##### Table of Contents





UNITED STATES
    SECURITIES AND EXCHANGE COMMISSION
    WASHINGTON, D.C. 20549
  FORM 10-Q
  (X) QUARTERLY REPORT PURSUANT TO SECTION 13 or
    15(d)
  OF THE SECURITIES EXCHANGE ACT OF 1934
  September 30, 2008
  OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 or
    15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934
  
   000-26132
  SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.
    New York

13-3729162(State or other jurisdiction of

(I.R.S. Employerincorporation or organization)

Identification No.)   c/o Citigroup
    Managed Futures LLC
 55 E. 59th Street - 10th Fl
 New York, New York 10022
    (212) 599-2011
       Yes X     No
   Rule 12b-2
  Large accelerated filer

Accelerated filer

Non-accelerated filerX    rule 12b-2
  Yes      No X




---



##### 





SMITH
    BARNEY DIVERSIFIED FUTURES FUND L.P.FORM 10-Q
    INDEX
   
 PageNumberPART I  Financial
    Information:Item 1.

Financial Statements:Statements of Financial Condition at
    September 30, 2008 and December 31, 2007 (unaudited)

3Schedules of Investments at September 30, 2008
    and December 31, 2007 (unaudited)

4  5Statements of Income and Expenses and
    Partners Capital for the three
    and nine months ended September 30, 2008 and 2007 (unaudited)

6Statements of Cash Flows for the nine
    months ended September 30, 2008 and 2007 (unaudited)

7Notes to Financial Statements (unaudited)

8  14Item 2.

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

15  17Item 3.

Quantitative and Qualitative Disclosures about
    Market Risk

18  21Item 4T.

Controls and Procedures

22PART II  Other
    Information

23  26EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



PART I Item 1.
    Financial Statements Smith
    Barney Diversified Futures Fund L.P.
    Statements of Financial Condition
    (Unaudited)  September 30,
    
    
    December 31,2008
    
    

2007Assets:Investment in Partnerships, at fair value
    
    $
    48,582,039
    
    
    $
    47,978,230Cash
    
    
    77,301
    
    
    
    66,383Distribution receivable
    
    
    34,312
    
    
    
    95,184Total assets
    
    $
    48,693,652
    
    
    $
    48,139,797Liabilities and Partners Capital:Liabilities:Accrued expenses:Brokerage commissions
    
    $
    223,180
    
    
    $
    220,641Management fees
    
    
    75,179
    
    
    
    73,161Incentive fees
    
    
    27,300
    
    
    
    105,828Other
    
    
    58,360
    
    
    
    45,913Redemptions payable
    
    
    492,001
    
    
    
    296,617Total
liabilities
    
    
    876,020
    
    
    
    742,160Partners Capital:General
Partner, 835.3289 and 311.4862 Unit equivalents
outstanding in 2008 and 2007, respectively
    
    
    1,583,508
    
    
    
    542,575Limited
Partners, 24,389.3389 and 26,899.0407 Redeemable Units of Limited
Partnership Interest outstanding in 2008 and 2007,
respectively
    
    
    46,234,124
    
    
    
    46,855,062Total
partners capital
    
    
    47,817,632
    
    
    
    47,397,637Total
liabilities and partners capital
    
    $
    48,693,652
    
    
    $
    48,139,797
    3




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
    Schedule of Investments
September 30, 2008    (Unaudited)  % of PartnersFair Value


CapitalInvestment in PartnershipsCMF Winton Master L.P.

$
13,269,209



27.75
%CMF Campbell Master Fund L.P.


7,862,682



16.44CMF Willowbridge Argo Master Fund L.P.


10,435,814



21.82CMF Graham Capital Master Fund L.P.


9,759,626



20.41CMF Eckhardt Master Fund L.P.


7,254,708



15.17Total investment in Partnerships, at fair value

$
48,582,039



101.59
%    4




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
    Schedule of Investments
    December 31, 2007
    (Unaudited)
  % of PartnersFair Value


CapitalInvestment in PartnershipsCMF Winton Master L.P.

$
15,945,975



33.64
%CMF Campbell Master Fund L.P.


11,181,427



23.59CMF Willowbridge Argo Master Fund L.P.


9,223,461



19.46CMF Graham Capital Master Fund L.P.


11,627,367



24.53Total investment in Partnerships, at fair value

$
47,978,230



101.22
%    5




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.Statements of Income and Expenses and
    Partners Capital
 (Unaudited)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Income:Net gains (losses) on trading of commodity
interests and investment in Partnerships:Change in net unrealized gains (losses) on
investment in Partnerships
    
    $
    (1,835,635
    )
    
    $
    (1,734,700
    )
    
    $
    7,665,779
    
    
    $
    2,624,669Expenses:Brokerage commissions
    
    
    667,385
    
    
    
    661,842
    
    
    
    2,050,854
    
    
    
    2,050,210Management fees
    
    
    224,407
    
    
    
    220,838
    
    
    
    684,846
    
    
    
    686,428Incentive fees
    
    
    27,300
    
    
    
    76,924
    
    
    
    742,124
    
    
    
    132,119Other
    
    
    25,300
    
    
    
    27,832
    
    
    
    82,025
    
    
    
    71,636Total expenses
    
    
    944,392
    
    
    
    987,436
    
    
    
    3,559,849
    
    
    
    2,940,393Net income (loss)
    
    
    (2,780,027
    )
    
    
    (2,722,136
    )
    
    
    4,105,930
    
    
    
    (315,724
    )AdditionsGeneral Partner
    
    
    
    
    
    
    
    
    
    
    1,000,000
    
    
    
    RedemptionsGeneral Partner
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,441,407
    )RedemptionsLimited Partners
    
    
    (1,324,214
    )
    
    
    (1,392,024
    )
    
    
    (4,685,935
    )
    
    
    (4,228,631
    )Net increase (decrease) in Partners Capital
    
    
    (4,104,241
    )
    
    
    (4,114,160
    )
    
    
    419,995
    
    
    
    (5,985,762
    )Partners Capital, beginning of period
    
    
    51,921,873
    
    
    
    51,524,909
    
    
    
    47,397,637
    
    
    
    53,396,511Partners Capital, end of period
    
    $
    47,817,632
    
    
    $
    47,410,749
    
    
    $
    47,817,632
    
    
    $
    47,410,749Net Asset Value per Unit
(25,224.6678 and 28,574.2554 Units outstanding
at September 30, 2008 and 2007, respectively)
    
    $
    1,895.67
    
    
    $
    1,659.21
    
    
    $
    1,895.67
    
    
    $
    1,659.21Net income (loss) per Redeemable Unit of Limited Partnership
Interest and General Partner Unit equivalent
    
    $
    (106.63
    )
    
    $
    (92.33
    )
    
    $
    153.78
    
    
    $
    (3.27
    )
    6




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
 Statements of Cash Flows
 (Unaudited)
  Nine Months EndedSeptember 30,2008


2007Cash flows from operating activities:Net income (loss)

$
4,105,930


$
(315,724
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Changes in operating assets and liabilities:Purchase of Investment in Partnership


(8,000,000
)


Proceeds from sale of investment in Partnerships


15,122,842



8,427,669Net unrealized (appreciation) depreciation on investment in
    Partnerships


(7,726,651
)


(2,624,669
)(Increase) decrease in distribution receivable


60,872



Accrued expenses:Increase (decrease) in brokerage commissions


2,539



(26,680
)Increase (decrease) in management fees


2,018



(9,907
)Increase (decrease) in incentive fees


(78,528
)


50,138Increase (decrease) in other


12,447



(10,521
)Net cash provided by (used in) operating activities


3,501,469



5,490,306Cash flows from financing activities:Proceeds from additionsGeneral Partner


1,000,000



Payments for redemptionsLimited Partners


(4,490,551
)


(4,066,922
)Payments for redemptionsGeneral Partner






(1,441,407
)Net cash provided by (used in) financing activities


(3,490,551
)


(5,508,329
)Net change in cash


10,918



(18,023
)Cash, at beginning of period


66,383



48,213Cash, at end of period

$
77,301


$
30,190    7




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.Notes to Financial Statements
    September 30, 2008
    (Unaudited)
  1.
    General:        Form 10-K
      2.
    Financial
    Highlights:    Three Months Ended


Nine Months EndedSeptember 30,


September 30,2008


2007


2008


2007Net realized
and unrealized gains (losses)*
    
    $
    (95.85
    )
    
    $
    (81.16
    )
    
    $
    210.99
    
    
    $
    26.22Expenses**
    
    
    (10.78
    )
    
    
    (11.17
    )
    
    
    (57.21
    )
    
    
    (29.49
    )Increase
(decrease) for the period
    
    
    (106.63
    )
    
    
    (92.33
    )
    
    
    153.78
    
    
    
    (3.27
    )Net Asset
Value per Redeemable Unit, beginning of period
    
    
    2,002.30
    
    
    
    1,751.54
    
    
    
    1,741.89
    
    
    
    1,662.48Net Asset
Value per Redeemable Unit, end of period
    
    $
    1,895.67
    
    
    $
    1,659.21
    
    
    $
    1,895.67
    
    
    $
    1,659.21  *
    
    Includes brokerage commissions.**
    
    Excludes brokerage commissions. 8




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2008
    (Unaudited)
   Financial
    Highlights (continued):
 Three Months Ended
September 30,


Nine Months Ended
September 30,2008


2007


2008


2007Ratios to Average Net Assets:***Net investment income (loss) before
incentive fees****
    
    
    (7.5
    )%
    
    
    (7.5
    )%
    
    
    (7.6
    )%
    
    
    (7.6
    )%Operating expense
    
    
    7.5
    %
    
    
    7.5
    %
    
    
    7.6
    %
    
    
    7.6
    %Incentive fees
    
    
    0.1
    
    
    
    0.2
    
    
    
    1.5
    
    
    
    0.3Total expenses
    
    
    7.6
    %
    
    
    7.7
    %
    
    
    9.1
    %
    
    
    7.9
    %Total return:Total return before incentive fees
    
    
    (5.3
    )%
    
    
    (5.1
    )%
    
    
    10.5
    
    
    
    0.1
    %Incentive fees
    
    
    0.0
    *****
    
    
    (0.2
    )
    
    
    (1.7
    )
    
    
    (0.3
    )Total return after incentive fees
    
    
    (5.3
    )%
    
    
    (5.3
    )%
    
    
    8.8
    
    
    
    (0.2
    )%   ***
    
    Annualized (other than incentive fees).****
    
    Interest income less total expenses.*****
    
    Due to rounding.    3.
    Trading
    Activities:        4.
    Fair
    Value Measurements:  Investments.
  Fair Value Measurements. Fair Value Measurements No. FAS 157-2, Effective Date of FASB Statement No. 157
 9




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2008
    (Unaudited)
    Quoted Prices inActive Markets


Significant Other


Significantfor Identical


Observable Inputs


Unobservable9/30/2008


Assets (Level 1)


(Level 2)


Inputs (Level 3)AssetsInvestment in Partnerships

$
48,582,039


$



$
48,582,039


$
Total fair value

$
48,582,039


$



$
48,582,039


$
   5.
    Investment
    in Partnerships:       10




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
    Notes to Financial StatementsSeptember 30, 2008(Unaudited)
          give-up,
   11




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2008
    (Unaudited)
    September 30, 2008Total Assets


Total Liabilities


Total CapitalWinton Master

$
490,507,894


$
1,597,793


$
488,910,101Campbell Master


154,427,267



7,239,412



147,187,855Willowbridge Master


287,503,914



249,408



287,254,506Graham Master


232,440,697



27,525,390



204,915,307Eckhardt Master


24,179,253



238,266



23,940,987Total
    
    $
    1,189,059,025
    
    
    $
    36,850,269
    
    
    $
    1,152,208,756   December 31, 2007Total Assets


Total Liabilities


Total CapitalWinton Master
    
    $
    464,943,301
    
    
    $
    7,898,167
    
    
    $
    457,045,134Campbell Master
    
    
    226,825,488
    
    
    
    10,129,288
    
    
    
    216,696,200Willowbridge Master
    
    
    213,552,209
    
    
    
    497,187
    
    
    
    213,055,022Graham Master
    
    
    223,277,892
    
    
    
    9,683,505
    
    
    
    213,594,387Total
    
    $
    1,128,598,890
    
    
    $
    28,208,147
    
    
    $
    1,100,390,743     September 30, 2008

For the three months ended September 30, 2008% of









NetPartnerships

Fair

Income

Expenses

Income

Investment

RedemptionsInvestment

Net Assets

Value

(Loss)

Commissions

Other

(Loss)

Objective

PermittedWinton Master
    
    
    27.75
    %
    
    $
    13,269,209
    
    
    $
    (1,044,816
    )
    
    $
    3,004
    
    
    $
    254
    
    
    $
    (1,048,074
    )
    
    CommodityPortfolio
    
    MonthlyCampbell Master
    
    
    16.44
    %
    
    
    7,862,682
    
    
    
    (223,624
    )
    
    
    1,453
    
    
    
    433
    
    
    
    (225,510
    )
    
    Financials,
Metals &Energy
Portfolio
    
    MonthlyWillowbridge Master
    
    
    21.82
    %
    
    
    10,435,814
    
    
    
    334,450
    
    
    
    4,512
    
    
    
    345
    
    
    
    329,593
    
    
    CommodityPortfolio
    
    MonthlyGraham Master
    
    
    20.41
    %
    
    
    9,759,626
    
    
    
    (382,235
    )
    
    
    11,809
    
    
    
    311
    
    
    
    (394,355
    )
    
    CommodityPortfolio
    
    MonthlyEckhardt Master
    
    
    15.17
    %
    
    
    7,254,708
    
    
    
    (489,792
    )
    
    
    3,623
    
    
    
    3,874
    
    
    
    (497,289
    )
    
    CommodityPortfolio
    
    MonthlyTotal
    
    
    
    
    
    
    $48,582,039
    
    
    
    $(1,806,017
    )
    
    
    $24,401
    
    
    
    $5,217
    
    
    
    $(1,835,635
    )   12




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2008
    (Unaudited)
  September 30, 2008

For the nine months ended September 30, 2008% of









NetPartnerships

Fair

Income

Expenses

Income

Investment

RedemptionsInvestment

Net Assets

Value

(Loss)

Commissions

Other

(Loss)

Objective

PermittedWinton Master
    
    
    27.75
    %
    
    $
    13,269,209
    
    
    $
    2,138,274
    
    
    $
    12,309
    
    
    $
    771
    
    
    $
    2,125,194
    
    
    CommodityPortfolio
    
    MonthlyCampbell Master
    
    
    16.44
    %
    
    
    7,862,682
    
    
    
    408,867
    
    
    
    4,986
    
    
    
    1,274
    
    
    
    402,607
    
    
    Financials,
Metals &Energy
Portfolio
    
    MonthlyCommodityWillowbridge Master
    
    
    21.82
    %
    
    
    10,435,814
    
    
    
    3,494,690
    
    
    
    12,619
    
    
    
    1,064
    
    
    
    3,481,007
    
    
    Portfolio
    
    MonthlyCommodityGraham Master
    
    
    20.41
    %
    
    
    9,759,626
    
    
    
    1,557,973
    
    
    
    42,843
    
    
    
    1,144
    
    
    
    1,513,986
    
    
    Portfolio
    
    MonthlyCommodityEckhardt Master
    
    
    15.17
    %
    
    
    7,254,708
    
    
    
    165,228
    
    
    
    6,275
    
    
    
    15,968
    
    
    
    142,985
    
    
    Portfolio
    
    MonthlyTotal
    
    
    
    
    
    
    $48,582,039
    
    
    
    $7,765,032
    
    
    
    $79,032
    
    
    
    $20,221
    
    
    
    $7,665,779   December 31, 2007

For the three months ended September 30, 2007% of









NetPartnerships

Fair

Income

Expenses

Income

Investment

RedemptionsInvestment

Net Assets

Value

(Loss)

Commissions

Other

(Loss)

Objective

PermittedWinton Master
    
    
    33.64
    %
    
    
    15,945,975
    
    
    
    782,463
    
    
    
    7,003
    
    
    
    440
    
    
    
    775,020
    
    
    CommodityPortfolio
    
    MonthlyCampbell Master
    
    
    23.59
    %
    
    $
    11,181,427
    
    
    $
    (2,054,992
    )
    
    $
    2,796
    
    
    $
    579
    
    
    $
    (2,058,367
    )
    
    Financials,
Metals &Energy
Portfolio
    
    MonthlyCommodityWillowbridge Master
    
    
    19.46
    %
    
    
    9,223,461
    
    
    
    (293,454
    )
    
    
    3,735
    
    
    
    334
    
    
    
    (297,523
    )
    
    Portfolio
    
    MonthlyCommodityGraham Master
    
    
    24.53
    %
    
    
    11,627,367
    
    
    
    (139,385
    )
    
    
    13,851
    
    
    
    594
    
    
    
    (153,830
    )
    
    Portfolio
    
    MonthlyTotal
    
    
    
    
    
    
    $47,978,230
    
    
    
    $(1,705,368
    )
    
    
    $27,385
    
    
    
    $1,947
    
    
    
    $(1,734,700
    )   December 31, 2007

For the nine months ended September 30, 2007% of









NetPartnerships

Fair

Income

Expenses

Income

Investment

RedemptionsInvestment

Net Assets

Value

(Loss)

Commissions

Other

(Loss)

Objective

PermittedWinton Master
    
    
    33.64
    %
    
    
    15,945,975
    
    
    
    1,887,474
    
    
    
    28,489
    
    
    
    1,401
    
    
    
    1,857,584
    
    
    CommodityPortfolio
    
    MonthlyCampbell Master
    
    
    23.59
    %
    
    $
    11,181,427
    
    
    $
    (779,998
    )
    
    $
    10,360
    
    
    $
    1,556
    
    
    $
    (791,914
    )
    
    Financials,
Metals &Energy
Portfolio
    
    MonthlyCommodityWillowbridge Master
    
    
    19.46
    %
    
    
    9,223,461
    
    
    
    (210,569
    )
    
    
    18,955
    
    
    
    1,363
    
    
    
    (230,887
    )
    
    Portfolio
    
    MonthlyCommodityGraham Master
    
    
    24.53
    %
    
    
    11,627,367
    
    
    
    1,831,778
    
    
    
    40,072
    
    
    
    1,820
    
    
    
    1,789,886
    
    
    Portfolio
    
    MonthlyTotal
    
    
    
    
    
    
    $47,978,230
    
    
    
    $2,728,685
    
    
    
    $97,876
    
    
    
    $6,140
    
    
    
    $2,624,669  13




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##### Table of Contents



Smith
    Barney Diversified Futures Fund L.P.
    Notes to Financial Statements
    September 30, 2008
    (Unaudited)
  6.
    Financial
    Instrument Risks:             14




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##### Table of Contents



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations.  Liquidity
    and Capital Resources
        Critical
    Accounting Policies
  Use of Estimates.
  Investments.
  Fair Value Measurements.
  Forward Foreign Currency Contracts. agreed-upon
  Options.
  15




---



##### Table of Contents



Income Taxes.
      Recent Accounting Pronouncements.
  Results
    of Operations
           16




---



##### Table of Contents



30-day and/or 90-day
       17




---



##### Table of Contents



Item 3.
    Quantitative
    and Qualitative Disclosures about Market Risk          one-day
  Form 10-K
 18




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##### Table of Contents



September 30,
    2008
    (Unaudited)
  Three Months Ended September 30, 2008% of Total


High


Low


AverageMarket Sector

Value at Risk


Capital


Value at Risk


Value at Risk


Value at Risk*Currencies:Exchange Traded Contracts

$
2,536,881



0.52
%

$
3,807,089


$
2,255,442


$
2,858,142Energy


1,450,250



0.30
%


6,420,400



1,450,250



4,019,433Grains


676,380



0.14
%


2,752,000



676,380



1,586,681Interest Rates U.S.


2,291,950



0.47
%


3,934,150



1,850,700



2,844,617Interest Rates Non-U.S.


4,020,151



0.82
%


6,764,425



3,079,904



5,158,804Livestock


178,000



0.04
%


178,000



32,205



111,747Lumber


2,200



0.00
%**


5,400



2,200



2,567Metals :Exchange Traded Contracts


241,750



0.05
%


1,869,500



114,250



643,417OTC Contracts


1,050,956



0.22
%


1,856,086



683,145



1,076,510Softs


461,926



0.09
%


854,028



461,926



642,026Indices


7,161,056



1.46
%


12,018,105



7,091,823



9,534,109Total

$
20,071,500



4.11
%    *
    
    Average of month-end Values at Risk.**
    
    Due to rounding    September 30,
    2008
    (Unaudited)
  Three Months Ended September 30, 2008% of Total


High


Low


AverageMarket Sector

Value at Risk


Capital


Value at Risk


Value at Risk


Value at Risk*Currencies:OTC Contracts

$
2,876,841



1.96
%

$
6,459,319


$
2,876,841


$
4,601,348Energy


541,660



0.37
%


1,300,850



541,660



756,787Interest Rates U.S.


1,312,600



0.89
%


1,754,540



597,450



1,482,057Interest Rates Non-U.S.


1,750,301



1.19
%


2,596,726



1,509,566



1,787,253Metals:Exchange Traded Contracts


110,000



0.07
%


176,000



7,500



80,417OTC Contracts


171,734



0.12
%


468,207



171,734



252,869Indices


2,654,457



1.80
%


8,798,196



2,654,457



4,060,971Total

$
9,417,593



6.40
%    *
    
    Average of month-end Values at Risk 19




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##### Table of Contents



September 30,
    2008
    (Unaudited)
  Three Months Ended September 30, 2008Value


% of Total


High Value


Low Value


Average ValueMarket Sector

at Risk


Capital


at Risk


at Risk


at Risk*Currencies:Exchange Traded Contracts

$
2,172,488



0.75
%

$
11,556,229


$
1,289,789


$
5,293,563Energy


1,926,250



0.67
%


6,294,750



1,926,250



2,861,283Grains


1,541,000



0.54
%


5,325,300



201,000



1,334,333Interest Rates Non-U.S.


1,568,237



0.55
%


4,420,669



1,014,083



3,125,016Livestock


53,600



0.02
%


220,000



53,600



54,400Metals:Exchange Traded Contracts


770,500



0.27
%


6,385,000



770,500



1,450,917Softs


663,300



0.23
%


2,169,500



120,600



524,700Total

$
8,695,375



3.03
%       September 30,
    2008
    (Unaudited)
  Three Months Ended September 30, 2008Value


% of Total


High Value


Low Value


Average ValueMarket Sector

at Risk


Capital


at Risk


at Risk


at Risk*Currencies:Exchange Traded Contracts

$
18,000



0.01
%

$
34,000


$
4,400


$
18,000OTC Contracts


9,276,313



4.53
%


27,527,348



7,928,147



19,253,186Energy


1,418,960



0.69
%


2,825,275



335,875



1,013,172Grains


657,800



0.32
%


1,045,500



66,550



361,157Interest Rates U.S.


320,600



0.16
%


2,381,150



24,412



691,367Interest Rates Non-U.S.


1,150,706



0.56
%


3,767,848



461,503



1,814,976Livestock


21,600



0.01
%


21,600



800



10,500Metals:Exchange Traded Contracts


285,250



0.14
%


656,500



92,000



245,197OTC Contracts


641,670



0.31
%


1,415,425



374,315



536,684Softs


551,663



0.27
%


596,579



293,730



480,354Indices


1,980,731



0.97
%


5,270,747



1,227,969



2,934,659Total

$
16,323,293



7.97
%    *
    
    Average of month-end Values at Risk 20




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##### Table of Contents



September 30,
    2008
    (Unaudited)
  Three Months Ended September 30, 2008% of Total


High Value


Low Value


Average ValueMarket Sector

Value at Risk


Capitalization


at Risk


at Risk


at Risk*Energy

$
9,250



0.04
%


602,000



9,250



52,833Grains


22,000



0.09
%


131,500



22,000



48,733Interest Rates U.S.


248,900



1.04
%


693,100



19,800



320,650Interest Rates Non-U.S.


209,995



0.88
%


501,299



26,466



174,295Softs


19,059



0.08
%


146,081



12,489



49,197Total

$
509,204



2.13
%    *
    
    Average of month-end Values at Risk 21




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##### Table of Contents



Item 4T.
    Controls
    and Procedures      Rule 13a-15(e) 15d-115(e)
  internal control over financial
    reporting
  
    pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of the assets of the Partnership;
    provide reasonable assurance that (i) transactions are
    recorded as necessary to permit preparation of financial
    statements in accordance with U.S. generally accepted
    accounting principles, and (ii) the Partnerships
    receipts are handled and expenditures are made only pursuant to
    authorizations of the General Partner; and
    provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Partnerships assets that could have a material effect on
    the financial statements.   22




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##### Table of Contents



PART II.  OTHER
    INFORMATION  Item 1.
    Legal
    Proceedings  Form 10-K Form 10-Q
 Research Analyst Litigation
  Subprime-Mortgage-Related Litigation
 23




---



##### Table of Contents



Auction Rate Securities-Related Litigation
 24




---



##### Table of Contents



Item 1A.
    Risk
    Factors.  Form 10-K Form 10-Q
    Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds.      (d) Maximum Number(or Approximate(c) Total Number of



Dollar Value) ofUnits



Units(a) Total



(b) Average Price



Purchased as Part



that May Yet BeNumber of



Paid per



of Publicly Announced



Purchased Under thePeriod


Units Purchased*



Unit**



Plans or Programs



Plans or ProgramsJuly 1, 2008   July 31, 2008



207.1536



$
1,866.03




N/A




N/AAugust 1, 2008   August 31, 2008



239.7096



$
1,859.16




N/A




N/ASeptember 1, 2008   September 30, 2008



259.5395



$
1,895.67




N/A




N/A706.4027



$
1,874.59  *
    
    Generally, Limited Partners are permitted to redeem their
    Redeemable Units as of the end of each month on
    10 days notice to the General Partner. Under certain
    circumstances, the General Partner can compel redemption but, to
    date, the General Partner has not exercised this right.
    Purchases of Redeemable Units by the Partnership reflected in
    the chart above were made in the ordinary course of the
    Partnerships business in connection with effecting
    redemptions for Limited Partners.**
    
    Redemptions of Redeemable Units are effected as of the last day
    of each month at the Net Asset Value per Redeemable Unit as of
    that day.  Item 3.
    Defaults
    Upon Senior Securities  None   Item 4.
    Submission
    of Matters to a Vote of Security Holders 
    None   Item 5.
    Other
    Information  None 25




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##### Table of Contents



Item 6.
    Exhibits  Regulation S-K Form 10-K
  Rule 13a-14(a)/15d-14(a)
  Rule 13a-14(a)/15d-14(a)
     26




---



##### Table of Contents



SIGNATURES
    SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.
  By:
    Citigroup Managed
    Futures LLC    By:
    /s/  Jerry
    Pascucci       By:
    /s/  Jennifer
    Magro      27