UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

               [X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
                          COMMISSION FILE NO. 333-46550

                                       OR

             [X] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                        FOR THE TRANSITION PERIOD FROM TO

                          SHAFFER DIVERSIFIED FUND, LP
                (Name of registrant as specified in its charter)

              DELAWARE                                 13-4132934
              --------                                 ----------
   (State or other jurisdiction of                  (I.R.S. Employer
   Incorporation or organization)                 Identification No.)

          925 WESTCHESTER AVENUE,                      10604
          WHITE PLAINS, NEW YORK                       -----
          ----------------------                     (Zip Code)
 (Address of principal executive offices)

         Issuer's Telephone Number, including Area Code: (800) 352-5265
                                                          --------------

           Securities registered under Section 12(b) of the Act: NONE

              Securities registered under Section 12(g) of the Act:

                                      NONE
                                      ----
                                (Title of Class)

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. Yes [ ] No [X].

The Registrant has no voting stock. As of December 31, 2001 there was 1 (one)
Unit of Limited Partnership Interest issued and outstanding.


DOCUMENTS INCORPORATED BY REFERENCE
Prospectus dated October 16, 2001 included within the Registration Statement on
Form S-1 (File No. 333-4655), incorporated by reference into Parts I, II and
III.




<PAGE>

                           FORWARD-LOOKING STATEMENTS


This report includes "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Forward-looking statements use words like "believes," "intends,"
"expects," "may," "will," "should" or "anticipates," or the negative equivalents
of those words or comparable terminology, and discuss strategies that involve
risks and uncertainties.

Shaffer Asset Management, Inc., the General Partner of Shaffer Diversified Fund,
LP based all forward-looking statements upon estimates and assumptions about
future events that were derived from information available to it on the date of
this report. Given the risks and uncertainties of the business of the Fund,
actual events and results may differ materially from those expressed or implied
by forward-looking statements. In light of these risks, uncertainties and
assumptions, the forward-looking statements included in this report may not
occur. Risks, uncertainties and assumptions that may affect the business,
financial condition and results of operations of the Fund include changes in the
financial markets generally, increased competition, risks associated with
leverage, changes in general economic conditions and the risks discussed in
"Risk Factors" beginning on page 5 of the prospectus dated October 16, 2001.



















                                       2



<PAGE>






                          SHAFFER DIVERSIFIED FUND, LP

                                      INDEX

PART I - BUSINESS DESCRIPTION                                         Page No.
------------------------------                                        --------
Item 1.     Business                                                     4

            Regulation                                                   4

            Operations                                                   5

Item 2.     Property                                                     5

Item 3.     Legal Proceedings                                            5

Item 4.     Submission of Matters to a vote of Security Holders          5


PART II - OTHER INFORMATION                                              6
---------------------------
Item 5.   Market for Registrant's Equity and
          Related Stockholder Matters                                    6

Item 6.   Selected Financial Data                                        6

Item 7.   Management's Discussion                                        6

          Overview                                                       6

          Liquidity                                                      7

          Capital Resources                                              7

          Financial Instruments                                          7

Item 7A   Quantitative and Qualitative Disclosures                       8

Item 8.   Financial Statements and Supplementary Data                    8

Item 9.   Changes in and Disagreements with Auditors                     8


PART III - ADDITONAL INFORMATION
--------------------------------
Item 10.  Directors and Executive Officers                               9

Item 11.  Executive Compensation                                         9

Item 12.  Security Ownership of Certain Beneficial Owners and Mgmt.      10

Item 13.  Certain Relationships and Related Transactions                 10

Item 14.  Exhibits, Financial Statements Schedules and
          Reports on Form 8-K                                            10

           Financial Statement Schedules                                 13

           Schedules                                                     13

           Reports on Form 8-k                                           11







                                       3
<PAGE>


                                     PART I

ITEM 1. BUSINESS


Shaffer Diversified Fund, LP the "Registrant" or the "Fund") is a limited
partnership organized on August 29, 2000 under the Delaware Revised Uniform
Limited Partnership Act. The Registrant is a commodity investment pool, whose
purpose is to trade speculatively in the United States futures markets. The
business of the Fund is to seek medium and long-term capital appreciation
through speculative trading in a diversified portfolio of commodity futures
contracts and other related interests in the United States commodity futures
markets. Specifically, the Fund invests in a diversified portfolio consisting
primarily of currency, interest rate, grain, metal and energy futures contracts.
The trading advisor of the Registrant is Shaffer Asset Management, Inc.
("Shaffer Asset"). In addition to making all trading decisions in its capacity
as trading advisor, Shaffer Asset controls all aspects of the business and
administration of the Registrant in its role as general partner.

The Registrant originally filed a registration statement with the United States
Securities and Exchange Commission on September 25, 2000 for the sale of a
minimum of $1,000,000 and a maximum of $25,000,000 in Units of Limited
Partnership at $1,000 each, ($950 + 50 selling charges), which registration
statement was declared effective on October 16, 2001. As of December 31, 2001
the Registrant had not commenced trading activities.

The Registrant's initial offering period lasted approximately 120 days and ended
February 13, 2002. During the initial offering the Registrant accepted
subscriptions for 1,049 Units of Limited Partnership Interests at a selling
price of $1,000.00 ($950 + 50 selling charges) for a total of $1,049,000.
Selling charges and expenses of $49,950.oo were disbursed at closing and the
Fund commenced trading activities with net proceeds of $996,550.00.


The Registrant will be terminated and dissolved promptly thereafter upon the
happening of the earlier of: (a) the expiration of the Registrant's stated term
of December 31, 2025; (b) an election to dissolve the Registrant at any time by
Limited Partners owning more than 50% of the Units then outstanding; (c) the
withdrawal of Shaffer Asset unless one or more new general partners have been
elected or appointed pursuant to the Agreement of Limited Partnership; (d) the
Partnership's investments experience a substantial decline in value, as defined
in the Partnership Agreement or (e) any event which shall make unlawful the
continuing existence of the Registrant.


REGULATION

The Registrant's operations are regulated by the provisions of the Commodity
Exchange Act, the regulations of the Commodity Futures Trading Commission, and
the rules of the National Futures Association. The Registrant is subject to
regulatory requirements under the Securities Act of 1933 and the Securities
Exchange Act of 1934. As a commodity investment pool, the Registrant is subject
to the regulations of the Commodity Futures Trading Commission, an agency of the
United States ("US") Government which regulates most aspects of the commodity
future industry; the rules of the National Futures Association, an industry
self-regulatory organization; and the requirements of the various commodity
exchanges where the Registrant executes transactions. Additionally, the
Registrant is subject to the requirements of Futures Commission Merchants or
Brokers through which the Registrant will trade.

In addition to such registration requirements, the CFTC and certain commodity
exchanges have established limits on the maximum net long and net short
positions which any person, including the Registrant, may hold or control in
particular commodities. Most exchanges also limit the maximum changes in futures
contract prices that may occur during a single trading day. The Registrant also
trades in dealer markets for forward and swap contracts, which are not regulated
by the CFTC. Federal and state banking authorities also do not regulate forward
trading or forward dealers. In addition, the Registrant trades on foreign
commodity exchanges which are not subject to regulation by any United States
government agency.





                                       4




<PAGE>

OPERATIONS

A description of the business of the Registrant, including trading approach,
rights and obligations of the Partners, and compensation arrangements is
contained in the Prospectus under "Summary," "Risk Factors," "Advantages of
Investment in the Fund," "Shaffer Asset" and "Conflicts of Interest" and such
description is incorporated herein by reference from the Prospectus.

The Registrant conducts its business in one industry segment, the speculative
trading of futures contracts. The Registrant is a market participant in the
"managed futures" industry. The managed futures industry has grown substantially
in the previous ten years. Market participants include all types of investors,
such as corporations, employee benefit plans, individuals and foreign investors.
Service providers of the managed futures industry include (a) pool operators,
which control all aspects of trading funds such as the Registrant (except
trading decisions), (b) trading advisors, which make the specific trading
decisions, and (c) commodity brokers, which execute and clear the trades
pursuant to the instructions of the trading advisor. The Registrant has no
employees, and does not engage in the sale of goods or services.

The Registrant intends to engage in financial instrument trading in up to
approximately 17 financial instrument contracts in domestic markets. The
contracts traded by the Registrant will fluctuate from time to time.

The Registrant may, in the future, experience increased competition for the
commodity futures and other contracts in which it trades. Shaffer Asset may
recommend similar or identical trades for other accounts under its management.
Such competition may also increase due to the widespread utilization of
computerized methods similar to those used by Shaffer Asset.


ITEM 2.  PROPERTY

The Registrant does not use any physical properties in the conduct of its
business. Its assets currently consist of commodity futures and other contracts
and cash.


ITEM 3.  LEGAL PROCEEDINGS

Shaffer Asset Management is not aware of any material legal proceedings to which
the Registrant is a party or to which any of their assets are subject.


ITEM 4.  SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.











                                       5



<PAGE>

                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED PARTNERSHIP
         MATTERS

The Registrant's Units of Limited Partnership Interest are not publicly traded.
Units may be transferred or redeemed subject to the conditions imposed by the
Agreement of Limited Partnership. As of December 31, 2001, there was 1 (one)
Limited Partner in the Registrant issued and 1(one) Unit of Limited Partnership
Interest outstanding.

Shaffer Asset has sole discretion in determining what distributions, if any, the
Registrant will make to its Unit holders. Shaffer Asset has not made any
distributions as of the date hereof.


ITEM 6.  SELECTED FINANCIAL DATA


                                           For the Year Ended December 31,
                                           -------------------------------
                                               2001            2000
                                            ---------        ---------

Total Assets                               $ 413,586        $   1,916

Total Liabilities:
  Advance Capital contributions              413,000             -0-

Total Liabilities & Partners' Capital        413,586            1,916

Net Income (Loss)                             (1,330)             (84)

Net Income (Loss) Per General
    and Limited Partner Unit                  (1,330)             (84)
Increase (Decrease) in Net Asset
Value per General and Limited
    Partner Unit                              (1,330)             (84)



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
               RESULTS OF OPERATIONS


OVERVIEW
Shaffer Diversified Fund, LP is a limited partnership organized on August 29,
2000 under the Delaware Revised Uniform Limited Partnership Act as an investment
vehicle that allows investors to include commodity futures contracts traded on
the United States commodity futures markets in their portfolios in the same way
that they include mutual funds, money market funds and limited partnerships in
other areas. The Fund commenced trading activities on February 13, 2002. The
only transactions during the fiscal years 2000 and 2001 were the organization of
the Fund, the preparation of the offering and the capital contributions by
Shaffer Asset Management and by Daniel S. Shaffer, the initial limited partner.
The Fund has no operating history.



                                       6



<PAGE>


LIQUIDITY
The Fund deposits its assets with the commodity brokers in a separate futures
trading account established for the trading advisor, which assets are used as
margin to engage in trading. The assets are held in either non-interest-bearing
bank accounts or in securities and instruments permitted by the CFTC for
investment of customer segregated or secured funds. The Fund's assets held by
the commodity broker may be used as margin solely for the Fund's trading. Since
the Fund's sole purpose is to trade in futures, it is expected that the Fund
will continue to own such liquid assets for margin purposes.

The Fund's investment in futures may, from time to time, be illiquid. Most U.S.
futures exchanges limit fluctuations in prices during a single day by
regulations referred to as "daily price fluctuations limits" or "daily limits."
Trades may not be executed at prices beyond the daily limit. If the price for a
particular futures contract has increased or decreased by an amount equal to the
daily limit, positions in that futures contract can neither be taken nor
liquidated unless traders are willing to effect trades at or within the limit.
Futures prices have occasionally moved the daily limit for several consecutive
days with little or no trading. These market conditions could prevent the Fund
from promptly liquidating its futures contract and result in restrictions on
redemptions.

The Registrant's initial offering period was 120 days and ended February 13,
2002. During the initial offering the Registrant accepted subscriptions for
1,049 Units of Limited Partnership Interests at a selling price of $1,000.00
($950 + 50 selling charges) for a total of $1,049,000. Selling charges and
expenses of $49,950.00 were disbursed at closing and the Fund commenced trading
activities with net proceeds of $996,550.00.



CAPITAL RESOURCES
The Fund does not have, or expect to have, any capital assets. Redemptions,
exchanges and sales of additional units in the future will affect the amount of
funds available for investments in futures interests in subsequent periods. It
is not possible to estimate the amount and therefore the impact of future
redemptions.



FINANCIAL INSTRUMENTS

The Fund will be a party to financial instruments with elements of off-balance
sheet market and credit risk. The Fund may trade futures in interest rates,
currencies, energies, grains and precious metals. In entering into these
contracts, the Fund will be subject to the market risk that such contracts may
be significantly influenced by market conditions, such as interest rate
volatility, resulting in such contracts being less valuable. If the markets
should move against all of the positions held by the Fund at the same time, and
if the trading advisor was unable to offset positions of the Fund, the Fund
could lose all of its assets and investors would realize a 100% loss.

In addition to market risk, in entering into futures contracts there is a credit
risk to the Fund that the counterparty on a contract will not be able to meet
its obligations to the Fund. The ultimate counterparty or guarantor of the Fund
for futures contracts traded on the U.S. exchanges in which the Fund trade is
the clearinghouse associated with such exchange. In general, a clearinghouse is
backed by the membership of the exchange and will act in the event of
non-performance by one of its members or one of its member's customers, which
should significantly reduce this credit risk. For example, a clearinghouse may
cover a default by drawing upon a defaulting member's mandatory contributions
and/or non-defaulting members' contributions to a clearinghouse guarantee fund,
established lines or letters of credit with banks, and/or the clearinghouse's
surplus capital and other available assets of the exchange and clearinghouse, or
assessing its members.


                                       7


<PAGE>


There is no assurance that a clearinghouse or exchange will meet its obligations
to the Fund, and the general partner and commodity brokers will not indemnify
the Fund against a default by such parties. Further, the law is unclear as to
whether a commodity broker has any obligation to protect its customers from loss
in the event of an exchange or clearinghouse defaulting on trades effected for
the broker's customers.

Shaffer Asset Management will deal with these credit risks of the Fund in
several ways. It will monitor the Fund's credit exposure to each exchange on a
daily basis, calculating not only the amount of margin required for it but also
the amount of its unrealized gains at each exchange, if any. The commodity
brokers will inform the Fund, as with all their customers, of its net margin
requirements for all its existing open positions, but do not break that net
figure down, exchange by exchange.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Fund is a commodity pool involved in the speculative trading of futures. The
Fund has not commenced trading activities as of December 31, 2001. The market
sensitive instruments to be held by the Fund will be acquired for speculative
trading purposes only and, as a result, all or substantially all of the Fund's
assets will be at risk of trading loss. Unlike an operating company, the risk of
market sensitive instruments is central, not incidental, to the Fund's main
business activities.

The futures traded by the Fund involve varying degrees of market risk. Market
risk is often dependent upon changes in the level or volatility of interest
rates, exchange rates, and prices of financial instruments and commodities.
Fluctuations in market risk based upon these factors result in frequent changes
in the fair value of the Fund's open positions, and, consequently, in its
earnings and cash flow.

The Fund's total market risk will be influenced by a wide variety of factors,
including the diversification among the Fund's open positions, the volatility
present within the markets, and the liquidity of the markets. At different
times, each of these factors may act to increase or decrease the market risk
associated with the Fund.

Any attempt to numerically quantify a Fund's market risk is limited by the
uncertainty of its speculative trading. The Fund's speculative trading may cause
future losses and volatility (i.e. "risk of ruin") that far exceed any
reasonable expectations based upon historical changes in market value.


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial statements meeting the requirements of Regulation S-X appear beginning
on Page 13 of this report. The supplementary financial information specified by
Item 302 of Regulation S-K is not applicable.


ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                 AND FINANCIAL DISCLOSURE
None.


                                    PART III



<PAGE>


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Registrant has no directors or executive officers. The Registrant has no
employees. Shaffer Asset manages it in its capacity as general partner. Shaffer
Asset has been registered with the CFTC as a commodity pool operator (CPO) since
July 7, 2000 and as a commodity-trading advisor (CTA) since October 2, 1998. Its
main business address is 925 Westchester Ave, White Plains, New York 10604,
(800) 352-5265. Shaffer Asset's directors and executive officers are as follows:

Daniel S. Shaffer, born in 1961, founded Shaffer Asset in March 1998 and serves
as the Chief Executive Officer, President, Secretary and a Director. In
addition, Mr. Shaffer currently is, and has been, a registered representative
with Berthel Fisher & Company since May 2000. Prior to founding Shaffer Asset
Management, Mr. Shaffer spent nine years as a money manager and financial
planner associated with Northwestern Mutual Life/Robert W. Baird & Company, Inc.
Prior to 1989, Mr. Shaffer was associated with Hambrecht & Quist, a money
management and investment banking firm, and Bear Stearns & Co., also a money
management and investment banking firm. In 1983, Mr. Shaffer was a floor trader
for his own account on the New York Futures Exchange. He received his Masters in
Accounting degree from New York University in June 1986 and a Bachelor of
Science degree in Speech Communications with a minor in Finance/Accounting from
Syracuse University in December 1982. Mr. Shaffer is the majority shareholder of
Shaffer Asset. In addition to his role as CEO, he is responsible for daily
trading and systems development and has developed technical computerized trading
models for futures trading. Mr. Shaffer is an Associated Person of Shaffer
Asset.


Bruce I. Greenberg, born in 1960, joined Shaffer Asset in January 2001 and
serves as the Chief Financial Officer, Vice President, Treasurer and a Director.
He is also the President of Bruce I. Greenberg, CPA, PC (an accounting and tax
firm) since 1993. In addition, Mr. Greenberg currently is, and has been, a
registered representative with Berthel Fisher & Company since May 2000. Prior to
that, Mr. Greenberg spent 9 years as a Partner in the accounting and tax firm of
Blaustein, Greenberg & Company. Prior to 1991, Mr. Greenberg was a manager with
MR Weiser & Company, an accounting and tax firm, and he was a manager with
Siegel, Rich, Patchman & Company, also an accounting and tax firm. Prior to
1987, Mr. Greenberg was an accountant with Solomon, Schneider & Orenstein, an
accounting firm. Mr. Greenberg is a CPA and has a Bachelor of Science degree in
Accounting from Brooklyn College. In addition to his role as CFO, Mr. Greenberg
oversees administration and compliance. Mr. Greenberg is an Associated Person of
Shaffer Asset.

ITEM 11.  EXECUTIVE COMPENSATION

Its general partner, Shaffer Asset, manages the Registrant. Shaffer Asset
receives from the Registrant an Initial Offering Fee equal to 1% of the
Registrant's newly sold units, Monthly Management Fees equal to 1/12 of 3.75% of
the Net Asset Value per unit of the Fund's assets under management at month's
end with respect to Units purchased within the prior twelve-month period and
1/12 of 1% of the Net Asset Value per unit of the Fund's assets under management
at month's end with respect to Units purchased more than twelve months prior
thereto. Shaffer Asset also receives an Incentive Allocation Fee equal to 15% of
the Fund's new trading profits (exclusive of any interest earned by the Fund)
achieved by Shaffer Asset for such quarter on the Fund's assets under
management. Any early Redemption Fees imposed by the Fund will be payable to
Shaffer Asset.



                                       9




<PAGE>



ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        (a)    Security Ownership of Certain Beneficial Owners.  As of
               December 31, 2001, 1 (one) Unit of Limited Partnership was owned
               by an officer of Shaffer Asset.

        (b)    Security Ownership of Management. As of December 31, 2001,
               Shaffer Asset 1 (one) Unit of General Partnership Interest having
               a value of $586. Units of General Partnership will always be
               owned by Shaffer Asset in its capacity as general partner.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

See Item 12, Executive Compensation and Item 13, Security Ownership of Certain
Beneficial Owners and Management.



ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K.

a)         Financial Statements Schedules

           1)   Financial Statements
                An index to the Financial Statements appears on Page 13.

2)         Schedules
           All Financial Statement Schedules are omitted because
           they are not applicable, not required under the
           instructions or all information is set forth in the
           Financial Statements or Notes hereto.

b)         Exhibits


Exhibit No.                        Exhibit
----------                         -------

3.2            Agreement of Limited Partnership of the Registrant dated August
               29, 2000 *

3.2.1          Amended Agreement of Limited Partnership of the Registrant Dated
               October 16, 2001 *****

1.1            Form of Selling Agreement among the Registrant and Berthel Fisher
               & Company Financial Services, Inc. *****

10.1           Form of Customer Agreement between the Registrant and ADM
               Investor Services, Inc. **

1.2            Form of Selected Dealers Agreement **

1.3            Form of Continuing Services Agreement ***** ADM Investor
               Services, Inc.


4.2            Exhibits 3.1, 3.2, 3.3 & 4.1 define the rights of security
               holders ***


3.1            Certificate of Limited Partnership of the Registrant *


10.3           Form of Advisory Agreement between the Registrant and Shaffer
               Asset **


10.6           Escrow Agreement between the Registrant and JPMorganChase ***

23.3           Consent of Auditors





                                       10

<PAGE>


                                INDEX TO EXHIBITS
                                -----------------

*       Incorporated by reference to the respective exhibit to the Registrant's
        Registration Statement on Form S-1 (No. 333-46455) filed on September
        25, 2000

**      Incorporated by reference to the respective exhibit to the Registrant's
        Registration Statement on Form S-1 (No. 333-46455) filed on January 24,
        2001

***     Incorporated by reference to the respective exhibit to the Registrant's
        Registration Statement on Form S-1 (No. 333-46455) filed on August 17,
        2001

****    Incorporated by reference to the respective exhibit to the Registrant's
        Registration Statement on Form S-1 (No. 333-46455) filed on October 16,
        2001

*****   Incorporated by reference to the respective exhibit to the Registrant's
        Prospectus filed pursuant to rule 424(b) filed on October 19, 2001


Upon request, the Registrant will furnish a copy of any Exhibit to this report
upon payment of reasonable copying and mailing expenses.



c)         Reports on Form 8-K

                None.



















                                       11

<PAGE>












                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                      SHAFFER DIVERSIFIED FUND, LP

                                      By: Shaffer Asset Management, Inc.,
                                      its general partner

                                      By: /s/ Bruce I. Greenberg
                                                                ----
                                      Bruce I. Greenberg
                                      Chief Financial Officer, VP, Treasurer
                                      And Director


Dated:  March 31, 2002

Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated have signed this report below.


SIGNATURE                          CAPACITY                        DATE
---------                          --------                        ----
/s/ Daniel S. Shaffer
Daniel S. Shaffer           Chairman of the Board, President,   March 31, 2002
                            Secretary and Director


/s/ Bruce I. Greenberg
Bruce I. Greenberg          Chief Financial Officer, VP,        March 31, 2002
                            Treasurer and Director






















                                       12



<PAGE>





                          SHAFFER DIVERSIFIED FUND, LP




Item 1.   Financial Statements                                 Exhibit No.
                                                               -----------

          Statements of Financial Condition                        F-1


          Statements of Operations for the                         F-1
          Year Ended December 31, 2001, and from inception
          August 29, 2000 to December 31, 2000

          Statements of Changes in Partners' Capital F-1
          for the Year Ended December 31, 2001 and from
          inception August 29, 2000 to December 31, 2000


          Statements of Cash Flows for the                         F-1
          Year Ended December 31, 2001 and from
          inception August 29, 2000 to December 31, 2000


          Notes to Financial Statements                            F-1


















                                       13




<PAGE>



                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

TO THE PARTNERS OF
    SHAFFER DIVERSIFIED FUND, LP:

           We have audited the accompanying statements of financial condition of
Shaffer Diversified Fund, LP as of December 31, 2001 and 2000 and the related
statements of operations, changes in partners' capital and cash flows for the
year ended December 31, 2001 and the period from August 29, 2000 (inception)
through December 31, 2000. These financial statements are the responsibility of
the Fund's management. Our responsibility is to express an opinion on the
financial statements based on our audit.

           We conducted our audit in accordance with auditing standards
generally accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

           In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Shaffer Diversified
Fund, LP at December 31, 2001 and 2000 and the results of its operations and the
changes in partners' capital and its cash flows for the year ended December 31,
2001 and the period from August 29, 2000 (inception) through December 31, 2000
in conformity with accounting principles generally accepted in the United States
of America.

                                               /s/ Anchin, Block & Anchin LLP
New York, New York
February 15, 2002



                                       F-1



<PAGE>



<TABLE>
<CAPTION>


                         SHAFFER DIVERSIFIED FUND, L.P.
                         ------------------------------

                        STATEMENTS OF FINANCIAL CONDITION
                        ---------------------------------


                                                                    December 31,
                                                    -----------------------------------------
                                                            2001                   2000
                                                            ----                   ----
ASSETS:
<S>                                               <C>                     <C>
      Cash                                           $            586        $         1,916

      Cash in escrow account                                  413,000                      -
                                                    ------------------      -----------------

                                                     $        413,586        $         1,916
                                                    ==================      =================


LIABILITIES:
      Capital contributions received in advance      $        413,000        $             -


PARTNERS' CAPITAL                                                 586                  1,916
                                                    ------------------      -----------------


TOTAL LIABILITIES AND PARTNERS' CAPITAL              $        413,586        $         1,916
                                                    ==================      =================




</TABLE>





               See accompanying Notes to the Financial Statements

                                       F-1



<PAGE>


<TABLE>
<CAPTION>


                         SHAFFER DIVERSIFIED FUND, L.P.
                         ------------------------------

                            STATEMENTS OF OPERATIONS
                            ------------------------


                                                         For the Period
                                                         August 29, 2000
                                        For the Year       (Inception)
                                            Ended            through
                                        December 31,       December 31,
                                            2001              2000
                                            ----              ----

OPERATING EXPENSES:

<S>                                 <C>               <C>
      Bank charges                     $       398       $        84

      Filing fees                              737                 -

      Other                                    195                 -
                                       ------------      -------------



NET LOSS                               $     1,330       $        84
                                       ============      =============

</TABLE>












               See accompanying Notes to the Financial Statements.

                                       F-1




<PAGE>



<TABLE>
<CAPTION>

                         SHAFFER DIVERSIFIED FUND, L.P.
                         ------------------------------

                   STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                   ------------------------------------------



                                                                   For the Period
                                                                   August 29, 2000
                                                For the Year        (Inception)
                                                    Ended             through
                                                December 31,        December 31,
                                                    2001               2000
                                                    ----               ----

<S>                                       <C>                   <C>
PARTNERS' CAPITAL - BEGINNING                $       1,916         $             -


CHANGES IN CAPITAL FROM:

    Net loss                                       (1,330)                    (84)

    Partners' transactions
        Capital contributions                            -                   2,000
                                             --------------       -----------------


PARTNERS' CAPITAL - ENDING                   $         586         $         1,916
                                             ==============       =================




</TABLE>










               See accompanying Notes to the Financial Statements.

                                       F-1





<PAGE>




<TABLE>
<CAPTION>



                         SHAFFER DIVERSIFIED FUND, L.P.
                         ------------------------------

                            STATEMENTS OF CASH FLOWS
                            ------------------------



                                                                                   For the Period
                                                                                  August 29, 2000
                                                            For the Year            (Inception)
                                                               Ended                  through
                                                            December 31,            December 31,
                                                                2001                    2000
                                                                ----                    ----

CASH FLOWS FROM OPERATING ACTIVITIES:

<S>                                                  <C>                     <C>
     Net loss                                          $        (1,330)        $             (84)
                                                      ------------------      --------------------


CASH FLOWS FROM FINANCING ACTIVITIES:

     Contributions to capital                                         -                     2,000
                                                      ------------------      --------------------


NET INCREASE (DECREASE) IN CASH                                 (1,330)                     1,916


CASH:

     Beginning of period                                          1,916                         -
                                                      ------------------      --------------------


     End of period                                      $           586         $           1,916
                                                      ==================      ====================


</TABLE>





             See the accompanying Notes to the Financial Statements.


                                       F-1



<PAGE>



                          SHAFFER DIVERSIFIED FUND, LP
                          ----------------------------


                        NOTES TO THE FINANCIAL STATEMENTS
                        ---------------------------------


o ORGANIZATION       Shaffer Diversified Fund, LP (the "Partnership") is a
                     Delaware limited partnership formed on August 29, 2000 that
                     intends to operate as a commodity investment pool. The
                     Partnership's objective will be the appreciation of its
                     assets through speculative trading of commodity futures
                     contracts and related instruments. As of December 31, 2001
                     the Partnership has not commenced operations.

                     The Partnership will continue until December 31, 2025
                     unless earlier terminated. However, if the Partnership's
                     investments experience a substantial decline in value, as
                     defined in the Partnership Agreement, (the "Agreement") the
                     Partnership will be dissolved.

                     The Partnership is registered with the Securities and
                     Exchange Commission, and is subject to regulatory
                     requirements under the Securities Act of 1933 and the
                     Securities Exchange Act of 1934. As a commodity investment
                     pool, the Partnership will be subject to the regulations of
                     the Commodity Futures Trading Commission, an agency of the
                     United States government which regulates most aspects of
                     the commodity futures industry; the rules of the National
                     Futures Association, an industry self-regulatory
                     organization; and the requirements of the various commodity
                     exchanges where the Partnership executes transactions.
                     Additionally, the Partnership will be subject to the
                     requirements of Futures Commission Merchants (brokers)
                     through which the Partnership will trade.


o FINANCIAL          The preparation of financial statements in conformity with
  STATEMENT          generally accepted accounting principles may require
  ESTIMATES          management to make estimates and assumptions that affect
                     the reported amounts of assets and liabilities and
                     disclosure of contingent assets and liabilities at the date
                     of the financial statements and the reported amounts of
                     revenues and expenses during the reporting period. Actual
                     results could differ from those estimates.








                                       F-1

<PAGE>



o RELATED           The General Partner of the Partnership is Shaffer Asset
  PARTY             Management, Inc. (the "General Partner") which will conduct
  TRANSACTIONS      and manage the business of the Partnership. The General
                    Partner is also the commodity-trading advisor of the
                    Partnership.

                    The Partnership will pay for management and servicing at an
                    annual rate of 5% of monthly net asset value of the
                    Partnership, calculated and payable monthly. Such fees will
                    be allocated between the General Partner and the selling
                    agents as follows: 3.75% to the General Partner and 1.25%
                    to the selling agents during the first 12 months after an
                    investment is made and 1% to the General Partner and 4% to
                    the selling agents thereafter for various services
                    performed on an ongoing basis.

                    Investors will be charged a 5% sales commission of which
                    the General Partner will receive approximately 20%.

                    The General Partner will share in all Partnership income
                    and losses to the extent of its interest in the
                    Partnership. The General Partner will also receive on a
                    quarterly basis a special allocation from the Partnership
                    equivalent to 15% per year of any increase in the
                    cumulative appreciation of the net asset value of the
                    Partnership, as defined in the Partnership Agreement.

                    The General Partner has agreed to maintain a minimum net
                    worth of not less than the greater of $50,000 or 5% of
                    contributions made to the Partnership as further defined in
                    the Agreement. The General Partner will also be required to
                    maintain a minimum capital contribution to the Partnership
                    of the greater of $25,000 or 1% of contributions made to
                    the Partnership as further defined in the Agreement.

                    The General Partner will pay all expenses associated with
                    the organization of the Partnership and the initial
                    offering of the Units ("Units") of the limited and general
                    partnership interest in the Partnership. Partnership
                    operating expenses (excluding continuing services fees,
                    management fees, incentive allocations, brokerage
                    commissions and extraordinary expenses) in excess of 0.5%
                    of the average monthly net asset value of the Partnership
                    will be reimbursed by the General Partner.

                                      F-1

<PAGE>



o REDEMPTIONS       A limited partner may request and receive redemption of its
                    Units owned, subject to restrictions in the Agreement of
                    Limited Partnership. Early redemption fees charged to the
                    limited partner apply through the first twelve months
                    following purchase ranging from 1% to 4% based on length of
                    investment. After twelve months following purchase of a
                    Unit, no redemption fees will be charged. These fees will
                    be paid to the General Partner.

o TRADING           The Partnership will engage in the speculative trading of
  ACTIVITIES        U.S. commodity futures contracts, which are derivative
  AND               financial instruments. The Partnership will be exposed to
  RELATED           both market risk, the risk arising from changes in the
  RISKS             market value of the contracts, and credit risk, the risk of
                    failure by another party to perform according to the terms
                    of a contract.

                    Purchase and sale of futures contracts requires margin
                    deposits with the broker. In the event of a broker's
                    insolvency, it is possible that the recovered amount of
                    margin deposits could be less than the total property
                    deposited.

                    The amount of required margin and good faith deposits with
                    the broker usually ranges from 10% to 40% of net asset
                    value.

o INCOME TAXES      The Partnership is not subject to income taxes. The
                    partners report their allocable share of income, expense
                    and trading gains or losses on their own tax returns.

o CASH
  CONCENTRATIONS    Cash in escrow consists of a balance held in an account
                    with JP Morgan, which represents capital contributions
                    received in advance. The Securities Investor Protection
                    Corporation (SIPC) insures the account to the extent of
                    $500,000 (including up to $100,000 for cash). Balances in
                    excess of these limits are covered by additional insurance
                    maintained by the broker. Amounts in excess of insurance
                    coverages are secured by the good faith and credit of the
                    broker.


o  SUBSEQUENT        The Partnership commenced trading activity in February
   EVENT             2002 with contributed capital of $1,049,000.




                                       F-1