UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.20549

FORM 10-K

Annual Report Pursuant to Section 13or 15(d) of the Securities Exchange Act of 1934

For theyear ended December 31, 2004

Commission FileNumber 0-50735

SMITH BARNEY POTOMAC FUTURES FUNDL.P.

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(Exactname of registrant as specified in its charter)

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| NewYork                                                     |  | 13-3937275                          |
| (State or otherjurisdiction ofincorporation ororganization) |  | (I.R.S. Employer IdentificationNo.) |
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c/o Citigroup Managed Futures LLC 399Park Ave. – 7th Fl. New York, New York10022

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(Address and ZipCode of principal executive offices)

(212)559-2011

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(Registrant'stelephone number, including area code)

Securitiesregistered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:Redeemable Units of Limited Partnership Interest

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Indicate by checkmark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subjectto such filing requirements for the past 90 days.

YesX        No     

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405of Regulation S-K is not contained herein, and will not be contained,to the best of registrant's knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of thisForm 10-K or any amendment to this form 10-K [X]

Indicate by check mark whether the registrant is anaccelerated filer (as defined in Rule 12b-2 of the Act).

YesX        No     

LimitedPartnership Redeemable Units with an aggregate value of $122,382,882were outstanding and held by non-affiliates as of the last business dayof the registrants most recently completed second fiscal quarter.

As of February 28, 2005, 102,589.6555 Limited PartnershipRedeemable Units were outstanding.

DOCUMENTS INCORPORATEDBY REFERENCE

None

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PART I

Item1.    Business.

(a)     General development ofbusiness.   Smith Barney Potomac Futures Fund L.P.("Partnership") is a limited partnershiporganized on March 14, 1997 under the partnership laws of the State ofNew York. The Partnership commenced trading operations on October 1,1997. The Partnership engages in speculative trading of a diversifiedportfolio of commodity interests, including futures contracts, optionsand forward contracts.

Beginning April 22, 1997, 200,000redeemable units of Limited Partnership Interest("Redeemable Units") were offered at $1,000per Redeemable Unit for a period of ninety days, subject to increasefor up to an additional sixty days at the sole discretion of thegeneral partner. Between April  22, 1997 (commencement of theoffering period) and September 30, 1997, 1,383 Redeemable Units weresold. Proceeds of the offering were held in an escrow account and weretransferred, along with the general partner's contribution of$1,400,000 to the Partnership's trading account on October 1,1997 when the Partnership commenced trading. The Partnership privatelyand continuously offers Redeemable Units. Sales of additionalRedeemable Units and additional general partner contributions for theyears ended December 31, 2004, 2003 and 2002, and redemptions ofRedeemable Units for the years ended December 31, 2004, 2003 and 2002are reported in the Statements of Changes in Partners' Capital onpage F-8 under "Item 8. Financial Statements andSupplementary Data."

Citigroup Managed FuturesLLC, formerly Smith Barney Futures Management LLC, acts as the generalpartner (the "General Partner") of thePartnership. The Partnership's commodity broker is CitigroupGlobal Markets Inc. ("CGM"), formerly SalomonSmith Barney Inc. CGM is an affiliate of the General Partner. TheGeneral Partner is wholly owned by Citigroup Global Markets HoldingsInc. ("CGMHI"), formerly Salomon Smith BarneyHoldings Inc., which is the sole owner of CGM. CGMHI is a wholly ownedsubsidiary of Citigroup Inc.

The Partnership's trading offutures, forwards and options contracts, if applicable, on commoditiesis done primarily on United States of America and foreign commodityexchanges. It engages in such trading through a commodity brokerageaccount maintained with CGM.

The General Partner has agreed tomake capital contributions, if necessary, so that its generalpartnership interest will be equal to the greater of (i) an amount toentitle it to 1% of each material item of Partnership income,loss, deduction or credit and (ii) the greater of (a) 1% of thepartners' contributions to the Partnership or (b) $25,000. ThePartnership will be liquidated upon the first of the following tooccur: December 31, 2017; the net asset value per Redeemable Unit fallsbelow $400 as of the close of any business day; or under certaincircumstances as defined in the Limited Partnership Agreement of thePartnership (the "Limited PartnershipAgreement").

The General Partner has entered into aManagement Agreement (the "ManagementAgreement") with Campbell & Company, Inc., (the"Advisor") who will make all commoditytrading decisions for the Partnership. The Advisor is not affiliatedwith the General Partner or CGM. The Advisor is not responsible for theorganization or operation of the Partnership.

Pursuant to theterms of the Management Agreement, the Partnership pays the Advisor amonthly management fee equal to 1/6 of 1% (2% per year)of month-end Net Assets allocated to the Advisor and an incentive feepayable quarterly equal to 20% of the New Trading Profits.Month-end Net Assets, for the purpose of calculating management feesare Net Assets, as defined in the Limited Partnership Agreement, priorto the reduction of redemptions and incentive fees

ThePartnership has entered into a Customer Agreement with CGM (the"Customer Agreement") which provides that thePartnership will pay CGM a monthly Brokerage Fee equal to 6.5%per year of month-end Net Assets, in lieu of brokerage commissions on aper trade basis. Month-end Net Assets, for the purpose of calculatingcommissions are Net Assets, as defined in the Limited PartnershipAgreement, prior to the reduction of accrued expenses and redemptionspayable. CGM also pays a portion of its brokerage fees to its financialconsultants who have sold Redeemable Units of the Partnership and whoare registered as associated persons with the Commodity Futures TradingCommission (the "CFTC"). 

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The Partnership pays for National FuturesAssociation ("NFA") fees, exchange andclearing fees, give-up and user fees and floor brokerage fees. TheCustomer Agreement between the Partnership and CGM gives thePartnership the legal right to net unrealized gains and losses. Inaddition, CGM pays the Partnership interest on 80% of theaverage daily equity maintained in cash in its account during eachmonth at a 30-day U.S. Treasury bill rate determined weekly by CGMbased on the average non-competitive yield on 3-month U.S. Treasurybills maturing in 30 days from the date on which such weekly rate isdetermined.

(b)    Financial information about industrysegments.   The Partnership's business consists of onlyone segment, speculative trading of commodity interests. ThePartnership does not engage in sales of goods or services. ThePartnership's net income (loss) from operations for the yearsended December 31, 2004, 2003 and 2002 is set forth under"Item 6. Selected Financial Data."The Partnership's capital as of December 31, 2004 was$154,682,645.

(c)    Narrative description ofbusiness.

    See Paragraphs (a) and (b) above.

    (i) through (xii) - Not applicable.

    (xiii) - ThePartnership has no employees.

(d)    Financial InformationAbout Geographic Areas.   The Partnership does not engage insales of goods or services or own any long lived assets, and thereforethis item is not applicable.

(e)    AvailableInformation.   The Partnership does not have an Internetaddress. The Partnership will provide paper copies of its annual reporton Form 10-K, quarterly reports on Form 10-Q, current reports on Form8-K and any amendments to these reports free of charge uponrequest.

Item 2.     Properties.

ThePartnership does not own or lease any properties. The General Partneroperates out of facilities provided by its affiliate, CGM.

Item3.    Legal Proceedings.

This section describes themajor pending legal proceedings, other than ordinary routine litigationincidental to the business, to which Citigroup Global Markets HoldingsInc. ("CGMHI") or its subsidiaries is a partyor to which any of their property is subject. There are no materiallegal proceedings pending against the Partnership or the GeneralPartner.

Citigroup Global Markets Inc.("CGM") is a New York corporation with itsprincipal place of business at 388 Greenwich St., New York, New York10013. CGM is registered as a broker-dealer and futures commissionmerchant ("FCM"), and provides futuresbrokerage and clearing services for institutional and retailparticipants in the futures markets. CGM and its affiliates alsoprovide investment banking and other financial services for clientsworldwide.

There have been no material administrative, civil orcriminal actions within the past five years against Citigroup GlobalMarkets (formerly known as Salomon Smith Barney) or any of itsindividual principals and no such actions are currently pending, exceptas follows.

Regulatory Matters

Both the Department ofLabor and the Internal Revenue Service("IRS") have advised CGM that they were orare reviewing transactions in which Ameritech Pension Trust purchasedfrom CGM and certain affiliates approximately $20.9 million inparticipations in a portfolio of motels owned by Motels of America,Inc. and Best Inns, Inc. With respect to the IRS review, CGM andcertain affiliated entities have consented to extensions of time forthe assessment of excise taxes that may be claimed to be due withrespect to the transactions for the years 1987, 1988 and1989.

In April 2000, CGM and several other broker-dealersentered into a settlement with the IRS and the SEC, concluding anindustry-wide investigation into the pricing of Treasury securities inadvanced refunding transactions.

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IPO Regulatory Inquiries

SinceApril 2002, CGM and several other broker dealers have receivedsubpoenas and/or requests for information from various governmental andself-regulatory agencies and Congressional committees as part of theirresearch on IPO allocation inquiries. With respect to issues raised bythe NASD, the NYSE and the SEC about CGM's and other firms'e-mail retention practices, CGM and several other broker/dealers andthe NASD, the NYSE and the SEC entered into a settlement agreement inDecember 2002. CGM agreed to pay a penalty in the amount of $1.65million and did not admit any wrongdoing.

IPO CivilLitigation

In April 2002, consolidated amended complaints werefiled against CGM and other investment banks named in numerous allegedclass actions filed in the United States District Court for theSouthern District of New York, alleging violations of certain federalsecurities laws (including Section 11 of the Securities Act of 1933, asamended, and Section 10(b) of the Securities Exchange Act of 1934, asamended) with respect to the allocation of shares for certain initialpublic offerings and related aftermarket transactions and damage toinvestors caused by allegedly biased research analyst reports. OnFebruary 19, 2003, the Court issued an opinion denyingdefendants' motion to dismiss.

On October 13, 2004, thecourt granted in part the motion to certify class actions for six focuscases in the securities litigation. CGM is not a defendant in any ofthe six focus cases. The underwriter defendants in the focus cases havefiled a petition to the United States Court of Appeals for the SecondCircuit seeking review of this decision.

Also filed in theSouthern District of New York against CGM and other investment bankswere several alleged class actions that were consolidated into a singleclass action alleging violations of certain federal and state antitrustlaws in connection with the allocation of shares in initial publicofferings when acting as underwriters. On November 3, 2003, the courtgranted CGM's motion to dismiss the consolidated amendedcomplaint in the antitrust case. An appeal to the Second Circuit of thedismissal granted to CGM in November 2003 with respect to the antitrustcase relating to the allocation of shares for certain initial publicofferings is pending.

Research Settlement

On April 28,2003, CGM announced final agreements with the SEC, the NASD, the NYSEand the New York Attorney General (as lead state among the 50 states,the District Columbia and Puerto Rico) to resolve on a civil basis allof their outstanding investigations into its research and IPOallocation and distribution practices (the "ResearchSettlement"). As part of the Research Settlement, CGM hasconsented to the entry of (1) an injunction under the federalsecurities laws to be entered in the United States District Court forthe Southern District of New York, barring CGM from violatingprovisions of the federal securities laws and related NASD and NYSErules relating to research, certain IPO allocation practices, thesafeguarding of material nonpublic information, and the maintenance ofrequired books and records and requiring CGM to adopt and enforce newrestrictions on the operation of research; (2) an NASD AcceptanceWaiver and Consent requiring CGM to cease and desist from violations ofcorresponding NASD rules and requiring CGM to adopt and enforce thesame new restrictions; (3) an NYSE Stipulation and Consent requiringCGM to cease and desist from violations of corresponding NYSE rules andrequiring CGM to adopt and enforce the same new restrictions; and (4)an Assurance of Discontinuance with the New York Attorney Generalcontaining substantially the same or similar restrictions. The ResearchSettlement requires CGM to pay $300 million for retrospective relief,plus $25 million for investor education, and commit to spend $75million to provide independent third-party research to its clients atno charge. CGM reached these final settlement agreements withoutadmitting or denying any wrongdoing or liability. The ResearchSettlement does not establish wrongdoing or liability for purposes ofany other proceeding. The $300 million was accrued during the 2002fourth quarter.

To effectuate the Research Settlement, the SECfiled a Complaint and Final Judgment in the United States DistrictCourt for the Southern District of New York. On October 31, 2003, finaljudgment was entered against CGM and nine other investment banks. TheNASD has accepted the Letter of 

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Acceptance, Waiver and Consent entered intowith CGM in connection with the Research Settlement. In May 2003, theNYSE advised CGM that the Hearing Panel's Decision, in which itaccepted the Research Settlement, had become final. As required by theResearch Settlement, CGM also has entered into separate settlementagreements with numerous states and certain U.S. territories.

Several individual actions have been filed against Citigroup and CGMrelating to, among other things, research on Qwest CommunicationsInternational, Inc. alleging violations of state and federal securitieslaws.

Enron Regulatory Settlement

On July 28,2003, Citigroup (CGM's ultimate parent) entered into a finalsettlement agreement with the SEC to resolve the SEC'soutstanding investigations into Citigroup transactions with Enron Corp.and Dynegy Inc. Pursuant to the settlement, Citigroup has, among otherterms, (1) consented to the entry of an administrative cease and desistorder, which bars Citigroup from committing or causing violations ofprovisions of the federal securities laws, and (2) agreed to pay $120million ($101.25 million allocable to Enron and $18.75 millionallocable to Dynegy). Citigroup entered into this settlement withoutadmitting or denying any wrongdoing or liability, and the settlementdoes not establish wrongdoing or liability for purposes of any otherproceeding. On July 28, 2003, Citibank, N.A. entered into an agreementwith the Office of the Comptroller of the Currency("OCC") and Citigroup entered into anagreement with the Federal Reserve Bank of New York("FED") to resolve their inquiries intocertain of Citigroup's transactions with Enron. Pursuant to theagreements, Citibank and Citigroup have agreed to submit plans to theOCC and FED, respectively, regarding the handling of complex structuredfinance transactions. Also on July 28, 2003, Citigroup entered into asettlement agreement with the Manhattan District Attorney'sOffice to resolve its investigation into certain of Citigroup'stransactions with Enron. Pursuant to that settlement, Citigroup hasagreed to pay $25.5 million and to abide by its agreements with theSEC, OCC and FED.

Enron-Related Civil Actions

CGM,Citigroup and various other Citigroup-related entities have been namedas defendants in over 20 civil lawsuits pending in state and federalcourts throughout the United States, alleging claims against Citigroupand CGM based on their dealings with Enron. The majority of these caseshave been brought by purchasers and sellers of Enron equity and debtsecurities and Enron-linked securities. Many of the plaintiffs in theseactions are large, institutional investors that had substantial Enronand Enron-linked holdings. The lawsuits collectively allege as againstCitigroup and/or its affiliates and subsidiaries, among other things,federal securities fraud, state law claims of negligentmisrepresentation, fraud, breach of fiduciary duty, aiding and abettinga breach of fiduciary duty and related claims. In most of theselawsuits, Citigroup is named as a co-defendant along with otherinvestment banks alleged to have had dealings with Enron. The majorityof cases pending in the federal courts have been, or are in the processof being, consolidated before a single judge in the United StatesDistrict Court for the Southern District of Texas. In addition, in fiveadversary proceedings in the Enron Chapter 11 bankruptcy, Enron and, inone case, its co-debtor affiliates and subsidiaries, and the OfficialCommittee of Unsecured Creditors of Enron Corp., et al., have namedCitigroup and/or its affiliates or subsidiaries as defendants.

ACitigroup affiliate, along with other defendants, settled all claimsagainst it in In Re: Newpower Holdings Securities Litigation, aclass action brought on behalf of certain investors in NewPowersecurities. Citigroup reached this settlement agreement withoutadmitting any wrongdoing. On September 13, 2004, the United StatesDistrict Court for the Southern District of New York preliminarilyapproved the settlement.

WorldCom-Related Litigation

Citigroup, CGM and certain executive officers and current and formeremployees have been named as defendants — along with twenty-twoother investment banks, certain current and former WorldCom officersand directors, and WorldCom's former auditors — in aconsolidated class action brought on behalf of individuals and entitieswho purchased or acquired publicly traded securities of WorldCombetween 

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April 29, 1999 and June 25, 2002 In Re:Worldcom, Inc. Securities Litigation. The class action complaintasserts claims against CGM under (i) Sections 11 and 12(a)(2) of theSecurities Act of 1933, as amended, in connection with certain bondofferings in which it served as underwriter, and (ii) Sections 10(b)and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule10b-5 promulgated under Section 10(b), alleging that it participated inthe preparation and/or issuance of misleading WorldCom registrationstatements and disseminated misleading research reports concerningWorldCom stock. In 2003, the district court denied CGM' motion todismiss the consolidated class action complaint and granted theplaintiffs' motion for class certification.

Pursuant to anorder entered May 28, 2003, the District Court consolidatedapproximately seventy-eight individual actions with the class actionfor pretrial proceedings. The claims asserted in these individualactions are substantially similar to the claims alleged in the classaction and assert state and federal securities law claims based onCGM's research reports concerning WorldCom and/or CGM'srole as an underwriter in WorldCom offerings. Plaintiffs in certain ofthese actions filed motions to remand their cases to state court. TheDistrict Court denied these motions and its rulings were upheld onappeal.

Numerous other actions asserting claims against CGM inconnection with its research reports about WorldCom and/or its role asan investment banker for WorldCom are pending in other federal andstate courts around the country. These actions have been remanded tovarious state courts, are pending in other federal courts, or have beenconditionally transferred to the United States District Court for theSouthern District of New York to be consolidated with the class action.In addition to the court suits, actions asserting claims againstCitigroup and certain of its affiliates relating to its WorldComresearch reports are pending in numerous arbitrations around thecountry. These actions assert claims that are substantially similar tothe claims asserted in the class action.

On May 10, 2004,Citigroup announced that it had agreed to pay $2.58 billion to settlethe WorldCom class action suits. The United States District Court forthe Southern District of New York granted approval to the proposedsettlement on November 10, 2004.

On September 17, 2004,Weinstein, et al. v. Ebbers, et al., an alleged class actionagainst CGM and others brought on behalf of holders of WorldComsecurities asserting claims based on, among other things, CGM'sresearch reports concerning WorldCom, was dismissed with prejudice inits entirety by the United States District Court for the SouthernDistrict of New York. The plaintiffs noticed an appeal of the dismissalto the United States Court of Appeals for the Second Circuit on October15, 2004. The parties have reached an agreement in principle on theterms of a settlement of this action.

Citigroup and CGM, alongwith a number of other defendants, have settled Retirement Systemsof Alabama, et al. v. J.P. Morgan Chase & Co., et al., aWorldCom individual action that had been remanded to the Circuit Courtof Montgomery County, Alabama. The settlement became final on September30, 2004.

On June 28, 2004, the United States District Court forthe Southern District of New York dismissed all claims under theSecurities Act of 1933, as amended, and certain claims under theSecurities Exchange Act of 1934 in In Re: Targets SecuritiesLitigation, an alleged class action against Citigroup and CGM andcertain former employees, leaving only claims under the 1934 Act forpurchases of Targeted Growth Enhanced Terms Securities With Respect tothe Common Stock of MCI WorldCom, Inc.("TARGETS") after July 30, 1999. On October20, 2004, the parties signed a Memorandum of Understanding settingforth the terms of a settlement of all remaining claims in this action.The settlement was preliminarily approved by the Court on January 11,2005.

A fairness hearing was held on November 5, 2004 inconnection with the proposed class settlement between plaintiffs andthe Citigroup-related defendants in In Re: Worldcom, Inc. SecuritiesLitigation.

Global Crossing

On or about January 28,2003, lead plaintiff in a consolidated alleged class action in theUnited States District Court for the Southern District of New York(In Re: Global Crossing, Ltd. Securities Litigation) filed aconsolidated complaint on behalf of purchasers of the securities ofGlobal Crossing and Asia Global Crossing, which names as defendants,among others, Citigroup, CGM, CGMH and certain 

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executive officers and current and formeremployees. The purported class action complaint asserts claims underthe federal securities laws alleging that the defendants issuedresearch reports without a reasonable basis in fact and failed todisclose conflicts of interest with Global Crossing in connection withpublished investment research. On March 22, 2004, the lead plaintiffamended its consolidated complaint to add claims on behalf ofpurchasers of the securities of Asia Global Crossing. The added claimsassert causes of action under the federal securities laws and commonlaw in connection with CGM's research reports about GlobalCrossing and Asia Global Crossing and for CGM's roles as aninvestment banker for Global Crossing and as an underwriter in theGlobal Crossing and Asia Global Crossing offerings. The Citigrouprelated defendants moved to dismiss all of the claims against them onJuly 2, 2004. The plaintiffs and the Citigroup related defendants havereached an agreement in principle on the terms of a settlement of thisaction.

In addition, on or about January 27, 2004, the GlobalCrossing Estate Representative filed in the United States BankruptcyCourt for the Southern District of New York (i) an adversary proceedingasserting claims against, among others, Citigroup, CGM and certainexecutive officers and current and former employees, asserting claimsunder federal bankruptcy law and common law in connection withCGM's research reports about Global Crossing and for its role asan underwriter in Global Crossing offerings, and (ii) an adversaryproceeding against Citigroup and several other financial institutionsseeking to rescind the payment of a $1 billion loan made to asubsidiary of Global Crossing. The Citigroup related defendants movedto dismiss the former action on June 26, 2004, and the latter on May28, 2004.

In addition, actions asserting claims againstCitigroup and certain of its affiliates relating to its Global Crossingresearch reports are pending in numerous arbitrations around thecountry. These arbitration proceedings assert claims that aresubstantially similar to the claims asserted in the alleged classaction.

Adelphia Communications Corporation

On July 6,2003, an adversary proceeding was filed by the Official Committee ofUnsecured Creditors on behalf of Adelphia Communications Corporationagainst certain lenders and investment banks, including CGM, Citibank,N.A., Citicorp USA, Inc., and Citigroup Financial Products, Inc.(together, the Citigroup Parties). The complaint alleges that theCitigroup Parties and numerous other defendants committed acts inviolation of the Bank Holding Company Act and the common law. Thecomplaint seeks equitable relief and an unspecified amount ofcompensatory and punitive damages. In November 2003, a similaradversary proceeding was filed by the Equity Holders Committee ofAdelphia. In June 2004, motions to dismiss were filed with respect tothe complaints of the Official Committee of Unsecured Creditors and theEquity Holders Committee. The motions are currently pending.

Inaddition, CGM is among the underwriters named in numerous civil actionsbrought to date by investors in Adelphia debt securities in connectionwith Adelphia securities offerings between September 1997 and October2001. Three of the complaints also assert claims against Citigroup Inc.and Citibank, N.A. All of the complaints allege violations of federalsecurities laws, and certain of the complaints also allege violationsof state securities laws and the common law. The complaint seeksunspecified damages. In December 2003, a second amended complaint wasfiled and consolidated before the same judge of the United StatesDistrict Court for the Southern District of New York. In February 2004,motions to dismiss the class and individual actions pending in theUnited States District Court for the Southern District were filed. Themotions are currently pending.

Mutual Funds

Citigroupand certain of its affiliates have been named in several class actionlitigations pending in various federal district courts arising out ofalleged violations of the federal securities laws, the InvestmentCompany Act and common law (including breach of fiduciary duty andunjust enrichment). The claims concern practices in connection with thesale of mutual funds, including allegations involving market timing,revenue sharing, incentive payments for the sale of proprietary funds,undisclosed breakpoint discounts for the sale of certain classes offunds, inappropriate share class recommendations and inappropriate fundinvestments. The litigations involving market timing have beenconsolidated under the MDL rules in the United States District Courtfor the District of Maryland, and the litigations involving

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revenue sharing, incentive payment and otherissues have been consolidated in the United States District Court forthe Southern District of New York. The plaintiffs in these litigationsgenerally seek unspecified compensatory damages, rescissionary damages,injunctive relief, costs and fees. In the principal market timing casesthat name Citigroup, a lead plaintiff has been appointed but thatplaintiff has not yet filed an amended complaint. In the casesconcerning revenue sharing, incentive payment and other issues, thelead plaintiff filed a consolidated and amended complaint on December15, 2004.

Several issues in the mutual fund industry have comeunder scrutiny of federal and state regulators. Citigroup has receivedsubpoenas and other requests for information from various governmentregulators regarding market timing, financing, fees, sales practicesand other mutual fund issues in connection with various investigations.Citigroup is cooperating with all such reviews.

ResearchAnalyst Litigation

Since May 2002, CGM and certain executiveofficers and current and former employees have been named as defendantsin numerous alleged class action complaints, individual actions, andarbitration demands by purchasers of various securities alleging thatthey violated federal securities law, including Sections 10 and 20 ofthe Securities Exchange Act of 1934, as amended, and certain state lawsfor allegedly issuing research reports without a reasonable basis infact and for allegedly failing to disclose conflicts of interest withcompanies in connection with published investment research, includingGlobal Crossing, Ltd., AT&T Corp., Level 3 Communications, Inc.,Metromedia Fiber Network, Inc., XO Communications, Inc., WilliamsCommunications Group Inc., and Focal Communications, Inc. The allegedclass actions relating to research of these companies are pendingbefore a single judge in the United States District Court for theSouthern District of New York for coordinated proceedings. The Courthas consolidated these actions into separate proceedings correspondingto the companies named above. On December 2, 2004, the Court granted inpart and denied in part the Citigroup related defendants' motionsto dismiss the claims against it in the AT&T, Level 3, XO andWilliams actions. On January 6, 2005, the Court granted in part anddenied in part Citigroup's motion to dismiss the claims againstit in the Metromedia action.

In addition to the alleged researchclass actions, several individual actions have been filed againstCitigroup and CGM relating to, among other things, research on QwestCommunications International, Inc. These actions allege violations ofstate and federal securities laws in connection with CGM'spublication of research about Qwest and its underwriting of Qwestsecurities.

Two alleged class actions against CGM assertingcommon law claims in connection with published investment research onbehalf of CGM customers have been dismissed by United States DistrictCourts, one of which was affirmed by the United States Court of Appealsfor the Ninth Circuit, and one of which is pending on appeal to theUnited States Courts of Appeals for the Third Circuit. Two moreputative class actions raising similar claims are pending against CGM,one in the United States District Court for the Southern District ofNew York (Norman v. Salomon Smith Barney, et al.) and the otherin Illinois state court (Disher v. CGM Inc.). On June 9, 2004,the District Court denied CGMI's motion to dismiss Norman v.Salomon Smith Barney, et al., a case which asserts violations ofthe Investment Advisers Act of 1940 and various common law claims inconnection with certain investors who maintained guided portfoliomanagement accounts at Smith Barney.

SupervisoryInvestigation

In May 2003, the SEC, NYSE and NASD issued asubpoena and letters to CGM requesting documents and information withrespect to their continuing investigation of individuals in connectionwith the supervision of the research and investment banking departmentsof CGM. Other parties to the Research Settlement have received similarsubpoenas and letters.

West Virginia Attorney General Suit

On June 23, 2003, the West Virginia Attorney General filed an actionagainst CGM and nine other firms that were parties to the ResearchSettlement. The West Virginia Attorney General alleges that the firmsviolated the West Virginia Consumer Credit and Protection Act inconnection with their research activities and seeks monetarypenalties.

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Citigroup Shareholder Litigation

In July 2002, Citigroup, CGM and certain officers were named asdefendants in an alleged class action filed in the United StatesDistrict Court for the Southern District of New York, brought on behalfof purchasers of Citigroup common stock between July 24, 1999 and July23, 2002. The complaint seeks unspecified compensatory and punitivedamages for alleged violations of Sections 10(b) and 20(a) of theSecurities Exchange Act of 1934, and for common law fraud. Fourteenvirtually identical complaints have been filed and consolidated. Thecomplaints allege that Citigroup misstated the extent of itsEnron-related exposure, and that Citigroup's stock price fellonce the true extent of Citigroup's Enron involvements becameknown. Plaintiffs filed an amended complaint on March 10, 2003, whichincorporated the allegations in the 15 separate actions and added newmaterial as well. The amended complaint focuses on certain transactionsbetween Citigroup and Enron and alleged analyst conflicts of interest.The class period for the consolidated amended complaint is July 24,1999 to December 11, 2002. On June 2, 2003, Citigroup filed a motion todismiss the consolidated amended complaint. Plaintiffs' responsewas filed on July 30, and Citigroup's reply was filed on October3, 2003. On August 10, 2004, Judge Swain granted Citigroup'smotion to dismiss the consolidated amended complaint. The plaintiffsfiled a notice of appeal in October 2004.

NASD Settlement

In November 2004, CGM entered into a final agreement with the NASDto resolve the NASD's investigation into certain of its sellingpractices. Without admitting or denying any allegations or findings,CGM accepted certain factual findings by the NASD that it (i) soldunits in two managed futures funds to 45 customers for whom theinvestment was not suitable, (ii) failed to maintain records disclosingthe basis upon which its investor suitability determinations were madeand (iii) failed to adequately disclose the risks of investing inmanaged futures products on its website. CGM consented to a censure anda fine of $275,000 and offered to redeem the investment of thecustomers for whom investment in the two managed futures funds wasfound not suitable.

In the course of its business, CGM, as amajor futures commission merchant and broker-dealer is a party tovarious claims and routine regulatory investigations and proceedingsthat the general partner believes do not have a material adverse effecton the business of CGM.

Item 4.    Submission of Mattersto a Vote of Security Holders.

There were no matterssubmitted to the security holders for a vote during the last fiscalyear covered by this report.

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PART II

Item5.    **Market for Registrant's Common Equity and RelatedSecurity Holder Matters.**

(a)    MarketInformation.   The Partnership has issued no stock. There is nopublic market for the Redeemable Units of Limited PartnershipInterest.

(b)    Holders.   The number of holdersof Redeemable Units of Limited Partnership Interest as of December 31,2004 was 1,304.

(c)    Distribution.   ThePartnership did not declare a distribution in 2004 or 2003.

(d)    Use of Proceeds.   For the twelve months endedDecember 31, 2004, there were additional sales of 42,345.5298Redeemable Units totaling $71,933,000 and General Partner contributionsrepresenting 245.1600 Unit equivalents totaling $410,000. For thetwelve months ended December 31, 2003, there were additional sales of37,057.5971 Redeemable Units totaling $57,948,000 and General Partnercontributions representing 212.2588 Unit equivalents totaling $325,000.For the twelve months ended December 31, 2002, there were additionalsales of 32,280.3008 Redeemable Units totaling $41,923,000 and GeneralPartner contributions representing 132.5215 Unit equivalents totaling$158,000.

Proceeds from the sale of additional Redeemable Unitsare used in the trading of commodity interests including futurescontracts, options and forward contracts.

Item6.    Selected Financial Data.

Net realized andunrealized trading gains (losses), interest income, net income (loss)and increase (decrease) in Net Asset Value per Redeemable Unit for theyears ended December 31, 2004, 2003, 2002, 2001 and 2000 and totalassets at December 31, 2004, 2003, 2002, 2001 and 2000 were asfollows:

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|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------|-------------|--------|--|--------|-------------|--------|--|--------|------------|--------|--|--------|------------|---------|--|--------|-----------|--------|--|--|
|                                                                                                                                                                     |  | 2004   |             | 2003   |  | 2002   |             | 2001   |  | 2000   |
| Net realized and unrealized trading gains net of brokeragecommissions (including clearing fees) of $8,851,986, $5,141,634,$2,393,869, $714,031 and $478,182,respectively |  | $      | 9,776,664   |   |  | $      | 14,536,489  |   |  | $      | 6,640,010  |   |  | $      | 189,137    |    |  | $      | 499,572   |   |
| Interest income                                                                                                                                                          |  |   | 1,320,817   |   |  |   | 592,252     |   |  |   | 432,817    |   |  |   | 258,886    |    |  |   | 311,081   |   |
|                                                                                                                                                                     |  | $      | 11,097,481  |   |  | $      | 15,128,741  |   |  | $      | 7,072,827  |   |  | $      | 448,023    |    |  | $      | 810,653   |   |
| Net income (loss)                                                                                                                                                        |  | $      | 4,343,937   |   |  | $      | 11,181,118  |   |  | $      | 4,978,790  |   |  | $      | (23,512    | )  |  | $      | 546,396   |   |
| Increase (decrease) in Net Asset Value per Redeemable Unit                                                                                                               |  | $      | 65.15       |   |  | $      | 240.36      |   |  | $      | 142.51     |   |  | $      | (5.15      | )  |  | $      | 92.98     |   |
| **Total assets**                                                                                                                                                         |  | $      | 169,235,483 |   |  | $      | 104,112,505 |   |  | $      | 55,595,799 |   |  | $      | 17,658,713 |    |  | $      | 7,546,109 |   |
|                                                                                                                                                                          |

Item7.    Management's Discussion and Analysis of FinancialCondition and Results of Operations.

Overview

ThePartnership aims to achieve substantial capital appreciation throughspeculative trading, directly and indirectly, in U.S. and internationalmarkets for currencies, interest rates, stock indices, agricultural andenergy products and precious and base metals. The Partnership mayemploy futures, options on futures, and forward, spot and swapcontracts in those markets.

The General Partner manages allbusiness of the Partnership. The General Partner has delegated itsresponsibility for the investment of the Partnership's assets toCampbell & Company, Inc. The General Partner employs a team ofapproximately 20 professionals whose primary emphasis is on attemptingto maintain quality control among the advisors to the Partnershipsoperated or managed by the General 

9

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Partner. A full-time staff of due diligenceprofessionals use state-of-the-art technology and on-site evaluationsto monitor new and existing futures money managers. The accounting andoperations staff provide processing of trading activity and reportingto limited partners and regulatory authorities. In selecting theAdvisor for the Partnership, the General Partner considered pastperformance, trading style, volatility of markets traded and feerequirements.

Responsibilities of the General Partnerinclude:

|              |                                           |
|--------------|-------------------------------------------|
| •  | due diligence examinations ofthe Advisor; |

|              |                                                      |
|--------------|------------------------------------------------------|
| •  | selection,appointment and termination of theAdvisor; |

|              |                                            |
|--------------|--------------------------------------------|
| •  | negotiation of themanagement agreement;and |

|              |                                        |
|--------------|----------------------------------------|
| •  | monitoring the activity ofthe Advisor. |

In addition, the General Partner prepares the booksand records and provides the administrative and compliance servicesthat are required by law or regulation from time to time in connectionwith operation of the Partnership. These services include thepreparation of required books and records and reports to limitedpartners, government agencies and regulators; computation of net assetvalue; calculation of fees; effecting subscriptions, redemptions andlimited partner communications; and preparation of offering documentsand sales literature.

The General Partner shall seek the bestprices and services available in its commodity futures brokeragetransactions. The General Partner reviews at least annually, thebrokerage rates charged to commodity pools similar to the Partnershipto determine that the brokerage fee the Partnership pays is competitivewith other rates.

The Advisor trades its FME Large Portfolio forthe Partnership. Campbell's trading models are designed to detectand exploit medium-term to long-term price changes, while also applyingrisk management and portfolio management principles.

Campbellbelieves that utilizing multiple trading models provides an importantlevel of diversification, and is most beneficial when multiplecontracts of each market are traded. Every trading model may not tradeevery market. It is possible that one trading model may signal a longposition while another trading model signals a short position in thesame market. It is Campbell & Company's intention to offsetthose signals to reduce unnecessary trading, but if the signals are notsimultaneous, both trades will be taken and since it is unlikely thatboth positions would prove profitable, in retrospect, one or bothtrades will appear to have been unnecessary. It is Campbell'spolicy to follow trades signaled by each trading model independently ofthe other models.

As a managed futures Partnership, thePartnership's performance is dependent upon the successfultrading of the Partnership's Advisor to achieve thePartnership's objectives. It is the business of the GeneralPartner to monitor the Advisor's performance to assure compliancewith the Partnership's trading policies and to determine if theAdvisor's performance is meeting the Partnership'sobjectives. Based on 2004 results, the General Partner continues tobelieve the Advisor and the trading of FME Large Portfolio have met thePartnership's objectives and expects to continue to allocate thePartnership's assets to the Advisor and this program unlessotherwise indicated.

        (a)    Liquidity.

ThePartnership does not engage in sales of goods or services. Its onlyassets are its equity in its commodity futures trading account,consisting of cash and cash equivalents, net unrealized appreciation(depreciation) on open futures contracts and interest receivable.Because of the low margin deposits normally required in commodityfutures trading, relatively small price movements may result insubstantial losses to the Partnership. Such substantial losses couldlead to a material loss in liquidity.

To minimize this riskrelating to low margin deposits, the Partnership follows certaintrading policies, including:

|           |                                                                                                                                                                                     |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (i)  | ThePartnership invests its assets only in commodity interests that anAdvisor believes are traded in sufficient volume to permit ease oftaking and liquidating positions. Sufficient |

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|        |                                                                                                                                                               |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | volume, in this context, refers to a levelof liquidity that the Advisor believes will permit it to enter and exittrades without noticeably moving the market. |

|            |                                                                                                                                                                                                                          |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  | An Advisor will not initiate additionalpositions in any commodity if these positions would result in aggregatepositions requiring a margin of more than66 2/3% of the Partnership's net assetsallocated to that Advisor. |

|             |                                                                                                                                                                                                                                                             |
|-------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iii)  | ThePartnership may occasionally accept delivery of a commodity. Unlesssuch delivery is disposed of promptly by retendering the warehousereceipt representing the delivery to the appropriate clearinghouse, thephysical commodity position is fully hedged. |

|            |                                                                                                                                                                                                                                                         |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (iv)  | The Partnership does not employ the tradingtechnique commonly known as "pyramiding", inwhich the speculator uses unrealized profits on existing positions asmargin for the purchases or sale of additional positions in the same orrelated commodities. |

|           |                                                                                                                                   |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------|
| (v)  | The Partnership doesnot utilize borrowings except short-term borrowings if the Partnershiptakes delivery of any cash commodities. |

|            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (vi)  | The Advisor may, from time to time, employtrading strategies such as spreads or straddles on behalf of thePartnership. The term "spread" or"straddle" describes a commodity futurestrading strategy involving the simultaneous buying and selling offutures contracts on the same commodity but involving differentdelivery dates or markets and in which the trader expects to earn aprofit from a widening or narrowing of the difference between theprices of the two contracts. |

|             |                                                                                                                                                                                                                                                                                       |
|-------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (vii)  | ThePartnership will not permit the churning of its commodity tradingaccount. The term "churning" refers to thepractice of entering and exiting trades with a frequency unwarranted bylegitimate efforts to profit from the trades, driven by the desire togenerate commission income. |

In the normal course of business,the Partnership is party to financial instruments with off-balancesheet risk, including derivative financial instruments and derivativecommodity instruments. These financial instruments include forwards,futures, options and swaps, whose values are based upon an underlyingasset, index or reference rate, and generally represent futurecommitments to exchange currencies or cash flows, or to purchase orsell other financial instruments at specified terms at specified futuredates, or, in the case of derivative commodity interests, to have areasonable possibility to be settled in cash, through physical deliveryor with another financial instrument. These instruments may be tradedon an exchange or over-the-counter ("OTC").Exchange traded instruments are standardized and include futures andcertain option contracts. OTC contracts are negotiated betweencontracting parties and include forwards, swaps and certain options.Each of these instruments is subject to various risks similar to thoserelating to the underlying financial instruments including market andcredit risk. In general, the risks associated with OTC contracts aregreater than those associated with exchange traded instruments becauseof the greater risk of default by the counterparty to an OTCcontract.

Market risk is the potential for changes in the valueof the financial instruments traded by the Partnership due to marketchanges, including interest and foreign exchange rate movements andfluctuations in commodity or security prices. Market risk is directlyimpacted by the volatility and liquidity in the markets in which therelated underlying assets are traded.

Credit risk is thepossibility that a loss may occur due to the failure of a counterpartyto perform according to the terms of a contract. Credit risk withrespect to exchange traded instruments is reduced to the extent that anexchange or clearing organization acts as counterparty to thetransactions. The Partnership's risk of loss in the event ofcounterparty default is typically limited to the amounts recognized inthe statement of financial condition and not represented by thecontract or notional amounts of the instruments. The Partnership hascredit risk and concentration risk because the sole counterparty orbroker with respect to the Partnership's assets is CGM.

The General Partner monitors and controls the Partnership'srisk exposure on a daily basis through financial, credit and riskmanagement monitoring systems, and accordingly believes that it haseffective procedures for evaluating and limiting the credit and marketrisks to which the Partnership is subject. 

11

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These monitoring systems allow the GeneralPartner to statistically analyze actual trading results with riskadjusted performance indicators and correlation statistics. Inaddition, on-line monitoring systems provide account analysis offutures, forwards and options positions by sector, margin requirements,gain and loss transactions and collateral positions. (See also"Item 8. Financial Statements and SupplementaryData" for further information on financial instrumentrisk included in the notes to financial statements.)

Other thanthe risks inherent in commodity futures and swaps trading, thePartnership knows of no trends, demands, commitments, events oruncertainties which will result in or which are reasonably likely toresult in the Partnership's liquidity increasing or decreasing inany material way. The Limited Partnership Agreement provides that theGeneral Partner may, in its discretion, cause the Partnership to ceasetrading operations and liquidate all open positions under certaincircumstances including a decrease in Net Asset Value per RedeemableUnit to less than $400 as of the close of business on any businessday.

(b)    Capital resources.

(i)    ThePartnership has made no material commitments for capitalexpenditures.

(ii)    The Partnership's capital consistsof the capital contributions of the partners as increased or decreasedby gains or losses on trading and by expenses, interest income,redemptions of Redeemable Units and distributions of profits, if any.Gains or losses on trading cannot be predicted. Market moves incommodities are dependent upon fundamental and technical factors whichthe Advisors may or may not be able to identify, such as changingsupply and demand relationships, weather, government agricultural,commercial and trade programs and policies, national and internationalpolitical and economic events and changes in interest rates.Partnership expenses consist of, among other things, commissions,advisory fees and administrative fees. The level of these expenses isdependent upon the level of trading and the ability of the Advisors toidentify and take advantage of price movements in the commoditymarkets, in addition to the level of Net Assets maintained. Inaddition, the amount of interest income payable by CGM is dependentupon interest rates over which the Partnership has no control.

No forecast can be made as to the level of redemptions in any givenperiod. A limited partner may require the Partnership to redeem hisRedeemable Units at their Net Asset Value as of the last day of a monthon 10 days' notice to the General Partner. For the purpose of aredemption, any accrued liability for reimbursement of offering andorganization expenses for the Initial Offering Period will not reduceNet Asset Value per Redeemable Unit. There is no fee charged to limitedpartners in connection with redemptions. For the year ended December31, 2004, 14,194.2293 Redeemable Units were redeemed totaling$24,340,720. For the year ended December 31, 2003, 14,013.5496Redeemable Units were redeemed totaling $21,980,348. For the year endedDecember 31, 2002, 6,984.0027 Redeemable Units were redeemed totaling$9,621,322.

For the year ended December 31, 2004, there wereadditional sales of 42,345.5298 Redeemable Units totaling $71,933,000and General Partner contributions representing 245.1600 Unitequivalents totaling $410,000. For the year ended December 31, 2003,there were additional sales of 37,057.5971 Redeemable Units totaling$57,948,000 and General Partner contributions representing 212.2588Unit equivalents totaling $325,000. For the year ended December 31,2002, there were additional sales of 32,280.3008 Redeemable Unitstotaling $41,923,000 and General Partner contributions representing132.5215 Unit equivalent totaling $158,000.

(c)    Resultsof Operations.

For the year ended December 31, 2004, theNet Asset Value per Redeemable Unit increased 4.0% from$1,634.64 to $1,699.79. For the year ended December 31, 2003, the NetAsset Value per Redeemable Unit increased 17.2% from $1,394.28to $1,634.64. For the year ended December 31, 2002, the Net Asset Valueper Redeemable Unit decreased 11.4% from $1,251.77 to$1,394.28.

The Partnership experienced net trading gains of$18,628.650 before commissions and expenses in 2004. Gains wereprimarily attributable to the trading of currencies, U.S. and non-U.S.interest rates and energy and were partially offset by lossesrecognized in the trading of metals and indices.

In 2004, themarkets had periodic strong trends and then just as strong reversalsresulting in a mixed year for the Partnership's overallperformance.

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Trading results for the year 2004 can bedescribed in three distinct periods: the first three months of the yearproduced positive results of over 14% with trends carrying overfrom late 2003, the next six months experienced extraordinarilydifficult conditions and resulting in a decline of 16% in thenet asset value per unit, and the period October through December saw arecovery period with profits of nearly 8% but from a lower base.Overall, the Partnership ended the year up approximately 4%. Theresults for the year were heavily influenced by two historic trends:the decline in the value of the U.S. dollar and the run-up in the priceof crude oil to over $50 a barrel.

The year started stronglywith many of the trends from late 2003 continuing into early 2004.Notably lower interest rates in the U.S. and other major countriesfostered strong global economic growth and pressured commodity prices.These resulted in upward trends in many sectors, especially energy,metals, and stock indices and provided profitable trading opportunitiesfor the Partnership's advisor. These trends persisted into Marchwhen economic indicators in the U.S. and China suggested risinginflation and markets reversed with higher interest rates, collapsingcommodity prices and the dollar reversal.

The second quarterbegan a protracted period of tentative and conflicting trends acrossmany sectors. As expected in the nature of trend-following, thestrength of profitable trends is often followed by temporary but oftensevere periods of losses. April though September was such a period forthe Partnership's advisor as positions were adjusted from whathad been profitable, long-term trends to choppy, directionless andvolatile markets. Particularly treacherous and thus unprofitable wastrading in U.S. and Asian interest rates and global stock indices whileenergy and metals provided some offsetting profits. The fundamentaleconomic concerns hanging over these markets were further exacerbatedby the uncertainty surrounding the tightly contested U.S. presidentialelection.

With the year looking dismal going into the fall, theprice of crude oil resumed its climb to $50 a barrel brought on by adeteriorating security situation in Iraq, Saudi Arabia politicalturmoil, and renewed threats of terrorism. Long positions in the energysector resulted provided profits for the Partnership early in thefourth quarter. After early November, expectations for furtherdeterioration in the US double deficits pushed the U.S. dollar toward$1.40 to the euro. Stock markets resumed a positive trend and interestrates declined both favorable to the advisor's trading positions.The Partnership ended the fourth quarter positive and had a profitableoverall year.

In the General Partner's opinion, the Advisorcontinues to employ its trading methods in a consistent and disciplinedmanner and its results are consistent with the objectives of thePartnership and expectations for the Advisor's programs. TheGeneral Partner continues to monitor the Advisor's performance ona daily, weekly, monthly and annual basis to assure these objectivesare met.

The Partnership experienced net trading gains of$19,678,123 before commissions and expenses in 2003. Gains wereprimarily attributable to the trading of currencies and indices andwere partially offset by losses recognized in the trading of metals,energy, U.S. and non-U.S. interest rates.

The Partnershipexperienced net trading gains of $9,033,879 before commissions andexpenses in 2002. Gains were primarily attributable to the trading ofcurrencies, U.S. and non-U.S. interest rates, indices and werepartially offset by losses recognized in the trading of energy andmetals.

Commodity markets are highly volatile. The potential forbroad and rapid price fluctuations increases the risks involved incommodity trading, but also increases the possibility of profit. Theprofitability of the Partnership depends on the existence of majorprice trends and the ability of the Advisor to correctly identify thoseprice trends correctly. Price trends are influenced by, among otherthings, changing supply and demand relationships, weather,governmental, agricultural, commercial and trade programs and policies,national and international political and economic events and changes ininterest rates. To the extent that market trends exist and the Advisoris able to identify them, the Partnership expects to increase capitalthrough operations.

(d)    Operational Risk.

The Partnership is directly exposed to market risk and credit risk,which arise in the normal course of its business activities. Slightlyless direct, but of critical importance, are risks pertaining tooperational and back office support. This is particularly the case in arapidly changing and increasingly global environment with increasingtransaction volumes and an expansion in the number and complexity ofproducts in the marketplace.

13

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Such risks include:

Operational/Settlement Risk — the risk of financial andopportunity loss and legal liability attributable to operationalproblems, such as inaccurate pricing of transactions, untimely tradeexecution, clearance and/or settlement, or the inability to processlarge volumes of transactions. The Partnership is subject to increasedrisks with respect to its trading activities in emerging marketsecurities, where clearance, settlement, and custodial risks are oftengreater than in more established markets.

TechnologicalRisk — the risk of loss attributable to technologicallimitations or hardware failure that constrain the Partnership'sability to gather, process, and communicate information efficiently andsecurely, without interruption, to customers, among Redeemable Unitswithin the Partnership, and in the markets where the Partnershipparticipates.

Legal/Documentation Risk — the riskof loss attributable to deficiencies in the documentation oftransactions (such as trade confirmations) and customer relationships(such as master netting agreements) or errors that result innoncompliance with applicable legal and regulatory requirements.

Financial Control Risk — the risk of loss attributableto limitations in financial systems and controls. Strong financialsystems and controls ensure that assets are safeguarded, thattransactions are executed in accordance with management'sauthorization, and that financial information utilized by managementand communicated to external parties, including the Partnership'sRedeemable Unit holder, creditors, and regulators, is free of materialerrors.

(e)     Critical Accounting Policies.

The preparation of financial statements in conformity withaccounting principles generally accepted in the United States ofAmerica requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities, disclosures ofcontingent assets and liabilities at the date of the financialstatements.

All commodity interests (including derivativefinancial instruments and derivative commodity instruments) are usedfor trading purposes. The commodity interests are recorded on tradedate and open contracts are recorded in the statement of financialcondition at fair value on the last business day of the period, whichrepresents market value for those commodity interests for which marketquotations are readily available or other measures of fair value deemedappropriate by management of the General Partner for those commodityinterests and foreign currencies for which market quotations are notreadily available, including dealer quotes for swaps and certain optioncontracts. Investments in commodity interests denominated in foreigncurrencies are translated into U.S. dollars at the exchange ratesprevailing on the last business day of the period. Realized gains(losses) and changes in unrealized values on commodity interests andforeign currencies are recognized in the period in which the contractis closed or the changes occur and are included in net gains (losses)on trading of commodity interests.

Foreign currency contractsare those contracts where the Partnership agrees to receive or delivera fixed quantity of foreign currency for an agreed-upon price on anagreed future date. Foreign currency contracts are valued daily, andthe Partnership's net equity therein, representing unrealizedgain or loss on the contracts as measured by the difference between theforward foreign exchange rates at the dates of entry into the contractsand the forward rates at the reporting dates, is included in thestatement of financial condition. Realized gains (losses) and changesin unrealized values on foreign currency contracts are recognized inthe period in which the contract is closed or the changes occur and areincluded in the statement of income and expenses and partners'capital.

The General Partner believes that the accountingpolicies that will be most critical to the Partnership'sfinancial condition and results of operations relate to the valuationof the Partnership's positions. The majority of thePartnership's positions will be exchange-traded futurescontracts, which will be valued daily at settlement prices published bythe exchanges. If applicable, the Partnership's spot and forwardforeign currency contracts will also be valued at published dailysettlement prices or at dealers' quotes. The General Partnerexpects that under normal circumstances substantially all of thePartnership's assets will be valued by objective measures andwithout difficulty.

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Item 7A.    Quantitative andQualitative Disclosures About Market Risk

Introduction

The Partnership is a speculative commoditypool. The market sensitive instruments held by it are acquired forspeculative trading purposes, and all or substantially all of thePartnership's assets are subject to the risk of trading loss.Unlike an operating company, the risk of market sensitive instrumentsis integral, not incidental, to the Partnership's main line ofbusiness.

Market movements result in frequent changes in thefair market value of the Partnership's open positions and,consequently, in its earnings and cash flow. The Partnership'smarket risk is influenced by a wide variety of factors, including thelevel and volatility of interest rates, exchange rates, equity pricelevels, the market value of financial instruments and contracts, thediversification effects among the Partnership's open positionsand the liquidity of the markets in which it trades.

ThePartnership rapidly acquires and liquidates both long and shortpositions in a wide range of different markets. Consequently, it is notpossible to predict how a particular future market scenario will affectperformance, and the Partnership's past performance is notnecessarily indicative of its future results.

Value at Risk is ameasure of the maximum amount which the Partnership could reasonably beexpected to lose in a given market sector. However, the inherentuncertainty of the Partnership's speculative trading and therecurrence in the markets traded by the Partnership of market movementsfar exceeding expectations could result in actual trading ornon-trading losses far beyond the indicated Value at Risk or thePartnership's experience to date (i.e., "risk ofruin"). In light of the foregoing as well as the risks anduncertainties intrinsic to all future projections, the inclusion of thequantification in this section should not be considered to constituteany assurance or representation that the Partnership's losses inany market sector will be limited to Value at Risk or by thePartnership's attempts to manage its market risk.

Quantifying the Partnership's Trading Value at Risk

The following quantitative disclosures regarding thePartnership's market risk exposures contain"forward-looking statements" within themeaning of the safe harbor from civil liability provided for suchstatements by the Private Securities Litigation Reform Act of 1995 (setforth in Section 27A of the Securities Act of 1933 and Section 21E ofthe Securities Exchange Act of 1934). All quantitative disclosures inthis section are deemed to be forward-looking statements for purposesof the safe harbor except for statements of historical fact (such asthe terms of particular contracts and the number of market risksensitive instruments held during or at the end of the reportingperiod).

The Partnership's risk exposure in the variousmarket sectors traded by the Advisor is quantified below in terms ofValue at Risk. Due to the Partnership's mark-to-marketaccounting, any loss in the fair value of the Partnership's openpositions is directly reflected in the Partnership's earnings(realized or unrealized).Exchange maintenance margin requirements havebeen used by the Partnership as the measure of its Value at Risk.Maintenance margin requirements are set by exchanges to equal or exceedthe maximum losses reasonably expected to be incurred in the fair valueof any given contract in 95%–99% of any one-dayintervals. The maintenance margin levels are established by dealers andexchanges using historical price studies as well as an assessment ofcurrent market volatility (including the implied volatility of theoptions on a given futures contract) and economic fundamentals toprovide a probabilistic estimate of the maximum expected near-termone-day price fluctuation. Maintenance margin has been used rather thanthe more generally available initial margin, because initial marginincludes a credit risk component which is not relevant to Value atRisk.

In the case of market sensitive instruments which are notexchange traded (almost exclusively currencies in the case of thePartnership), the margin requirements for the equivalent futurespositions have been used as Value at Risk. In those rare cases in whicha futures-equivalent margin is not available, dealers' marginshave been used.

The fair value of the Partnership'sfutures and forward positions does not have any optionality component.However, the Advisor may trade commodity options. The Value at Riskassociated with 

15

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options is reflected in the following tableas the margin requirement attributable to the instrument underlyingeach option. Where this instrument is a futures contract, the futuresmargin, and where this instrument is a physical commodity, thefutures-equivalent maintenance margin has been used. This calculationis conservative in that it assumes that the fair value of an optionwill decline by the same amount as the fair value of the underlyinginstrument, whereas, in fact, the fair values of the options traded bythe Partnership in almost all cases fluctuate to a lesser extent thanthose of the underlying instruments.

In quantifying thePartnership's Value at Risk, 100% positive correlation inthe different positions held in each market risk category has beenassumed. Consequently, the margin requirements applicable to the opencontracts have simply been added to determine each tradingcategory's aggregate Value at Risk. The diversification effectsresulting from the fact that the Partnership's positions arerarely, if ever, 100% positively correlated have not beenreflected.

The Partnership's Trading Value at Risk inDifferent Market Sectors

The following table indicates thetrading Value at Risk associated with the Partnership's openpositions by market category as of December 31, 2004 and 2003, and thehighest, lowest and average value at any point during the year and theaverage value for the twelve months ended December 31, 2004. All openposition trading risk exposures of the Partnership have been includedin calculating the figures set forth below. As of December 31, 2004,the Partnership's total capitalization was $154,682,645.

December 31,2004

|                          |  |               |            |                         |  |                  |       |                  |  |                       |            |        |  |        |           |        |  |        |           |        |  |  |
|--------------------------|--|---------------|------------|-------------------------|--|------------------|-------|------------------|--|-----------------------|------------|--------|--|--------|-----------|--------|--|--------|-----------|--------|--|--|
|                     |  |          |            |                    |  | YeartoDate       |
| MarketSector             |  | Value at Risk |            | % ofTotalCapitalization |  | HighValue atRisk |       | LowValue at Risk |  | Average Value atRisk* |
| Currencies:              |  |
| —OTC               |  | $             | 5,669,043  |                    |  |             | 3.66  | %           |  | $                     | 11,568,820 |   |  | $      | 1,144,652 |   |  | $      | 4,118,998 |   |
| Energy                   |  |          | 989,890    |                    |  |             | 0.64  | %           |  |                  | 1,491,800  |   |  |   | 16,000    |   |  |   | 632,993   |   |
| Interest Rates U.S.      |  |          | 1,244,550  |                    |  |             | 0.80  | %           |  |                  | 2,232,200  |   |  |   | 11,475    |   |  |   | 907,595   |   |
| Interest Rates Non -U.S. |  |          | 2,912,533  |                    |  |             | 1.88  | %           |  |                  | 5,753,067  |   |  |   | 814,887   |   |  |   | 3,023,855 |   |
| Metals                   |  |
| — OTC              |  |          | 301,299    |                    |  |             | 0.20  | %           |  |                  | 431,812    |   |  |   | 1,585     |   |  |   | 191,660   |   |
| Indices                  |  |          | 7,247,953  |                    |  |             | 4.69  | %           |  |                  | 7,416,472  |   |  |   | 646,913   |   |  |   | 3,809,557 |   |
| **Total**                |  | $             | 18,365,268 |                    |  |             | 11.87 | %           |  |                  |       |   |  |   |      |   |  |   |      |   |
|                          |

|  |
|--|
|  |  |
|  |

*    Annualaverage based on month-end value at risk

As of December 31,2003, the Partnership's total capitalization was$102,336,428.

December 31,2003

|                                 |  |               |            |                         |  |                  |       |                  |  |                      |           |        |  |        |         |        |  |        |           |        |  |  |
|---------------------------------|--|---------------|------------|-------------------------|--|------------------|-------|------------------|--|----------------------|-----------|--------|--|--------|---------|--------|--|--------|-----------|--------|--|--|
|                            |  |          |            |                    |  | YeartoDate       |
| MarketSector                    |  | Value at Risk |            | % ofTotalCapitalization |  | HighValue atRisk |       | LowValue at Risk |  | AverageValue atRisk* |
| Currencies                      |  |
| —Exchange TradedContracts |  | $             | 2,774,184  |                    |  |             | 2.71  | %           |  | $                    | 2,865,324 |   |  | $      | 892,219 |   |  | $      | 1,735,467 |   |
| Energy                          |  |          | 1,157,250  |                    |  |             | 1.13  | %           |  |                 | 2,062,962 |   |  |   | 71,200  |   |  |   | 813,125   |   |
| InterestratesU.S.               |  |          | 1,340,100  |                    |  |             | 1.31  | %           |  |                 | 1,340,100 |   |  |   | 36,400  |   |  |   | 416,250   |   |
| InterestratesNon-U.S.           |  |          | 2,016,237  |                    |  |             | 1.97  | %           |  |                 | 2,016,237 |   |  |   | 388,037 |   |  |   | 966,794   |   |
| Indices                         |  |          | 3,059,311  |                    |  |             | 2.99  | %           |  |                 | 4,054,564 |   |  |   | 58,248  |   |  |   | 2,095,546 |   |
| **Total**                       |  | $             | 10,347,082 |                    |  |             | 10.11 | %           |  |
|                                 |

*    Annualaverage based on month-end value at risk

Material Limitationson Value at Risk as an Assessment of Market Risk

The face valueof the market sector instruments held by the Partnership is typicallymany times the applicable maintenance margin requirement (marginrequirements generally range between 2% and 15%

16

----

of contract face value) as well as manytimes the capitalization of the Partnership. The magnitude of thePartnership's open positions creates a "risk ofruin" not typically found in most other investmentvehicles. Because of the size of its positions, certain marketconditions — unusual, but historically recurring from time totime — could cause the Partnership to incur severe losses over ashort period of time. The foregoing Value at Risk table — as wellas the past performance of the Partnership — give no indicationof this "risk of ruin."

Non-TradingRisk

The Partnership has non-trading market risk on its foreigncash balances not needed for margin. However, these balances (as wellas any market risk they represent) are immaterial.

Materialityas used in this section, "Qualitative and QuantitativeDisclosures About Market Risk," is based on an assessmentof reasonably possible market movements and the potential losses causedby such movements, taking into account the leverage, optionality andmultiplier features of the Partnership's market sensitiveinstruments.

Qualitative Disclosures Regarding Primary TradingRisk Exposures

The following qualitative disclosures regardingthe Partnership's market risk exposures — except for (i)those disclosures that are statements of historical fact and (ii) thedescriptions of how the Partnership manages its primary market riskexposures — constitute forward-looking statements within themeaning of Section 27A of the Securities Act and Section 21E of theSecurities Exchange Act. The Partnership's primary market riskexposures as well as the strategies used and to be used by the GeneralPartner and the Advisor for managing such exposures are subject tonumerous uncertainties, contingencies and risks, any one of which couldcause the actual results of the Partnership's risk controls todiffer materially from the objectives of such strategies. Governmentinterventions, defaults and expropriations, illiquid markets, theemergence of dominant fundamental factors, political upheavals, changesin historical price relationships, an influx of new marketparticipants, increased regulation and many other factors could resultin material losses as well as in material changes to the risk exposuresand the management strategies of the Partnership. There can be noassurance that the Partnership's current market exposure and/orrisk management strategies will not change materially or that any suchstrategies will be effective in either the short- or long- term.Investors must be prepared to lose all or substantially all of theirinvestment in the Partnership.

The following were the primarytrading risk exposures of the Partnership as of December 31, 2004, bymarket sector.

Interest Rates. Interest rate movementsdirectly affect the price of the futures positions held by thePartnership and indirectly the value of its stock index and currencypositions. Interest rate movements in one country as well as relativeinterest rate movements between countries materially impact thePartnership's profitability. The Partnership's primaryinterest rate exposure is to interest rate fluctuations in the UnitedStates and the other G-8 countries. However, the Partnership also takesfutures positions on the government debt of smaller nations —e.g., Australia.

Currencies.   ThePartnership's currency exposure is to exchange rate fluctuations,primarily fluctuations which disrupt the historical pricingrelationships between different currencies and currency pairs. Thesefluctuations are influenced by interest rate changes as well aspolitical and general economic conditions. The General Partner does notanticipate that the risk profile of the Partnership's currencysector will change significantly in the future. The currency tradingValue at Risk figure includes foreign margin amounts converted intoU.S. dollars with an incremental adjustment to reflect the exchangerate risk inherent to the dollar-based Partnership in expressing Valueat Risk in a functional currency other than dollars.

StockIndices.   The Partnership's primary equity exposure isto equity price risk in the G-8 countries. The stock index futurestraded by the Partnership are limited to futures on broadly basedindices. As of December 31, 2004, the Partnership's primaryexposures were in the EUREX and CME E-mini S&P 500 stock indices.The General Partner anticipates little, if any, trading in non-G-8stock indices. The 

17

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Partnership is primarily exposed to the riskof adverse price trends or static markets in the major U.S., Europeanand Japanese indices. (Static markets would not cause major marketchanges but would make it difficult for the Partnership to avoid being"whipsawed" into numerous small losses.)

Metals.   The Partnership's primary metal marketexposure is to fluctuations in the price of copper.

Energy.   The Partnership's primary energy marketexposure is to gas and oil price movements, often resulting frompolitical developments in the Middle East. Oil prices can be volatileand substantial profits and losses have been and are expected tocontinue to be experienced in this market.

QualitativeDisclosures Regarding Non-Trading Risk Exposure

The followingwere the only non-trading risk exposures of the Partnership as ofDecember 31, 2004.

Foreign Currency Balances.   ThePartnership's primary foreign currency balances are in Japaneseyen, Canadian dollar and Swiss francs. The Advisor regularly convertsforeign currency balances to dollars in an attempt to control thePartnership's non-trading risk.

Qualitative DisclosuresRegarding Means of Managing Risk Exposure

The General Partnermonitors and controls the Partnership's risk exposure on a dailybasis through financial, credit and risk management monitoring systemsand accordingly believes that it has effective procedures forevaluating and limiting the credit and market risks to which thePartnership is subject.

The General Partner monitors thePartnership's performance and the concentration of its openpositions, and consults with the Advisor concerning thePartnership's overall risk profile. If the General Partner feltit necessary to do so, the General Partner could require the Advisor toclose out individual positions as well as enter certain positionstraded on behalf of the Partnership. However, any such interventionwould be a highly unusual event. The General Partner primarily relieson the Advisor's own risk control policies while maintaining ageneral supervisory overview of the Partnership's market riskexposures.

The Advisor applies its own risk management policiesto its trading. The Advisor often follows diversification guidelines,margin limits and stop loss points to exit a position. TheAdvisor's research of risk management often suggests ongoingmodifications to its trading programs.

As part of the GeneralPartner's risk management, the General Partner periodically meetswith the Advisor to discuss its risk management and to look for anymaterial changes to the Advisor's portfolio balance and tradingtechniques. The Advisor is required to notify the General Partner ofany material changes to itsprograms.

18

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Item8.    Financial Statements and Supplementary Data.

SMITH BARNEY POTOMAC FUTURES FUND L.P.

INDEX TO FINANCIALSTATEMENTS

|                                                                                               |  |                   |  |  |  |  |
|-----------------------------------------------------------------------------------------------|--|-------------------|--|--|--|--|
|                                                                                          |  | PageNumber        |
| Oath or Affirmation                                                                           |  | F-2               |
| Reportof Independent Registered Public AccountingFirm                                         |  | F-3               |
| FinancialStatements:                                                                          |  |
| Statements of Financial Condition atDecember 31, 2004 and 2003                                |  | F-4               |
| CondensedSchedules of Investments at December 31, 2004 and 2003                               |  | F-5– F-6    |
| Statements of Income and Expenses forthe years ended December 31, 2004, 2003 and  2002        |  | F-7               |
| Statements of Changes inPartners' Capital for the years ended December 31, 2004, 2003 and2002 |  | F-8               |
| Statements of Cash Flows for theyears ended December 31, 2004, 2003 and 2002                  |  | F-9               |
| Notes to Financial Statements                                                                 |  | F-10 – F-13 |
| Selected UnauditedQuarterly Financial Data                                                    |  | F-14              |
|                                                                                               |

F-1

----

Tothe Limited Partners ofSmith Barney Potomac Futures Fund L.P.

To the best of the knowledge and belief of the undersigned, theinformation contained herein is accurate and complete.

|  |    /s/   Daniel R. McAuliffe,Jr. |
|--|----------------------------------------------------------------|

|  |
|--|
|  |  |  |
|  |

|  | By:   DanielR. McAuliffe, Jr.           Chief Financial Officer andDirector          Citigroup Managed FuturesLLC          General Partner, Smith Barney          Potomac Futures Fund L.P. |
|--|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | **Citigroup Managed Futures LLC**399 ParkAvenue7th FloorNew York, N.Y.10022212-559-2011 |
|--|-----------------------------------------------------------------------------------------|

F-2

----

Report of Independent Registered PublicAccounting Firm

To the Partners of    SmithBarney Potomac Futures Fund L.P.:

We have audited theaccompanying statements of financial condition of Smith Barney PotomacFutures Fund L.P. (the Partnership), including the condensed schedulesof investments as of December 31, 2004 and 2003, and the relatedstatements of income and expenses, changes in partners' capital,and cash flows for each of the years in the three-year period endedDecember 31, 2004. These financial statements are the responsibility ofthe Partnership's management. Our responsibility is to express anopinion on these financial statements based on our audits.

Weconducted our audits in accordance with the standards of the PublicCompany Accounting Oversight Board (United States). Those standardsrequire that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles used andsignificant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our auditsprovide a reasonable basis for our opinion.

In our opinion, thefinancial statements referred to above present fairly, in all materialrespects, the financial position of Smith Barney Potomac Futures FundL.P. as of December 31, 2004 and 2003, and the results of itsoperations, changes in its partners' capital, and its cash flowsfor each of the years in the three-year period ended December 31, 2004,in conformity with U.S. generally accepted accounting principles.

/s/   KPMG LLPNew York, New YorkMarch 14,2005

F-3

----

Smith Barney Potomac Futures FundL.P.Statements of Financial ConditionDecember 31, 2004 and2003

|                                                                                                                                        |  |        |             |        |  |        |             |        |  |        |
|----------------------------------------------------------------------------------------------------------------------------------------|--|--------|-------------|--------|--|--------|-------------|--------|--|--------|
|                                                                                                                                   |  | 2004   |             | 2003   |
| **Assets:**                                                                                                                            |  |
| Equityin commodity futures trading account:                                                                                            |  |
| Cash(restricted $19,775,170 and $12,244,698 in 2004 and 2003, respectively)(Note3c)                                                    |  | $      | 157,080,994 |   |  | $      | 99,381,393  |   |
| Netunrealized appreciation on open futurespositions                                                                                    |  |   | 2,504,531   |   |  |   | 4,672,048   |   |
| Unrealizedappreciation on open forwardcontracts                                                                                        |  |   | 9,444,675   |   |  |   | —     |   |
|                                                                                                                                   |  |   | 169,030,200 |   |  |   | 104,053,441 |   |
| Interestreceivable (Note3c)                                                                                                            |  |   | 205,283     |   |  |   | 59,064      |   |
|                                                                                                                                   |  | $      | 169,235,483 |   |  | $      | 104,112,505 |   |
|                                                                                                                                   |  |
| **Liabilitiesand Partners'Capital:**                                                                                                   |  |
| Liabilities:                                                                                                                           |  |
| Unrealizeddepreciation on open forwardcontracts                                                                                        |  | $      | 10,366,214  |   |  | $      | —     |   |
| Accruedexpenses:                                                                                                                       |  |
| Commissions (Note3c)                                                                                                                   |  |   | 874,649     |   |  |   | 574,758     |   |
| Management fees(Note 3b)                                                                                                               |  |   | 267,511     |   |  |   | 175,717     |   |
| Incentivefees (Note3b)                                                                                                                 |  |   | —     |   |  |   | 594,066     |   |
| Professionalfees                                                                                                                       |  |   | 57,362      |   |  |   | 81,808      |   |
| Other                                                                                                                                  |  |   | 19,616      |   |  |   | 9,400       |   |
| Redemptionspayable (Note5)                                                                                                             |  |   | 2,967,486   |   |  |   | 340,328     |   |
|                                                                                                                                   |  |   | 14,552,838  |   |  |   | 1,776,077   |   |
| Partners'capital (Notes 1 and 5):                                                                                                      |  |
| General Partner,729.3902 and 484.2302 Unit equivalents outstanding in 2004 and 2003,respectively                                       |  |   | 1,239,810   |   |  |   | 791,542     |   |
| LimitedPartners, 90,271.8164 and 62,120.5159 Redeemable Units of LimitedPartnership Interest outstanding in 2004 and 2003,respectively |  |   | 153,442,835 |   |  |   | 101,544,886 |   |
|                                                                                                                                   |  |   | 154,682,645 |   |  |   | 102,336,428 |   |
|                                                                                                                                   |  | $      | 169,235,483 |   |  | $      | 104,112,505 |   |
|                                                                                                                                   |  |   |        |   |  |   |        |   |  |   |   |   |  |   |   |   |
|                                                                                                                                        |

Seeaccompanying notes to financialstatements.

F-4

----

SmithBarney Potomac Futures Fund L.P.

Condensed Schedule ofInvestmentsDecember 31,2004

|                                                           |  |                                                     |  |           |             |         |  |  |  |  |
|-----------------------------------------------------------|--|-----------------------------------------------------|--|-----------|-------------|---------|--|--|--|--|
| Sector                                                    |  | Contract                                            |  | FairValue |
| Currencies                                                |  |                                                |  |      |        |    |
|                                                      |  | Unrealizeddepreciation on forward contracts(6.58)%  |  | $         | (10,181,726 | )  |
|                                                      |  | Unrealizedappreciation on forward contracts6.03%    |  |      | 9,332,621   |    |
|     TotalCurrencies(0.55)%            |  |                                                |  |      | (849,105    | )  |
|                                                      |  |                                                |  |      |        |    |
| Energy(0.20)%                                             |  | Futures contracts purchased(0.20)%                  |  |      | (309,904    | )  |
| InterestRates Non-U.S.                                    |  |                                                |  |      |        |    |
|                                                      |  | Futurescontracts sold0.00%*                         |  |      | 2,190       |    |
|                                                      |  | Futurescontracts purchased0.73%                     |  |      | 1,127,489   |    |
|     TotalInterest Rates Non-U.S.0.73% |  |                                                |  |      | 1,129,679   |    |
|                                                      |  |                                                |  |      |        |    |
| InterestRates U.S.                                        |  | Futures contracts purchased 0.17%                   |  |      | 265,100     |    |
|                                                      |  | Futures contracts sold0.03%                         |  |      | 41,797      |    |
| TotalInterest Rates U.S. 0.20%                            |  |                                                |  |      | 306,897     |    |
|                                                      |  |                                                |  |      |        |    |
| Metals                                                    |  |
|                                                      |  | Unrealizeddepreciation on forward contracts (0.12)% |  |      | (184,488    | )  |
|                                                      |  | Unrealized appreciation onforward contracts 0.07%   |  |      | 112,054     |    |
| Total Metals(0.05)%                                       |  |                                                |  |      | (72,434     | )  |
|                                                      |  |                                                |  |      |        |    |
| Indices0.89%                                              |  | Futures contracts purchased 0.89%                   |  |      | 1,377,859   |    |
|                                                      |  |                                                |  |      |        |    |
| TotalFair Value1.02%                                      |  |                                                |  | $         | 1,582,992   |    |
|                                                           |

|                    |  |                          |           |                              |  |        |        |         |  |  |
|--------------------|--|--------------------------|-----------|------------------------------|--|--------|--------|---------|--|--|
| CountryComposition |  | Investmentsat Fair Value |           | % ofInvestmentsat Fair Value |
| Australia          |  | $                        | 2,190     |                         |  |   | 0.14   | %  |
| Canada             |  |                     | (5,906    | )                       |  |   | (0.37  | )  |
| Germany            |  |                     | 911,575   |                         |  |   | 57.58  |    |
| Hong Kong          |  |                     | 289       |                         |  |   | 0.02   |    |
| Japan              |  |                     | 109,646   |                         |  |   | 6.92   |    |
| Spain              |  |                     | 123,742   |                         |  |   | 7.82   |    |
| United Kingdom     |  |                     | 159,333   |                         |  |   | 10.07  |    |
| United States      |  |                     | 282,123   |                         |  |   | 17.82  |    |
|               |  | $                        | 1,582,992 |                         |  |   | 100.00 | %  |
|                    |

|  |                                                                     |
|--|---------------------------------------------------------------------|
|  | Percentagesare based on Partners' capital unless otherwiseindicated |

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

See accompanying notes to financial statements

F-5

----

Smith Barney Potomac Futures FundL.P.

Condensed Schedule of InvestmentsDecember31,2003

|                                                             |  |                                    |  |           |            |         |  |  |  |  |
|-------------------------------------------------------------|--|------------------------------------|--|-----------|------------|---------|--|--|--|--|
| Sector                                                      |  | Contract                           |  | FairValue |
| Currencies                                                  |  |                               |  |      |       |    |
|                                                        |  | Futurescontracts purchased5.40%    |  | $         | 5,520,628  |    |
|                                                        |  | Futurescontracts sold(2.40)%       |  |      | (2,454,608 | )  |
|     TotalCurrencies3.00%                |  |                               |  |      | 3,066,020  |    |
| Energy0.50%                                                 |  | Futures contracts purchased0.50%   |  |      | 515,673    |    |
| InterestRates U.S. (0.14)%                                  |  | Futures contracts purchased(0.14)% |  |      | (146,125   | )  |
| InterestRates Non-U.S                                       |  |                               |  |      |       |    |
|                                                        |  | Futurescontracts purchased(0.06)%  |  |      | (57,653    | )  |
|                                                        |  | Futurescontracts sold(0.11)%       |  |      | (117,205   | )  |
|     TotalInterest Rates Non-U.S.(0.17)% |  |                               |  |      | (174,858   | )  |
| Indices1.38%                                                |  | Futures contracts purchased1.38%   |  |      | 1,411,338  |    |
| TotalFair Value4.57%                                        |  |                               |  | $         | 4,672,048  |    |
|                                                             |

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

|  |                                                                     |
|--|---------------------------------------------------------------------|
|  | Percentagesare based on Partners' capital unless otherwiseindicated |

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

See accompanying notes to financial statements

F-6

----

Smith Barney Potomac Futures FundL.P.

Statements of Income and Expensesfor theyears ended December 31, 2004, 2003 and2002

|                                                                                                                 |  |        |            |         |  |        |            |        |  |        |           |        |  |  |
|-----------------------------------------------------------------------------------------------------------------|--|--------|------------|---------|--|--------|------------|--------|--|--------|-----------|--------|--|--|
|                                                                                                            |  | 2004   |            | 2003    |  | 2002   |
| Income:                                                                                                         |  |
| Netgains (losses) on trading of commodityinterests:                                                             |  |
| Realized gains on closed positionsand foreign currencies                                                        |  | $      | 21,717,706 |    |  | $      | 17,180,183 |   |  | $      | 7,693,514 |   |
| Changein unrealized gains (losses) on openpositions                                                             |  |   | (3,089,056 | )  |  |   | 2,497,940  |   |  |   | 1,340,365 |   |
|                                                                                                            |  |   | 18,628,650 |    |  |   | 19,678,123 |   |  |   | 9,033,879 |   |
| Interest income(Note  3c)                                                                                       |  |   | 1,320,817  |    |  |   | 592,252    |   |  |   | 432,817   |   |
|                                                                                                            |  |   | 19,949,467 |    |  |   | 20,270,375 |   |  |   | 9,466,696 |   |
| Expenses:                                                                                                       |  |
| Brokeragecommissions including clearing fees of $129,807, $143,818 and $83,631,respectively (Note  3c)          |  |   | 8,851,986  |    |  |   | 5,141,634  |   |  |   | 2,393,869 |   |
| Management fees(Note 3b)                                                                                        |  |   | 2,642,931  |    |  |   | 1,513,837  |   |  |   | 697,460   |   |
| Incentive fees (Note3b)                                                                                         |  |   | 3,973,895  |    |  |   | 2,325,768  |   |  |   | 1,281,597 |   |
| Professionalfees                                                                                                |  |   | 120,115    |    |  |   | 98,551     |   |  |   | 102,151   |   |
| Otherexpenses                                                                                                   |  |   | 16,603     |    |  |   | 9,467      |   |  |   | 12,829    |   |
|                                                                                                            |  |   | 15,605,530 |    |  |   | 9,089,257  |   |  |   | 4,487,906 |   |
| Net income                                                                                                      |  | $      | 4,343,937  |    |  | $      | 11,181,118 |   |  | $      | 4,978,790 |   |
| Net income perRedeemable Unit of Limited Partnership Interest and General PartnerUnit equivalent (Notes 1 and6) |  | $      | 65.15      |    |  | $      | 240.36     |   |  | $      | 142.51    |   |
|                                                                                                                 |

Seeaccompanying notes to financial statements.

F-7

----

Smith Barney Potomac Futures FundL.P.Statements of Changes in Partners' Capital for theyears ended December 31, 2004, 2003 and2002

|                                                                                                                                            |  |                 |             |                |  |        |           |        |  |        |             |         |  |  |
|--------------------------------------------------------------------------------------------------------------------------------------------|--|-----------------|-------------|----------------|--|--------|-----------|--------|--|--------|-------------|---------|--|--|
|                                                                                                                                       |  | LimitedPartners |             | GeneralPartner |  | Total  |
| Partners' capital atDecember 31,2001                                                                                                       |  | $               | 17,249,631  |           |  | $      | 174,559   |   |  | $      | 17,424,190  |    |
| Netincome                                                                                                                                  |  |            | 4,932,145   |           |  |   | 46,645    |   |  |   | 4,978,790   |    |
| Saleof 32,280.3008 Redeemable Units of Limited Partnership Interest andGeneral Partner contribution representing 132.5215 Unitequivalents  |  |            | 41,923,000  |           |  |   | 158,000   |   |  |   | 42,081,000  |    |
| Redemptionof 6,984.0027 Redeemable Units of Limited PartnershipInterest                                                                    |  |            | (9,621,322  | )         |  |   | —   |   |  |   | (9,621,322  | )  |
| Partners'capital at December 31,2002                                                                                                       |  |            | 54,483,454  |           |  |   | 379,204   |   |  |   | 54,862,658  |    |
| Netincome                                                                                                                                  |  |            | 11,093,780  |           |  |   | 87,338    |   |  |   | 11,181,118  |    |
| Saleof 37,057.5971 Redeemable Units of Limited Partnership Interest andGeneral Partner contribution representing 212.2588 Unitequivalents  |  |            | 57,948,000  |           |  |   | 325,000   |   |  |   | 58,273,000  |    |
| Redemptionof 14,013.5496 Redeemable Units of Limited PartnershipInterest                                                                   |  |            | (21,980,348 | )         |  |   | —   |   |  |   | (21,980,348 | )  |
| Partners'capital at December 31,2003                                                                                                       |  |            | 101,544,886 |           |  |   | 791,542   |   |  |   | 102,336,428 |    |
| Netincome                                                                                                                                  |  |            | 4,305,669   |           |  |   | 38,268    |   |  |   | 4,343,937   |    |
| Sale of 42,345.5298 Redeemable Units of Limited PartnershipInterest and General Partner contribution representing 245.1600 Unitequivalents |  |            | 71,933,000  |           |  |   | 410,000   |   |  |   | 72,343,000  |    |
| Redemption of 14,194.2293 Redeemable Units of LimitedPartnershipInterest                                                                   |  |            | (24,340,720 | )         |  |   | —   |   |  |   | (24,340,720 | )  |
| Partners' capital at December 31,2004                                                                                                      |  | $               | 153,442,835 |           |  | $      | 1,239,810 |   |  | $      | 154,682,645 |    |
|                                                                                                                                            |

NetAsset Value per RedeemableUnit:

|      |
|------|
|      |  |  |  |  |  |  |
| 2002 |  | $ | 1,394.28 |   |
| 2003 |  | $ | 1,634.64 |   |
| 2004 |  | $ | 1,699.79 |   |
|      |

Seeaccompanying notes to financial statements.

F-8

----

Smith Barney Potomac Futures FundL.P.Statements of Cash Flowsfor the years ended December 31,2004,2003 and 2002

|                                                                                           |  |        |             |         |  |        |             |         |  |        |            |         |  |  |
|-------------------------------------------------------------------------------------------|--|--------|-------------|---------|--|--------|-------------|---------|--|--------|------------|---------|--|--|
|                                                                                      |  | 2004   |             | 2003    |  | 2002   |
| Cash flows from operatingactivities:                                                      |  |   |        |    |  |   |        |    |  |
| Netincome                                                                                 |  | $      | 4,343,937   |    |  | $      | 11,181,118  |    |  | $      | 4,978,790  |    |
| Adjustmentsto reconcile net income to net cash provided by (used in) operatingactivities: |  |   |        |    |  |   |        |    |  |
| Changesin operating assets andliabilities:                                                |  |   |        |    |  |   |        |    |  |
| (Increase)decrease in restrictedcash                                                      |  |   | (7,530,472  | )  |  |   | (7,297,426  | )  |  |   | (3,365,257 | )  |
| (Increase)decrease in net unrealized appreciation (depreciation) on open futurespositions |  |   | 2,167,517   |    |  |   | (2,487,104  | )  |  |   | (1,351,201 | )  |
| (Increase)decrease in unrealized appreciation on open forwardcontracts                    |  |   | (9,444,675  | )  |  |   | 60,345      |    |  |   | (60,345    | )  |
| (Increase)decrease in interestreceivable                                                  |  |   | (146,219    | )  |  |   | (15,341     | )  |  |   | (23,502    | )  |
| Increase(decrease) in unrealized depreciation on open forwardcontracts                    |  |   | 10,366,214  |    |  |   | (71,181     | )  |  |   | 71,181     |    |
| Accruedexpenses:                                                                          |  |   |        |    |  |   |        |    |  |
| Increase(decrease) incommissions                                                          |  |   | 299,891     |    |  |   | 268,232     |    |  |   | 209,040    |    |
| Increase(decrease) in managementfees                                                      |  |   | 91,794      |    |  |   | 82,042      |    |  |   | 63,932     |    |
| Increase(decrease) in incentivefees                                                       |  |   | (594,066    | )  |  |   | 594,066     |    |  |   | —    |    |
| Increase(decrease) in professionalfees                                                    |  |   | (24,446     | )  |  |   | 15,633      |    |  |   | 22,108     |    |
| Increase(decrease) inother                                                                |  |   | 10,216      |    |  |   | 4,960       |    |  |   | (2,457     | )  |
| Increase(decrease) in redemptions payable                                                 |  |   | 2,627,158   |    |  |   | 149,184     |    |  |   | 134,814    |    |
| Netcash provided by (used in) operatingactivities                                         |  |   | 2,166,849   |    |  |   | 2,484,528   |    |  |   | 677,103    |    |
| Cashflows from financingactivities:                                                       |  |   |        |    |  |   |        |    |  |
| Proceeds fromadditions – GeneralPartner                                             |  |   | 410,000     |    |  |   | 325,000     |    |  |   | 158,000    |    |
| Proceedsfrom additions – LimitedPartners                                            |  |   | 71,933,000  |    |  |   | 57,948,000  |    |  |   | 41,923,000 |    |
| Paymentsfor redemptions – LimitedPartners                                           |  |   | (24,340,720 | )  |  |   | (21,980,348 | )  |  |   | (9,621,322 | )  |
| Netcash provided by (used in) financingactivities                                         |  |   | 48,002,280  |    |  |   | 36,292,652  |    |  |   | 32,459,678 |    |
| Netchange incash                                                                          |  |   | 50,169,129  |    |  |   | 38,777,180  |    |  |   | 33,136,781 |    |
| Unrestrictedcash, at beginning ofyear                                                     |  |   | 87,136,695  |    |  |   | 48,359,515  |    |  |   | 15,222,734 |    |
| Unrestrictedcash, at end ofyear                                                           |  | $      | 137,305,824 |    |  | $      | 87,136,695  |    |  | $      | 48,359,515 |    |
|                                                                                           |

Seeaccompanying notes to financialstatements.

F-9

----

SmithBarney PotomacFutures Fund L.P. Notes to FinancialStatements

1.    PartnershipOrganization:

Smith Barney Potomac Futures Fund L.P. (the"Partnership") is a limited partnership whichwas organized on March 14, 1997 under the partnership laws of the Stateof New York to engage in the speculative trading of a diversifiedportfolio of commodity interests including futures contracts, optionsand forward contracts. The commodity interests that are traded by thePartnership are volatile and involve a high degree of market risk. ThePartnership was authorized to sell an unlimited number of redeemableunits of Limited Partnership Interest ("RedeemableUnits") during its initial offering period. ThePartnership continues to offer Redeemable Units.

CitigroupManaged Futures LLC, formerly Smith Barney Futures Management LLC, actsas the general partner (the "GeneralPartner") of the Partnership. The Partnership'scommodity broker is Citigroup Global Markets Inc.("CGM"), formerly Salomon Smith Barney Inc.CGM is an affiliate of the General Partner. The General Partner iswholly owned by Citigroup Global Markets Holdings Inc.("CGMHI"), formerly Smith Barney HoldingsInc., which is the sole owner of CGM. CGMHI is a wholly ownedsubsidiary of Citigroup Inc.

The General Partner and eachlimited partner share in the profits and losses of the Partnership inproportion to the amount of partnership interest owned by each exceptthat no limited partner shall be liable for obligations of thePartnership in excess of their initial capital contribution andprofits, if any, net of distributions.

The Partnership will beliquidated upon the first to occur of the following: December 31, 2017;the Net Asset Value of a Redeemable Unit decreases to less than $400per Redeemable Unit as of a close of any business day; a decline in netassets after trading commences to less than $1,000,000; or undercertain other circumstances as defined in the Limited PartnershipAgreement.

2.    Accounting Policies:

|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a.  | All commodity interests (includingderivative financial instruments and derivative commodity instruments)are used for trading purposes. The commodity interests are recorded ontrade date and open contracts are recorded in the statements offinancial condition at fair value on the last business day of the year,which represents market value for those commodity interests for whichmarket quotations are readily available. Investments in commodityinterests denominated in foreign currencies are translated into U.S.dollars at the exchange rates prevailing on the last business day ofthe year. Realized gains (losses) and changes in unrealized gains(losses) on open positions are recognized in the period in which thecontract is closed or the changes occur and are included in net gains(losses) on trading of commodity interests. |

|          |                                                                                                                                                          |
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------|
| b.  | Income taxes have not been provided as eachpartner is individually liable for the taxes, if any, on their share ofthe Partnership's income and expenses. |

|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| c.  | The preparation of financial statements inconformity with accounting principles generally accepted in the UnitedStates of America requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities, disclosureof contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during thereporting period. Actual results could differ from these estimates. |

3.    Agreements:

|          |                               |
|----------|-------------------------------|
| a.  | LimitedPartnership Agreement: |

The General Partner administersthe business and affairs of the Partnership including selecting one ormore advisors to make trading decisions for the Partnership.

F-10

----

SmithBarney PotomacFutures Fund L.P. Notes to FinancialStatements

|          |                       |
|----------|-----------------------|
| b.  | ManagementAgreements: |

The General Partner, on behalf of thePartnership, has entered into a Management Agreement with Campbell& Company, Inc. (the "Advisor"), aregistered commodity trading advisor. The Management Agreement providesthat the Advisor has discretion in determining the investment of theassets of the Partnership allocated to the Advisor by the GeneralPartner. The Partnership will pay a monthly management fee equal to 1/6of 1% (2% per year) of Net Assets allocated to theAdvisor as of the end of each month. Month-end Net Assets, for thepurpose of calculating management fees are Net Assets, as defined inthe Limited Partnership Agreement, prior to the reduction ofredemptions and incentive fees.

The Partnership isobligated to pay the Advisor an incentive fee, payable quarterly, equalto 20% of the new trading profits, as defined in the ManagementAgreement, earned by it for the Partnership.

|          |                     |
|----------|---------------------|
| c.  | Customer Agreement: |

ThePartnership has entered into a Customer Agreement which provides thatthe Partnership will pay CGM a monthly brokerage fee equal to6.5% per year of month-end Net Assets, in lieu of brokeragecommissions on a per trade basis. Month-end Net Assets, for the purposeof calculating commissions are Net Assets, as defined in the LimitedPartnership Agreement, prior to the reduction of all accrued expensesand redemptions payable. CGM will pay a portion of brokerage fees toits financial consultants who have sold Redeemable Units in thePartnership. The Partnership will pay for National Futures Association("NFA") fees, exchange, clearing, user,give-up and floor brokerage fees. All of the Partnership's assetsare deposited in the Partnership's account at CGM. ThePartnership's cash is deposited by CGM in segregated bankaccounts to the extent required by Commodity Futures Trading Commissionregulations. At December 31, 2004 and 2003, the amount of cash held formargin requirements was $19,775,170 and $12,244,698, respectively. CGMhas agreed to pay the Partnership interest on 80% of the averagedaily equity maintained in cash in its account during each month at a30-day U.S. Treasury Bill rate determined weekly by CGM based on theaverage noncompetitive yield on 3-month U.S. Treasury Bills maturing in30 days from the date on which such weekly rate is determined. TheCustomer Agreement between the Partnership and CGM gives thePartnership the legal right to net unrealized gains and losses. TheCustomer Agreement may be terminated upon notice by either party.

4.    Trading Activities:

The Partnership was formed forthe purpose of trading contracts in a variety of commodity interests,including derivative financial instruments and derivative commodityinterests. The results of the Partnership's trading activitiesare shown in the statements of income and expenses.

All of thecommodity interests, owned by the Partnership, are held for tradingpurposes. The average fair value during the years ended December 31,2004 and 2003, based on a monthly calculation, was $3,194,280 and$3,373,573, respectively.

5.    Distributions andRedemptions:

Distributions of profits, if any, will be made atthe sole discretion of the General Partner. A limited partner mayrequire the Partnership to redeem some or all of their Redeemable Units(minimum 10 Redeemable Units) at their Net Asset Value as of the lastday of any month on 10 days notice to the General Partner provided thatno redemption may result in the limited partner holding fewer than 10Redeemable Units after such redemption is effected. There is no feecharged to limited partners in connection with redemptions.

F-11

----

SmithBarney PotomacFutures Fund L.P. Notes to FinancialStatements

6.    Financial Highlights:

Changes in the Net Asset Value per Redeemable Unit of LimitedPartnership Interest for the years ended December  31, 2004, 2003and 2002 were asfollows:

|                                                      |  |        |          |         |  |        |          |         |  |        |          |         |  |  |
|------------------------------------------------------|--|--------|----------|---------|--|--------|----------|---------|--|--------|----------|---------|--|--|
|                                                 |  | 2004   |          | 2003    |  | 2002   |
| Netrealized and unrealizedgains*                     |  | $      | 144.22   |    |  | $      | 312.46   |    |  | $      | 201.88   |    |
| Interestincome                                       |  |   | 16.47    |    |  |   | 12.51    |    |  |   | 16.49    |    |
| Expenses**                                           |  |   | (95.54   | )  |  |   | (84.61   | )  |  |   | (75.86   | )  |
| Increasefor theyear                                  |  |   | 65.15    |    |  |   | 240.36   |    |  |   | 142.51   |    |
| Netasset value per Redeemable Unit, beginning ofyear |  |   | 1,634.64 |    |  |   | 1,394.28 |    |  |   | 1,251.77 |    |
| Netasset value per Redeemable Unit, end ofyear       |  | $      | 1,699.79 |    |  | $      | 1,634.64 |    |  | $      | 1,394.28 |    |
|                                                      |

|  |
|--|
|  |  |
|  |

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

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

|                                            |  |        |        |          |  |        |        |          |  |        |        |          |  |  |
|--------------------------------------------|--|--------|--------|----------|--|--------|--------|----------|--|--------|--------|----------|--|--|
| Ratiosto average netassets:                |  |   |   |     |  |   |   |     |  |   |   |     |
| Netinvestment loss before incentivefees*** |  |   | (8.1   | )%  |  |   | (8.6   | )%  |  |   | (8.6   | )%  |
|                                       |  |   |   |     |  |   |   |     |  |   |   |     |
| Operatingexpenses                          |  |   | 9.2    | %   |  |   | 9.4    | %   |  |   | 9.9    | %   |
| Incentivefees                              |  |   | 3.2    | %   |  |   | 3.2    | %   |  |   | 3.9    | %   |
| Totalexpenses                              |  |   | 12.4   | %   |  |   | 12.6   | %   |  |   | 13.8   | %   |
|                                       |  |   |   |     |  |   |   |     |  |   |   |     |
| Totalreturn:                               |  |   |   |     |  |   |   |     |  |   |   |     |
| Total returnbefore incentivefees           |  |   | 6.7    | %   |  |   | 19.9   | %   |  |   | 13.9   | %   |
| Incentivefees                              |  |   | (2.7   | )%  |  |   | (2.7   | )%  |  |   | (2.5   | )%  |
| Totalreturn after incentivefees            |  |   | 4.0    | %   |  |   | 17.2   | %   |  |   | 11.4   | %   |
|                                            |

|  |
|--|
|  |  |
|  |

|     |                                                                   |
|-----|-------------------------------------------------------------------|
| *** | Interestincome less total expenses (exclusive of incentive fees). |

The above ratios may vary for individual investors based on thetiming of capital transactions during the year. Additionally, theseratios are calculated for the limited partner class using limitedpartners' share of income, expenses and average net assets.

7.    Financial Instrument Risks:

In the normal course ofits business, the Partnership is party to financial instruments withoff-balance sheet risk, including derivative financial instruments andderivative commodity instruments. These financial instruments mayinclude forwards, futures and options, whose values are based upon anunderlying asset, index, or reference rate, and generally representfuture commitments to exchange currencies or cash flows, to purchase orsell other financial instruments at specific terms at specified futuredates, or, in the case of derivative commodity instruments, to have areasonable possibility to be settled in cash, through physical deliveryor with another financial instrument. These instruments may be tradedon an exchange or over-the-counter ("OTC").Exchange traded instruments are standardized and include futures andcertain option contracts. OTC contracts are negotiated betweencontracting parties and include forwards and certainoptions.

F-12

----

SmithBarney PotomacFutures Fund L.P. Notes to FinancialStatements

Each of these instruments is subject tovarious risks similar to those related to the underlying financialinstruments including market and credit risk. In general, the risksassociated with OTC contracts are greater than those associated withexchange traded instruments because of the greater risk of default bythe counterparty to an OTC contract.

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

Credit risk is the possibility that a loss may occur dueto the failure of a counterparty to perform according to the terms of acontract. Credit risk with respect to exchange-traded instruments isreduced to the extent that an exchange or clearing organization acts asa counterparty to the transactions. The Partnership's risk ofloss in the event of counterparty default is typically limited to theamounts recognized in the statements of financial condition and notrepresented by the contract or notional amounts of the instruments. ThePartnership has credit risk and concentration risk because the solecounterparty or broker with respect to the Partnership's assetsis CGM.

The General Partner monitors and controls thePartnership's risk exposure on a daily basis through financial,credit and risk management monitoring systems, and accordingly believesthat it has effective procedures for evaluating and limiting the creditand market risks to which the Partnership is subject. These monitoringsystems allow the General Partner to statistically analyze actualtrading results with risk adjusted performance indicators andcorrelation statistics. In addition, on-line monitoring systems provideaccount analysis of futures, forwards and options positions by sector,margin requirements, gain and loss transactions and collateralpositions.

The majority of these instruments mature within oneyear of December 31, 2004. However, due to the nature of thePartnership's business, these instruments may not be held tomaturity.

8.    Subsequent Event:

Effective January 1,2005, the Partnership allocated substantially all of its capital to theCMF Campbell Master Fund L.P. fortrading.

F-13

----

Selectedunaudited quarterly financial data for the years ended December 31,2004 and 2003 are summarized below:

|                                                                                                                      |  |                                                        |            |                                                      |  |                                                 |            |                                                    |  |   |             |         |  |   |            |        |  |  |
|----------------------------------------------------------------------------------------------------------------------|--|--------------------------------------------------------|------------|------------------------------------------------------|--|-------------------------------------------------|------------|----------------------------------------------------|--|---|-------------|---------|--|---|------------|--------|--|--|
|                                                                                                                 |  | Forthe period from October 1, 2004 to December 31,2004 |            | For the period from July 1, 2004 toSeptember 30,2004 |  | For the period fromApril 1, 2004 toJune 30,2004 |            | For the period fromJanuary 1, 2004 toMarch 31,2004 |
| Net realized and unrealized trading gains(losses) net of brokerage commissions and clearing fees plus interestincome |  | $                                                      | 12,082,816 |                                                 |  | $                                               | (4,856,928 | )                                             |  | $ | (16,826,795 | )  |  | $ | 20,698,388 |   |
| Netincome (loss)                                                                                                     |  | $                                                      | 11,223,959 |                                                 |  | $                                               | (5,533,525 | )                                             |  | $ | (17,454,416 | )  |  | $ | 16,107,919 |   |
| Increase(decrease) in Net Asset Value per Redeemable Unit                                                            |  | $                                                      | 127.03     |                                                 |  | $                                               | (66.74     | )                                             |  | $ | (238.11     | )  |  | $ | 242.97     |   |
|                                                                                                                      |

|                                                                                                                    |  |                                                        |           |                                                      |  |                                                 |            |                                                    |  |   |           |        |  |   |           |        |  |  |
|--------------------------------------------------------------------------------------------------------------------|--|--------------------------------------------------------|-----------|------------------------------------------------------|--|-------------------------------------------------|------------|----------------------------------------------------|--|---|-----------|--------|--|---|-----------|--------|--|--|
|                                                                                                               |  | Forthe period from October 1, 2003 to December 31,2003 |           | For the period from July 1, 2003 toSeptember 30,2003 |  | For the period fromApril 1, 2003 toJune 30,2003 |            | For the period fromJanuary 1, 2003 toMarch 31,2003 |
| Net realized and unrealized trading gains(loss)net of brokerage commissions and clearing fees plus interest income |  | $                                                      | 6,853,641 |                                                 |  | $                                               | (2,736,401 | )                                             |  | $ | 3,693,270 |   |  | $ | 7,318,231 |   |
| Netincome (loss)                                                                                                   |  | $                                                      | 5,795,350 |                                                 |  | $                                               | (3,133,855 | )                                             |  | $ | 2,673,770 |   |  | $ | 5,845,853 |   |
| Increase(decrease) in Net Asset Value per Redeemable Unit                                                          |  | $                                                      | 103.49    |                                                 |  | $                                               | (65.75     | )                                             |  | $ | 59.06     |   |  | $ | 143.56    |   |
|                                                                                                                    |

F-14

----

Item 9.    Changesin and Disagreements with Accountants and Accounting and FinancialDisclosure

Not applicable.

Item9A.    Controls and Procedures

Based on theirevaluation of the Partnership's disclosure controls andprocedures as of year end the President and Chief Financial Officer ofthe General Partner have concluded that such controls and proceduresare effective.

There were no significant changes in thePartnership's internal controls or in other factors that couldsignificantly affect such controls subsequent to the date of theirevaluation as of year end.

PART III

Item10.    Directors and Executive Officers of theRegistrant.

The Partnership has no officers or directorsand its affairs are managed by its General Partner, Citigroup ManagedFutures LLC. Investment decisions are made by Campbell & Company,Inc.

The Partnership has not adopted a code of ethics thatapplies to officers because it has no officers.

Item11.    Executive Compensation.

The Partnership hasno directors or officers. Its affairs are managed by Citigroup ManagedFutures LLC, its General Partner. CGM, an affiliate of the GeneralPartner, is the commodity broker for the Partnership and receivesbrokerage commissions for such services, as described under"Item 1. Business." Brokeragecommissions and clearing $8,851,986 were earned for the year endedDecember 31, 2004. Management fees and incentive fees of $2,642,931 and$3,973,895, respectively were earned by the Advisor for the year endedDecember 31, 2004.

Item 12.    Security Ownership ofCertain Beneficial Owners and Management.

(a)    Security ownership of certain beneficialowners.

As of March 1, 2005, one beneficial owner who isneither director nor executive officer owns more than five percent(5%) of the outstanding Redeemable Units issued by theRegistrant as follows:

|                                                 |  |                                                                                           |  |                                         |  |                 |      |         |  |  |  |  |  |  |
|-------------------------------------------------|--|-------------------------------------------------------------------------------------------|--|-----------------------------------------|--|-----------------|------|---------|--|--|--|--|--|--|
| Titleof Class                                   |  | Name and AddressofBeneficial Owner                                                        |  | Amount and Nature ofBeneficialOwnership |  | Percent ofClass |
| RedeemableUnits of Limited Partnership Interest |  | JVA EnterprisesHoldings LLCMark BuggePotomac2905 Lucerne St. SEGrand Rapids, MI49546-7160 |  | 6,828.4889RedeemableUnits               |  |            | 6.68 | %  |
|                                                 |

(b)    Securityownership of management. Under the terms of the LimitedPartnership Agreement, the Partnership's affairs are managed bythe General Partner. The General Partner owns Units of generalpartnership interest equivalent to 729.3902 Units (0.8%) ofLimited Partnership Interest as of December 31, 2004.

(c)    Changes in control. None.

Item13.    Certain Relationship and Related Transactions.

Citigroup Global Markets Inc. and Citigroup Managed Futures LLCwould be considered promoters for purposes of item 404 (d) ofRegulation S-K. The nature and the amounts of compensation eachpromoter will receive, if any, from the Partnership are set forth under"Item 1. Business" and"Item 11. ExecutiveCompensation."

19

----

Item 14.    Principal AccountantFees and Services.

(1)    Audit Fees. Theaggregate fees billed for each of the last two fiscal years forprofessional services rendered by KPMG LLP for the audit of thePartnership's annual financial statements, review of financialstatements included in the Partnership's Forms 10-Q and 10-K andother services normally provided in connection with regulatory filingsor engagements are as follows:

2004                $50,450

2003                $34,422

(2)    Audit-Related Fees. None

(3)    TaxFees. The aggregate fees billed for each of the last two fiscalyears for professional services rendered by KPMG LLP for tax complianceand tax advice given in the preparation of the Partnership'sSchedule K1s, the preparation of the Partnership's Form 1065 andpreparation of all State Tax Returns are as follows:

2004                $5,136

2003                $4,452

(4)    All OtherFees. None.

(5)    Not Applicable.

(6)    NotApplicable.

20

----

PART IV

Item15.    Exhibits, Financial Statement Schedules, and Reports onForm 8-K.

|               |                      |
|---------------|----------------------|
| (a) (1)  | FinancialStatements: |

|        |                                                                 |
|--------|-----------------------------------------------------------------|
|   | Statements of FinancialCondition at December 31, 2004 and 2003. |

|        |                                                                  |
|--------|------------------------------------------------------------------|
|   | Condensed Schedules of Investments at December31, 2004 and 2003. |

|        |                                                                                        |
|--------|----------------------------------------------------------------------------------------|
|   | Statements of Income andExpenses for the years ended December 31, 2004, 2003 and 2002. |

|        |                                                                                                 |
|--------|-------------------------------------------------------------------------------------------------|
|   | Statements of Changes in Partners' Capitalfor the years ended December 31, 2004, 2003 and 2002. |

|        |                                                                               |
|--------|-------------------------------------------------------------------------------|
|   | Statements of Cash Flows for the years endedDecember 31, 2004, 2003 and 2002. |

|        |                               |
|--------|-------------------------------|
|   | Notes toFinancial Statements. |

|           |           |
|-----------|-----------|
| (2)  | Exhibits: |

|        |                                                                                                                    |
|--------|--------------------------------------------------------------------------------------------------------------------|
|   | 3.1 – Certificate of LimitedPartnership (filed as Exhibit 3.1 to the Partnership Form 10)(previously filed). |

|        |                                                                                                                                     |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.2 –Amendment to the Certificate of Limited Partnership (filed as Exhibit3.2 to the Partnership Form 10) (previously filed). |

|        |                                                                                                                           |
|--------|---------------------------------------------------------------------------------------------------------------------------|
|   | 3.3 – Certificate of change LimitedPartnership (filed as Exhibit 3.3 to the Partnership Form 10)(previously filed). |

|        |                                                                                                                                     |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.4 –Amendment to the Certificate of Limited Partnership (filed as Exhibit3.4 to the Partnership Form 10) (previously filed). |

|        |                                                                                                                                     |
|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.5 – Amendment to the Certificateof Limited Partnership (filed as Exhibit 3.5 to the Partnership Form10) (previously filed). |

|        |                                                                                                                                           |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------|
|   | 3.6 –Second Amended and Restated Limited Partnership Agreement (filed asExhibit 3.6 to the Partnership Form 10) (previously filed). |

|        |                                                                                                                                                                                                                 |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.1 – Management Agreement amongthe Partnership, the General Partner, SFG Global Investments, Inc. andCampbell & Company, Inc. (filed as Exhibit 10.1 to the PartnershipForm 10) (previously filed). |

|        |                                                                                                                                                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.1 (a)– First Amendment to the Management Agreement among thePartnership, the General Partner, SFG Global Investments, Inc. andCampbell & Company, Inc. (filed as Exhibit 10.1 (a) to thePartnership Form 10) (previously filed). |

|        |                                                                                                                                                                                                                                             |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.1 (b) – Second Amendment to theManagement Agreement among the Partnership, the General Partner,Salomon Smith Barney Inc and Campbell & Company, Inc. (filed asExhibit 10.1 (b) to the Partnership Form 10) (previously filed). |

|        |                                                                                                                                                                                                            |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.2 – Second Amendment to theCustomer Agreement between the Partnership, and Salomon Smith BarneyInc.(the Predecessor to CGM) (filed as Exhibit 10.2 to the PartnershipForm 10) (previously filed). |

|        |                                                                                                                                                                                                           |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.3– Amendment and Reinstated Agency Agreement between thePartnership and Salomon Smith Barney, Inc. (the predecessor to CGM)(filed as Exhibit 10.3 to the Partnership Form 10) (previouslyfiled). |

|        |                                                                                                                  |
|--------|------------------------------------------------------------------------------------------------------------------|
|   | 10.4 – Form ofSubscription Agreement (filed as Exhibit 10.4 to the Partnership Form10) (previously filed). |

|        |                                                                                                                                                                                              |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.5 –Letter extending Management Agreement between the General Partner andCampbell & Company, Inc. for 1997 (filed as Exhibit 10.5 to thePartnership Form 10) (previously filed). |

|        |                                                                                                                                                                                              |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.6 – Letter extending ManagementAgreement between the General Partner and Campbell & Company, Inc.for 1998 (filed as Exhibit 10.6 to the Partnership Form 10) (previouslyfiled). |

21

----

|        |                                                                                                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.7 –Letter extending Management Agreement between the General Partner andCampbell & Company, Inc. for 1999 (filed as Exhibit 10. 7 to thePartnership Form 10) (previously filed). |

|        |                                                                                                                                                                                               |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.8 – Letter extending ManagementAgreement between the General Partner and Campbell & Company, Inc.for 2000 (filed as Exhibit 10. 8 to the Partnership Form 10)(previously filed). |

|        |                                                                                                                                                                                              |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.9 –Letter extending Management Agreement between the General Partner andCampbell & Company, Inc. for 2001 (filed as Exhibit 10.9 to thePartnership Form 10) (previously filed). |

|        |                                                                                                                                                                                                |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.10 – Letter extending ManagementAgreement between the General Partner and Campbell & Company, Inc.for 2002 (filed as Exhibit 10.10 to the Partnership Form 10)(previously filed). |

|        |                                                                                                                                                                                                |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.11 –Letter extending Management Agreement between the General Partner andCampbell & Company, Inc. for 2003 (filed as Exhibit 10.11 to thePartnership Form 10) (previously filed). |

|        |                                                                                                                                         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|   | 10.12 – Letter extending ManagementAgreement between the General Partner and Campbell & Company, Inc.for 2004 (filed herein). |

|        |                                                                                                                          |
|--------|--------------------------------------------------------------------------------------------------------------------------|
|   | 16.1 –Letter from PricewaterhouseCoopers LLP (filed as Exhibit 16.1 to thePartnership Form 10) (previously filed). |

The exhibitsrequired to be filed by Item 601 of regulation S-K are incorporatedherein by reference

|        |                                                                                                     |
|--------|-----------------------------------------------------------------------------------------------------|
|   | Exhibit 31.1– Rule 13a-14(a)/15d-15(a) Certification (Certification ofPresident and Director) |

|        |                                                                                                                   |
|--------|-------------------------------------------------------------------------------------------------------------------|
|   | Exhibit31.2 – Rule 13a-14(a)/15d-14(a) Certification (Certification ofChief Financial Officer and Director) |

|        |                                                                                          |
|--------|------------------------------------------------------------------------------------------|
|   | Exhibit 32.1 – Section 1350Certification (Certification of President and Director) |

|        |                                                                                                       |
|--------|-------------------------------------------------------------------------------------------------------|
|   | Exhibit 32.2 – Section 1350Certification (Certification of Chief Financial Officer andDirector) |

|           |                                |
|-----------|--------------------------------|
| (b)  | Reports on 8-K: (b)None Filed. |

22

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Supplemental Information To Be FurnishedWith Reports Filed Pursuant To Section 15(d) Of The Act by RegistrantsWhich Have Not Registered Securities Pursuant To Section 12 Of theAct.

Annual Report to Limited Partners

No proxymaterial has been sent to LimitedPartners.

23

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of theSecurities Exchange Act of 1934, the Registrant has duly caused thisannual report on Form 10-K to be signed on its behalf by theundersigned, thereunto duly authorized on the 15th day of March2005.

Smith Barney Potomac Futures Fund L.P.

By:    /s/ Citigroup Managed Futures LLC           (General Partner)

By:    /s/David J. Vogel            David J. Vogel, President& Director

Pursuant to the requirements of the SecuritiesExchange Act of 1934, this annual report on Form 10-K has been signedbelow by the following persons on behalf of the Registrant and in thecapacities and on the dateindicated.

|                              |  |                       |  |  |  |  |
|------------------------------|--|-----------------------|--|--|--|--|
| /s/ David J. Vogel           |  | /s/ ShelleyUllman     |
| David J. Vogel               |  | ShelleyUllman         |
| Director, PrincipalExecutive |  | Director              |
| Officer andPresident         |  |                  |
| /s/Maureen O'Toole           |  | /s/ Steve J.Keltz     |
| Maureen O'Toole              |  | Steve J.Keltz         |
| Director                     |  | Secretary andDirector |
| /s/ Daniel R.McAuliffe, Jr.  |  |                  |
| Daniel R. McAuliffe,Jr.      |  |                  |
| Chief Financial Officerand   |  |                  |
| Director                     |  |                  |
|                              |

24

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