FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                 (X) QUARTERLY REPORT UNDER SECTION 13 or 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

               OR ( ) TRANSITION REPORT UNDER SECTION 13 or 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarter ended June 30, 2002
                      -------------

Commission File Number 0-26132
                       -------

                   SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

      New York                                13-3729162
--------------------------------------------------------------------------------
(State or other jurisdiction of         (I.R.S. Employer
incorporation or organization)       Identification No.)


                     c/o Smith Barney Futures Management LLC
                           388 Greenwich St. - 7th Fl.
                            New York, New York 10013
--------------------------------------------------------------------------------
              (Address and Zip Code of principal executive offices)


                          (212) 723-5424
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


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

                                                 Yes   X    No
                                                     -----     ----


<PAGE>


                   SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.
                                    FORM 10-Q
                                      INDEX

                                                                   Page
                                                                  Number

PART I - Financial Information:

 Item 1.          Financial Statements:

                  Statement of Financial Condition
                  at June 30, 2002 and December 31,
                  2001 (unaudited).                                  3

                  Condensed Schedules of Investments at
                  June 30, 2002 and December 21, 2001
                  (unaudited).                                     4 - 5

                  Statement of Income and Expenses
                  and Partners' Capital for the three
                  and six months ended June 30, 2002
                  and 2001 (unaudited).                              6

                  Notes to Financial Statements
                  (unaudited)                                      7 - 10

 Item 2.          Management's Discussion and
                  Analysis of Financial Condition
                  and Results of Operations                        11 - 13

 Item 3.          Quantitative and Qualitative
                  Disclosures of Market Risk                       14 - 15

PART II - Other Information                                           16


                                       2
<PAGE>
                                     PART I
                          ITEM 1. FINANCIAL STATEMENTS

                   SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.
                        STATEMENT OF FINANCIAL CONDITION
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                                   <C>         <C>
                                                   June 30,    December 31,
                                                    2002          2001
                                                ------------   ------------


Assets:

Equity in commodity futures trading account:
  Cash                                           $53,665,455   $63,493,595
  Net unrealized appreciation
   on open positions                               7,259,995     2,703,661
  Commodity options owned, at fair value
   (cost $3,149,250 and $1,752,250 in 2002 and
    2001, respectively)                            2,899,575       849,250
                                                 -----------   -----------
                                                  63,825,025    67,046,506
Interest receivable                                   62,688        77,094
                                                 -----------   -----------
                                                 $63,887,713   $67,123,600
                                                 ===========   ===========

LIABILITIES AND PARTNERS' CAPITAL:

Liabilities:

 Accrued expenses:
  Commissions                                    $   287,512   $   308,245
  Management fees                                    115,970       153,342
  Incentive fees                                     268,774           -
  Other                                              105,180        75,682
 Redemptions payable                               1,076,623       217,590
                                                 -----------   -----------
                                                   1,854,059       754,859
                                                 -----------   -----------

Partners' Capital:

General Partner, 2,048.9308 Unit
   equivalents outstanding in 2002 and 2001        2,448,862     2,379,259
Limited Partners, 49,853.9416 and
  55,105.2813 Units of Limited Partnership
  Interest outstanding in 2002 and 2001,
  respectively                                    59,584,792    63,989,482
                                                 -----------   -----------
                                                  62,033,654    66,368,741
                                                 -----------   -----------
                                                 $63,887,713   $67,123,600
                                                 ===========   ===========
</TABLE>


See Notes to Financial Statements.
                                        3



<PAGE>
                   Smith Barney Diversified Futures Fund L.P.
                        Condensed Schedule of Investments
                                  June 30, 2002
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                                        <C>                                   <C>
Sector                                                    Contract                            Fair Value
----------------------------------       --------------------------------------------        -------------
Currencies
                                         Exchange contracts purchased - 4.53%                 $ 2,808,616
                                         Options owned - 4.68%                                  2,899,575
                                         Exchange contracts sold - 0.26%                          162,896
                                                                                             -------------
                                           Total Exchange - 9.47%                               5,871,087

                                         Over the counter contracts purchased - 3.70%           2,295,956
                                         Over the counter contracts sold - (2.40)%             (1,487,717)
                                                                                             -------------
                                           Total Over the counter - 1.30%                         808,239

                                                                                             -------------
   Total Currencies - 10.77%                                                                    6,679,326
                                                                                             -------------

Energy
                                         Futures contracts purchased - 0.00%*                       1,649
                                         Futures contracts sold - 0.01%                             4,680
                                                                                             -------------
   Total Energy - 0.01%                                                                             6,329
                                                                                             -------------
Grains
                                         Futures contracts purchased - 0.74%                      458,883
                                         Futures contracts sold - (0.03)%                         (15,657)
                                                                                             -------------
  Total Grains - 0.71%                                                                            443,226
                                                                                             -------------

Total Interest Rates U.S. - 2.21%        Futures contracts purchased - 2.21%                    1,372,741
                                                                                             -------------

Total Interest Rates Non-U.S. - 2.48%    Futures contracts purchased - 2.48%                    1,540,880
                                                                                             -------------
Livestock
                                         Futures contracts purchased - 0.01%                        6,360
                                         Futures contracts sold - (0.02)%                         (12,980)
                                                                                             -------------
   Total Livestock - (0.01)%                                                                       (6,620)
                                                                                             -------------
Metals
                                         Futures contracts purchased - (0.04)%                    (28,620)
                                         Futures contracts sold - (0.44)%                        (272,777)
                                                                                             -------------
   Total Metals - (0.48)%                                                                        (301,397)
                                                                                             -------------
Softs
                                         Futures contracts purchased - 0.56%                      349,801
                                         Futures contracts sold - 0.10%                            64,291
                                                                                             -------------
  Total Softs - 0.66%                                                                             414,092
                                                                                             -------------
Indices
                                         Futures contracts purchased - (0.05)%                    (30,801)
                                         Futures contracts sold - 0.08%                            47,811
                                                                                             -------------
  Total Indices - 0.03%                                                                            17,010
                                                                                             -------------
Total Lumber - (0.00)%*                  Futures contracts sold - (0.00)%*                         (6,017)
                                                                                             -------------
Total Fair Value - 16.38%                                                                    $ 10,159,570
                                                                                             =============

Country Composition                                                                         % of Investments
                                                    Investments at Fair Value                at Fair Value
----------------------------------       --------------------------------------------        -------------
Australia                                                                    $ 3,079                0.03%
Canada                                                                         2,159                0.02%
Germany                                                                      502,553                4.95%
France                                                                       (75,028)              (0.74)%
Hong Kong                                                                    (17,853)              (0.18)%
Japan                                                                        273,969                2.70%
Spain                                                                         79,533                0.78%
United Kingdom                                                               551,263                5.43%
United States                                                              8,839,895               87.01%
                                         --------------------------------------------        -------------
                                                                        $ 10,159,570              100.00%
                                         ============================================        =============
</TABLE>
Percentages are based on Partners' capital unless otherwise indicated
* Due to rounding
See Notes to Financial Statements
                                        4
<PAGE>
                   Smith Barney Diversified Futures Fund L.P.
                        Condensed Schedule of Investments
                                December 31, 2001
<TABLE>
<CAPTION>
<S>                                                   <C>                                                           <C>
Sector                                             Contract                                                      Fair Value
----------------------------------------------------------------------------------------------------------------------------
Energy                                             Futures contracts purchased - (0.06)%                         $  (40,499)
                                                   Futures contracts sold - (0.19)%                                (126,734)
                                                                                                                 ----------
     Total Energy - (0.25)%                                                                                        (167,233)
                                                                                                                 ----------

Grains                                             Futures contracts purchased - (0.01)%                             (4,000)
                                                   Futures contracts sold - 0.42%                                   280,846
                                                                                                                 ----------
     Total Grains - 0.41%                                                                                           276,846
                                                                                                                 ----------
Interest Rates U.S.                                Futures contracts purchased - 0.07%                               48,625
                                                   Futures contracts sold - 0.03%                                    14,496
                                                                                                                 ----------
     Total Interest Rates U.S. - 0.10%                                                                               63,121
                                                                                                                 ----------
Interest Rates Non-U.S.                            Futures contracts purchased - (0.19)%                           (129,572)
                                                   Futures contracts sold - 0.29%                                   194,860
                                                                                                                 ----------
     Total Interest Rates Non-U.S. - 0.10%                                                                           65,288
                                                                                                                 ----------
Livestock                                          Futures contracts purchased - 0.06%                               42,050
                                                   Futures contracts sold - (0.08)%                                 (57,934)
                                                                                                                 ----------
     Total Livestock - (0.02)%                                                                                      (15,884)
                                                                                                                 ----------
Metals                                             Futures contracts purchased -  0.12%                              82,041
                                                   Futures contracts sold - (0.55)%                                (365,357)
                                                                                                                 ----------
     Total Metals - (0.43)%                                                                                        (283,316)
                                                                                                                 ----------
Currencies                                         Exchange contracts purchased - 0.75%                             501,553
                                                   Exchange contracts sold - 1.38%                                  914,350
                                                                                                                 ----------
                                                     Total Exchange - 2.13%                                       1,415,903

                                                   Over the counter contracts purchased - 0.20%                     132,886
                                                   Over the counter contracts sold - 1.47%                          974,655
                                                                                                                 ----------
                                                     Total Over the counter - 1.67%                               1,107,541
                                                                                                                 ----------
     Total Currencies - 3.80%                                                                                     2,523,444
                                                                                                                 ----------
Softs                                              Futures contracts purchased - 0.19%                              125,707
                                                   Futures contracts sold - (0.02)%                                 (14,192)
                                                                                                                 ----------
     Total Softs - 0.17%                                                                                            111,515
                                                                                                                 ----------
Indices                                            Futures contracts purchased - 0.21%                              140,713
                                                   Futures contracts sold - (0.01)%                                  (5,850)
                                                                                                                 ----------
     Total Indices - 0.20%                                                                                          134,863
                                                                                                                 ----------
Total Lumber - (0.01)%                             Futures contracts sold - (0.01)%                                  (4,983)
                                                                                                                 ----------
Total Fair Value on Future and Forwards - 4.07%                                                                   2,703,661
                                                                                                                 ----------
Total Currencies - 1.28%                           Commodity options owned - 1.28%                                  849,250
                                                                                                                 ----------
Total Investments - 5.35%                                                                                        $3,552,911
                                                                                                                  =========
</TABLE>
<TABLE>
<CAPTION>
<S>               <C>                      <C>                    <C>
                                        Investments         % of Investments
           Country Composition         at Fair Value          at Fair Value
           --------------------        -------------          -------------
           Australia                 $     18,429                0.52%
           Canada                          22,325                0.63%
           France                          24,533                0.69%
           Germany                        144,855                4.08%
           Hong Kong                        3,976                0.11%
           Italy                            1,696                0.05%
           Japan                          (73,301)              (2.06)%
           Spain                           (5,828)              (0.16)%
           United Kingdom                (432,138)             (12.16)%
           United States                3,848,364              108.32%
                                        ----------             -------
                                       $3,552,911              100.00%
                                        =========              ======
</TABLE>
Percentages are based on Partners' capital unless otherwise indicated
See notes to financial statements.
                                      5
<PAGE>

                   SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.
             STATEMENT OF INCOME AND EXPENSES AND PARTNERS' CAPITAL
                                   (UNAUDITED)





<TABLE>
<CAPTION>
<S>                                                     <C>             <C>             <C>              <C>
                                                        THREE MONTHS ENDED                SIX MONTHS ENDED
                                                             JUNE 30,                          JUNE 30,
                                                    ----------------------------   -----------------------------
                                                         2002            2001            2002           2001
                                                    ------------    ------------   ------------     -------------

Income:
  Net gains (losses) on trading of commodity
   interests:
  Realized gains (losses) on closed positions       $  3,371,204    $ (2,469,504)   $ (1,281,655)   $    406,663
  Change in unrealized gains (losses) on open
   positions                                           2,979,452      (2,326,211)      5,209,659      (2,060,031)
                                                     ------------    ------------    ------------    -----------
                                                       6,350,656      (4,795,715)      3,928,004     (1,653,368)
  Interest income                                        191,622         529,023         400,359       1,298,497
                                                    ------------    ------------    ------------    -----------
                                                       6,542,278      (4,266,692)      4,328,363       (354,871)
                                                    ------------    ------------    ------------    -----------

Expenses:
   Brokerage commissions including
     clearing fees of $48,118, $86,445,
     $96,264 and $151,890,  respectively                 923,101       1,156,825*      1,867,693       2,351,184*
  Management fees                                        350,270         495,151         764,451       1,070,191
  Incentive fees                                         268,774        (459,929)        268,774         376,871
  Other expenses                                          26,172          30,879          52,286          60,510
                                                     ------------    ------------    ------------    -----------
                                                       1,568,317       1,222,926       2,953,204      3,858,756
                                                     ------------    ------------    ------------    -----------
  Net income (loss)                                    4,973,961      (5,489,618)      1,375,159      (4,213,627)
  Additions                                                2,438           6,526           4,915          12,847
  Redemptions                                         (4,062,403)     (3,406,681)     (5,715,161)     (6,627,964)
                                                    ------------    ------------    ------------    -----------
  Net increase (decrease) in Partners' capital           913,996      (8,889,773)     (4,335,087)    (10,828,744)
Partners' capital, beginning of period                61,119,658      78,560,078      66,368,741      80,499,049
                                                    ------------    ------------    ------------    -----------
Partners' capital, end of period                    $ 62,033,654    $ 69,670,305    $ 62,033,654    $ 69,670,305
                                                    ============    ============    ============    ===========
Net asset value per Unit
  (51,902.8724 and 60,714.5683 Units outstanding
  at June 30, 2002 and 2001, respectively)          $   1,195.19    $   1,147.51    $   1,195.19    $  1,147.51
                                                    ============    ============    ============    -----------
Net income (loss) per Unit of Limited Partnership
  Interest and General Partner Unit equivalent      $      96.98    $     (87.04)   $      33.97    $    (66.44)
                                                    ============    ============    ============    ===========
</TABLE>


* Amounts reclassified for comparative purposes
See Notes to Financial Statements


                                        6



<PAGE>


                   Smith Barney Diversified Futures Fund L.P.
                          Notes to Financial Statements
                                  June 30, 2002
                                   (Unaudited)

1.     General:

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

     Smith  Barney  Futures  Management  LLC acts as the  general  partner  (the
"General  Partner") of the Partnership.  The  Partnership's  commodity broker is
Salomon Smith Barney Inc.  ("SSB").  SSB is an affiliate of the General Partner.
The  General  Partner is wholly  owned by Salomon  Smith  Barney  Holdings  Inc.
("SSBHI"), which is the sole owner of SSB. SSBHI is a wholly owned subsidiary of
Citigroup  Inc.  As of June 30,  2002,  all trading  decisions  are made for the
Partnership  by  Campbell  &  Company,  Inc.,  Willowbridge  Associates,   Inc.,
Stonebrook  Structured  Products,  LLC,  Winton  Capital  Management  and Graham
Capital Management L.P. (collectively the "Advisors").

     The accompanying  financial statements are unaudited but, in the opinion of
management,  include  all  adjustments,  consisting  only  of  normal  recurring
adjustments,  necessary for a fair presentation of the  Partnership's  financial
condition  at June 30,  2002  and  December  31,  2001  and the  results  of its
operations  for the three and six  months  ended June 30,  2002 and 2001.  These
financial  statements  present the results of interim periods and do not include
all disclosures  normally  provided in annual financial  statements.  You should
read these financial statements together with the financial statements and notes
included  in the  Partnership's  annual  report  on Form  10-K  filed  with  the
Securities and Exchange Commission for the year ended December 31, 2001.

     Due to the nature of commodity  trading,  the results of operations for the
interim  periods  presented  should not be considered  indicative of the results
that may be expected for the entire year.


                                       7
<PAGE>


                   Smith Barney Diversified Futures Fund L.P.
                          Notes to Financial Statements
                                  June 30, 2002
                                   (continued)
                                   (Unaudited)
2. Financial Highlights:

     Changes in net asset value per Unit for the three and six months ended June
30, 2002 and 2001 were as follows:

<TABLE>
<CAPTION>
<S>                                        <C>           <C>            <C>          <C>
                                            THREE-MONTHS ENDED        SIX-MONTHS ENDED
                                                JUNE 30,                  JUNE 30,
                                        ----------------------      -----------------------
                                          2002          2001          2002          2001
                                        -----------------------     -----------------------

Net realized and unrealized
 gains(losses) *                       $  105.47     $  (94.34)    $   46.53      $ (63.37)
Interest income                             3.54          8.43          7.21         20.16
Expenses **                               (12.03)        (1.13)       (19.77)       (23.23)
                                        ---------     ---------     ---------     ---------
Increase(decrease) for period              96.98        (87.04)        33.97        (66.44)
Net Asset Value per Unit,
 beginning of period                    1,098.21      1,234.55      1,161.22      1,213.95
                                        ---------     ---------     ---------     ---------
Net Asset Value per Unit,
 end of period                        $ 1,195.19    $ 1,147.51    $ 1,195.19    $ 1,147.51
                                        =========     =========     =========     =========

Ratio to average net assets: ***
Net income(loss) before incentive
 fee                                       35.76%       (32.49)%        5.44%       (10.28)%
Incentive fee                              (1.83)%        2.51%        (0.89)%       (1.01)%
                                        ---------     ---------     ---------     ---------
Net income(loss) after incentive
 fee                                       33.93%       (29.98)%        4.55%       (11.29)%
                                        =========     =========     =========     =========

Operating expenses                          8.87%         9.19%         8.87%         9.33%
Incentive fee                               1.83%         2.51%         0.89%         1.01%
                                        ---------     ---------     ---------     ---------
Total expenses and incentive fees          10.70%        11.70%         9.76%        10.34%
                                        =========     =========     =========     =========

Total return:
Total return before incentive fee           9.30%        (7.66)%        3.40%        (4.96)%
Incentive fee                              (0.47)%        0.61%        (0.47)%       (0.51)%
                                        ---------     ---------     ---------     ---------
Total return after incentive fee            8.83%        (7.05)%        2.93%        (5.47)%
                                        =========     =========     =========     =========
</TABLE>

*    Net realized and unrealized gains (losses) is net of commission expense.
**   Expenses exclude commission expense.
***  Annualized

                                       8
<PAGE>


                   Smith Barney Diversified Futures Fund L.P.
                          Notes to Financial Statements
                                  June 30, 2002
                                   (Unaudited)
                                   (Continued)

3.  Trading Activities:

     The  Partnership  was formed for the  purpose  of  trading  contracts  in a
variety of commodity interests,  including derivative financial  instruments and
derivative  commodity  instruments.  The  results of the  Partnership's  trading
activity  are  shown in the  statement  of income  and  expenses  and  partners'
capital.

     The  Customer   Agreement   between  the  Partnership  and  SSB  gives  the
Partnership the legal right to net unrealized gains and losses.

     All of the  commodity  interests  owned  by the  Partnership  are  held for
trading purposes. The average fair values during the six and twelve months ended
June 30,  2002 and  December  31,  2001,  based on a monthly  calculation,  were
$3,643,799  and  $3,898,076,  respectively.  The fair values of these  commodity
interests,  including  options  thereon,  if  applicable,  at June 30,  2002 and
December 31, 2001, were  $10,159,570 and $3,552,911,  respectively.  Fair values
for exchange  traded  commodity  futures and options are based on quoted  market
prices for those  futures  and  options.  Fair  values  for all other  financial
instruments for which market  quotations are not readily  available are based on
calculations approved by the General Partner.

4. Financial Instrument Risk:

     The Partnership is party to financial  instruments with  off-balance  sheet
risk,  including  derivative  financial  instruments  and  derivative  commodity
instruments,  in the normal course of its business.  These financial instruments
may  include  forwards,  futures  and  options,  whose  values are based upon an
underlying  asset,  index,  or reference  rate, and generally  represent  future
commitments  to exchange  currencies  or cash  flows,  to purchase or sell other
financial  instruments at specific terms at specified  future dates,  or, in the
case of derivative commodity instruments, to have a reasonable possibility to be
settled in cash, through physical delivery or with another financial instrument.
These  instruments  may be traded on an  exchange or  over-the-counter  ("OTC").
Exchange  traded  instruments are  standardized  and include futures and certain
option contracts.  OTC contracts are negotiated between  contracting parties and
include  forwards and certain options.  Each of these  instruments is subject to
various risks similar to those related to the underlying  financial  instruments
including  market and credit risk.  In general,  the risks  associated  with OTC


                                       9
<PAGE>


                   Smith Barney Diversified Futures Fund L.P.
                          Notes to Financial Statements
                                  June 30, 2002
                                   (Unaudited)

contracts are greater than those  associated  with exchange  traded  instruments
because of the greater risk of default by the counterparty to an OTC contract.

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

     Credit risk is the possibility  that a loss may occur due to the failure of
a counterparty to perform according to the terms of a contract. Credit risk with
respect to exchange traded instruments is reduced to the extent that an exchange
or  clearing  organization  acts  as a  counterparty  to the  transactions.  The
Partnership's  risk of loss in the event of  counterparty  default is  typically
limited to the amounts recognized as unrealized appreciation in the statement of
financial  condition and not represented by the contract or notional  amounts of
the  instruments.  The  Partnership  has  concentration  risk  because  the sole
counterparty or broker with respect to the Partnership's assets is SSB.

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

     The  notional  or  contractual  amounts  of these  instruments,  while  not
recorded in the financial  statements,  reflect the extent of the  Partnership's
involvement  in these  instruments.  The  majority of these  instruments  mature
within  one  year  of  June  30,  2002.  However,  due  to  the  nature  of  the
Partnership's business, these instruments may not be held to maturity.


                                       10
<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations.

Liquidity and Capital Resources

     The Partnership does not engage in the sale of goods or services.  Its only
assets are its equity in its commodity  futures trading  account,  consisting of
cash, net  unrealized  appreciation  (depreciation)  on open futures and forward
contracts,  commodity options and interest receivable. Because of the low margin
deposits normally required in commodity futures trading,  relatively small price
movements may result in substantial losses to the Partnership. While substantial
losses could lead to a decrease in liquidity, no such losses occurred during the
second quarter of 2002.

     The  Partnership's  capital  consists of the capital  contributions  of the
partners as  increased  or  decreased  by gains or losses on  commodity  futures
trading,  expenses,  interest  income,  additions and  redemptions  of Units and
distributions of profits, if any.

     For the six months ended June 30, 2002,  Partnership capital decreased 6.5%
from  $66,368,741  to  $62,033,654.   This  decrease  was  attributable  to  the
redemption of 5,255.8294 Units totaling  $5,715,161,  which was partially offset
by net income from operations of $1,375,159,  coupled with  additional  sales of
4.4897 Units totaling $4,915.  Persons  investing  $1,000,000 or more will pay a
reduced  brokerage  fee,  receiving the  differential  in the form of additional
Units.  Future  redemptions  can  impact  the  amount  of  funds  available  for
investments in commodity contract positions in subsequent periods.

Critical Accounting Policies

     The  preparation  of financial  statements  in conformity  with  accounting
principles  generally  accepted  in the United  States  requires  estimates  and
assumptions that affect the reported amounts of assets and liabilities, revenues
and expenses,  and related  disclosures of contingent  assets and liabilities in
the financial statements and accompanying notes.

     All commodity interests  (including  derivative  financial  instruments and
derivative commodity  instruments) are used for trading purposes.  The commodity
interests  are  recorded on trade date and open  contracts  are  recorded in the
statement of financial  condition at fair value on the last  business day of the
period,  which represents  market value for those commodity  interests for which
market  quotations are readily  available.  Investments  in commodity  interests
denominated  in  foreign  currencies  are  translated  into U.S.  dollars at the
exchange rates prevailing on the last business day of the period. Realized gains



                                       11
<PAGE>

(losses) and changes in  unrealized  values on commodity  interests  and foreign
currencies  are  recognized in the period in which the contract is closed or the
changes  occur and are  included in net gains  (losses) on trading of  commodity
interests.

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

Results of Operations

     During the  Partnership's  second  quarter of 2002, the net asset value per
unit  increased  8.8% from  $1,098.21  to $1,195.19 as compared to a decrease of
7.1% in the second  quarter of 2001. The  Partnership  experienced a net trading
gain before brokerage commissions and related fees in the second quarter of 2002
of  $6,350,656.  Gains were primarily  attributable  to the trading of commodity
contracts in  currencies,  U.S.  interest  rates,  grains and livestock and were
partially  offset by losses in  energy,  softs,  metals,  indices  and  non-U.S.
interest rates. The Partnership  experienced a net trading loss before brokerage
commissions and related fees in the second quarter of 2001 of $4,795,715. Losses
were primarily  attributable to the trading of commodity  futures in currencies,
indices,  metals, softs,  livestock,  U.S. and non-U.S.  interest rates and were
partially offset by gains in energy and grains.

     Commodity futures markets are highly volatile.  The potential for broad and
rapid price fluctuations  increases the risks involved in commodity trading, but
also increases the possibility of profit.  The  profitability of the Partnership
depends on the  existence  of major price trends and the ability of the Advisors
to correctly identify those 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  and
international  political and economic  events and changes in interest  rates. To
the extent that market trends exist and the Advisors are able to identify  them,
the Partnership expects to increase capital through operations.

     Interest income on 80% of the Partnership's daily equity maintained in cash
was earned on the monthly  average  30-day U.S.  Treasury  bill rate  determined


                                       12

<PAGE>

weekly by SSB based on the  non-competitive  yield on three month U.S.  Treasury
bills  maturing 30 days from the date in which such  weekly rate is  determined.
Salomon  Smith Barney may continue to maintain  the  Partnership  assets in cash
and/or to place all of the Fund  assets  in  90-day  Treasury  bills and pay the
Partnership 80% of the interest earned on the Treasury bills purchased.  Salomon
Smith Barney will retain 20% of any interest earned on Treasury bills.  Interest
income for the three and six months  ended June 30, 2002  decreased  by $337,401
and $898,138,  respectively,  as compared to the corresponding  periods in 2001.
The decrease in interest income is primarily due to a decrease in interest rates
during the three and six months ended June 30, 2002 as compared to 2001.

     Brokerage  commissions are calculated on the  Partnership's net asset value
as of the last day of each  month  and,  therefore,  vary  according  to trading
performance and redemptions.  Accordingly,  they must be compared in relation to
the fluctuations in monthly net asset values. Commissions and fees for the three
and six  months  ended  June  30,  2002  decreased  by  $233,724  and  $483,491,
respectively,  as compared to the corresponding periods in 2001. The decrease in
brokerage  commissions  is due to a decrease in assets  during the three and six
months ended June 30, 2002 as compared to 2001.

     Management  fees are  calculated  on the portion of the  Partnership's  net
asset value  allocated to each  Advisor at the end of the month and,  therefore,
are affected by trading  performance  and  redemptions.  Management fees for the
three and six months ended June 30, 2002  decreased  by $144,881  and  $305,740,
respectively,  as compared to the corresponding periods in 2001. The decrease in
management  fees is due to a decrease in assets  during the three and six months
ended June 30, 2002 as compared to 2001.

     Incentive  fees are  based on the new  trading  profits  generated  by each
Advisor at the end of the quarter, as defined in the advisory agreements between
the Partnership,  the General Partner and each Advisor.  Trading performance for
the six months  ended  June 30,  2002 and 2001  resulted  in  incentive  fees of
$268,774 and $376,871, respectively.

                                       13
<PAGE>


Item 3.  Quantitative and Qualitative Disclosures of Market Risk

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

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

     The  Partnership  rapidly  acquires  and  liquidates  both  long and  short
positions in a wide range of different markets. Consequently, it is not possible
to predict how a particular future market scenario will affect performance,  and
the Partnership's  past performance is not necessarily  indicative of its future
results.

     Value at Risk is a measure  of the  maximum  amount  which the  Partnership
could  reasonably  be expected to lose in a given market  sector.  However,  the
inherent uncertainty of the Partnership's speculative trading and the recurrence
in the markets  traded by the  Partnership  of market  movements  far  exceeding
expectations could result in actual trading or non-trading losses far beyond the
indicated Value at Risk or the Partnership's  experience to date (i.e., "risk of
ruin").  In  light  of the  foregoing  as well as the  risks  and  uncertainties
intrinsic to all future projections, the inclusion of the quantification in this
section should not be considered to constitute  any assurance or  representation
that the  Partnership's  losses in any market sector will be limited to Value at
Risk or by the Partnership's attempts to manage its market risk.

     Exchange  maintenance margin requirements have been used by the Partnership
as the measure of its Value at Risk.  Maintenance margin requirements are set by
exchanges  to equal or exceed  the  maximum  losses  reasonably  expected  to be
incurred  in the fair value of any given  contract  in  95%-99%  of any  one-day
intervals.  Maintenance  margin  has been used  rather  than the more  generally
available  initial  margin,  because  initial  margin  includes  a  credit  risk
component, which is not relevant to Value at Risk.

                                       14
<PAGE>


     The following table indicates the trading Value at Risk associated with
the Partnership's open positions by market category as of June 30, 2002. All
open position trading risk exposures of the Partnership have been included in
calculating the figures set forth below. As of June 30, 2002, the Partnership's
total capitalization was $62,033,654. There has been no material change in the
trading Value at Risk information previously disclosed in the Form 10-K for the
year ended December 31, 2001.

                                  June 30, 2002
                                   (Unaudited)
<TABLE>
<CAPTION>
<S>                                <C>         <C>                   <C>         <C>
                                                                   Year to Date
                                               % of Total          High           Low
Market Sector                Value at Risk   Capitalization    Value at Risk   Value at Risk
--------------------------------------------------------------------------------------------

Currencies:
 - Exchange Traded Contracts   $ 2,425,883     3.91%            $2,547,460     $811,429
 - OTC Contracts                 1,185,253     1.91%             1,440,741      862,878
Energy                             347,600     0.56%             2,523,100      171,800
Grains                             400,538     0.65%               427,506      189,990
Interest Rates U.S.              1,225,700     1.98%             1,225,700      180,300
Interest Rates Non-U.S.          2,610,432     4.21%             2,619,432      549,484
Livestock                           45,450     0.07%               124,650       44,832
Metals:
 - Exchange Traded Contracts       410,800     0.66%               935,900       93,600
 - OTC Contracts                   503,175     0.81%               689,975       75,875
Softs                              380,630     0.61%               453,864      160,134
Indices                          1,034,543     1.67%             2,838,322      335,077
Lumber                               6,500     0.01%                 9,200        1,300
                              ------------    ------
Total                          $10,576,504    17.05%
                              ============   =======
</TABLE>

                                       15

<PAGE>


                            PART II OTHER INFORMATION

Item 1.  Legal Proceedings -

               In April 2002, consolidated amended complaints were filed against
          Salomon Smith Barney Inc and other  investment banks named in numerous
          putative  class actions filed in the United States  District Court for
          the  Southern  District  of New York  alleging  violations  of certain
          federal securities laws (including Section 11 of the Securities Act of
          1933, as amended,  and Section 10(b) of the Securities Exchange Act of
          1934, as amended) with respect to the allocation of shares for certain
          initial  public  offerings and related  aftermarket  transactions  and
          damage  to  investors  caused by  allegedly  biased  research  analyst
          reports.  Also  pending in the  Southern  District of New York against
          Salomon  Smith  Barney  Inc and other  investment  banks  are  several
          putative  class  actions  which have been  consolidated  into a single
          class  action  alleging   violations  of  certain  federal  and  state
          antitrust laws in connection  with the allocation of shares in initial
          public offerings when acting as underwriters.

Item 2.   Changes in Securities and Use of Proceeds -

               Additional  Units  offered  represent a reduced  brokerage fee to
          existing limited partners who invested $1,000,000 or more. For the six
          months  ended June 30,  2002,  there were  additional  sales of 4.4897
          Units totaling  $4,915.  For the six months ended June 30, 2001, there
          were additional sales of 10.8059 Units totaling $12,847.

               Proceeds  from  the  sale of  additional  Units  are  used in the
          trading of commodity  interests  including futures contracts,  options
          and forward contracts.

Item 3.   Defaults Upon Senior Securities - None

Item 4.   Submission of Matters to a Vote of Security Holders -   None

Item 5.   Other Information - None

Item 6.  (a) Exhibit - 99.1 Certificate of Chief Executive Officer.
             Exhibit - 99.2 Certificate of Chief Financial Officer.

         (b) Reports on Form 8-K - None with respect to the second quarter of
             2002. On July 17, 2002 the Partnership filed a notice on Form 8-K
             to report a change in accountants from PricewaterhouseCoopers LLP
             to KPMG LLP.

                                       16
<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of Section  13 or 15 (d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.


By:        Smith Barney Futures Management LLC
           (General Partner)


By:        /s/ David J. Vogel, President
           -------------------------------
           David J. Vogel, President

Date:      8/14/02
           --------


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

By:        Smith Barney Futures Management LLC
           (General Partner)


By:        /s/ David J. Vogel, President
           -------------------------------
           David J. Vogel, President


Date:      8/14/02
           --------


By:       /s/ Daniel R. McAuliffe, Jr.
          -------------------------------------
          Daniel R. McAuliffe, Jr.
          Chief Financial Officer and
          Director

Date: 8/14/02

                                       17