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 March 31, 2011
  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
March 31, 2011 (unaudited) and December 31, 2010

3Statements of Income and Expenses
    and Changes in Partners Capital for the three
    months ended March 31, 2011  and 2010 (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  24Item 3.

Quantitative and Qualitative
    Disclosures about Market Risk

25  26Item 4.

Controls and Procedures

27PART II - Other Information

28  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)March 31,


December 31,2011


2010Assets:Investment in Master, at fair value

$
37,752,203


$
36,378,264Cash


51,348



51,367Total assets

$
37,803,551


$
36,429,631Liabilities and Partners Capital:Liabilities:Accrued expenses:Brokerage fees

$
173,266


$
166,969Management fees


62,657



60,366Other


36,171



43,141Redemptions payable


520,560



288,124Total liabilities


792,654



558,600Partners Capital:General Partner, 337.4926 unit equivalents
outstanding at March 31, 2011 and December 31, 2010


460,326



488,490Limited Partners, 26,797.3965 and 24,445.4336 Redeemable
Units outstanding at March 31, 2011 and December 31, 2010, respectively


36,550,571



35,382,541Total partners capital


37,010,897



35,871,031Total liabilities and partners capital

$
37,803,551


$
36,429,631Net asset value per unit

$
1,363.96


$
1,447.41    3




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##### 



Potomac Futures Fund L.P.
    Statements of Income and Expenses and Changes in Partners Capital
    (Unaudited) Three Months EndedMarch 31,2011
    
    
    2010Investment Income:Interest income allocated from Master
    
    $
    7,384
    
    
    $
    5,768Expenses:Expenses allocated from Master
    
    
    36,631
    
    
    
    37,371Brokerage fees
    
    
    526,824
    
    
    
    766,568Management fees
    
    
    190,385
    
    
    
    234,084Other
    
    
    60,200
    
    
    
    55,477Total expenses
    
    
    814,040
    
    
    
    1,093,500Net investment income (loss)
    
    
    (806,656
    )
    
    
    (1,087,732
    )Trading Results:Net realized gains (losses) on closed contracts allocated
from Master
    
    
    (197,686
    )
    
    
    (3,039,275
    )Change in net unrealized gains (losses) on open
contracts allocated from Master
    
    
    (1,258,108
    )
    
    
    1,858,685Total trading results allocated from Master
    
    
    (1,455,794
    )
    
    
    (1,180,590
    )Net income (loss)
    
    
    (2,262,450
    )
    
    
    (2,268,322
    )Subscriptions  Limited Partners
    
    
    5,371,395
    
    
    
    105,000Redemptions  Limited Partners
    
    
    (1,969,079
    )
    
    
    (2,278,834
    )Net increase (decrease) in Partners Capital
    
    
    1,139,866
    
    
    
    (4,442,156
    )Partners Capital, beginning of period
    
    
    35,871,031
    
    
    
    50,141,327Partners Capital, end of period
    
    $
    37,010,897
    
    
    $
    45,699,171Net asset value per unit (27,134.8891 and 35,550.9289 units
outstanding at March 31, 2011 and 2010, respectively)
    
    $
    1,363.96
    
    
    $
    1,285.46Net income (loss) per unit*
    
    $
    (83.45
    )
    
    $
    (60.29
    )Weighted average units outstanding
    
    
    26,783.8069
    
    
    
    36,945.2836
 *
    
    Based on change in net asset value per unit.    4




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##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (Unaudited)  1.
    General:             5




---



##### 



Potomac Futures Fund L.P.

    Notes to Financial StatementsMarch 31, 2011
    (Unaudited)
  Form 10-K
       6




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##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
    March 31, 2011
    (Unaudited)
    CMF
    Campbell Master Fund L.P.
    Statements of Financial Condition
  (Unaudited)March 31,
    
    
    December 31,2011
    
    
    2010Assets:Equity in trading account:Cash
    
    $
    32,768,669
    
    
    $
    32,330,637Cash margin
    
    
    5,197,082
    
    
    
    2,935,375Net unrealized appreciation on open futures contracts
    
    
    237,072
    
    
    
    360,633Net unrealized appreciation on open forward contracts
    
    
    
    
    
    
    714,542Options purchased, at fair value (cost $65,780 and $99,341 at
March 31, 2011 and December 31, 2010, respectively)
    
    
    110,220
    
    
    
    130,648Total assets
    
    $
    38,313,043
    
    
    $
    36,471,835Liabilities and Partners Capital:Liabilities:Net unrealized depreciation on open forward contracts
    
    $
    434,037
    
    
    $
    Options
premium received, at fair value (premium $43,000 and $18,835 at March 31, 2011 and December 31, 2010, respectively)
    
    
    79,619
    
    
    
    56,353Accrued expenses:Professional fees
    
    
    48,769
    
    
    
    39,490Total liabilities
    
    
    562,425
    
    
    
    95,843Partners Capital:General Partner, 0.0000 unit equivalents at March 31, 2011
and December 31, 2010
    
    
    
    
    
    
    Limited Partners, 30,215.8214 and 27,995.8787 units
outstanding at March 31, 2011 and December 31, 2010,
respectively
    
    
    37,750,618
    
    
    
    36,375,992Total liabilities and partners capital
    
    $
    38,313,043
    
    
    $
    36,471,835Net asset value per unit
    
    $
    1,249.37
    
    
    $
    1,299.33
  7




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
    March 31, 2011
    (Unaudited)
  CMF
    Campbell Master Fund L.P.
    Condensed Schedule of Investments
    March 31, 2011
    (Unaudited)
  Notional ($)/ Number
    
    
    
    
    
    
    % of Partnersof Contracts
    
    
    Fair Value
    
    
    CapitalFutures Contracts PurchasedEnergy
    
    
    74
    
    
    $
    166,537
    
    
    
    0.44
    %Grains
    
    
    43
    
    
    
    23,443
    
    
    
    0.06Indices
    
    
    165
    
    
    
    183,061
    
    
    
    0.48Interest Rates Non-U.S.
    
    
    303
    
    
    
    (141,772
    )
    
    
    (0.38
    )Interest Rates U.S.
    
    
    260
    
    
    
    (148,777
    )
    
    
    (0.39
    )Livestock
    
    
    22
    
    
    
    14,240
    
    
    
    0.04Metals
    
    
    29
    
    
    
    66,630
    
    
    
    0.18Softs
    
    
    29
    
    
    
    25,329
    
    
    
    0.07Total futures contracts purchased
    
    
    
    
    
    
    188,691
    
    
    
    0.50Futures Contracts SoldGrains
    
    
    13
    
    
    
    (27,470
    )
    
    
    (0.07
    )Indices
    
    
    3
    
    
    
    (12,791
    )
    
    
    (0.03
    )Interest Rates Non-U.S.
    
    
    205
    
    
    
    84,711
    
    
    
    0.22Interest Rates U.S.
    
    
    41
    
    
    
    (2,094
    )
    
    
    (0.01
    )Metals
    
    
    2
    
    
    
    6,025
    
    
    
    0.02Total futures contracts sold
    
    
    
    
    
    
    48,381
    
    
    
    0.13Unrealized Appreciation on Open
Forward ContractsCurrencies
    
    
    $196,301,869
    
    
    
    2,211,140
    
    
    
    5.86Metals
    
    
    44
    
    
    
    65,105
    
    
    
    0.17Total unrealized appreciation on
open forward contracts
    
    
    
    
    
    
    2,276,245
    
    
    
    6.03Unrealized Depreciation on Open
Forward ContractsCurrencies
    
    
    $181,713,586
    
    
    
    (2,550,807
    )
    
    
    (6.76
    )Metals
    
    
    65
    
    
    
    (159,475
    )
    
    
    (0.42
    )Total unrealized depreciation on
open forward contracts
    
    
    
    
    
    
    (2,710,282
    )
    
    
    (7.18
    )Options PurchasedCurrenciesCalls
    
    
    $5,320,597,950
    
    
    
    102,662
    
    
    
    0.27Puts
    
    
    $2,770,151,605
    
    
    
    7,558
    
    
    
    0.02Total options purchased
    
    
    
    
    
    
    110,220
    
    
    
    0.29Options Premium ReceivedCurrenciesCalls
    
    
    $752,243,938
    
    
    
    (58,993
    )
    
    
    (0.16
    )Puts
    
    
    $35,847,383,403
    
    
    
    (20,626
    )
    
    
    (0.05
    )Total options premium received
    
    
    
    
    
    
    (79,619
    )
    
    
    (0.21
    )Net fair value
    
    
    
    
    
    $
    (166,364
    )
    
    
    (0.44
    )%
 8




---



##### 



Potomac Futures Fund L.P.Notes to Financial
StatementsMarch 31, 2011(Unaudited)
  CMF
    Campbell Master Fund L.P.Condensed Schedule of
InvestmentsDecember 31, 2010
 Notional ($)/Number of





% of PartnersContracts


Fair Value


CapitalFutures Contracts PurchasedEnergy


69


$
80,412



0.22
%Grains


56



126,606



0.35Indices


338



10,189



0.03Interest Rates
    Non-U.S.


163



22,693



0.06Interest Rates U.S.


78



22,062



0.06Livestock


10



550



0.00
*Metals


15



96,690



0.27Softs


31



100,006



0.27Total futures contracts purchased






459,208



1.26Futures Contracts SoldEnergy


13



(29,230
)


(0.08
)Grains


1



(2,870
)


(0.01
)Indices


2



4,022



0.01Interest Rates
    Non-U.S.


66



(44,183
)


(0.12
)Interest Rates U.S.


32



(24,734
)


(0.07
)Livestock


1



(1,580
)


(0.00
)*Total futures contracts sold






(98,575
)


(0.27
)Unrealized Appreciation on Open Forward ContractsCurrencies


$124,455,128



3,015,962



8.29Metals


31



184,969



0.50Total unrealized appreciation on open forward contracts






3,200,931



8.79Unrealized Depreciation on Open Forward ContractsCurrencies


$111,245,655



(2,455,912
)


(6.75
)Metals


7



(30,477
)


(0.08
)Total unrealized depreciation on open forward contracts






(2,486,389
)


(6.83
)Options PurchasedCurrenciesCalls


$3,525,490,581



104,466



0.29Puts


$13,652,298,260



26,182



0.07Total options purchased






130,648



0.36Options Premium ReceivedCurrenciesCalls


$11,412,894,676



(55,752
)


(0.15
)Puts


$8,668,304,279



(601
)


(0.00
)*Total options premium received






(56,353
)


(0.15
)Net fair value





$
1,149,470



3.16
%* Due to rounding.
 9




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
    March 31, 2011
    (Unaudited)
  CMF
    Campbell Master Fund L.P.
    Statements of Income and Expenses and Changes in Partners Capital
    (Unaudited)
   Three Months EndedMarch 31,2011
    
    
    2010Investment Income:Interest income
    
    $
    7,384
    
    
    $
    6,486Expenses:Clearing fees
    
    
    17,352
    
    
    
    31,142Professional fees
    
    
    19,279
    
    
    
    11,528Total expenses
    
    
    36,631
    
    
    
    42,670Net investment income (loss)
    
    
    (29,247
    )
    
    
    (36,184
    )Trading Results:Net gains (losses) on trading of commodity interests:Net realized gains (losses) on closed contracts
    
    
    (197,686
    )
    
    
    (3,557,353
    )Change in net unrealized gains (losses) on open contracts
    
    
    (1,258,108
    )
    
    
    1,994,729Total trading results
    
    
    (1,455,794
    )
    
    
    (1,562,624
    )Net income (loss)
    
    
    (1,485,041
    )
    
    
    (1,598,808
    )Subscriptions  Limited Partners
    
    
    5,371,395
    
    
    
    105,000Redemptions  Limited Partners
    
    
    (2,504,344
    )
    
    
    (9,527,204
    )Distribution of interest income to feeder funds
    
    
    (7,384
    )
    
    
    (6,486
    )Net increase (decrease) in Partners Capital
    
    
    1,374,626
    
    
    
    (11,027,498
    )Partners Capital, beginning of period
    
    
    36,375,992
    
    
    
    62,525,663Partners Capital, end of period
    
    $
    37,750,618
    
    
    $
    51,498,165Net asset
value per unit (30,215.8214 and 47,688.8913 units outstanding at March 31, 2011 and 2010, respectively)
    
    $
    1,249.37
    
    
    $
    1,079.88Net income (loss) per unit*
    
    $
    (49.71
    )
    
    $
    (25.51
    )Weighted average units outstanding
    
    
    30,239.9191
    
    
    
    54,543.8885
 *
    
    Based on change in net asset value per unit.  10




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##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (Unaudited)
  2.
    Financial
    Highlights:    Three Months EndedMarch 31,2011
    
    
    2010Net realized
and unrealized gains (losses) allocated from Master*
    
    $
    (73.61
    )
    
    $
    (52.34
    )Interest
income allocated from Master
    
    
    0.28
    
    
    
    0.16Expenses **
    
    
    (10.12
    )
    
    
    (8.11
    )Increase
(decrease) for the period
    
    
    (83.45
    )
    
    
    (60.29
    )Net asset
value per unit, beginning of period
    
    
    1,447.41
    
    
    
    1,345.75Net asset
value per unit, end of period
    
    $
    1,363.96
    
    
    $
    1,285.46
   *
    
    Includes Partnership brokerage fees and clearing fees
    allocated from the Master.**
    
    Excludes Partnership brokerage fees and clearing fees
    allocated from the Master.  Three Months EndedMarch 31,2011
    
    
    2010Ratio to
average net assets:***Net
investment income (loss) before incentive fees****
    
    
    (8.9
    )%
    
    
    (9.4
    )%Operating
expenses
    
    
    8.9
    %
    
    
    9.4
    %Incentive fees
    
    
    
    %
    
    
    
    %Total
expenses
    
    
    8.9
    %
    
    
    9.4
    %Total return:Total return before incentive fees
    
    
    (5.8
    )%
    
    
    (4.5
    )%Incentive fees
    
    
    
    %
    
    
    
    %Total return after incentive fees
    
    
    (5.8
    )%
    
    
    (4.5
    )%
   ***
    
    Annualized (other than incentive fees).****
    
    Interest income allocated from Master less total expenses.   11




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##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (Unaudited)
    Three Months EndedMarch 31,2011
    
    
    2010Net realized and unrealized gains (losses)*
    
    $
    (49.31
    )
    
    $
    (25.41
    )Interest income
    
    
    0.25
    
    
    
    0.13Expenses **
    
    
    (0.65
    )
    
    
    (0.23
    )Increase (decrease) for the period
    
    
    (49.71
    )
    
    
    (25.51
    )Distribution
of interest income to feeder funds
    
    
    (0.25
    )
    
    
    (0.13
    )Net asset
value per unit, beginning of period
    
    
    1,299.33
    
    
    
    1,105.52Net asset
value per unit, end of period
    
    $
    1,249.37
    
    
    $
    1,079.88*     Includes clearing fees.**   Excludes clearing fees.Three Months EndedMarch 31,2011
    
    
    2010Ratios to Average Net Assets:***Net
investment income (loss)****
    
    
    (0.3
    )%
    
    
    (0.3
    )%Operating
expenses
    
    
    0.4
    %
    
    
    0.3
    %Total return
    
    
    (3.8
    )%
    
    
    (2.3
    )%
 ***
    
    Annualized.****
    
    Interest income less total expenses.   3. Trading Activities:
       12




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##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (Unaudited)
   Assets
    
    March 31, 2011Futures
ContractsEnergy
    
    $
    166,537Grains
    
    
    37,504Indices
    
    
    189,240Interest Rates Non-U.S.
    
    
    96,833Interest Rates U.S.
    
    
    2,781Livestock
    
    
    14,240Metals
    
    
    75,085Softs
    
    
    62,525Total unrealized appreciation on open futures contracts
    
    $
    644,745LiabilitiesFutures
ContractsGrains
    
    $
    (41,531
    )Indices
    
    
    (18,970
    )Interest Rates Non-U.S.
    
    
    (153,894
    )Interest Rates U.S.
    
    
    (153,652
    )Metals
    
    
    (2,430
    )Softs
    
    
    (37,196
    )Total unrealized depreciation on open futures contracts
    
    $
    (407,673
    )Net unrealized appreciation on open futures contracts
    
    $
    237,072
    *AssetsForward
ContractsCurrencies
    
    $
    2,211,140Metals
    
    
    65,105Total unrealized appreciation on open forward contracts
    
    $
    2,276,245LiabilitiesForward
ContractsCurrencies
    
    $
    (2,550,807
    )Metals
    
    
    (159,475
    )Total unrealized depreciation on open forward contracts
    
    $
    (2,710,282
    )Net
unrealized depreciation on open forward contracts
    
    $
    (434,037
    )**
   *
    
    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
March 31, 2011
    (Unaudited)
  Assets

March 31, 2011Options PurchasedCurrencies

$
110,220Total options purchased

$
110,220
***LiabilitiesOptions Premium ReceivedCurrencies

$
(79,619
)Total options premium received

$
(79,619
)*******  
    This amount is in Options purchased, at fair value on
    the Masters Statements of Financial Condition.**** This amount is in Options premium received, at fair value on
    the Masters Statements of Financial Condition.Assets

December 31, 2010Futures ContractsEnergy

$
104,562Grains


126,606Indices


110,856Interest Rates
    Non-U.S.


32,933Interest Rates U.S.


22,063Livestock


700Metals


97,200Softs


118,914Total unrealized appreciation on open futures contracts

$
613,834LiabilitiesFutures ContractsEnergy

$
(53,380
)Grains


(2,870
)Indices


(96,645
)Interest Rates
    Non-U.S.


(54,423
)Interest Rates U.S.


(24,734
)Livestock


(1,730
)Metals


(510
)Softs


(18,909
)Total unrealized depreciation on open futures contracts

$
(253,201
)Net unrealized appreciation on open futures contracts

$
360,633
*   *
    
    This amount is in Net unrealized appreciation on open
    futures contracts on the Masters Statements of Financial Condition. AssetsForward ContractsCurrencies

$
3,015,962Metals


184,969Total unrealized appreciation on open forward contracts

$
3,200,931LiabilitiesForward ContractsCurrencies

$
(2,455,912
)Metals


(30,477
)Total unrealized depreciation on open forward contracts

$
(2,486,389
)Net unrealized appreciation on open forward contracts

$
714,542
**   **
    
    This amount is in Net unrealized appreciation on open
    forward contracts on the Masters Statements of Financial Condition. 14




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (Unaudited)
  Assets

December 31, 2010Options PurchasedCurrencies

$
130,648Total options purchased

$
130,648
***LiabilitiesOptions Premium ReceivedCurrencies

$
(56,353
)Total options premium received

$
(56,353
)****   ***
    
    This amount is in Options purchased, at fair value
    on the Masters Statements of Financial Condition.****
    
    This amount is in Options premium received, at fair
    value on the Masters Statements of Financial Condition.  Three Months EndedMarch 31,Sector
    
    2011
    
    
    2010Currencies
    
    $
    (721,447
    )
    
    $
    (336,483
    )Energy
    
    
    804,281
    
    
    
    (519,788
    )Grains
    
    
    (261,074
    )
    
    
    29,711Indices
    
    
    (795,217
    )
    
    
    (1,232,613
    )Interest Rates U.S.
    
    
    (229,757
    )
    
    
    501,539Interest Rates Non-U.S.
    
    
    (378,016
    )
    
    
    536,561Livestock
    
    
    (27,350
    )
    
    
    18,480Metals
    
    
    (130,337
    )
    
    
    (512,210
    )Softs
    
    
    283,123
    
    
    
    (47,821
    )Total
    
    $
    (1,455,794
    )*****
    
    $
    (1,562,624
    )*****
 
 *****
    
    This amount is in Total trading results 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
March 31, 2011
    (Unaudited)
   Quoted Pricesin Active Markets


Significant Other


Significantfor Identical


Observable Inputs


UnobservableMarch 31, 2011


Assets (Level 1)


(Level 2)


Inputs (Level 3)AssetsInvestment in Master

$
37,752,203


$



$
37,752,203


$
Net fair value

$
37,752,203


$



$
37,752,203


$
Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable Inputs
    
    
    UnobservableDecember
31, 2010
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)AssetsInvestment in Master
    
    $
    36,378,264
    
    
    $
    
    
    
    $
    36,378,264
    
    
    $
    Net fair value
    
    $
    36,378,264
    
    
    $
    
    
    
    $
    36,378,264
    
    
    $
      Masters Investments.
 Masters Fair Value Measurements.
   16




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (Unaudited)
   Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable Inputs
    
    
    UnobservableMarch 31, 2011
    
    


Assets
(Level 1)
    
    

(Level
2)
    
    

Inputs
(Level 3)AssetsFutures
    
    $
    644,745
    
    
    $
    644,745
    
    
    $
    
    
    
    $
    Forwards
    
    
    2,276,245
    
    
    
    65,105
    
    
    
    2,211,140
    
    
    
    Options purchased
    
    
    110,220
    
    
    
    
    
    
    
    110,220
    
    
    
    Total assets
    
    
    3,031,210
    
    
    
    709,850
    
    
    
    2,321,360
    
    
    
    LiabilitiesFutures
    
    $
    407,673
    
    
    $
    407,673
    
    
    $
    
    
    
    $
    Forwards
    
    
    2,710,282
    
    
    
    159,475
    
    
    
    2,550,807
    
    
    
    Options premium received
    
    
    79,619
    
    
    
    
    
    
    
    79,619
    
    
    
    Total liabilities
    
    
    3,197,574
    
    
    
    567,148
    
    
    
    2,630,426
    
    
    
    Net fair value
    
    $
    (166,364
    )
    
    $
    142,702
    
    
    $
    (309,066
    )
    
    $
    Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable Inputs
    
    
    UnobservableDecember
31, 2010*
    
    

Assets
(Level 1)
    
    

(Level
2)
    
    

Inputs
(Level 3)AssetsFutures
    
    $
    613,834
    
    
    $
    613,834
    
    
    $
    
    
    
    $
    Forwards
    
    
    3,200,931
    
    
    
    184,969
    
    
    
    3,015,962
    
    
    
    Options purchased
    
    
    130,648
    
    
    
    
    
    
    
    130,648
    
    
    
    Total assets
    
    
    3,945,413
    
    
    
    798,803
    
    
    
    3,146,610
    
    
    
    LiabilitiesFutures
    
    $
    253,201
    
    
    $
    253,201
    
    
    $
    
    
    
    $
    Forwards
    
    
    2,486,389
    
    
    
    30,477
    
    
    
    2,455,912
    
    
    
    Options premium received
    
    
    56,353
    
    
    
    
    
    
    
    56,353
    
    
    
    Total liabilities
    
    
    2,795,943
    
    
    
    283,678
    
    
    
    2,512,265
    
    
    
    Net fair value
    
    $
    1,149,470
    
    
    $
    515,125
    
    
    $
    634,345
    
    
    $
     
 *
    
    The amounts have been reclassified from the December 31, 2010 prior year financial
statements to conform to current year presentation based on new fair value guidance.
  17




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (Unaudited)
  5.
    Financial
    Instrument Risks:               18




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (Unaudited)
  6.  Critical
    Accounting Policies
  Use of Estimates
  Partnerships Investments
 Partnerships and Masters Fair Value Measurements.
     19




---



##### 



Potomac Futures Fund L.P.
    Notes to Financial Statements
March 31, 2011
    (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
March 31, 2011
    (Unaudited)
      Subsequent Events.
  Net Income (Loss) per unit.
  21




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Liquidity
    and Capital Resources
            Critical
    Accounting Policies
    22




---



##### 



Results
    of Operations
       23




---



##### 



30-day 3-month
        24




---



##### 



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk            one-day
 25




---



##### 



March 31, 2011
  Three Months Ended March 31, 2011% of Total
    
    
    High
    
    
    Low
    
    
    AverageMarket Sector
    
    Value at Risk
    
    
    Capitalization
    
    
    Value at Risk
    
    
    Value at Risk
    
    
    Value at Risk*Currencies
    
    $
    1,866,660
    
    
    
    4.94
    %
    
    $
    2,527,349
    
    
    $
    883,986
    
    
    $
    1,456,795Energy
    
    
    357,260
    
    
    
    0.94
    %
    
    
    440,210
    
    
    
    160,800
    
    
    
    316,177Grains
    
    
    70,100
    
    
    
    0.19
    %
    
    
    208,500
    
    
    
    43,400
    
    
    
    129,075Indices
    
    
    723,589
    
    
    
    1.92
    %
    
    
    2,014,273
    
    
    
    341,913
    
    
    
    1,242,752Interest Rates U.S.
    
    
    285,880
    
    
    
    0.76
    %
    
    
    355,800
    
    
    
    166,950
    
    
    
    159,544Interest Rates Non-U.S.
    
    
    569,643
    
    
    
    1.51
    %
    
    
    618,267
    
    
    
    231,396
    
    
    
    404,297Livestock
    
    
    26,900
    
    
    
    0.07
    %
    
    
    26,900
    
    
    
    2,450
    
    
    
    13,933Metals
    
    
    392,491
    
    
    
    1.04
    %
    
    
    655,142
    
    
    
    155,338
    
    
    
    402,233Softs

    
    136,500
    
    
    
    0.36
    %
    
    
    215,100
    
    
    
    116,500
    
    
    
    152,433Total
    
    $
    4,429,023
    
    
    
    11.73
    %
 
  *
    Average of Month-end Values at Risk.
  December 31, 2010Twelve Months Ended December 31, 2010% of Total
    
    
    High
    
    
    Low
    
    
    AverageMarket Sector
    
    Value at Risk
    
    
    Capitalization
    
    
    Value at Risk
    
    
    Value at Risk
    
    
    Value at Risk*Currencies
    
    $
    1,263,212
    
    
    
    3.47
    %
    
    $
    3,076,532
    
    
    $
    45,857
    
    
    $
    1,544,875Energy
    
    
    275,400
    
    
    
    0.76
    %
    
    
    561,250
    
    
    
    56,374
    
    
    
    256,720Grains
    
    
    109,562
    
    
    
    0.30
    %
    
    
    335,050
    
    
    
    12,500
    
    
    
    109,901Indices
    
    
    1,190,652
    
    
    
    3.27
    %
    
    
    1,974,159
    
    
    
    444,941
    
    
    
    1,162,418Interest Rates U.S.
    
    
    23,067
    
    
    
    0.06
    %
    
    
    889,400
    
    
    
    23,067
    
    
    
    400,082Interest Rates Non-U.S.
    
    
    200,338
    
    
    
    0.55
    %
    
    
    1,860,915
    
    
    
    142,880
    
    
    
    919,067Livestock
    
    
    10,050
    
    
    
    0.03
    %
    
    
    33,350
    
    
    
    1,000
    
    
    
    11,913Metals
    
    
    322,981
    
    
    
    0.89
    %
    
    
    913,240
    
    
    
    69,732
    
    
    
    419,922Softs
    
    
    128,500
    
    
    
    0.35
    %
    
    
    317,000
    
    
    
    5,200
    
    
    
    116,413Total
    
    $
    3,523,762
    
    
    
    9.68
    %
 
 *
    
    Annual average of month-end Values at Risk. 26




---



##### 



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.   27




---



##### 



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings    Mutual Funds
    FINRA Settlement
  Auction Rate Securities
   28




---



##### 



Subprime Mortgage-Related Actions
    Credit Crisis Related Matters
    29




---



##### 



Item 1A.  Risk     Factors
    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 ProgramsJanuary 1, 2011 -
    January 31, 2011



417.6175



$
1,431.23




N/A




N/AFebruary 1, 2011 -
February 28, 2011



581.3065



$
1,463.62




N/A




N/AMarch 1, 2011 -
March 31, 2011



381.6535



$
1,363.96




N/A




N/A1,380.5775



$
1,426.27   * Generally, limited partners
    are permitted to redeem their Redeemable Units as of the end of
    each month on three business days notice to the General Partner.
    Under certain circumstances, the General Partner can compel
    redemption, although 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 Morgan Stanley Smith Barney LLC, 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 2010, dated June 1, 2010 (filed as Exhibit 10.6(c) to the Form 10-K filed on March
31, 2011 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 and Director).32.1
    
    Section 1350 Certification (Certification of President and Director).32.2
    
    Section 1350 Certification (Certification of Chief Financial Officer and Director). 31




---



##### 



SIGNATURES
    POTOMAC FUTURES FUND L.P.By:

Ceres Managed Futures LLC(General
    Partner)By:

/s/  Walter DavisWalter Davis
    President and DirectorDate: May 16, 2011By:

/s/  Jennifer
    MagroJennifer
    Magro
    Chief Financial Officer and Director
(Principal Accounting Officer)Date: May 16, 2011  32