FORM10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C.20549 (X) QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 OR (    ) TRANSITIONREPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF1934

For the Quarter ended March 31,2005

Commission File Number 0-26132

SMITH BARNEY DIVERSIFIED FUTURES FUNDL.P.

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(Exact nameof registrant as specified in its charter)

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|--------------------------------------------------------------|--|-----------------------------------|--|--|--|--|
| NewYork                                                      |  | 13-3729162                        |
| (State or otherjurisdiction ofincorporation or organization) |  | (I.R.S.EmployerIdentificationNo.) |
|                                                              |

c/o Citigroup ManagedFutures LLC 399 Park Avenue - 7th Fl. New York, New York10022

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(Addressand Zip Code of principal executive offices)

(212)599-2011

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(Registrant'stelephone number, including area code)

Indicateby check mark whether the registrant (1) has filed all reports requiredto be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period thatthe registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days.

Yes    X                No          

Indicate by checkmark whether the registrant is an accelerated filer (as defined in rule12b-2 of the Exchange Act).

Yes                       No   X   

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SMITH BARNEY DIVERSIFIEDFUTURES FUND L.P.FORM 10-QINDEX

|                                      |  |                                                                                                                      |  |                         |  |  |  |  |  |  |  |  |  |  |
|--------------------------------------|--|----------------------------------------------------------------------------------------------------------------------|--|-------------------------|--|--|--|--|--|--|--|--|--|--|
|                                 |  |                                                                                                                 |  | PageNumber              |  |
| PARTI – Financial Information: |  |
| Item 1.                              |  | FinancialStatements:                                                                                                 |  |
|                                 |  | Statementsof Financial Condition at March 31, 2005 and December 31, 2004(unaudited)                                  |  | 3                       |  |
|                                 |  | Condensed Schedules of Investments at March 31, 2005and December 31, 2004(unaudited)                                 |  | 4 – 5   |  |
|                                 |  | Statements of Income and Expenses and Partners'Capital for the three months ended March 31, 2005 and 2004(unaudited) |  | 6                       |  |
|                                 |  | Statements of CashFlows for the three months ended March  31,  2005 and 2004(unaudited)                              |  | 7                       |  |
|                                 |  | Notes to FinancialStatements (unaudited)                                                                             |  | 8 – 12  |  |
| Item2.                               |  | Management's Discussion and Analysis of FinancialCondition and Results ofOperations                                  |  | 13 – 14 |  |
| Item3.                               |  | Quantitative and Qualitative Disclosures about MarketRisk                                                            |  | 15 – 16 |  |
| Item4.                               |  | Controls and Procedures                                                                                              |  | 17                      |  |
| PART II– OtherInformation      |  | 18                                                                                                                   |  |
|                                      |

2

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PART I

Item 1.Financial Statements

Smith Barney Diversified Futures FundL.P.Statements of FinancialCondition(Unaudited)

|                                                                                                                                        |  |              |            |                 |  |        |            |        |  |  |  |  |  |  |
|----------------------------------------------------------------------------------------------------------------------------------------|--|--------------|------------|-----------------|--|--------|------------|--------|--|--|--|--|--|--|
|                                                                                                                                   |  | March31,2005 |            | December31,2004 |  |
| ASSETS:                                                                                                                                |  |         |       |            |  |   |       |   |  |
| Investmentin Partnerships, at fairvalue                                                                                                |  | $            | 35,135,968 |            |  | $      | 16,141,889 |   |  |
| Equityin commodity futures tradingaccount:                                                                                             |  |         |       |            |  |   |       |   |  |
| Cash (restricted$5,549,772 and $8,098,048 in 2004 and 2005,respectively)                                                               |  |         | 29,103,527 |            |  |   | 52,660,336 |   |  |
| Netunrealized appreciation on open futurespositions                                                                                    |  |         | 1,054,791  |            |  |   | 1,601,032  |   |  |
| Unrealizedappreciation on open forwardcontracts                                                                                        |  |         | 389,661    |            |  |   | 2,250,162  |   |  |
|                                                                                                                                   |  |         | 65,683,947 |            |  |   | 72,653,419 |   |  |
| Interestreceivable                                                                                                                     |  |         | 53,621     |            |  |   | 69,831     |   |  |
|                                                                                                                                   |  | $            | 65,737,568 |            |  | $      | 72,723,250 |   |  |
| LIABILITIESAND PARTNERS'CAPITAL:                                                                                                       |  |         |       |            |  |   |       |   |  |
| Liabilities:                                                                                                                           |  |         |       |            |  |   |       |   |  |
| Unrealizeddepreciation on open forwardcontracts                                                                                        |  | $            | 484,680    |            |  | $      | 1,925,334  |   |  |
| Accruedexpenses:                                                                                                                       |  |         |       |            |  |   |       |   |  |
| Commissions                                                                                                                            |  |         | 304,811    |            |  |   | 329,810    |   |  |
| Managementfees                                                                                                                         |  |         | 103,064    |            |  |   | 112,466    |   |  |
| Incentivefees                                                                                                                          |  |         | 153,674    |            |  |   | 78,926     |   |  |
| Other                                                                                                                                  |  |         | 81,101     |            |  |   | 60,798     |   |  |
| Redemptionspayable                                                                                                                     |  |         | 642,371    |            |  |   | 985,058    |   |  |
|                                                                                                                                   |  |         | 1,769,701  |            |  |   | 3,492,392  |   |  |
|                                                                                                                                   |  |         |       |            |  |   |       |   |  |
| Partners'Capital:                                                                                                                      |  |         |       |            |  |   |       |   |  |
| General Partner,1,276.7484 Unit equivalents outstanding in 2005 and2004                                                                |  |         | 2,101,592  |            |  |   | 2,229,662  |   |  |
| LimitedPartners, 37,584.7366 and 38,366.2074 Redeemable Units of LimitedPartnership Interest outstanding in 2005 and 2004,respectively |  |         | 61,866,275 |            |  |   | 67,001,196 |   |  |
|                                                                                                                                   |  |         | 63,967,867 |            |  |   | 69,230,858 |   |  |
|                                                                                                                                   |  | $            | 65,737,568 |            |  | $      | 72,723,250 |   |  |
|                                                                                                                                        |

|  |                                                |
|--|------------------------------------------------|
|  | See Accompanying Notes toFinancial Statements. |

3

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Smith Barney Diversified Futures FundL.P. Condensed Schedule of Investments March 31,2005(Unaudited)

|                                       |  |                                                    |  |           |            |         |  |  |  |  |
|---------------------------------------|--|----------------------------------------------------|--|-----------|------------|---------|--|--|--|--|
| Sector                                |  | Contract                                           |  | FairValue |
| Currencies                            |  |
|                                  |  | Futurescontracts sold0.19%                         |  | $         | 119,385    |    |
|                                  |  | Futurescontracts purchased(0.08)%                  |  |      | (51,170    | )  |
|                                  |  | Totalfutures contracts0.11%                        |  |      | 68,215     |    |
|                                  |  | Unrealizeddepreciation on forward contracts(0.65)% |  |      | (418,896   | )  |
|                                  |  | Unrealizedappreciation on forward contracts0.23%   |  |      | 149,812    |    |
|                                  |  | Totalforward contracts(0.42)%                      |  |      | (269,084   | )  |
| TotalCurrencies(0.31)%                |  |                                               |  |      | (200,869   | )  |
| Energy1.20%                           |  | Futures contracts purchased1.20%                   |  |      | 770,329    |    |
| Grains0.30%                           |  | Futures contracts purchased0.30%                   |  |      | 190,757    |    |
| U.S.Interest Rates 0.24%              |  | Futures contracts sold0.24%                        |  |      | 155,745    |    |
| Interest RatesNon-U.S.                |  |
|                                  |  | Futures contracts sold(0.36)%                      |  |      | (232,708   | )  |
|                                  |  | Futures contracts purchased0.01%                   |  |      | 9,339      |    |
| Total InterestRates Non-U.S. (0.35)%  |  |                                               |  |      | (223,369   | )  |
| Metals                                |  |                                               |  |      |       |    |
|                                  |  | Futurescontracts purchased0.10%                    |  |      | 65,963     |    |
|                                  |  | Unrealizeddepreciation on forward contracts(0.10)% |  |      | (65,784    | )  |
|                                  |  | Unrealizedappreciation on forward contracts0.37%   |  |      | 239,849    |    |
|                                  |  | Totalforward contracts0.27%                        |  |      | 174,065    |    |
| Total Metals0.37%                     |  |                                               |  |      | 240,028    |    |
| Softs                                 |  |                                               |  |      |       |    |
|                                  |  | Futurescontracts sold(0.00)%*                      |  |      | (3,875     | )  |
|                                  |  | Futurescontracts purchased0.37%                    |  |      | 238,252    |    |
| Total Softs0.37%                      |  |                                               |  |      | 234,377    |    |
| Indices                               |  |                                               |  |      |       |    |
|                                  |  | Futurescontracts sold(0.01)%                       |  |      | (5,437     | )  |
|                                  |  | Futurescontracts purchased(0.31)%                  |  |      | (201,789   | )  |
| TotalIndices (0.32)%                  |  |                                               |  |      | (207,226   | )  |
| Investment inPartnerships             |  |                                               |  |      |       |    |
|                                  |  | CMFCampbell Master Fund LP28.58%                   |  |      | 18,285,362 |    |
|                                  |  | CMFWinton Master Fund LP26.34%                     |  |      | 16,850,606 |    |
| TotalInvestment in Partnerships54.93% |  |                                               |  |      | 35,135,968 |    |
| TotalFair Value56.43%                 |  |                                               |  | $         | 36,095,740 |    |
|                                       |

|                    |  |                           |            |                             |  |        |        |          |  |  |
|--------------------|--|---------------------------|------------|-----------------------------|--|--------|--------|----------|--|--|
| CountryComposition |  | Investments at Fair Value |            | % ofInvestments atFairValue |
| Australia          |  | $                         | (8         | )                      |  |   | (0.00) | %*  |
| France             |  |                      | 22,560     |                        |  |   | 0.06   |     |
| Germany            |  |                      | (257,240   | )                      |  |   | (0.71  | )   |
| HongKong           |  |                      | (10,834    | )                      |  |   | (0.03  | )   |
| Japan              |  |                      | (92,555    | )                      |  |   | (0.26  | )   |
| Spain              |  |                      | 2,983      |                        |  |   | 0.01   |     |
| UnitedKingdom      |  |                      | 120,816    |                        |  |   | 0.34   |     |
| UnitedStates       |  |                      | 36,310,018 |                        |  |   | 100.59 |     |
|               |  | $                         | 36,095,740 |                        |  |   | 100.00 | %   |
|                    |

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

|   |                |
|---|----------------|
| * | Due torounding |

See Accompanying Notes to FinancialStatements.

4

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Smith Barney Diversified Futures FundL.P.Condensed Schedule of InvestmentsDecember 31,2004

|                                   |  |                                                    |  |           |            |         |  |  |  |  |
|-----------------------------------|--|----------------------------------------------------|--|-----------|------------|---------|--|--|--|--|
| Sector                            |  | Contract                                           |  | FairValue |
| Currencies                        |  |
|                              |  | Futurescontracts purchased0.61%                    |  | $         | 423,469    |    |
|                              |  | Unrealizedappreciation on forward contracts2.85%   |  |      | 1,969,858  |    |
|                              |  | Unrealizeddepreciation on forward contracts(2.38)% |  |      | (1,645,688 | )  |
|                              |  | Totalforward contracts0.47%                        |  |      | 324,170    |    |
| TotalCurrencies1.08%              |  |                                               |  |      | 747,639    |    |
| Energy                            |  |
|                              |  | Futurescontracts purchased(0.06)%                  |  |      | (43,173    | )  |
|                              |  | Futurescontracts sold0.42%                         |  |      | 293,267    |    |
| TotalEnergy0.36%                  |  |                                               |  |      | 250,094    |    |
| Grains                            |  |
|                              |  | Futurescontracts purchased(0.12)%                  |  |      | (80,231    | )  |
|                              |  | Futurescontracts sold(0.00)%*                      |  |      | (703       | )  |
| TotalGrains(0.12)%                |  |                                               |  |      | (80,934    | )  |
| InterestRates U.S.                |  |
|                              |  | Futures contracts purchased0.09%                   |  |      | 62,139     |    |
|                              |  | Futurescontracts sold0.10%                         |  |      | 69,596     |    |
| TotalInterest Rates U.S.0.19%     |  |                                               |  |      | 131,735    |    |
| InterestRates Non-U.S.            |  |
|                              |  | Futures contracts purchased0.43%                   |  |      | 294,324    |    |
|                              |  | Futurescontracts sold0.00%*                        |  |      | 325        |    |
| TotalInterest Rates Non-U.S.0.43% |  |                                               |  |      | 294,649    |    |
| Livestock0.02%                    |  | Futures contracts purchased0.02%                   |  |      | 16,491     |    |
| Metals                            |  |
|                              |  | Futurescontracts purchased(0.03)%                  |  |      | (22,450    | )  |
|                              |  | Unrealizedappreciation on forward contracts0.40%   |  |      | 280,304    |    |
|                              |  | Unrealizeddepreciation on forward contracts(0.40)% |  |      | (279,646   | )  |
|                              |  | Totalforward contracts0.00%*                       |  |      | 658        |    |
| TotalMetals(0.03)%                |  |                                               |  |      | (21,792    | )  |
| Softs                             |  |
|                              |  | Futurescontracts purchased0.14%                    |  |      | 93,622     |    |
|                              |  | Futurescontracts sold(0.02)%                       |  |      | (12,420    | )  |
| TotalSofts0.12%                   |  |                                               |  |      | 81,202     |    |
| Indices                           |  |
|                              |  | Futurescontracts purchased0.73%                    |  |      | 505,676    |    |
|                              |  | Futurescontracts sold0.00%*                        |  |      | 1,100      |    |
| TotalIndices0.73%                 |  |                                               |  |      | 506,776    |    |
| Investmentin Partnership 23.32%   |  | CMF Winton Master Fund L.P.23.32%                  |  |      | 16,141,889 |    |
| TotalFair Value26.10%             |  |                                               |  | $         | 18,067,749 |    |
|                                   |

|                    |  |                           |            |                              |  |        |        |         |  |  |
|--------------------|--|---------------------------|------------|------------------------------|--|--------|--------|---------|--|--|
| CountryComposition |  | Investments at Fair Value |            | % ofInvestments at FairValue |
| Australia          |  | $                         | 737        |                         |  |   | 0.00*  | %  |
| Canada             |  |                      | (725       | )                       |  |   | (0.00) | *  |
| France             |  |                      | (1,582     | )                       |  |   | (0.01  | )  |
| Germany            |  |                      | 176,133    |                         |  |   | 0.97   |    |
| HongKong           |  |                      | 257        |                         |  |   | 0.00   | *  |
| Japan              |  |                      | 72,974     |                         |  |   | 0.40   |    |
| Spain              |  |                      | 53,523     |                         |  |   | 0.30   |    |
| UnitedKingdom      |  |                      | 167,316    |                         |  |   | 0.93   |    |
| UnitedStates       |  |                      | 17,599,116 |                         |  |   | 97.41  |    |
|               |  | $                         | 18,067,749 |                         |  |   | 100.00 | %  |
|                    |

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

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

See accompanying notes to financialstatements.

5

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Smith BarneyDiversified Futures Fund L.P. Statements of Income and Expensesand Partners'Captial(Unaudited)

|                                                                                                                                       |  |                            |            |         |  |        |            |         |  |  |
|---------------------------------------------------------------------------------------------------------------------------------------|--|----------------------------|------------|---------|--|--------|------------|---------|--|--|
|                                                                                                                                  |  | ThreeMonths EndedMarch 31, |
|                                                                                                                                  |  | 2005                       |            | 2004    |
| Income:                                                                                                                               |  |                       |       |    |  |
| Netgains (losses) on trading of commodityinterests:                                                                                   |  |                       |       |    |  |   |       |    |
| Realized gains(losses) on closed positions                                                                                            |  | $                          | (2,458,639 | )  |  | $      | 12,188,662 |    |
| Changein unrealized gains (losses) on open positions and investment inPartnerships                                                    |  |                       | (295,213   | )  |  |   | 75,541     |    |
|                                                                                                                                  |  |                       | (2,753,852 | )  |  |   | 12,264,203 |    |
| Interestincome                                                                                                                        |  |                       | 139,149    |    |  |   | 133,288    |    |
|                                                                                                                                  |  |                       | (2,614,703 | )  |  |   | 12,397,491 |    |
| Expenses:                                                                                                                             |  |                       |       |    |  |   |       |    |
| Brokeragecommissions including clearing fees of $11,724 and $31,801,respectively                                                      |  |                       | 899,204    |    |  |   | 1,143,038  |    |
| Managementfees                                                                                                                        |  |                       | 298,382    |    |  |   | 374,982    |    |
| Incentivefees                                                                                                                         |  |                       | 153,674    |    |  |   | 1,880,089  |    |
| Otherexpenses                                                                                                                         |  |                       | 20,302     |    |  |   | 22,456     |    |
|                                                                                                                                  |  |                       | 1,371,562  |    |  |   | 3,420,565  |    |
| Net income (loss)                                                                                                                     |  |                       | (3,986,265 | )  |  |   | 8,976,926  |    |
| Additions                                                                                                                             |  |                       | —    |    |  |   | 1,801      |    |
| Redemptions                                                                                                                           |  |                       | (1,276,726 | )  |  |   | (1,703,458 | )  |
| Netincrease (decrease) in Partners' capital                                                                                           |  |                       | (5,262,991 | )  |  |   | 7,275,269  |    |
| Partners'capital, beginning of period                                                                                                 |  |                       | 69,230,858 |    |  |   | 71,727,346 |    |
| Partners'capital, end of period                                                                                                       |  | $                          | 63,967,867 |    |  | $      | 79,002,615 |    |
| Netasset value per Redeemable Unit (38,861.4850 and 42,849.5747 RedeemableUnits outstanding at March 31, 2005 and 2004, respectively) |  | $                          | 1,646.05   |    |  | $      | 1,843.72   |    |
| Netincome (loss) per Redeemable Unit of Limited Partnership Interest andGeneral Partner Unit equivalent                               |  | $                          | (100.31    | )  |  | $      | 207.08     |    |
|                                                                                                                                       |

SeeAccompanying Notes to Financial Statements.

6

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Smith Barney Diversified Futures FundL.P. Statements of CashFlows(Unaudited)

|                                                                                                  |  |                           |             |         |  |        |            |         |  |  |
|--------------------------------------------------------------------------------------------------|--|---------------------------|-------------|---------|--|--------|------------|---------|--|--|
|                                                                                             |  | ThreeMonths EndedMarch31, |
|                                                                                             |  | 2005                      |             | 2004    |
| Cashflows from operating activities:                                                             |  |
| Net income(loss)                                                                                 |  | $                         | (3,986,265  | )  |  | $      | 8,976,926  |    |
| Adjustmentsto reconcile net income (loss) to net cash provided by (used in)operating activities: |  |
| Changes inoperating assets and liabilities:                                                      |  |
| (Increase)decrease in restrictedcash                                                             |  |                      | 2,548,276   |    |  |   | 2,497,305  |    |
| (Increase)decrease in investment in Partnership at fairvalue                                     |  |                      | (18,994,079 | )  |  |   | —    |    |
| (Increase)decrease in net unrealized appreciation on open futures positions                      |  |                      | 546,241     |    |  |   | (1,644,535 | )  |
| (Increase)decrease in unrealized appreciation on open forward contracts                          |  |                      | 1,860,501   |    |  |   | 2,420,299  |    |
| (Increase)decrease in interest     receivable                                |  |                      | 16,210      |    |  |   | (10,630    | )  |
| Increase(decrease) in unrealized depreciation on open forward contracts                          |  |                      | (1,440,654  | )  |  |   | (851,305   | )  |
| Accruedexpenses:                                                                                 |  |
| Increase (decrease) in commissions                                                               |  |                      | (24,999     | )  |  |   | 37,080     |    |
| Increase(decrease) in management fees                                                            |  |                      | (9,402      | )  |  |   | 11,282     |    |
| Increase(decrease) in incentive fees                                                             |  |                      | 74,748      |    |  |   | 1,118,808  |    |
| Increase(decrease) in other                                                                      |  |                      | 20,303      |    |  |   | 12,655     |    |
| Increase (decrease) in redemptions payable                                                       |  |                      | (342,687    | )  |  |   | (293,426   | )  |
| Netcash provided by (used in)     operating activities                       |  |                      | (19,731,807 | )  |  |   | 12,274,459 |    |
| Cashflows from financing activities:                                                             |  |
| Proceedsfrom additions—Limited Partners                                                    |  |                      | —     |    |  |   | 1,801      |    |
| Payments forredemptions—Limted Partners                                                    |  |                      | (1,276,726  | )  |  |   | (1,703,458 | )  |
| Netcash provided by (used in)     financing activities                       |  |                      | (1,276,726  | )  |  |   | (1,701,657 | )  |
| Netchange in cash                                                                                |  |                      | (21,008,533 | )  |  |   | 10,572,802 |    |
| Unrestrictedcash, at beginning of period                                                         |  |                      | 44,562,288  |    |  |   | 54,604,180 |    |
| Unrestrictedcash, at end of period                                                               |  | $                         | 23,553,755  |    |  | $      | 65,176,982 |    |
|                                                                                                  |

SeeAccompanying Notes to FinancialStatements.

7

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SmithBarney Diversified Futures Fund L.P.Notes to FinancialStatementsMarch 31, 2005(Unaudited)

1.    General:

Smith Barney Diversified Futures Fund L.P. (the"Partnership") is a limited partnershiporganized under the laws of the State of New York on August 13, 1993 toengage in the speculative trading of a diversified portfolio ofcommodity interests including futures contracts, options and forwardcontracts. The commodity interests that are traded by the Partnershipare volatile and involve a high degree of market risk. The Partnershipcommenced trading operations on January 12, 1994.

CitigroupManaged Futures LLC, acts as the general partner (the"General Partner") of the Partnership. ThePartnership's commodity broker is Citigroup Global Markets Inc.("CGM"), CGM is an affiliate of the GeneralPartner. The General Partner is wholly owned by Citigroup GlobalMarkets Holdings Inc. ("CGMHI"), which is thesole owner of CGM. CGMHI is a wholly owned subsidiary of Citigroup Inc.("Citigroup"). As of March 31, 2005, alltrading decisions are made for the Partnership by Campbell &Company, Inc. ("Campbell"), WillowbridgeAssociates, Inc. ("Willowbridge"), WintonCapital Management Limited ("Winton") andGraham Capital Management L.P. ("Graham")(each an "Advisor" and collectively, the"Advisors").

The accompanyingfinancial statements are unaudited but, in the opinion of management,include all adjustments, consisting only of normal recurringadjustments, necessary for a fair presentation of thePartnership's financial condition at March 31, 2005 and December31, 2004 and the results of its operations and cash flows for the threemonths ended March 31, 2005 and 2004. These financial statementspresent the results of interim periods and do not include alldisclosures normally provided in annual financial statements. Youshould read these financial statements together with the financialstatements and notes included in the Partnership's annual reporton Form 10-K filed with the Securities and Exchange Commission for theyear ended December 31, 2004.

Due to the nature of commoditytrading, the results of operations for the interim periods presentedshould not be considered indicative of the results that may be expectedfor the entire year.

2.    Financial Highlights:

Changes in Net Asset Value per Redeemable Unit of LimitedPartnership Interest for the three months ended March 31, 2005 and 2004were asfollows:

|                                                        |  |                           |          |         |  |        |          |         |  |  |
|--------------------------------------------------------|--|---------------------------|----------|---------|--|--------|----------|---------|--|--|
|                                                   |  | ThreeMonths EndedMarch31, |
|                                                   |  | 2005                      |          | 2004    |
| Netrealized and unrealized gains(losses)*              |  | $                         | (91.85   | )  |  | $      | 256.55   |    |
| Interestincome                                         |  |                      | 3.53     |    |  |   | 3.07     |    |
| Expenses**                                             |  |                      | (11.99   | )  |  |   | (52.54   | )  |
| Increase(decrease) for the period                      |  |                      | (100.31  | )  |  |   | 207.08   |    |
| Net Asset Value perRedeemable Unit, beginning ofperiod |  |                      | 1,746.36 |    |  |   | 1,636.64 |    |
| NetAsset Value per Redeemable Unit, end ofperiod       |  | $                         | 1,646.05 |    |  | $      | 1,843.72 |    |
|                                                        |

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

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

8

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SmithBarney Diversified Futures Fund L.P.Notes to FinancialStatementsMarch 31, 2005(Unaudited)

Financial Highlights(continued):

|                                              |  |                           |      |          |  |        |      |          |  |  |
|----------------------------------------------|--|---------------------------|------|----------|--|--------|------|----------|--|--|
|                                         |  | ThreeMonths EndedMarch31, |
|                                         |  | 2005                      |      | 2004     |
| Ratioto average net assets: ***              |  |
| Netinvestment loss before incentive fees**** |  |                      | (6.7 | )%  |  |   | (7.5 | )%  |
| Operatingexpenses                            |  |                      | 7.6  | %   |  |   | 8.2  | %   |
| Incentivefees                                |  |                      | 0.2  | %   |  |   | 2.5  | %   |
| Totalexpenses                                |  |                      | 7.8  | %   |  |   | 10.7 | %   |
| Totalreturn:                                 |  |
| Total return before incentivefees            |  |                      | (5.5 | )%  |  |   | 15.3 | %   |
| Incentivefees                                |  |                      | (0.2 | )%  |  |   | (2.6 | )%  |
| Totalreturn after incentivefees              |  |                      | (5.7 | )%  |  |   | 12.7 | %   |
|                                              |

|     |                                       |
|-----|---------------------------------------|
| *** | Annualized(other than incentive fees) |

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

The above ratios mayvary for individual investors based on the timing of capitaltransactions during the period. Additionally, these ratios arecalculated for the Limited Partner class using the LimitedPartners' share of income, expenses and average net assets.

3.    Trading Activities:

The Partnership was formed forthe purpose of trading contracts in a variety of commodity interests,including derivative financial instruments and derivative commodityinstruments. The results of the Partnership's trading activitiesare shown in the Statements of Income and Expenses and Partners'Capital and are discussed in Item 2, Management's Discussion andAnalysis of Financial Condition and Results of Operations.

TheCustomer Agreement between the Partnership and CGM gives thePartnership the legal right to net unrealized gains and losses on openfutures positions.

All of the commodity interests owned by thePartnership are held for trading purposes. The average fair values ofthese interests during the three and twelve months ended March 31, 2005and December 31, 2004, based on a monthly calculation, were $402,209and $2,973,373, respectively. The fair values of these commodityinterests, including options thereon, if applicable, at March 31, 2005and December 31, 2004, were $959,772 and $18,067,749, respectively.Fair values for exchange traded commodity futures and options are basedon quoted market prices for those futures and options. Fair values forall other financial instruments for which market quotations are notreadily available are based on calculations approved by the GeneralPartner.

4.    Investment in Partnerships

EffectiveNovember 1, 2004, the Partnership allocated capital for trading to theCMF Winton Master Fund L.P., a limited partnership organized under thepartnership laws of New York State (the "WintonMaster"). The partnership purchased 15,054.1946 Units ofthe Winton Master with cash equal to $14,251,586, and a contribution ofopen commodity futures and forward positions with a fair value of$802,609. The Winton Master was formed in order to permit commoditypools managed now or in the 

9

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SmithBarney Diversified Futures Fund L.P.Notes to FinancialStatementsMarch 31, 2005(Unaudited)

future by Winton, to invest together in onetrading vehicle. The General Partner is the Managing Member of theWinton Master. Individual and pooled accounts currently managed byWinton, including the Partnership (collectively, the"Feeder Funds") are permitted to be anon-managing member of the Winton Master. The General Partner andWinton believe that trading through this master/feeder structure shouldpromote efficiency and economy in the trading process. Expenses toinvestors as a result of the investment in the Winton Master areapproximately the same and redemption rights are not affected.

Effective January 1, 2005, the assets allocated to Campbell fortrading were invested in the CMF Campbell Master Fund L.P.("Campbell Master"), a limited liabilitypartnership organized under the partnership laws of the State of NewYork. The Partnership purchased 19,621.1422 Units of Campbell Masterwith cash equal to $19,428,630, and a contribution of open commodityfutures and forward positions with a fair value of $192,512. CampbellMaster was formed in order to permit commodity pools managed now or inthe future using Campbell's Financials Metals and Energy Program,to invest together in one trading vehicle. The General Partner is theManaging Member of Campbell Master. Individual and pooled accountscurrently managed by Campbell, including the Partnership (collectively,the "Feeder Funds") are permitted to be anon-managing member of Campbell Master. The General Partner andCampbell believe that trading through this master/feeder structureshould promote efficiency and economy in the trading process. Expensesto investors as a result of the investment in Campbell Master areapproximately the same and redemption rights are not affected.

The Winton's Master and Campbell's Master trading offutures, forwards and options contracts, if applicable, on commoditiesis done primarily on United States of America commodity exchanges andforeign commodity exchanges. The Masters all engage in such tradingthrough commodity brokerage accounts maintained with CGM.

Anon-managing member/limited partner may withdraw all or part of theircapital contribution and undistributed profits, if any, from the WintonMaster and Campbell Master in multiples of the net asset value per unitof limited partnership interest as of the last day of a month after arequest for redemption has been made to the managing Member/GeneralPartner at least 3 days in advance of month-end.

Management andincentive fees are not directly charged to the investments presentedbelow. These fees are charged at the Partnership level.

Allexchange, clearing, user, give-up, floor brokerage and National FuturesAssociation fees are borne by the Winton Master and Campbell Master.All other fees including CGM's direct brokerage commission arecharged at the Partnership level.

At March 31, 2005 and December31, 2004 the Partnership owned 11.1% and 14.0%,respectively of the Winton Master. At March 31, 2005, the Partnershipowned 6.7% of Campbell Master. It is Winton's andCampbell's intention to continue to invest the assets allocatedto each by the Partnership in the Winton Master and Campbell Master,respectively. The performance of the partnership is directly affectedby the performance of the Winton Master and Campbell Master.

10

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SmithBarney Diversified Futures Fund L.P.Notes to FinancialStatementsMarch 31, 2005(Unaudited)

Summarized information reflecting thePartnership's investment in, and the operations of the WintonMaster and Campbell's Master are as shown in the followingtable.

|                 |  |                              |       |                                          |  |              |            |                     |  |        |           |                  |  |                     |        |                      |  |        |       |        |  |        |           |         |  |                    |  |        |         |        |  |  |  |  |
|-----------------|--|------------------------------|-------|------------------------------------------|--|--------------|------------|---------------------|--|--------|-----------|------------------|--|---------------------|--------|----------------------|--|--------|-------|--------|--|--------|-----------|---------|--|--------------------|--|--------|---------|--------|--|--|--|--|
|            |  | March31, 2005                |       | For the three months ended March 31,2005 |  |         |            |                |
| Investment      |  | %of Partnership's Net Assets |       | FairValue                                |  | Income(loss) |            | ExpensesCommissions |  | Other  |           | NetIncome (Loss) |  | InvestmentObjective |        | RedemptionsPermitted |
| Campbell Master |  |                         | 26.34 | %                                   |  |         | 16,850,606 |                |  |   | (629,673  | )           |  |                | 8,548  |                 |  |   | 897   |   |  |   | (639,118  | )  |  | CommodityPortfolio |  |   | Monthly |   |
| Winton Master   |  |                         | 28.59 | %                                   |  |         | 18,285,362 |                |  |   | 1,146,181 |             |  |                | 26,680 |                 |  |   | 2,020 |   |  |   | 1,117,481 |    |  | CommodityPortfolio |  |   | Monthly |   |
| Total           |  |                         | 54.93 | %                                   |  | $            | 35,135,968 |                |  | $      | 516,508   |             |  | $                   | 35,228 |                 |  | $      | 2,917 |   |  | $      | 478,363   |    |  |               |  |   |    |   |
|                 |

|              |  |                  |       |                                          |  |        |            |        |  |        |         |        |  |        |         |        |  |        |         |        |  |        |         |        |  |        |                    |        |  |        |         |        |  |  |
|--------------|--|------------------|-------|------------------------------------------|--|--------|------------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--------|--------------------|--------|--|--------|---------|--------|--|--|
|         |  | December31, 2004 |       | For the three months ended March 31,2004 |  |   |            |   |
| WintonMaster |  |             | 23.32 | %                                   |  |   | 16,141,889 |   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | — |   |  |   | CommodityPortfolio |   |  |   | Monthly |   |
|              |

5.    FinancialInstrument Risks:

In the normal course of its business, thePartnership is party to financial instruments with off-balance sheetrisk, including derivative financial instruments and derivativecommodity instruments. These financial instruments may includeforwards, 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 certain options. Each ofthese instruments is subject to various risks similar to those relatedto the underlying financial instruments including market and creditrisk. In general, the risks associated with OTC contracts are greaterthan those associated with exchange-traded instruments because of thegreater risk of default by the counterparty to an OTC contract.

Market risk is the potential for changes in the value of thefinancial instruments traded by the Partnership due to market changes,including interest and foreign exchange rate movements and fluctuationsin commodity or security prices. Market risk is directly impacted bythe volatility and liquidity in the markets in which the relatedunderlying assets are traded.

Credit risk is the possibilitythat a loss may occur due to the failure of a counterparty to performaccording to the terms of a contract. Credit risk with respect toexchange traded instruments is reduced to the extent that an exchangeor clearing organization acts as a counterparty to the transactions.The Partnership's risk of loss in the event of counterpartydefault is typically limited to the amounts recognized as unrealizedappreciation 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

11

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SmithBarney Diversified Futures Fund L.P.Notes to FinancialStatementsMarch 31, 2005(Unaudited)

provide account analysis of futures, forwardsand options positions by sector, margin requirements, gain and losstransactions and collateral positions.

The majority of theseinstruments mature within one year of March 31, 2005. However, due tothe nature of the Partnership's business, these instruments maynot be held to maturity.

12

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Item2.    Management's Discussion and Analysis of FinancialCondition and Results of Operations.

Liquidity and CapitalResources

The Partnership does not engage in the sale ofgoods or services. Its only assets are its equity in its commodityfutures trading account, consisting of cash, net unrealizedappreciation on open futures and forward contracts and interestreceivable. Because of the low margin deposits normally required incommodity futures trading, relatively small price movements may resultin substantial losses to the Partnership. While substantial lossescould lead to a decrease in liquidity, no such losses occurred duringthe first quarter of 2005.

The Partnership's capitalconsists of the capital contributions of the partners as increased ordecreased by realized and/or unrealized gains or losses on commodityfutures trading, expenses, interest income, additions and redemptionsof Redeemable Units and distributions of profits, if any.

Forthe three months ended March 31, 2005, Partnership capital decreased7.6% from $69,230,858 to $63,967,867. This decrease wasattributable to a net loss from operations of $3,986,265 coupled withthe redemption of 781.4708 Redeemable Units totaling $1,276,726.Persons investing $1,000,000 or more will pay a reduced brokerage fee,receiving the differential in the form of additional Redeemable Units.Future redemptions can impact the amount of funds available forinvestment in commodity contract positions in subsequent periods.

Critical Accounting Policies

The preparationof financial statements in conformity with accounting principlesgenerally accepted in the United States of America requires managementto make estimates and assumptions that affect the reported amounts ofassets and liabilities, disclosures of contingent assets andliabilities at the date of the financial statements and reportedamounts of revenues and expenses during the reporting period. Actualresults could differ from these estimates.

All commodityinterests (including derivative financial instruments and derivativecommodity instruments) are used for trading purposes. The commodityinterests are recorded on trade date and open contracts are recorded inthe statements of financial condition at fair value on the lastbusiness day of the period, which represents market value for thosecommodity interests for which market quotations are readily availableor other measures of fair value deemed appropriate by management of theGeneral Partner for those commodity interests and foreign currenciesfor which market quotations are not readily available. Investments incommodity interests denominated in foreign currencies are translatedinto U.S. dollars at the exchange rates prevailing on the last businessday of the period. Realized gains (losses) and changes in unrealizedvalues 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. The investment in otherPartnerships are recorded at fair value, based upon thePartnership's proportionate interest held.

Foreigncurrency contracts are those contracts where the Partnership agrees toreceive or deliver a fixed quantity of foreign currency for anagreed-upon price on an agreed future date. Foreign currency contractsare valued daily, and the Partnership's net equity therein,representing unrealized gain or loss on the contracts as measured bythe difference between the forward foreign exchange rates at the dateof entry into the contracts and the forward rates at the reportingdates, is included in the statement of financial condition. Realizedgains (losses) and changes in unrealized values on foreign currencycontracts are recognized in the period in which the contract is closedor the changes occur and are included in the statements of income andexpenses and partners' capital.

Results ofOperations

During the Partnership's first quarter of2005 the net asset value per Redeemable Unit decreased 5.7% from$1,746.36 to $1,646.05 as compared to an increase of 12.7% inthe first quarter of 2004. The Partnership experienced a net tradingloss before brokerage commissions and related fees in the first quarterof 2005 of $2,753,852. Losses were primarily attributable to thetrading of commodity futures in 

13

----

currencies, U.S. and non-U.S. interest rates,livestock, metals and indices and were partially offset by gains inenergy, grains, and softs. The Partnership experienced a net tradinggain before brokerage commissions and related fees in the first quarterof 2004 of $12,264,203. Gains were primarily attributable to thetrading of commodity futures in currencies, energy, grains, U.S. andnon-U.S. interest rates, livestock, metals, indices and lumber and werepartially offset by losses in softs.

Results for the firstquarter were highlighted by uneven trading performance in volatileenergy and financial markets and resulted in effectively giving backapportion of the gains from the fourth quarter 2004.

Trends thathad emerged in late December continued to effect performance inJanuary. Energy price increases, particularly in crude oil and naturalgas, that had produced profits through much of the last third of 2004,initially weakened against advisors' positions, then laterregained strength, ended higher and produced the most profits among thevarious sectors for the quarter.

Alternatively, currencytrading, which had generated profits consistently in 2004, produced thequarter's greatest losses, as the decline of the U.S. dollarbegan to reverse its decline and moved back to the low 130s in relationto the Euro. This move was particularly disruptive in January andcontinued as the markets produced no identifiable direction throughmuch of the quarter. Trading in interest rate contracts was mixed withgains in U.S. contracts and losses in non-U.S. positions. Stock indicesshowed some strength in February sufficient to offset losses in Januaryand March. Metals and agricultural trading followed U.S. dollarpatterns with the net effect being flat for the quarter.

Commodity futures 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 Advisors to correctly identifythose price trends. Price trends are influenced by, among other things,changing supply and demand relationships, weather, governmental,agricultural, commercial and trade programs and policies, national andinternational political and economic events and changes in interestrates. To the extent that market trends exist and the Advisors are ableto identify them, the Partnership expects to increase capital throughoperations.

Interest income on 80% of thePartnership's daily equity maintained in cash was earned at themonthly average 30-day U.S. Treasury bill rate determined weekly by CGMbased on the non-competitive yield on three month U.S. Treasury billsmaturing 30 days from the date in which such weekly rate is determined.CGM may continue to maintain the Partnership's assets in cashand/or place all of the Partnership's assets in 90-day Treasurybills and pay the Partnership 80% of the interest earned on theTreasury bills purchased. CGM will retain 20% of any interestearned on Treasury bills. Interest income for the three months endedMarch 31, 2005 increased by $5,861, as compared to the correspondingperiod in 2004. The increase in interest income is primarily due to anincrease in interest rates during the three months ended March 31, 2005as compared to the corresponding period in 2004.

Brokeragecommissions are calculated on the Partnership's net asset valueas of the last day of each month and are affected by tradingperformance and redemptions. Accordingly, they must be compared inrelation to the fluctuations in monthly net asset values. Commissionsand fees for the three months ended March 31, 2005 decreased by$243,834, as compared to the corresponding period in 2004. The decreasein brokerage commissions is due to lower average net assets during thethree months ended March 31, 2005 as compared to the correspondingperiod in 2004.

Management fees are calculated on the portion ofthe Partnership's net asset value allocated to each Advisor atthe end of the month and, therefore, are affected by tradingperformance and redemptions. Management fees for the three months endedMarch 31, 2005 decreased by $76,600 as compared to the correspondingperiod in 2004. The decrease in management fees is due to lower averagenet assets during the three months ended March 31, 2005 as compared tothe corresponding period in 2004.

Incentive fees are based onthe new trading profits generated by each Advisor at the end of thequarter as defined in the advisory agreements between the Partnership,the General Partner and each Advisor. Trading performance for the threemonths ended March 31, 2005 and 2004 resulted in incentive fees of$153,674 and $1,880,089, respectively.

14

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Item 3.    Quantitative and QualitativeDisclosures about Market Risk

The Partnership is a speculativecommodity pool. The market sensitive instruments held by it areacquired for speculative trading purposes, and all or substantially allof the Partnership's assets are subject to the risk of tradingloss. Unlike an operating company, the risk of market sensitiveinstruments is integral, not incidental, to the Partnership'smain line of business.

Market movements result in frequentchanges in the fair value of the Partnership's open positionsand, consequently, in its earnings and cash flow. ThePartnership's market risk is influenced by a wide variety offactors, including the level and volatility of interest rates, exchangerates, equity price levels, the value of financial instruments andcontracts, the diversification effects among the Partnership'sopen positions and the liquidity of the markets in which it trades.

The Partnership 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. 

Exchangemaintenance margin requirements have been used by the Partnership asthe measure of its Value at Risk. Maintenance margin requirements areset by exchanges to equal or exceed the maximum losses reasonablyexpected to be incurred in the fair value of any given contract in95%-99% of any one-day interval. Maintenance margin hasbeen used rather than the more generally available initial margin,because initial margin includes a credit risk component, which is notrelevant to Value at Risk.

15

----

The following table indicates the tradingValue at Risk associated with the Partnership's open positions bymarket category as of March 31, 2005 and the highest, lowest andaverage value during the three months ended March 31, 2005. All openposition trading risk exposures of the Partnership have been includedin calculating the figures set forth below. As of March 31, 2005, thePartnership's total capitalization was $63,967,867. There hasbeen no material change in the trading Value at Risk informationpreviously disclosed in the Partnership's Annual Report on Form10-K for the year ended December 31, 2004.

March 31,2005(Unaudited)

|                           |  |               |           |                         |  |                                 |      |                  |  |                      |           |        |  |        |         |        |  |        |         |        |  |  |
|---------------------------|--|---------------|-----------|-------------------------|--|---------------------------------|------|------------------|--|----------------------|-----------|--------|--|--------|---------|--------|--|--------|---------|--------|--|--|
|                      |  |          |           |                    |  | ThreeMonths Ended March 31,2005 |
| MarketSector              |  | Value at Risk |           | % ofTotalCapitalization |  | HighValue atRisk                |      | LowValue at Risk |  | AverageValue atRisk* |
| Currencies:               |  |
| - ExchangeTradedContracts |  | $             | 156,862   |                    |  |                            | 0.24 | %           |  | $                    | 405,050   |   |  | $      | 80,973  |   |  | $      | 191,580 |   |
| -OTCContracts             |  |          | 180,428   |                    |  |                            | 0.29 | %           |  |                 | 868,318   |   |  |   | 149,489 |   |  |   | 201,764 |   |
| Energy                    |  |          | 1,443,750 |                    |  |                            | 2.26 | %           |  |                 | 1,458,875 |   |  |   | 27,500  |   |  |   | 730,633 |   |
| Grains                    |  |          | 305,800   |                    |  |                            | 0.48 | %           |  |                 | 340,050   |   |  |   | 14,850  |   |  |   | 188,383 |   |
| InterestRatesU.S.         |  |          | 329,400   |                    |  |                            | 0.51 | %           |  |                 | 331,284   |   |  |   | 136,625 |   |  |   | 228,365 |   |
| InterestRatesNon-U.S.     |  |          | 299,530   |                    |  |                            | 0.47 | %           |  |                 | 805,502   |   |  |   | 101,313 |   |  |   | 334,150 |   |
| Metals:                   |  |
| -Exchange TradedContracts |  |          | 181,000   |                    |  |                            | 0.28 | %           |  |                 | 181,000   |   |  |   | 9,000   |   |  |   | 125,667 |   |
| -OTCContracts             |  |          | 362,805   |                    |  |                            | 0.57 | %           |  |                 | 362,805   |   |  |   | 139,800 |   |  |   | 262,003 |   |
| Softs                     |  |          | 347,992   |                    |  |                            | 0.54 | %           |  |                 | 347,992   |   |  |   | 38,655  |   |  |   | 231,657 |   |
| Indices                   |  |          | 916,716   |                    |  |                            | 1.43 | %           |  |                 | 1,734,749 |   |  |   | 825,931 |   |  |   | 935,480 |   |
| Total                     |  | $             | 4,524,283 |                    |  |                            | 7.07 | %           |  |
|                           |

|   |                                     |
|---|-------------------------------------|
| * | Averageof month-end Values at Risk. |

16

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Item 4.    Controls and Procedures

Based on their evaluation of the Partnership's disclosurecontrols and procedures as of March 31, 2005, the President and ChiefFinancial Officer of the General Partner have concluded that suchcontrols and procedures are effective.

During thePartnership's last fiscal quarter, no changes occurred in thePartnership's internal control over financial reporting that havematerially affected, or are reasonably likely to materially affect, thePartnership's internal control over financialreporting.

17

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PART II.    OTHERINFORMATION

Item 1.    Legal Proceedings

Thefollowing information supplements and amends our discussion set forthunder Part I, Item 3 "Legal Proceedings" inthe Partnership's Annual Report on Form 10-K for the fiscal yearended December 31, 2004.

Enron Corp.

 InApril  2005, Citigroup, along with other financial institutiondefendants, reached an agreement-in-principle to settle fourstate-court actions brought by various investment funds, which were notpreviously consolidated or coordinated with the NEWBY action. The fourcases are OCM OPPORTUNITIES FUND III, L.P., et al. v. CITIGROUPINC., et al.; PACIFIC INVESTMENT MANAGEMENT CO. LLC, et al. v.CITIGROUP  INC., et al.; AUSA LIFE INSURANCE v. CITIGROUPINC., et al. and PRINCIPAL GLOBAL INVESTORS v. CITIGROUP  INC.,et al. The amounts to be paid in settlement of these actions arecovered by existing litigation reserves.

DynegyInc.

 The court had previously denied leadplaintiff's motion for leave to amend; no appeal was yet timelywhile the remainder of the case remained pending. On April  15,2005, as part of a global settlement involving all defendants,Citigroup entered into a memorandum of understanding to settle thiscase. The amount to be paid in settlement is covered by existinglitigation reserves.

WorldCom,  Inc.

 TheDistrict Court approved the settlement of the IN RE TARGETS SECURITIESLITIGATION on April  22, 2005.

Global Crossing

 The plaintiffs and the Citigroup Related Defendants haveentered into a definitive settlement agreement in the IN RE GLOBALCROSSING,  LTD SECURITIES LITIGATION; the settlement waspreliminarily approved by the Court on March  8, 2005. The amountto be paid in settlement is covered by existing litigationreserves.

Research

 Two putative class actionsagainst CGMI asserting common law claims on behalf of CGMI customers inconnection with published investment research have been dismissed byUnited States District Courts, the dismissals of which were affirmed bythe United States Court of Appeals for the Third and Ninth Circuits,respectively. Plaintiffs in the Ninth Circuit case have sought reviewby the United States Supreme Court; their petition for a writ ofcertiorari, which CGMI opposed, is pending before that court.

Mutual Funds

CGMHI entered into a settlement with the SECwith respect to revenue sharing and sales of classes of funds.

Investigations of Euro Zone Government Bonds Trade

 The German prosecutors have declined to take any actionsagainst the employees in connection with thismatter.

18

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Item 2.    Unregistered Sales of EquitySecurities and Use of Proceeds

Additional Redeemable Unitsoffered represent a reduced brokerage fee to existing limited partnerswho invested $1,000,000 or more.

The following chart sets forththe purchases of Redeemable Units by the Partnership.

|                                           |
|-------------------------------------------|
|                                           |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Period                                    |  | (a)TotalNumber of Shares(or Units) Purchased* |  | (b)Average PricePaid per Share(or Unit)** |  | (c) TotalNumber ofShares (or Units)Purchased as Partof PubliclyAnnouncedPlans or Programs |  | (d) Maximum Number(orApproximateDollar Value) ofShares (or Units)that May YetBePurchased Under thePlans orPrograms |
| January 1, 2005 – January 31, 2005  |  |   | 147.7559 |   |  | $ | 1,624.60 |   |  |   | N/A |   |  |   | N/A |   |
| February1, 2005 – February 28, 2005 |  |   | 243.4651 |   |  | $ | 1,619.58 |   |  |   | N/A |   |  |   | N/A |   |
| March1, 2005 – March 31, 2005       |  |   | 390.2498 |   |  | $ | 1,646.05 |   |  |   | N/A |   |  |   | N/A |   |
| Total                                     |  |   | 781.4708 |   |  | $ | 1,630.08 |   |  |   | N/A |   |  |   | N/A |   |
|                                           |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| * | Generally,Limited Partners are permitted to redeem their Redeemable Units as ofthe end of each month on 10 days' notice to the General Partner.Under certain circumstances, the General Partner can compel redemptionbut, to date, the General Partner has not exercised this right.Purchases of Redeemable Units by the Partnership reflected in the chartabove were made in the ordinary course of the Partnership'sbusiness in connection with effecting redemptions for LimitedPartners. |

|    |                                                                                                                                        |
|----|----------------------------------------------------------------------------------------------------------------------------------------|
| ** | Redemptions ofRedeemable Units are effected as of the last day of each month at theNet Asset Value per Redeemable Unit as of that day. |

Item3.    Defaults Upon Senior Securities — None

Item4.    Submission of Matters to a Vote of Security Holders —None

Item 5.    Other Information — None

Item6.    Exhibits

The exhibits required to be filedby Item 601 of Regulation S-K are incorporated herein by reference tothe exhibit index of the Partnership's Annual Report on Form 10-Kfor the year ended December 31, 2004.

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

Exhibit - 31.2 —Rule 13a-14(a)/15d-14(a) Certification (Certification of ChiefFinancial Officer and Director).

Exhibit - 32.1— Section 1350 Certification (Certification of President andDirector).

Exhibit - 32.2 — Section 1350Certification (Certification of Chief Financial Officer andDirector).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalfby the undersigned thereunto duly authorized.

|                                           |  |                                                                                                                                 |  |        |  |  |  |  |  |  |
|-------------------------------------------|--|---------------------------------------------------------------------------------------------------------------------------------|--|--------|--|--|--|--|--|--|
| SMITHBARNEY DIVERSIFIED FUTURES FUND L.P. |  |                                                                                                                            |
| By:                                       |  | CitigroupManaged FuturesLLC                                                                                                     |  |   |
|                                      |  | (GeneralPartner)                                                                                                                |  |
| By:                                       |  | /s/ David J.Vogel                                                                                                               |  |
|                                      |  | David J.VogelPresident and Director                                                                                             |  |
| Date:                                     |  | 5/16/05                     |  |
| By:                                       |  | /s/ Daniel R.McAuliffe, Jr.                                                                                                     |  |
|                                      |  | Daniel R. McAuliffe,Jr.Chief Financial Officer and Director                                                                     |  |
| Date:                                     |  | 5/16/05                     |  |
|                                           |

20

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