##### Table of Contents





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 September 30, 2009
  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
 55 East
59th
Street -
10th Floor
 New York, New York 10022
     (212) 559-2011
       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
September 30, 2009 and December 31, 2008 (unaudited)

3Statements of Income and Expenses
    and Changes in Partners Capital for the three and nine
    months ended September 30, 2009 and 2008
    (unaudited)

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

5 - 15Item 2.

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

16  19Item 3.

Quantitative and Qualitative
    Disclosures about Market Risk

20  21Item 4.

Controls and Procedures

22PART II - Other Information

23  27ExhibitsExhibit 3.1(e) Certificate of Amendment of the Certificate of Limited Partnership, dated September 21, 2005Exhibit 3.1(f) Certificate of Amendment of the Certificate of Limited Partnership, dated September 19, 2008Exhibit 10.1 Form of Subscription AgreementExhibit 10.5 Escrow Agreement, dated April 15, 1997Exhibit 31.1 CertificationExhibit 31.2 CertificationExhibit 32.1 CertificationExhibit 32.2 Certification   2




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##### Table of Contents



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


December 31,2009


2008Assets:Investment in Master, at fair value

$
60,050,228


$
91,152,448Cash


108,507



97,834Total assets

$
60,158,735


$
91,250,282Liabilities and Partners Capital:Liabilities:Accrued expenses:Brokerage commissions

$
325,860


$
494,272Management fees


99,577



151,058Other


86,744



121,454Redemptions payable


4,520,321



4,828,995Total liabilities


5,032,502



5,595,779Partners Capital:General Partner, 624.1683 and 729.3902 Unit equivalents
outstanding at September 30, 2009
    and December 31, 2008, respectively


864,398



1,098,155Limited Partners, 39,181.5904 and 56,162.1745 Redeemable
    Units of Limited Partnership Interest outstanding
at September 30, 2009 and December 31, 2008, respectively


54,261,835



84,556,348Total partners capital


55,126,233



85,654,503Total liabilities and partners capital

$
60,158,735


$
91,250,282    3




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##### Table of Contents



Potomac Futures Fund L.P.
    Statements of Income and Expenses and Changes in Partners Capital
    (Unaudited) Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Income:Net realized gains (losses) on closed positions allocated from Master

    $
    216,248
    
    
    $
    4,624,259
    
    
    $
    (3,845,309
    )
    
    $
    7,441,289Change in net unrealized gains (losses) on open positions allocated from Master

    
    2,338,865
    
    
    
    (8,053,487
    )
    
    
    2,272,126
    
    
    
    (1,721,623
    )Interest income allocated from Master

    
    13,457
    
    
    
    334,830
    
    
    
    44,778
    
    
    
    1,342,208Expenses allocated from Master

    
    (22,967
    )
    
    
    (26,014
    )
    
    
    (58,442
    )
    
    
    (91,409
    )Total income (loss)

    
    2,545,603
    
    
    
    (3,120,412
    )
    
    
    (1,586,847
    )
    
    
    6,970,465Expenses:Brokerage commissions

    
    1,005,655
    
    
    
    1,805,610
    
    
    
    3,428,819
    
    
    
    6,400,824Management fees

    
    307,305
    
    
    
    552,176
    
    
    
    1,047,877
    
    
    
    1,957,612Other

    
    35,268
    
    
    
    53,701
    
    
    
    157,429
    
    
    
    158,334Total expenses

    
    1,348,228
    
    
    
    2,411,487
    
    
    
    4,634,125
    
    
    
    8,516,770Net income (loss)

    
    1,197,375
    
    
    
    (5,531,899
    )
    
    
    (6,220,972
    )
    
    
    (1,546,305
    )Additions  Limited Partners

    
    212,000
    
    
    
    2,002,000
    
    
    
    2,181,000
    
    
    
    6,647,000Redemptions  Limited Partners

    
    (9,101,992
    )
    
    
    (17,569,276
    )
    
    
    (26,340,714
    )
    
    
    (53,614,638
    )Redemptions  General Partner
    
    
    
    
    
    
    
    
    
    (147,584
    )
    
    
    Net increase (decrease) in partners capital

    
    (7,692,617
    )
    
    
    (21,099,175
    )
    
    
    (30,528,270
    )
    
    
    (48,513,943
    )Partners Capital, beginning of period

    
    62,818,850
    
    
    
    121,454,883
    
    
    
    85,654,503
    
    
    
    148,869,651Partners Capital, end of period

    $
    55,126,233
    
    
    $
    100,355,708
    
    
    $
    55,126,233
    
    
    $
    100,355,708Net Asset Value per Unit (39,805.7587 and 64,927.4423 Units
    outstanding at September 30, 2009 and 2008, respectively)

    $
    1,384.88
    
    
    $
    1,545.66
    
    
    $
    1,384.88
    
    
    $
    1,545.66Net income (loss) per Redeemable Unit of Limited Partnership
    Interest and General Partner Unit equivalent

    $
    29.24
    
    
    $
    (79.02
    )
    
    $
    (120.70
    )
    
    $
    (27.79
    )Weighted average units outstanding

    
    45,235.6473
    
    
    
    70,101.2344
    
    
    
    49,218.3844
    
    
    
    83,312.2159
    4




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)  1.
    General:             Form 10-K
          5




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
    CMF
    Campbell Master Fund L.P.
    Statements of Financial Condition
    (Unaudited)
  September 30,
    
    
    December 31,2009
    
    
    2008Assets:Equity in trading account:Cash
    
    $
    63,631,357
    
    
    $
    119,063,081Cash margin
    
    
    6,064,967
    
    
    
    7,947,067Net unrealized appreciation on open futures contracts
    
    
    300,641
    
    
    
    159,230Net unrealized appreciation on open forward contracts
    
    
    2,549,702
    
    
    
    397,543Options
owned, at fair value (cost $70,816 and
$36,166 at September 30, 2009 and December 31, 2008, respectively)
    
    
    36,741
    
    
    
    20,304Total assets
    
    $
    72,583,408
    
    
    $
    127,587,225Liabilities and Partners Capital:Liabilities:Options
written, at fair value (premium $38,552 and
$108,994 at September 30, 2009 and December 31, 2008, respectively)
    
    $
    25,350
    
    
    $
    82,624Accrued expenses:Professional fees
    
    
    24,875
    
    
    
    29,639Total liabilities
    
    
    50,225
    
    
    
    112,263Partners Capital:General
Partner, 0.0000 Unit equivalents at September 30, 2009 and
December 31, 2008
    
    
    
    
    
    
    Limited
Partners 65,191.0739 and 112,523.4490 Redeemable
Units of Limited Partnership Interest outstanding at September 30, 2009
and December 31, 2008, respectively
    
    
    72,533,183
    
    
    
    127,474,962Total liabilities and partners capital
    
    $
    72,583,408
    
    
    $
    127,587,225
  6




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
  CMF
    Campbell Master Fund L.P.
    Schedule of Investments
    September 30, 2009
    (Unaudited)
  Notional($)/Number of

    
    
    
    
    
    
    % of PartnersContracts

    

    
    Fair Value
    
    
    CapitalFutures Contracts PurchasedInterest Rates Non-U.S.
    
    
    910
    
    
    $
    167,605
    
    
    
    0.23
    %Interest Rates U.S.
    
    
    359
    
    
    
    119,670
    
    
    
    0.17Indices
    
    
    561
    
    
    
    38,939
    
    
    
    0.05Metals
    
    
    74
    
    
    
    50,075
    
    
    
    0.07Softs
    
    
    3
    
    
    
    165
    
    
    
    0.00
    *Total futures contracts purchased
    
    
    
    
    
    
    376,454
    
    
    
    0.52Futures Contracts SoldEnergy
    
    
    54
    
    
    
    (155,953
    )
    
    
    (0.21
    )Grains
    
    
    33
    
    
    
    8,175
    
    
    
    0.01Interest Rates Non-U.S.
    
    
    184
    
    
    
    71,965
    
    
    
    0.10Total futures contracts sold
    
    
    
    
    
    
    (75,813
    )
    
    
    (0.10
    )Unrealized Appreciation on Forward ContractsCurrencies
    
    
    258,317,275
    
    
    
    4,739,323
    
    
    
    6.53Metals
    
    
    44
    
    
    
    86,748
    
    
    
    0.12Total unrealized appreciation on forward contracts
    
    
    
    
    
    
    4,826,071
    
    
    
    6.65Unrealized Depreciation on Forward ContractsCurrencies
    
    
    135,223,005
    
    
    
    (2,161,418
    )
    
    
    (2.98
    )Metals
    
    
    47
    
    
    
    (114,951
    )
    
    
    (0.16
    )Total unrealized depreciation on forward contracts
    
    
    
    
    
    
    (2,276,369
    )
    
    
    (3.14
    )Options OwnedCurrenciesCall
    
    
    331,388,831
    
    
    
    36,379
    
    
    
    0.05Put
    
    
    7,806,910,428
    
    
    
    362
    
    
    
    0.00
    *Total options owned
    
    
    
    
    
    
    36,741
    
    
    
    0.05Options WrittenCurrenciesCall
    
    
    32,750,144,035
    
    
    
    (24,793
    )
    
    
    (0.03
    )Put
    
    
    1,537,785
    
    
    
    (557
    )
    
    
    (0.00
    )*Total options written
    
    
    
    
    
    
    (25,350
    )
    
    
    (0.03
    )Total fair value
    
    
    
    
    
    $
    2,861,734
    
    
    
    3.95
    %
 *
    
    Due to rounding. 7




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##### Table of Contents



Potomac Futures Fund L.P.Notes to Financial
StatementsSeptember 30, 2009(Unaudited)
  CMF
    Campbell Master Fund L.P.Schedule of InvestmentsDecember 31, 2008(Unaudited)
 Notional($)/Number of

    
    



% of PartnersContracts

    

    
Fair Value


CapitalFutures Contracts PurchasedInterest Rates Non-U.S.

    
    1,065
    
    
$
600,131



0.47
%Interest Rates U.S.

    
    129
    
    

(204,258
)


(0.16
)Indices

    
    41
    
    

44,667



0.04Metals

    
    1
    
    

3,250



0.00
*Total futures contracts purchased

    
    
    
    

443,790



0.35Futures Contracts SoldEnergy

    
    20
    
    

(42,257
)


(0.03
)Interest Rates Non-U.S.

    
    174
    
    

(92,304
)


(0.07
)Interest Rates U.S.

    
    17
    
    

(987
)


(0.00
)*Indices

    
    193
    
    

(149,012
)


(0.12
)Total futures contracts sold

    
    
    
    

(284,560
)


(0.22
)Unrealized Appreciation on Open Forward ContractsCurrencies

    
    99,409,075
    
    

3,229,485



2.53Metals

    
    2
    
    

5,333



0.00
*Total unrealized appreciation on open forward contracts

    
    
    
    

3,234,818



2.53Unrealized Depreciation on Open Forward ContractsCurrencies

    
    88,487,957
    
    

(2,741,087
)


(2.15
)Metals

    
    31
    
    

(96,188
)


(0.08
)Total unrealized depreciation on open forward contracts

    
    
    
    

(2,837,275
)


(2.23
)Options OwnedCurrenciesCalls

    
    18,199,906,162
    
    

(2,055
)


(0.00
)*Puts

    
    3,116,570
    
    

22,359



0.02Total options owned

    
    
    
    

20,304



0.02Options WrittenCurrenciesCalls

    
    13,554,290
    
    

(5,765
)


(0.00
)*Puts

    
    62,971,974,893
    
    

(76,859
)


(0.06
)Total options written

    
    
    
    

(82,624
)


(0.06
)Total fair value

    
    
    
    
$
494,453



0.39
%   *
    
    Due to rounding.
 8




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
  CMF
    Campbell Master Fund L.P.
    Statements of Income and Expenses and Changes in Partners Capital
    (Unaudited)
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Income:Net gains (losses) on trading of commodity interests:Net realized gains (losses) on closed contracts
    
    $
    258,641
    
    
    $
    6,387,938
    
    
    $
    (4,873,481
    )
    
    $
    10,147,122Change in net unrealized gains (losses) on open contracts
    
    
    2,831,207
    
    
    
    (11,174,854
    )
    
    
    2,262,189
    
    
    
    (2,711,116
    )Gain (loss) from trading, net
    
    
    3,089,848
    
    
    
    (4,786,916
    )
    
    
    (2,611,292
    )
    
    
    7,436,006Interest
income
    
    
    16,320
    
    
    
    466,580
    
    
    
    60,078
    
    
    
    1,853,455Total
income (loss)
    
    
    3,106,168
    
    
    
    (4,320,336
    )
    
    
    (2,551,214
    )
    
    
    9,289,461Expenses:Clearing fees
    
    
    19,963
    
    
    
    27,956
    
    
    
    48,121
    
    
    
    100,269Professional fees
    
    
    7,837
    
    
    
    8,379
    
    
    
    28,810
    
    
    
    25,761Total expenses
    
    
    27,800
    
    
    
    36,335
    
    
    
    76,931
    
    
    
    126,030Net income (loss)
    
    
    3,078,368
    
    
    
    (4,356,671
    )
    
    
    (2,628,145
    )
    
    
    9,163,431Additions  Limited Partners
    
    
    212,000
    
    
    
    2,002,000
    
    
    
    2,181,000
    
    
    
    6,647,000Redemptions  Limited Partners
    
    
    (10,771,724
    )
    
    
    (31,406,172
    )
    
    
    (54,434,556
    )
    
    
    (83,465,321
    )Distribution
of interest income to feeder funds
    
    
    (16,320
    )
    
    
    (466,580
    )
    
    
    (60,078
    )
    
    
    (1,853,455
    )Net increase (decrease) in Partners Capital
    
    
    (7,497,676
    )
    
    
    (34,227,423
    )
    
    
    (54,941,779
    )
    
    
    (69,508,345
    )Partners Capital, beginning of period
    
    
    80,030,859
    
    
    
    181,415,278
    
    
    
    127,474,962
    
    
    
    216,696,200Partners Capital, end of period
    
    $
    72,533,183
    
    
    $
    147,187,855
    
    
    $
    72,533,183
    
    
    $
    147,187,855Net Asset Value per Redeemable Unit
(65,191.0739 and 129,411.7530 Units outstanding at
September 30, 2009 and 2008, respectively)
    
    $
    1,112.62
    
    
    $
    1,137.36
    
    
    $
    1,112.62
    
    
    $
    1,137.36Net income (loss) per Redeemable Unit of Limited Partnership Interest
    
    $
    47.10
    
    
    $
    (32.44
    )
    
    $
    (19.54
    )
    
    $
    52.92Weighted average units outstanding
    
    
    72,549.5908
    
    
    
    143,523.8090
    
    
    
    90,602.3699
    
    
    
    169,578.6814
  9




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
  2.
    Financial
    Highlights:    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net realized
and unrealized gains (losses) allocated from Master*
    
    $
    36.68
    
    
    $
    (75.05
    )
    
    $
    (96.77
    )
    
    $
    (17.98
    )Interest
income allocated from Master
    
    
    0.30
    
    
    
    4.76
    
    
    
    0.93
    
    
    
    15.86Expenses **
    
    
    (7.74
    )
    
    
    (8.73
    )
    
    
    (24.86
    )
    
    
    (25.67
    )Increase
(decrease) for the period
    
    
    29.24
    
    
    
    (79.02
    )
    
    
    (120.70
    )
    
    
    (27.79
    )Net Asset
Value per Redeemable Unit, beginning of period
    
    
    1,355.64
    
    
    
    1,624.68
    
    
    
    1,505.58
    
    
    
    1,573.45Net Asset
Value per Redeemable Unit, end of period
    
    $
    1,384.88
    
    
    $
    1,545.66
    
    
    $
    1,384.88
    
    
    $
    1,545.66   *
    
    Includes Partnership brokerage commissions and expenses
    allocated from the Master.**
    
    Excludes Partnership brokerage commissions and expenses
    allocated from the Master.  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Ratio to
average net assets:***Net
investment income (loss) before incentive fees****
    
    
    (9.0
    )%
    
    
    (7.7
    )%
    
    
    (9.0
    )%
    
    
    (7.6
    )%Operating
expenses
    
    
    9.1
    %
    
    
    8.9
    %
    
    
    9.1
    %
    
    
    9.1
    %Incentive fees
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %Total expenses
    
    
    9.1
    %
    
    
    8.9
    %
    
    
    9.1
    %
    
    
    9.1
    %Total return:Total return before incentive fees
    
    
    2.2
    %
    
    
    (4.9
    )%
    
    
    (8.0
    )%
    
    
    (1.8
    )%Incentive fees
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %Total return after incentive fees
    
    
    2.2
    %
    
    
    (4.9
    )%
    
    
    (8.0
    )%
    
    
    (1.8
    )%   ***
    
    Annualized (other than incentive fee).****
    
    Interest income allocated from Master less total expenses.   10




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
    Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net realized and unrealized gains (losses)*
    
    $
    46.99
    
    
    $
    (35.84
    )
    
    $
    (19.91
    )
    
    $
    41.79Interest income
    
    
    0.23
    
    
    
    3.46
    
    
    
    0.71
    
    
    
    11.29Expenses **
    
    
    (0.12
    )
    
    
    (0.06
    )
    
    
    (0.34
    )
    
    
    (0.16
    )Increase (decrease) for the period
    
    
    47.10
    
    
    
    (32.44
    )
    
    
    (19.54
    )
    
    
    52.92Distribution
of interest income to feeder funds
    
    
    (0.23
    )
    
    
    (3.46
    )
    
    
    (0.71
    )
    
    
    (11.29
    )Net Asset
Value per Redeemable Unit, beginning of period
    
    
    1,065.75
    
    
    
    1,173.26
    
    
    
    1,132.87
    
    
    
    1,095.73Net Asset
value per Redeemable Unit, end of period
    
    $
    1,112.62
    
    
    $
    1,137.36
    
    
    $
    1,112.62
    
    
    $
    1,137.36*     Includes clearing
fees.**  Excludes clearing fees.Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Ratios to Average Net Assets:***Net
investment income (loss)****
    
    
    (0.1
    )%
    
    
    1.1
    %
    
    
    0.0
    %*****
    
    
    1.3
    %Operating
expenses
    
    
    0.1
    %
    
    
    0.1
    %
    
    
    0.1
    %
    
    
    0.1
    %Total return
    
    
    4.4
    %
    
    
    (2.8
    )%
    
    
    (1.7
    )%
    
    
    4.8
    %
 ***
    
    Annualized.****
    
    Interest income less total expenses.*****
    
    Due to rounding.
   3. Trading Activities:
       11




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
       September 30, 2009
    
    
    
    
    
    

September 30, 2009
    
    
    
    
    

September 30, 2009Assets
    
    
    
    
    
    Assets
    
    
    
    
    
    AssetsFutures Contracts
    
    
    
    
    
    Forward Contracts
    
    
    
    
    
    Options OwnedEnergy
    
    $
    8,538
    
    
    Currencies
    
    $
    4,739,323
    
    
    Currencies
    
    $
    36,741Grains
    
    
    25,963
    
    
    Metals
    
    
    86,748Interest Rates Non-U.S.
    
    
    273,683Interest Rates U.S.
    
    
    121,764Indices
    
    
    181,851Metals
    
    
    72,205Softs
    
    
    170Total unrealized appreciation on open futures contracts
    
    $
    684,174
    
    
Total unrealized appreciation on open forward contracts
    
    $
    4,826,071
    
    
Total
options owned
    
    $
    36,741
    ***Liabilities
    
    
    
    
    
    Liabilities
    
    
    
    
    
    LiabilitiesFutures Contracts
    
    
    
    
    
    Forward Contracts
    
    
    
    
    
    Options WrittenEnergy
    
    $
    (164,491
    )
    
    Currencies
    
    $
    (2,161,418
    )
    
    Currencies
    
    $
    (25,350
    )Grains
    
    
    (17,788
    )
    
    Metals
    
    
    (114,951
    )Interest Rates Non-U.S.
    
    
    (34,113
    )Interest Rates U.S.
    
    
    (2,094
    )Indices
    
    
    (142,912
    )Metals
    
    
    (22,130
    )Softs
    
    
    (5
    )Total
unrealized depreciation on open futures contracts
    
    $
    (383,533
    )
    


Total
unrealized depreciation on open forward contracts
    
    $
    (2,276,369
    )


    
Total
options written
    
    $
    (25,350
    )****Net
unrealized appreciation on open futures contracts
    
    $
    300,641
    *
    

Net
unrealized appreciation on open forward contracts
    
    $
    2,549,702
    **
 
 *
    
    This amount is included in Net unrealized appreciation on open futures contracts on the Statements of Financial Condition.**
    
    This amount is included in Net unrealized appreciation on open forward contracts on the Statements of Financial Condition.***
    
    This amount is included in options owned, at fair value on the Statements of Financial Condition.****
    
    This amount is included in options written, at fair value on the Statements of Financial Condition. 12




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2009
    
    
    September 30, 2009Sector
    
    Gain (loss) from trading
    
    
    Gain (loss) from tradingCurrencies
    
    $
    2,299,932
    
    
    $
    1,470,394Energy
    
    
    (871,574
    )
    
    
    (662,653
    )Grains
    
    
    84,963
    
    
    
    84,963Indices
    
    
    1,486,707
    
    
    
    (1,475,502
    )Interest Rates U.S.
    
    
    (227,827
    )
    
    
    364,535Interest Rates Non-U.S.
    
    
    (340,758
    )
    
    
    (2,088,282
    )Metals
    
    
    834,259
    
    
    
    (128,893
    )Softs
    
    
    (175,854
    )
    
    
    (175,854
    )Total
    
    $
    3,089,848
    
    
    $
    (2,611,292
    )
  4.
    Fair
    Value Measurements:  Investments.
 Fair
Value Measurements.
   Quoted Pricesin Active Markets


Significant Other


Significantfor Identical


Observable Inputs


Unobservable9/30/2009


Assets (Level 1)


(Level 2)


Inputs (Level 3)AssetsInvestment in Master

$
60,050,228


$



$
60,050,228


$
Total fair value

$
60,050,228


$



$
60,050,228


$
Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable Inputs
    
    
    Unobservable12/31/2008
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)AssetsInvestment in Master
    
    $
    91,152,448
    
    
    $
    
    
    
    $
    91,152,448
    
    
    $
    Total fair value
    
    $
    91,152,448
    
    
    $
    
    
    
    $
    91,152,448
    
    
    $
      Investments.
 Fair
Value Measurements.
 13




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
    Quoted Prices inActive Markets


Significant Other


Significantfor Identical


Observable Inputs


Unobservable9/30/2009


Assets (Level 1)


(Level 2)


Inputs (Level 3)AssetsFutures
    
    $
    300,641
    
    
    $
    300,641
    
    
    $
    
    
    
    $
    Forwards
    
    
    2,577,905
    
    
    
    
    
    
    
    2,577,905
    
    
    
    Options owned
    
    
    36,741
    
    
    
    
    
    
    
    36,741
    
    
    
    Total assets
    
    
    2,915,287
    
    
    
    300,641
    
    
    
    2,614,646
    
    
    
    LiabilitiesForwards
    
    $
    28,203
    
    
    $
    28,203
    
    
    $
    
    
    
    $
    Options written
    
    
    25,350
    
    
    
    
    
    
    
    25,350
    
    
    
    Total
liabilities
    
    
    53,553
    
    
    
    28,203
    
    
    
    25,350
    
    
    
    Total fair value
    
    $
    2,861,734
    
    
    $
    272,438
    
    
    $
    2,589,296
    
    
    $
    Quoted Prices inActive Markets
    
    
    Significant Other
    
    
    Significantfor Identical
    
    
    Observable Inputs
    
    
    Unobservable12/31/2008
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    

Inputs (Level 3)AssetsFutures
    
    $
    159,230
    
    
    $
    159,230
    
    
    $
    
    
    
    $
    Forwards
    
    
    488,398
    
    
    
    
    
    
    
    488,398
    
    
    
    Options owned
    
    
    20,304
    
    
    
    
    
    
    
    20,304
    
    
    
    Total assets
    
    
    667,932
    
    
    
    159,230
    
    
    
    508,702
    
    
    
    LiabilitiesForwards
    
    $
    90,855
    
    
    $
    90,855
    
    
    $
    
    
    
    $
    Options written
    
    
    82,624
    
    
    
    
    
    
    
    82,624
    
    
    
    Total
liabilities
    
    
    173,479
    
    
    
    90,855
    
    
    
    82,624
    
    
    
    Total fair value
    
    $
    494,453
    
    
    $
    68,375
    
    
    $
    426,078
    
    
    $
       5.
    Financial
    Instrument Risks:  14




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##### Table of Contents



Potomac Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2009
    (Unaudited)
           15




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Liquidity
    and Capital Resources
            Critical
    Accounting Policies
  Use of Estimates
  Statement of Cash Flows
  Investments
 Fair Value Measurements.
    16




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##### Table of Contents



Futures Contracts
  Forward Foreign Currency Contracts
    London Metals Exchange Forward Contracts
 Options.
  Income Taxes
   17




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##### Table of Contents



Recent Accounting Pronouncements.
  Subsequent Events.
  Results
    of Operations
             18




---



##### Table of Contents



30-day 3-month and/or 90-day
        19




---



##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk            one-day
 20




---



##### Table of Contents



Form 10-K
   September 30,
    2009
    (Unaudited)
  Three
Months Ended September 30, 2009% of Total
    
    
    High
    
    
    Low
    
    
    AverageMarket Sector
    
    Value at Risk
    
    
    Capitalization
    
    
    Value at Risk
    
    
    Value at Risk
    
    
    Value at Risk*Currencies
    
    $
    2,410,861
    
    
    
    3.32
    %
    
    $
    3,560,326
    
    
    $
    1,365,144
    
    
    $
    2,277,127Energy
    
    
    280,538
    
    
    
    0.39
    %
    
    
    483,280
    
    
    
    120,600
    
    
    
    287,212Grains
    
    
    73,980
    
    
    
    0.10
    %
    
    
    162,540
    
    
    
    20,520
    
    
    
    94,638Interest Rates U.S.
    
    
    518,603
    
    
    
    0.72
    %
    
    
    665,550
    
    
    
    38,743
    
    
    
    446,840Interest Rates Non-U.S.
    
    
    1,961,713
    
    
    
    2.71
    %
    
    
    2,054,733
    
    
    
    620,517
    
    
    
    1,188,182Metals
    
    
    638,982
    
    
    
    0.88
    %
    
    
    1,109,145
    
    
    
    193,929
    
    
    
    483,517Softs
    
    
    6,300
    
    
    
    0.01
    %
    
    
    145,740
    
    
    
    2,100
    
    
    
    61,222Indices
    
    
    2,947,078
    
    
    
    4.06
    %
    
    
    3,340,257
    
    
    
    1,088,241
    
    
    
    1,846,673Total
    
    $
    8,838,055
    
    
    
    12.19
    %
  *
    Average of Month-end Values at Risk
 21




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##### Table of Contents



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.   22




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##### Table of Contents



PART II.
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings  Form 10-K
 Subprime Mortgage-Related Litigation
  Asher, et al. v. Citigroup Inc., et al. Pellegrini v. Citigroup Inc., et al. In re Citigroup Inc. Bond Litigation.
  Utah Retirement Systems v. Strauss, et al.
  In Re American
Home Mortgage Securities Litigation.
  In Re American International Group, Inc. 2008 Securities Litigation.
 Auction Rate Securities-Related Litigation and Other Matters
  K-V
Pharmaceutical Co. v. CGMI In Re Citigroup Auction Rate
Securities Litigation.
  In Re Citigroup Auction Rate Securities Litigation.
  Ocwen Financial Corp., et al. v.
CGMI In Re
Citigroup Auction Rate Securities Litigation.
 Other Matters
  ECA Acquisitions, Inc.,
et al. v. MAT Three LLC, et al..
 Adelphia Communications Corporation
   IPO Securities Litigation
   Other Matters
   Terra Securities Asa Konkursbo, et al. v. Citigroup Inc., et al.
 23




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##### Table of Contents



Item 1A.  Risk     Factors
   Speculative
position and trading limits may reduce profitability.
 Regulatory changes could restrict the Partnerships operations.
  Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds     24




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##### Table of Contents



(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 ProgramsJuly 1, 2009 -
    July 31, 2009



261.4059



$
1,350.12




N/A




N/AAugust 1, 2009 -
    August 31, 2009



3,164.7288



$
1,336.21




N/A




N/ASeptember 1, 2009 -
    September 30, 2009



3,264.0526



$
1,384.88




N/A




N/A6,690.1873



$
1,360.50   * 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.
    Submission
    of Matters to a Vote of Security Holders 
    None  Item 5.
    Other
Information  None. 25




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##### Table of Contents



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 herein)(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 herein).(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).3.2
    
    Second Amended and Restated Limited Partnership Agreement, dated April 1, 2001 (filed as
Exhibit 3.6 to the General Form for Registration of Securities on Form 10 filed on April 30,
2004 and incorporated herein by reference).10.1
    
    Form of Subscription Agreement (filed herein).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
    
    Amended and Restated Agency Agreement among the Partnership, Smith Barney Futures Management
LLC and Salomon Smith Barney Inc., dated April 1, 2001 (filed as Exhibit 10.3 to the General
Form for Registration of Securities on Form 10 filed on April 30, 2004 and incorporated herein
by reference).10.4
    
    Joinder Agreement among the Partnership, Citigroup Managed Futures LLC, Citigroup Global
Markets Inc. 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 herein).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 2008, dated June 5, 2008 (filed as Exhibit 10.15 to the Form 10-K filed on March
31, 2009 and incorporated herein by reference).16.1
    
    Letter Regarding Change of Certifying Accountant (filed as Exhibit 16.1 to the Form 8-K filed
on July 24, 2009 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). 26




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##### Table of Contents



SIGNATURES
    POTOMAC FUTURES FUND L.P.By:

Ceres Managed Futures LLC(General
    Partner)By:

/s/  Jerry
    PascucciJerry
    Pascucci
    President and DirectorDate: November 16, 2009By:

/s/  Jennifer
    MagroJennifer
    Magro
    Chief Financial Officer and Director
(Principal Accounting Officer)Date: November 16, 2009  27