UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
    WASHINGTON, D.C. 20549
  FORM 10-Q
  (X) QUARTERLY REPORT PURSUANT TO SECTION 13 or
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
  For the quarterly period ended June 30, 2010
  OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934
  
  000-50735
  POTOMAC FUTURES FUND L.P.
     New York

13-3937275(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)   c/o Ceres
    Managed Futures LLC
 522 Fifth Avenue -
14th
Floor
 New York, New York 10036
     (212) 296-1999
       Yes X  No
    Yes   No
  Rule 12b-2
  Large
    accelerated filer
    Accelerated filer
    Non-accelerated filer X
    Smaller reporting company  rule 12b-2
  Yes   No X




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##### 



POTOMAC FUTURES FUND L.P.
  FORM 10-Q
  INDEX
  PageNumberPART I - Financial Information:Item 1.

Financial Statements:Statements of Financial Condition
    at
June 30, 2010 and December 31, 2009 (unaudited)

3Statements of Income and Expenses
    and Changes in Partners Capital for the three and six
    months ended June 30, 2010 and 2009
    (unaudited)

4Notes to Financial Statements, including the Financial
    Statements of CMF Campbell Master Fund L.P.
    (unaudited)

5 - 21Item 2.

Managements Discussion and
    Analysis of Financial Condition
    and Results of Operations

22  25Item 3.

Quantitative and Qualitative
    Disclosures about Market Risk

26  27Item 4.

Controls and Procedures

28PART II - Other Information

29  32ExhibitsExhibit 31.1
CertificationExhibit 31.2
CertificationExhibit 32.1
CertificationExhibit 32.2
Certification  2




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##### 



PART I Item 1.
    Financial Statements  Potomac Futures Fund L.P.
    Statements of Financial Condition
    (Unaudited)  June 30,


December 31,2010


2009Assets:Investment in Master, at fair value

$
42,250,556


$
52,227,304Cash


45,617



105,370Total assets

$
42,296,173


$
52,332,674Liabilities and Partners Capital:Liabilities:Accrued expenses:Brokerage fees

$
229,104


$
283,469Management fees


70,068



86,598Other


26,393



90,507Redemptions payable


628,508



1,730,773Total liabilities


954,073



2,191,347Partners Capital:General Partner, 337.4926 and 624.1683 unit equivalents
outstanding at June 30, 2010
    and December 31, 2009, respectively


427,330



839,974Limited Partners, 32,313.3800 and 36,634.7661 Redeemable
    Units outstanding
at June 30, 2010 and December 31, 2009, respectively


40,914,770



49,301,353Total partners capital


41,342,100



50,141,327Total liabilities and partners capital

$
42,296,173


$
52,332,674Net asset value per unit

$
1,266.19


$
1,345.75    3




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##### 



Potomac Futures Fund L.P.
    Statements of Income and Expenses and Changes in Partners Capital
    (Unaudited) Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Income:Net realized
gains (losses) on closed contracts allocated from Master
    
    $
    1,448,377
    
    
    $
    (5,121,812
    )
    
    $
    (1,590,898
    )
    
    $
    (4,061,557
    )Change in
net unrealized gains (losses) on open contracts allocated
from Master
    
    
    (1,040,508
    )
    
    
    710,548
    
    
    
    818,177
    
    
    
    (66,739
    )Interest income allocated from Master
    
    
    11,030
    
    
    
    14,132
    
    
    
    16,798
    
    
    
    31,321Expenses allocated from Master
    
    
    (58,635
    )
    
    
    (16,832
    )
    
    
    (96,006)
    
    
    
    (35,475
    )Total income (loss)
    
    
    360,264
    
    
    
    (4,413,964
    )
    
    
    (851,929
    )
    
    
    (4,132,450
    )Expenses:Brokerage fees
    
    
    727,934
    
    
    
    1,110,773
    
    
    
    1,494,502
    
    
    
    2,423,164Management fees
    
    
    222,567
    
    
    
    339,445
    
    
    
    456,651
    
    
    
    740,572Other
    
    
    46,035
    
    
    
    57,031
    
    
    
    101,512
    
    
    
    122,161Total expenses
    
    
    996,536
    
    
    
    1,507,249
    
    
    
    2,052,665
    
    
    
    3,285,897Net income (loss)
    
    
    (636,272
    )
    
    
    (5,921,213
    )
    
    
    (2,904,594
    )
    
    
    (7,418,347
    )Additions  Limited Partners
    
    
    209,000
    
    
    
    1,449,000
    
    
    
    314,000
    
    
    
    1,969,000Redemptions  Limited Partners
    
    
    (3,554,799
    )
    
    
    (5,755,486
    )
    
    
    (5,833,633
    )
    
    
    (17,238,722
    )Redemptions  General Partner
    
    
    (375,000
    )
    
    
    (147,584
    )
    
    
    (375,000
    )
    
    
    (147,584
    )Net increase (decrease) in partners capital
    
    
    (4,357,071
    )
    
    
    (10,375,283
    )
    
    
    (8,799,227
    )
    
    
    (22,835,653
    )Partners Capital, beginning of period
    
    
    45,699,171
    
    
    
    73,194,133
    
    
    
    50,141,327
    
    
    
    85,654,503Partners Capital, end of period
    
    $
    41,342,100
    
    
    $
    62,818,850
    
    
    $
    41,342,100
    
    
    $
    62,818,850Net asset value per unit (32,650.8726 and 46,338.9505 units
outstanding at June 30, 2010 and 2009, respectively)
    
    $
    1,266.19
    
    
    $
    1,355.64
    
    
    $
    1,266.19
    
    
    $
    1,355.64Net income (loss) per Redeemable Unit and General Partner unit equivalent
    
    $
    (19.27
    )
    
    $
    (120.40
    )
    
    $
    (79.56
    )
    
    $
    (149.94
    )Weighted average units outstanding
    
    
    34,538.5154
    
    
    
    48,978.2195
    
    
    
    35,741.8995
    
    
    
    51,209.7530
    4




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)  1.
    General:             5




---



##### 



Potomac Futures Fund L.P.

    Notes to Financial Statements
June 30, 2010
    (Unaudited)
  Form 10-K
          6




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
    June 30, 2010
    (Unaudited)
    CMF
    Campbell Master Fund L.P.
    Statements of Financial Condition
    (Unaudited)
  June 30,
    
    
    December 31,2010
    
    
    2009Assets:Equity in trading account:Cash
    
    $
    39,682,030
    
    
    $
    57,797,715Cash margin
    
    
    5,791,846
    
    
    
    5,501,376Net unrealized appreciation on open futures contracts
    
    
    573,510
    
    
    
    Options
purchased, at fair value (cost $20,914 and
$96,122 at June 30, 2010 and December 31, 2009, respectively)
    
    
    21,391
    
    
    
    94,039Total assets
    
    $
    46,068,777
    
    
    $
    63,393,130Liabilities and Partners Capital:Liabilities:Net unrealized depreciation on open futures contracts
    
    $
    
    
    
    $
    366,940Net unrealized depreciation on open forward contracts
    
    
    511,482
    
    
    
    431,591Options
premiums received, at fair value (premium $38,936 and
$34,361 at June 30, 2010 and December 31, 2009, respectively)
    
    
    26,606
    
    
    
    35,406Accrued expenses:Professional fees
    
    
    16,937
    
    
    
    33,530Total liabilities
    
    
    555,025
    
    
    
    867,467Partners Capital:General
Partner, 0.0000 unit equivalents at June 30, 2010 and
December 31, 2009
    
    
    
    
    
    
    Limited
Partners, 41,853.2941 and 56,557.8676
units outstanding at June 30, 2010
and December 31, 2009, respectively
    
    
    45,513,752
    
    
    
    62,525,663Total liabilities and partners capital
    
    $
    46,068,777
    
    
    $
    63,393,130Net asset value per
 unit
    
    $
    1,087.46
    
    
    $
    1,105.52
  7




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
    June 30, 2010
    (Unaudited)
  CMF
    Campbell Master Fund L.P.
    Condensed Schedule of Investments
    June 30, 2010
    (Unaudited)
  Notional ($)/ Number
    
    
    
    
    
    
    % of Partnersof Contracts
    
    
    Fair Value
    
    
    CapitalFutures Contracts PurchasedEnergy
    
    
    39
    
    
    $
    (149,953
    )
    
    
    (0.33
    )%Grains
    
    
    29
    
    
    
    (7,872
    )
    
    
    (0.02
    )Interest Rates Non-U.S.
    
    
    1,535
    
    
    
    831,285
    
    
    
    1.83Interest Rates U.S.
    
    
    821
    
    
    
    409,308
    
    
    
    0.90Indices
    
    
    162
    
    
    
    (577,298
    )
    
    
    (1.27
    )Metals
    
    
    63
    
    
    
    35,095
    
    
    
    0.08Softs
    
    
    55
    
    
    
    14,664
    
    
    
    0.03Total futures contracts purchased
    
    
    
    
    
    
    555,229
    
    
    
    1.22Futures Contracts SoldEnergy
    
    
    17
    
    
    
    39,760
    
    
    
    0.09Grains
    
    
    97
    
    
    
    (43,627
    )
    
    
    (0.09
    )Interest Rates Non-U.S.
    
    
    67
    
    
    
    (29,864
    )
    
    
    (0.07
    )Indices
    
    
    25
    
    
    
    51,430
    
    
    
    0.11Metals
    
    
    3
    
    
    
    3,100
    
    
    
    0.01Livestock
    
    
    32
    
    
    
    540
    
    
    
    0.00
    *Softs
    
    
    15
    
    
    
    (3,058
    )
    
    
    (0.01
    )Total futures contracts sold
    
    
    
    
    
    
    18,281
    
    
    
    0.04Unrealized Appreciation on Forward ContractsCurrencies
    
    
    $82,999,936
    
    
    
    1,265,736
    
    
    
    2.78Metals
    
    
    8
    
    
    
    7,746
    
    
    
    0.02Total unrealized appreciation on forward contracts
    
    
    
    
    
    
    1,273,482
    
    
    
    2.80Unrealized Depreciation on Forward ContractsCurrencies
    
    
    $83,026,928
    
    
    
    (1,756,240
    )
    
    
    (3.86
    )Metals
    
    
    22
    
    
    
    (28,724
    )
    
    
    (0.06
    )Total unrealized depreciation on forward contracts
    
    
    
    
    
    
    (1,784,964
    )
    
    
    (3.92
    )Options PurchasedCurrenciesCalls
    
    
    $2,140,698
    
    
    
    2,118
    
    
    
    0.00
    *Puts
    
    
    $1,851,717,277
    
    
    
    19,273
    
    
    
    0.04Total options purchased
    
    
    
    
    
    
    21,391
    
    
    
    0.04Options Premiums ReceivedCurrenciesCalls
    
    
    $25,400,087,432
    
    
    
    (2,031
    )
    
    
    (0.00
    )*Puts
    
    
    $3,280,289,478
    
    
    
    (24,575
    )
    
    
    (0.05
    )Total options premiums received
    
    
    
    
    
    
    (26,606
    )
    
    
    (0.05
    )Total fair value
    
    
    
    
    
    $
    56,813
    
    
    
    0.13
    %
 * Due to rounding. 8




---



##### 



Potomac Futures Fund L.P.Notes to Financial
StatementsJune 30, 2010(Unaudited)
  CMF
    Campbell Master Fund L.P.Condensed Schedule of
InvestmentsDecember 31, 2009(Unaudited)
 Notional ($)/Number of





% of PartnersContracts


Fair Value


CapitalFutures Contracts PurchasedEnergy


36


$
21,183



0.03
%Grains


3



2,325



0.00
*Interest Rates
    Non-U.S.


446



(283,167
)


(0.45
)Interest Rates U.S.


507



(493,888
)


(0.79
)Indices


455



441,278



0.71Metals


18



(83,265
)


(0.13
)Softs


22



(4,234
)


(0.00
)*Total futures contracts purchased






(399,768
)


(0.63
)Futures Contracts SoldEnergy


1



2,730



0.00
*Grains


9



2,750



0.00
*Interest Rates
    Non-U.S.


136



26,911



0.04Interest Rates U.S.


2



437



0.00
*Total futures contracts sold






32,828



0.04Unrealized Appreciation on Forward ContractsCurrencies


$135,784,768



2,033,847



3.25Metals


37



285,660



0.46Total unrealized appreciation on forward contracts






2,319,507



3.71Unrealized Depreciation on Forward ContractsCurrencies


$154,270,721



(2,642,315
)


(4.23
)Metals


17



(108,783
)


(0.17
)Total unrealized depreciation on forward contracts






(2,751,098
)


(4.40
)Options PurchasedCurrenciesCalls


$2,499,064,517



49,773



0.08Puts


$430,245,216



44,266



0.07Total options purchased






94,039



0.15Options Premiums ReceivedCurrenciesCalls


$13,333,773



(26,438
)


(0.04
)Puts


$43,764,467,517



(8,968
)


(0.01
)Total premiums received






(35,406
)


(0.05
)Total fair value





$
(739,898
)


(1.18
)%   *
    
    Due to rounding.
 9




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
    June 30, 2010
    (Unaudited)
  CMF
    Campbell Master Fund L.P.
    Statements of Income and Expenses and Changes in Partners Capital
    (Unaudited)
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Income:Net gains (losses) on trading of commodity interests:Net realized gains (losses) on closed contracts
    
    $
    1,566,062
    
    
    $
    (6,670,059
    )
    
    $
    (1,991,292
    )
    
    $
    (5,132,123
    )Change in net unrealized gains (losses) on open contracts
    
    
    (1,118,236
    )
    
    
    578,840
    
    
    
    876,494
    
    
    
    (569,017
    )Gain (loss) from trading, net
    
    
    447,826
    
    
    
    (6,091,219
    )
    
    
    (1,114,798
    )
    
    
    (5,701,140
    )Interest income
    
    
    11,944
    
    
    
    18,962
    
    
    
    18,430
    
    
    
    43,758Total income (loss)
    
    
    459,770
    
    
    
    (6,072,257
    )
    
    
    (1,096,368
    )
    
    
    (5,657,382
    )Expenses:Clearing fees
    
    
    25,803
    
    
    
    12,569
    
    
    
    56,945
    
    
    
    28,158Professional fees
    
    
    37,694
    
    
    
    9,735
    
    
    
    49,222
    
    
    
    20,973Total expenses
    
    
    63,497
    
    
    
    22,304
    
    
    
    106,167
    
    
    
    49,131Net income (loss)
    
    
    396,273
    
    
    
    (6,094,561
    )
    
    
    (1,202,535
    )
    
    
    (5,706,513
    )Additions  Limited Partners
    
    
    209,000
    
    
    
    1,449,000
    
    
    
    314,000
    
    
    
    1,969,000Redemptions  Limited Partners
    
    
    (6,577,742
    )
    
    
    (24,821,156
    )
    
    
    (16,104,946
    )
    
    
    (43,662,832
    )Distribution
of interest income to feeder funds
    
    
    (11,944
    )
    
    
    (18,962
    )
    
    
    (18,430
    )
    
    
    (43,758
    )Net increase (decrease) in Partners Capital
    
    
    (5,984,413
    )
    
    
    (29,485,679
    )
    
    
    (17,011,911
    )
    
    
    (47,444,103
    )Partners Capital, beginning of period
    
    
    51,498,165
    
    
    
    109,516,538
    
    
    
    62,525,663
    
    
    
    127,474,962Partners Capital, end of period
    
    $
    45,513,752
    
    
    $
    80,030,859
    
    
    $
    45,513,752
    
    
    $
    80,030,859Net asset value per unit
(41,853.2941 and 75,093.4702 Units outstanding at
June 30, 2010 and 2009, respectively)
    
    $
    1,087.46
    
    
    $
    1,065.75
    
    
    $
    1,087.46
    
    
    $
    1,065.75Net income (loss) per Redeemable Unit
    
    $
    7.85
    
    
    $
    (69.28
    )
    
    $
    (17.66
    )
    
    $
    (66.64
    )Weighted average units outstanding
    
    
    46,143.5143
    
    
    
    92,498.7463
    
    
    
    50,343.7014
    
    
    
    99,628.7594
  10




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##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
  2.
    Financial
    Highlights:    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net realized
and unrealized gains (losses) allocated from Master*
    
    $
    (10.82
    )
    
    $
    (112.46
    )
    
    $
    (63.16
    )
    
    $
    (133.45
    )Interest
income allocated from Master
    
    
    0.32
    
    
    
    0.29
    
    
    
    0.48
    
    
    
    0.63Expenses **
    
    
    (8.77
    )
    
    
    (8.23
    )
    
    
    (16.88
    )
    
    
    (17.12
    )Increase
(decrease) for the period
    
    
    (19.27
    )
    
    
    (120.40
    )
    
    
    (79.56
    )
    
    
    (149.94
    )Net asset
value per Redeemable Unit, beginning of period
    
    
    1,285.46
    
    
    
    1,476.04
    
    
    
    1,345.75
    
    
    
    1,505.58Net asset
value per Redeemable Unit, end of period
    
    $
    1,266.19
    
    
    $
    1,355.64
    
    
    $
    1,266.19
    
    
    $
    1,355.64
   *
    
    Includes Partnership brokerage fees and clearing fees
    allocated from the Master.**
    
    Excludes Partnership brokerage fees and clearing fees
    allocated from the Master.  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Ratio to
average net assets:***Net
investment income (loss) before incentive fees****
    
    
    (9.6
    )%
    
    
    (9.0
    )%
    
    
    (9.5
    )%
    
    
    (9.1
    )%Operating
expenses
    
    
    9.7
    %
    
    
    9.0
    %
    
    
    9.6
    %
    
    
    9.2
    %Incentive fees
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %Total
expenses
    
    
    9.7
    %
    
    
    9.0
    %
    
    
    9.6
    %
    
    
    9.2
    %Total return:Total return before incentive fees
    
    
    (1.5
    )%
    
    
    (8.2
    )%
    
    
    (5.9
    )%
    
    
    (10.0
    )%Incentive fees
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %Total return after incentive fees
    
    
    (1.5
    )%
    
    
    (8.2
    )%
    
    
    (5.9
    )%
    
    
    (10.0
    )%
   ***
    
    Annualized (other than incentive fee).****
    
    Interest income allocated from Master less total expenses.   11




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net realized and unrealized gains (losses)*
    
    $
    8.42
    
    
    $
    (69.39
    )
    
    $
    (16.99
    )
    
    $
    (66.90
    )Interest income
    
    
    0.27
    
    
    
    0.23
    
    
    
    0.40
    
    
    
    0.48Expenses **
    
    
    (0.84
    )
    
    
    (0.12
    )
    
    
    (1.07
    )
    
    
    (0.22
    )Increase (decrease) for the period
    
    
    7.85
    
    
    
    (69.28
    )
    
    
    (17.66
    )
    
    
    (66.64
    )Distribution
of interest income to feeder funds
    
    
    (0.27
    )
    
    
    (0.23
    )
    
    
    (0.40
    )
    
    
    (0.48
    )Net asset
value per unit, beginning of period
    
    
    1,079.88
    
    
    
    1,135.26
    
    
    
    1,105.52
    
    
    
    1,132.87Net asset
value per unit, end of period
    
    $
    1,087.46
    
    
    $
    1,065.75
    
    
    $
    1,087.46
    
    
    $
    1,065.75*     Includes clearing fees.**   Excludes clearing fees.Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Ratios to Average Net Assets:***Net
investment (loss)****
    
    
    (0.4
    )%
    
    
    0.0
    %*****
    
    
    (0.3
    )%
    
    
    0.0
    %*****Operating
expenses
    
    
    0.5
    %
    
    
    0.1
    %
    
    
    0.4
    %
    
    
    0.1
    %Total return
    
    
    0.7
    %
    
    
    (6.1
    )%
    
    
    (1.6
    )%
    
    
    (5.9
    )%
 ***
    
    Annualized.****
    
    Interest income less total expenses.*****
    
    Due to rounding.   3. Trading Activities:
       12




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
   Assets
    
    June 30, 2010Futures
ContractsEnergy
    
    $
    39,760Grains
    
    
    19,390Interest Rates Non-U.S.
    
    
    887,121Interest Rates U.S.
    
    
    409,439Indices
    
    
    51,655Livestock
    
    
    8,830Metals
    
    
    74,520Softs
    
    
    31,772Total unrealized appreciation on open futures contracts
    
    $
    1,522,487LiabilitiesFutures
ContractsEnergy
    
    $
    (149,953
    )Grains
    
    
    (70,889
    )Interest Rates Non-U.S.
    
    
    (85,700
    )Interest Rates U.S.
    
    
    (131
    )Indices
    
    
    (577,523
    )Livestock
    
    
    (8,290
    )Metals
    
    
    (36,325
    )Softs
    
    
    (20,166
    )Total unrealized depreciation on open futures contracts
    
    $
    (948,977
    )Net unrealized appreciation on open futures contracts
    
    $
    573,510
    *AssetsForward
ContractsCurrencies
    
    $
    1,265,736Metals
    
    
    7,746Total unrealized appreciation on open forward contracts
    
    $
    1,273,482LiabilitiesForward
ContractsCurrencies
    
    $
    (1,756,240
    )Metals
    
    
    (28,724
    )Total unrealized depreciation on open forward contracts
    
    $
    (1,784,964
    )Net unrealized depreciation on open forward contracts
    
    $
    (511,482
    )**
   *
    
    This amount is in Net unrealized appreciation on open
    futures contracts on the Masters Statements of
    Financial Condition.**
    
    This amount is in Net unrealized depreciation on open
    forward contracts on the Masters Statements of
    Financial Condition.  13




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
  Assets

June 30, 2010Options PurchasedCurrencies

$
21,391Total options purchased

$
21,391
***LiabilitiesOptions Premiums ReceivedCurrencies

$
(26,606
)Total options premiums received

$
(26,606
)*******  
    This amount is in Options purchased, at fair value on
    the Masters Statements of Financial Condition.**** This amount is in Options premiums received, at fair value on
    the Masters Statements of Financial Condition.Assets

December 31, 2009Futures ContractsEnergy

$
28,837Grains


5,075Interest Rates
    Non-U.S.


76,641Interest Rates U.S.


437Indices


480,732Metals


410Softs


19,185Total unrealized appreciation on open futures contracts

$
611,317LiabilitiesFutures ContractsEnergy

$
(4,924
)Interest Rates
    Non-U.S.


(332,897
)Interest Rates U.S.


(493,888
)Indices


(39,454
)Metals


(83,675
)Softs


(23,419
)Total unrealized depreciation on open futures contracts

$
(978,257
)Net unrealized depreciation on open futures contracts

$
(366,940
)*AssetsForward ContractsCurrencies

$
2,033,847Metals


285,660Total unrealized appreciation on open forward contracts

$
2,319,507LiabilitiesForward ContractsCurrencies

$
(2,642,315
)Metals


(108,783
)Total unrealized depreciation on open forward contracts

$
(2,751,098
)Net unrealized depreciation on open forward contracts

$
(431,591
)***   This amount is in Net unrealized depreciation on open
    futures contracts on the Masters Statements of
    Financial Condition.** This amount is in Net unrealized depreciation on open
    forward contracts on the Masters Statements of
    Financial Condition.Assets

December 31, 2009Options PurchasedCurrencies

$
94,039Total options purchased

$
94,039
***LiabilitiesOptions Premiums ReceivedCurrencies

$
(35,406
)Total options premiums received

$
(35,406
)****   ***
    
    This amount is in Options purchased, at fair value on
    the Masters Statements of Financial Condition.****
    
    This amount is in Options premiums received, at fair value on
    the Masters Statements of Financial Condition. 14




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
  Three Months Ended
    
    
    Three Months Ended
    
    
    Six months ended
    
    
    Six months endedJune 30, 2010
    
    
    June 30, 2009
    
    
    June 30, 2010
    
    
    June 30, 2009Sector
    
    Gain (loss) from trading
    
    
    Gain (loss) from trading
    
    
    Gain (loss) from trading
    
    
    Gain (loss) from tradingCurrencies
    
    $
    (4,970
    )
    
    $
    (1,285,041
    )
    
    $
    (341,452
    )
    
    $
    (829,537
    )Energy
    
    
    (1,462,749
    )
    
    
    246,030
    
    
    
    (1,982,537
    )
    
    
    208,920Grains
    
    
    29,451
    
    
    
    
    
    
    
    59,161
    
    
    
    Indices
    
    
    (2,104,658
    )
    
    
    (2,204,717
    )
    
    
    (3,337,271
    )
    
    
    (2,962,209
    )Interest Rates U.S.
    
    
    1,159,350
    
    
    
    454,909
    
    
    
    1,660,889
    
    
    
    592,362Interest Rates Non-U.S.
    
    
    3,185,698
    
    
    
    (2,910,860
    )
    
    
    3,722,259
    
    
    
    (1,747,524
    )Livestock
    
    
    (33,480
    )
    
    
    
    
    
    
    (15,000
    )
    
    
    Metals
    
    
    (251,837
    )
    
    
    (391,540
    )
    
    
    (764,047
    )
    
    
    (963,152
    )Softs
    
    
    (68,979
    )
    
    
    
    
    
    
    (116,800
    )
    
    
    Total
    
    $
    447,826
    *****
    
    $
    (6,091,219
    )*****
    
    $
    (1,114,798
    )*****
    
    $
    (5,701,140
    )*****
 
 *****
    
    This amount is in Gain (loss) from trading, net on the Masters Statements of Income and Expenses and Changes in Partners Capital.  4.
    Fair
    Value Measurements:  Partnerships Investments.
 Partnerships Fair
Value Measurements.
   15




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
  Quoted Pricesin Active Markets


Significant Other


Significantfor Identical


Observable Inputs


Unobservable6/30/2010


Assets (Level 1)


(Level 2)


Inputs (Level 3)AssetsInvestment in Master

$
42,250,556


$



$
42,250,556


$
Total fair value

$
42,250,556


$



$
42,250,556


$
Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable Inputs
    
    
    Unobservable12/31/2009
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)AssetsInvestment in Master
    
    $
    52,227,304
    
    
    $
    
    
    
    $
    52,227,304
    
    
    $
    Total fair value
    
    $
    52,227,304
    
    
    $
    
    
    
    $
    52,227,304
    
    
    $
      Masters Investments.
 Masters Fair
Value Measurements.
 16




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
    Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable Inputs
    
    
    Unobservable6/30/2010
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)AssetsFutures
    
    $
    573,510
    
    
    $
    573,510
    
    
    $
    
    
    
    $
    Options purchased
    
    
    21,391
    
    
    
    
    
    
    
    21,391
    
    
    
    Total assets
    
    
    594,901
    
    
    
    573,510
    
    
    
    21,391
    
    
    
    LiabilitiesForwards
    
    $
    511,482
    
    
    $
    20,978
    
    
    $
    490,504
    
    
    $
    Options premiums received
    
    
    26,606
    
    
    
    
    
    
    
    26,606
    
    
    
    Total liabilites
    
    
    538,088
    
    
    
    20,978
    
    
    
    517,110
    
    
    
    Total fair value
    
    $
    56,813
    
    
    $
    552,532
    
    
    $
    (495,719
    )
    
    $
    
 Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable Inputs
    
    
    Unobservable12/31/2009
    
    

Assets (Level 1)
    
    
    (Level 2)
    
    

Inputs (Level 3)AssetsForwards
    
    $
    176,877
    
    
    $
    176,877
    
    
    $
    
    
    
    $
    Options
purchased
    
    
    94,039
    
    
    
    
    
    
    
    94,039
    
    
    
    Total assets
    
    
    270,916
    
    
    
    176,877
    
    
    
    94,039
    
    
    
    LiabilitiesFutures
    
    $
    366,940
    
    
    $
    366,940
    
    
    $
    
    
    
    $
    Forwards
    
    
    608,468
    
    
    
    
    
    
    
    608,468
    
    
    
    Options
premiums received
    
    
    35,406
    
    
    
    
    
    
    
    35,406
    
    
    
    Total liabilites
    
    
    1,010,814
    
    
    
    366,940
    
    
    
    643,874
    
    
    
    Total fair value
    
    $
    (739,898
    )
    
    $
    (190,063
    )
    
    $
    (549,835
    )
    
    $
    
  17




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
  5.
    Financial
    Instrument Risks:             18




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
  6.  Critical
    Accounting Policies
  Use of Estimates
  Statement of Cash Flows
  Partnerships Investments
 Partnerships and the Masters Fair Value Measurements.
   19




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
  Futures Contracts
  Forward Foreign Currency Contracts
    London Metals Exchange Forward Contracts
 Options.
  Income Taxes
   20




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
June 30, 2010
    (Unaudited)
    Subsequent Events.
  Recent Accounting Pronouncements.
  No. 2010-09 2010-09),
  Net Income (Loss) per Redeemable Unit.
 21




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Liquidity
    and Capital Resources
            Critical
    Accounting Policies
  Partnerships Investments
 Partnerships and the Masters Fair Value Measurements.
    22




---



##### 



Futures Contracts
  Forward Foreign Currency Contracts
    London Metals Exchange Forward Contracts
 Options.
  23




---



##### 



Results
    of Operations
         24




---



##### 



30-day 3-month and/or 90-day
        25




---



##### 



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk            one-day
 26




---



##### 



Form 10-K
   June 30, 2010

    (Unaudited)
  Three Months Ended June 30, 2010% of Total
    
    
    High
    
    
    Low
    
    
    AverageMarket Sector
    
    Value at Risk
    
    
    Capitalization
    
    
    Value at Risk
    
    
    Value at Risk
    
    
    Value at Risk*Currencies
    
    $
    1,333,381
    
    
    
    2.93
    %
    
    $
    2,022,510
    
    
    $
    1,333,381
    
    
    $
    1,733,146Energy
    
    
    84,994
    
    
    
    0.19
    %
    
    
    515,400
    
    
    
    56,374
    
    
    
    275,743Grains
    
    
    81,810
    
    
    
    0.18
    %
    
    
    183,419
    
    
    
    49,578
    
    
    
    105,386Interest Rates U.S.
    
    
    706,650
    
    
    
    1.55
    %
    
    
    746,750
    
    
    
    159,050
    
    
    
    465,483Interest Rates Non-U.S.
    
    
    1,558,651
    
    
    
    3.43
    %
    
    
    1,599,230
    
    
    
    800,893
    
    
    
    1,383,757Livestock
    
    
    28,850
    
    
    
    0.06
    %
    
    
    31,800
    
    
    
    4,375
    
    
    
    17,633Metals
    
    
    511,455
    
    
    
    1.12
    %
    
    
    562,267
    
    
    
    198,166
    
    
    
    463,356Softs
    
    
    148,913
    
    
    
    0.33
    %
    
    
    153,573
    
    
    
    16,900
    
    
    
    94,293Indices
    
    
    963,838
    
    
    
    2.12
    %
    
    
    1,974,159
    
    
    
    444,941
    
    
    
    1,176,124Total
    
    $
    5,418,542
    
    
    
    11.91
    %
  *
    Average of Month-end Values at Risk
 27




---



##### 



Item 4.
    Controls
    and Procedures      Rules 13a-15(e) 15d-15(e)
  internal control over financial
    reporting
  
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Partnership;
    provide reasonable assurance that (i) transactions are
    recorded as necessary to permit preparation of financial
    statements in accordance with GAAP and (ii) the Partnerships
    receipts are handled and expenditures are made only pursuant to
    authorizations of the General Partner; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Partnerships assets that could have a material effect on
    the financial statements.   28




---



##### 



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Form 10-K
 29




---



##### 



Item 1A.  Risk     Factors
  Regulatory changes could restrict the Partnerships operations.
  Regulatory changes could restrict the Partnerships operations.
    Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds          (d) Maximum Number(or Approximate(c) Total Number



Dollar Value) of(a) Total







of Redeemable Units



Redeemable Units thatNumber of



(b) Average



Purchased as Part



May Yet BeRedeemable



Price Paid per



of Publicly Announced



Purchased Under thePeriod


Units Purchased*



Redeemable Unit**



Plans or Programs



Plans or ProgramsApril 1, 2010 -
    April 30, 2010



507.4636



$
1,316.44




N/A




N/AMay 1, 2010 -
May 31, 2010



1,770.1180



$
1,275.76




N/A




N/AJune 1, 2010 -
June 30, 2010



496.3772



$
1,266.19




N/A




N/A2,773.9588



$
1,281.49   * Generally, limited partners
    are permitted to redeem their Redeemable Units as of the end of
    each month on 10 days notice to the General Partner.
    Under certain circumstances, the General Partner can compel
    redemption but to date the General Partner has not exercised
    this right. Purchases of Redeemable Units by the Partnership
    reflected in the chart above were made in the ordinary course of
    the Partnerships business in connection with effecting
    redemptions for limited partners.
  ** Redemptions of Redeemable
    Units are effected as of the last day of each month at the net
    asset value per Redeemable Unit as of that day.
  Item 3.
    Defaults
    Upon Senior Securities  None  Item 4.
    [Removed and Reserved]  Item 5.
    Other
Information  None. 30




---



##### 



Item 6.
    Exhibits 3.1
    
    Certificate of Limited Partnership as filed in the office of the Secretary of State of the
State of New York, dated March 13, 1997 (filed as Exhibit 3.1 to the General Form for
Registration of Securities on Form 10 filed on April 30, 2004 and incorporated herein by
reference).(a)
    
    Certificate of Amendment of the Certificate of Limited Partnership as filed in the office
of the Secretary of State of the State of New York, dated February 26, 1999 (filed as
Exhibit 3.4 to the General Form for Registration of Securities on Form 10 filed on April 30,
2004 and incorporated herein by reference).(b)
    
    Certificate of Change of the Certificate of Limited Partnership as filed in the office of
the Secretary of State of the State of New York, effective January 31, 2000 (filed as
Exhibit 3.3 to the General Form for Registration of Securities on Form 10 filed on April 30,
2004 and incorporated herein by reference).(c)
    
    Certificate of Amendment of the Certificate of Limited Partnership as filed in the office
of the Secretary of State of the State of New York, dated April 1, 2001 (filed as Exhibit
3.2 to the General Form for Registration of Securities on Form 10 filed on April 30, 2004
and incorporated herein by reference).(d)
    
    Certificate of Amendment of the Certificate of Limited Partnership as filed in the office
of the Secretary of State of the State of New York, dated April 21, 2003 (filed as Exhibit
3.5 to the General Form for Registration of Securities on Form 10 filed on April 30, 2004
and incorporated herein by reference).(e)
    
    Certificate of Amendment of the Certificate of Limited Partnership as filed in the office
of the Secretary of State of the State of
New York, dated September 21, 2005 (filed as Exhibit 3.1(e) to the Form 10-Q
filed on November 16, 2009 and incorporated
herein by reference).(f)
    
    Certificate of Amendment of the Certificate of Limited Partnership as filed in the office
of the Secretary of State of the State of New York, dated September 19, 2008 (filed as Exhibit 3.1(f) to the Form 10-Q filed on November 16, 2009 and incorporated
herein by reference).(g)
    
    Certificate of Amendment of the Certificate of Limited Partnership as filed in the office
of the Secretary of State of the State of New York, dated September 28, 2009 (filed as
Exhibit 99.1 to the Form 8-K filed on September 30, 2009 and incorporated herein by
reference).(h)
    
    Certificate of Amendment of the Certificate of Limited Partnership
as filed in the office of the Secretary of State of the State of New York,
dated June 29, 2010 (filed as Exhibit 3.1(h) to the Form 8-K filed on
June 30, 2010 and incorporated herein by reference).3.2
    
    Third Amended and Restated Limited Partnership Agreement, dated February 22, 2010 (filed as
Exhibit 3.1 to the Current Report on Form 8-K filed on February 25, 2010 and incorporated herein by reference).10.1
    
    Form of Subscription Agreement (filed as Exhibit 10.1 to the Form 10-Q filed on November 16, 2009 and incorporated
herein by reference).10.2
    
    Second Amended and Restated Customer Agreement between the Partnership and Salomon Smith
Barney Inc., dated April 1, 2001 (filed as Exhibit 10.2 to the General Form for Registration
of Securities on Form 10 filed on April 30, 2004 and incorporated herein by reference).10.3
    
    Second Amended and Restated Agency Agreement among the Partnership,
the General Partner, CGM and MSSB  dated July 29, 2010
(filed as Exhibit 10.3 to the Form 8-K filed on August 3, 2010 and incorporated herein by reference).10.4
    
    Joinder Agreement among the Partnership, the General Partner, CGM
and Morgan Stanley Smith Barney LLC, dated June 1, 2009 (filed as Exhibit 10 to
the Form 10-Q filed on August 14, 2009 and incorporated herein by reference).10.5
    
    Escrow Agreement among the Partnership, Smith Barney Futures Management Inc., Smith Barney
Inc. and European American Bank, dated April 15, 1997 (filed as Exhibit 10.5 to the Form 10-Q filed on November 16, 2009 and incorporated
herein by reference).10.6
    
    Management Agreement among the Partnership, Smith Barney Futures Management Inc. and Campbell
& Company, Inc., dated April 1, 1997 (filed as Exhibit 10.1 to the General Form for
Registration of Securities on Form 10 filed on April 30, 2004 and incorporated herein by
reference).(a)
    
    First Amendment to the Management Agreement among the Partnership, Smith Barney Futures
Management Inc., Campbell & Company, Inc. and SFG Global Investments, Inc., dated March 1,
1999 (filed as Exhibit 10.1(a) to the General Form for Registration of Securities on Form 10
filed on April 30, 2004 and incorporated herein by reference).(b)
    
    Second Amendment to the Management Agreement among the Partnership, Smith Barney Futures
Management LLC and Campbell & Company, Inc., dated April 1, 2001 (filed as Exhibit 10.1(b)
to the General Form for Registration of Securities on Form 10 filed on April 30, 2004 and
incorporated herein by reference).(c)
    
    Letter extending Management Agreement between the General Partner and Campbell & Company,
Inc. for 2009, dated June 9, 2009 (filed as Exhibit 10.6(c) to the Form 10-K filed on March
31, 2010 and incorporated herein by reference).31.1
    
    Rule 13a-14(a)/15d-14(a) Certification (Certification of President and Director).31.2
    
    Rule 13a-14(a)/15d-14(a) Certification (Certification of Chief Financial Officer, Secretary and Director).32.1
    
    Section 1350 Certification (Certification of President and Director).32.2
    
    Section 1350 Certification (Certification of Chief Financial Officer, Secretary and Director). 31




---



##### 



SIGNATURES
    POTOMAC FUTURES FUND L.P.By:

Ceres Managed Futures LLC(General
    Partner)By:

/s/  Walter DavisWalter Davis
    President and DirectorDate: August 16, 2010By:

/s/  Jennifer
    MagroJennifer
    Magro
    Chief Financial Officer, Secretary and Director
(Principal Accounting Officer)Date: August 16, 2010  32