 3,371.0328 |                                      |  | $                                                                                         | 1,600.67 |                                                                                                               |  |   | 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 of RedeemableUnits are effected as of the last day of each month at the Net AssetValue per Redeemable Unit as of that day. |

Item3.    Defaults Upon Senior Securities – None

Item4.    Submission of Matters to a Vote of Security Holders –None

Item 5.    Other Information – None

18

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Item 6.    Exhibits

Theexhibits required to be filed by Item 601 of Regulation S-K areincorporated herein by reference to the exhibit index of thePartnership's Registration Statement on Form 10-12G/A filed June1, 2004.

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 12,2004                |
| By:                                   |  | /s/Daniel R. McAuliffe, Jr.         Daniel R. McAuliffe,Jr. Chief Financial Officer and Director |
| Date: November 12,2004                |
|                                       |

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