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

FORM 10-K

Annual ReportPursuant to Section 13 or 15(d) of the Securities Exchange Act of1934

For the year ended December 31, 2005

Commission File Number 0-50736

SALOMON SMITH BARNEY FAIRFIELD FUTURES FUNDL.P.

|  |
|--|
|  |  |
|  |

(Exact name ofregistrant as specified in its charter)

|                                                               |  |                                     |  |  |  |  |
|---------------------------------------------------------------|--|-------------------------------------|--|--|--|--|
| NewYork                                                       |  | 04-3621353                          |
| (State or other jurisdiction ofincorporation or organization) |  | (I.R.S. EmployerIdentification No.) |
|                                                               |

c/o Citigroup ManagedFutures LLC 731 Lexington Ave. – 25th Fl. New York, NewYork 10022

|  |
|--|
|  |  |
|  |

(Addressand Zip Code of principal executive offices)

(212)559-2011

|  |
|--|
|  |  |
|  |

(Registrant'stelephone number, including area code)

Securitiesregistered pursuant to Section 12(b) of theAct:None

Securities registeredpursuant to Section 12(g) of the Act: Redeemable Units of LimitedPartnership Interest

|  | (Title ofClass) |
|--|-----------------|

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct.

Yes             No X 

Indicate by check mark if theregistrant is not required to file reports pursuant to Section 13 orSection 15(d) of the Act.

Yes             No X 

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

YesX        No     

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

Indicate by check mark whether the registrant is a largeaccelerated filer, an accelerated filer, or a non accelerated filer (asdefined in Rule 12b-2 of the Act).

Large acceleratedflier       Accelerated filer      Non accelerated flier  X 

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

Yes             No X 

Limited PartnershipRedeemable Units with an aggregate value of $86,327,749 wereoutstanding and held by non-affiliates as of the last business day ofthe registrants most recently completed second fiscal quarter.

As of February 28, 2006, 46,895.6271 Limited PartnershipRedeemable Units were outstanding.

DOCUMENTSINCORPORATED BY REFERENCE

None

----

PART I

Item1.    Business.

(a)    General development ofbusiness. Salomon Smith Barney Fairfield Futures Fund L.P.("Partnership") is a limited partnershiporganized on March 25, 2002 under the partnership laws of the State ofNew York. The Partnership commenced trading operations on June 5, 2002.The Partnership engages in speculative trading of commodity interests,including futures contracts, options and forward contracts. ThePartnership may also engage in swaps transactions and other derivativetransactions with the approval of the General Partner (definedbelow).

Beginning April 15, 2002, 110,000 redeemable units ofLimited Partnership Interest ("RedeemableUnits") were offered at $1,000 per Redeemable Unit for aperiod of ninety days, subject to increase for up to an additionalsixty days at the sole discretion of the general partner. Between April15, 2002 (commencement of the offering period) and June 4, 2002, 12,423Redeemable Units were sold. Proceeds of the offering were held in anescrow account and were transferred, along with the generalpartner's contribution of $125,000 to the Partnership'strading account on June 5, 2002 when the Partnership commenced trading.The Partnership is not currently offering Redeemable Units. Sales andredemptions of Redeemable Units and general partner contributions andredemptions for the years ended December 31, 2005, 2004 and 2003 arereported in the Statements of Changes in Partners' Capital onpage F-10 under "Item 8. Financial Statements andSupplementary Data."

Citigroup Managed FuturesLLC, acts as the general partner (the "GeneralPartner") of the Partnership. The Partnership'scommodity 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 CitigroupInc.

The Partnership's trading of futures, forwards andoptions contracts, if applicable, on commodities is done primarily onUnited States of America and foreign commodity exchanges. It engages insuch trading through a commodity brokerage account maintained withCGM.

The General Partner has agreed to make capitalcontributions, if necessary, so that its general partnership interestwill be equal to the greater of (i) an amount to entitle it to1% of each material item of Partnership income, loss, deductionor credit and (ii) the greater of (a) 1% of the partners'contributions to the Partnership or (b) $25,000. The Partnership willbe liquidated upon the first of the following to occur: December 31,2022; the net asset value per Redeemable Unit falls below $400 as ofthe close of any business day; a decline in net assets after tradingcommences to less than $1,000,000; or under certain circumstances asdefined in the Limited Partnership Agreement of the Partnership (the"Limited Partnership Agreement").

Underthe Limited Partnership Agreement, dated as of March 25, 2002, theGeneral Partner has sole responsibility for the administration of thebusiness and affairs of the Partnership. The Partnership pays theGeneral Partner a monthly administrative fee in return for its servicesto the Partnership equal to 0.5% of month-end Net Assets peryear.

The General Partner has entered into a ManagementAgreement (the "Management Agreement") withGraham Capital Management, L.P. ("Graham"),(the "Advisor") who will make all commoditytrading decisions for the Partnership. The Advisor is not affiliatedwith the General Partner or CGM. The Advisor is not responsible for theorganization or operation of the Partnership.

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

The Partnership has entered into a CustomerAgreement with CGM (the "Customer Agreement")which provides that the Partnership will pay CGM a monthly BrokerageFee equal to 4.5% per year of 

1

----

month-end Net Assets, in lieu of brokeragecommissions on a per trade basis. Month-end Net Assets, for the purposeof calculating commissions are Net Assets, as defined in the LimitedPartnership Agreement, prior to the reduction of accrued expenses andredemptions payable. CGM also pays a portion of its brokerage fees toits financial consultants who have sold Redeemable Units of thePartnership and who are registered as associated persons with theCommodity Futures Trading Commission (the"CFTC"). The Partnership pays for NationalFutures Association ("NFA") fees, exchangefees, clearing fees, give-up fees, user fees and floor brokerage fees.The Customer Agreement between the Partnership and CGM gives thePartnership the legal right to net unrealized gains and losses. Inaddition, CGM pays the Partnership interest on 80% of theaverage daily equity maintained in cash in its account during eachmonth at a 30-day U.S. Treasury bill rate determined weekly by CGMbased on the average non-competitive yield on 3-month U.S. Treasurybills maturing in 30 days from the date on which such weekly rate isdetermined.

(b)    Financial information about industrysegments. The Partnership's business consists of only onesegment, speculative trading of commodity interests (including, but notlimited to, futures contracts, options and forward contracts on U.S.Treasury Bills, other financial instruments, foreign currencies, stockindices and physical commodities). The Partnership does not engage insales of goods or services. The Partnership's net income (loss)from operations for the years ended December 31, 2005, 2004 and 2003 isset forth under "Item 6. Selected FinancialData." The Partnership's capital as of December31, 2005 was $69,726,554.

(c)    Narrative description ofbusiness.

See Paragraphs (a) and (b) above.

(i) through (xii) — Not applicable.

(xiii) — The Partnership has no employees.

(d)    Financial Information About Geographic Areas. ThePartnership does not engage in sales of goods or services or own anylong lived assets, and therefore this item is not applicable.

(e)    Available Information. The Partnership does nothave an Internet address. The Partnership will provide paper copies ofits annual report on Form 10-K, quarterly reports on Form 10-Q, currentreports on Form 8-K and any amendments to these reports free of chargeupon request.

Item 1A.    RiskFactors.

The trading of commodity interests is speculative,volatile and involves a high degree of leverage. A small change in themarket price of a commodity interest contract can produce major lossesfor the Partnership.

Due to the speculative nature of tradingcommodity interests, an investor could lose all of its investment inthe Partnership.

Regardless of its trading performance, thePartnership will incur fees and expenses, including brokerage andmanagement fees. Fees will be paid to the trading advisor even if thePartnership experiences a net loss for the full year.

Aninvestor's ability to redeem units is limited and no marketexists for the units.

The Partnership is subject to numerousconflicts of interest including those that arise from the factsthat:

|          |                                                        |
|----------|--------------------------------------------------------|
| 1.  | The General Partner andcommodity broker areaffiliates; |

|          |                                                                                                                                         |
|----------|-----------------------------------------------------------------------------------------------------------------------------------------|
| 2.  | The trading advisor,the commodity broker and their principals and affiliates may trade incommodity interests for their own accounts;and |

|          |                                                                                                                  |
|----------|------------------------------------------------------------------------------------------------------------------|
| 3.  | Smith Barney financialadvisors will receive ongoing compensation for providing services to aninvestor's account. |

The Partnership will not provide anybenefit of diversification of an investor's overall portfoliounless it is profitable and produces returns that are independent fromstock and bond market returns.

2

----

The advisor's trading strategies maynot perform as they have performed in the past. The advisor has fromtime to time incurred substantial losses in trading on behalf ofclients.

Investors are taxed on their share of thePartnership's income, even though the Partnership does not intendto make any distributions.

Item2.    Properties.

The Partnership does not own orlease any properties. The General Partner operates out of facilitiesprovided by its affiliate, CGM.

Item 3.    LegalProceedings.

This section describes the major pendinglegal proceedings, other than ordinary routine litigation incidental tothe business, to which Citigroup Global Markets Holdings Inc.("CGMHI") or its subsidiaries is a party orto which any of their property is subject. There are no material legalproceedings pending against the Partnership or the GeneralPartner.

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

There have been no material administrative, civil orcriminal actions within the past five years against Citigroup GlobalMarkets or any of its individual principals and no such actions arecurrently pending, except as follows.

Regulatory Matters

Both the Department of Labor and the Internal Revenue Service("IRS") have advised Citigroup Global Marketsthat they were or are reviewing transactions in which Ameritech PensionTrust purchased from Citigroup Global Markets and certain affiliatesapproximately $20.9 million in participations in a portfolio of motelsowned by Motels of America, Inc. and Best Inns, Inc. With respect tothe IRS review, Citigroup Global Markets and certain affiliatedentities have consented to extensions of time for the assessment ofexcise taxes that may be claimed to be due with respect to thetransactions for the years 1987, 1988 and 1989.

IPO RegulatoryInquiries

Since April 2002, Citigroup Global Markets andseveral other broker dealers have received subpoenas and/or requestsfor information from various governmental and self-regulatory agenciesand Congressional committees as part of their research on IPOallocation inquiries. With respect to issues raised by the NASD, theNYSE and the SEC about Citigroup Global Markets' and otherfirms' e-mail retention practices, Citigroup Global Markets andseveral other broker/dealers and the NASD, the NYSE and the SEC enteredinto a settlement agreement in December 2002. Citigroup Global Marketsagreed to pay a penalty in the amount of $1.65 million and did notadmit any wrongdoing. No individuals from Citigroup Global Markets havebeen charged in the IPO allocation proceedings.

IPO CivilLitigation

In April 2002, consolidated amended complaints werefiled against Citigroup Global Markets and other investment banks namedin numerous alleged class actions filed in the United States DistrictCourt for the Southern District of New York, alleging violations ofcertain federal securities laws (including Section 11 of the SecuritiesAct of 1933, as amended, and Section 10(b) of the Securities ExchangeAct of 1934, as amended) with respect to the allocation of shares forcertain initial public offerings and related aftermarket transactionsand damage to investors caused by allegedly biased research analystreports. On February 19, 2003, the Court issued an opinion denyingdefendants' motion to dismiss.

3

----

On October 13, 2004, the court granted inpart the motion to certify class actions for six focus cases in thesecurities litigation. Citigroup Global Markets is not a defendant inany of the six focus cases. The underwriter defendants in the focuscases have filed a petition to the United States Court of Appeals forthe Second Circuit seeking review of this decision.

On June 30,2005, the United States Court of Appeals for the Second Circuit enteredan order in In Re: Initial Public Offering Securities Litigationagreeing to review the district court's order grantingplaintiffs' motion for class certification.

Also filed inthe Southern District of New York against Citigroup Global Markets andother investment banks were several alleged class actions that wereconsolidated into a single class action alleging violations of certainfederal and state antitrust laws in connection with the allocation ofshares in initial public offerings when acting as underwriters. OnNovember 3, 2003, the court granted Citigroup Global Markets'motion to dismiss the consolidated amended complaint in the antitrustcase. On September 28, 2005, the United States Court of Appeals for theSecond Circuit in In Re: Initial Public Offering AntitrustLitigation vacated the district court's order dismissingthese actions and remanded for further proceedings.

ResearchSettlement

On April 28, 2003, Citigroup Global Marketsannounced final agreements with the SEC, the NASD, the NYSE and the NewYork Attorney General (as lead state among the 50 states, the Districtof Columbia and Puerto Rico) to resolve on a civil basis all of theiroutstanding investigations into its research and IPO allocation anddistribution practices (the "ResearchSettlement"). As part of the Research Settlement,Citigroup Global Markets has consented to the entry of (1) aninjunction under the federal securities laws to be entered in theUnited States District Court for the Southern District of New York,barring Citigroup Global Markets from violating provisions of thefederal securities laws and related NASD and NYSE rules relating toresearch, certain IPO allocation practices, the safeguarding ofmaterial nonpublic information, and the maintenance of required booksand records and requiring Citigroup Global Markets to adopt and enforcenew restrictions on the operation of research; (2) an NASD AcceptanceWaiver and Consent requiring Citigroup Global Markets to cease anddesist from violations of corresponding NASD rules and requiringCitigroup Global Markets to adopt and enforce the same newrestrictions; (3) an NYSE Stipulation and Consent requiring CitigroupGlobal Markets to cease and desist from violations of correspondingNYSE rules and requiring Citigroup Global Markets to adopt and enforcethe same new restrictions; and (4) an Assurance of Discontinuance withthe New York Attorney General containing substantially the same orsimilar restrictions. The Research Settlement requires Citigroup GlobalMarkets to pay $300 million for retrospective relief, plus $25 millionfor investor education, and commit to spend $75 million to provideindependent third-party research to its clients at no charge. CitigroupGlobal Markets reached these final settlement agreements withoutadmitting or denying any wrongdoing or liability. The ResearchSettlement does not establish wrongdoing or liability for purposes ofany other proceeding. The $300 million was accrued during the fourthquarter of 2002.

To effectuate the Research Settlement, the SECfiled a Complaint and Final Judgment in the United States DistrictCourt for the Southern District of New York. On October 31, 2003, finaljudgment was entered against Citigroup Global Markets and nine otherinvestment banks. The NASD has accepted the Letter of Acceptance,Waiver and Consent entered into with Citigroup Global Markets inconnection with the Research Settlement. In May 2003, the NYSE advisedCitigroup Global Markets that the Hearing Panel's Decision, inwhich it accepted the Research Settlement, had become final. Asrequired by the Research Settlement, Citigroup Global Markets also hasentered into separate settlement agreements with numerous states andcertain U.S. territories.

Several individual actions have beenfiled against Citigroup and Citigroup Global Markets relating to, amongother things, research on Qwest Communications International, Inc.alleging violations of state and federal securities laws.

4

----

Enron Regulatory Settlement

OnJuly 28, 2003, Citigroup (Citigroup Global Markets' ultimateparent) entered into a final settlement agreement with the SEC toresolve the SEC's outstanding investigations into Citigrouptransactions with Enron Corp. and Dynegy Inc. Pursuant to thesettlement, Citigroup has, among other terms, (1) consented to theentry of an administrative cease and desist order, which bars Citigroupfrom committing or causing violations of provisions of the federalsecurities laws, and (2) agreed to pay $120 million ($101.25 millionallocable to Enron and $18.75 million allocable to Dynegy). Citigroupentered into this settlement without admitting or denying anywrongdoing or liability, and the settlement does not establishwrongdoing or liability for purposes of any other proceeding. On July28, 2003, Citibank, N.A. entered into an agreement with the Office ofthe Comptroller of the Currency ("OCC") andCitigroup entered into an agreement with the Federal Reserve Bank ofNew York ("FED") to resolve their inquiriesinto certain of Citigroup's transactions with Enron. Pursuant tothe agreements, Citibank and Citigroup have agreed to submit plans tothe OCC and FED, respectively, regarding the handling of complexstructured finance transactions. Also on July 28, 2003, Citigroupentered into a settlement agreement with the Manhattan DistrictAttorney's Office to resolve its investigation into certain ofCitigroup' s transactions with Enron. Pursuant to thatsettlement, Citigroup has agreed to pay $25.5 million and to abide byits agreements with the SEC, OCC and FED.

Enron-Related CivilActions

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

On June 13, 2005, Citigroup announced a settlement of the Enronclass action litigation (Newby, et al v. Enron Corp., et al.)currently pending in the United States District Court for the SouthernDistrict of Texas, Houston Division. This settlement resolves allclaims against Citigroup brought on behalf of the class of purchasersof publicly traded equity and debt securities issued by Enron andEnron-related entities between September 9, 1997 and December 2, 2001.The settlement, which involves a pre-tax payment of $2.0 billion to thesettlement class, is fully covered by Citigroup's existinglitigation reserves. It is subject to approval by the Board of Regentsof the University of California (the lead plaintiff), the CitigroupBoard and the District Court in Texas.

A Citigroup affiliate,along with other defendants, settled all claims against it in In Re:Newpower Holdings Securities Litigation, a class action brought onbehalf of certain investors in NewPower securities. Citigroup reachedthis settlement agreement without admitting any wrongdoing. OnSeptember 13, 2004, the United States District Court for the SouthernDistrict of New York preliminarily approved the settlement.

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 other actions. 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. Citigroup Inc., et al.and Principal Global Investors v. Citigroup Inc., et al. Theamounts to be paid in settlement of these actions are covered byexisting litigation reserves.

5

----

On August 26, 2005, a group of 15plaintiffs filed an action in the United States District Court for theSouthern District of Texas (Avenue Capital Management II, L.P., etal. v. J.P. Morgan-Chase & Co., et al.). The complaint names asdefendants Citigroup Inc., Citibank, N.A., Citigroup Global Markets,and several J.P. Morgan entities and alleges fraud, breach of fiduciaryduty and breach of contract arising out of Enron bank debt incurredunder two syndicated revolving credit facilities and a syndicatedletter of credit facility.

Dynegy Inc.

On June6, 2003, the complaint in a pre-existing alleged class action pendingin the United States District Court for the Southern District of Texas(In Re: Dynegy  Inc. Securities Litigation) brought bypurchasers of publicly traded debt and equity securities ofDynegy  Inc. was amended to add Citigroup, Citibank and CitigroupGlobal Markets as defendants. The plaintiffs allege violations ofSections 10(b) and 20(a) of the Securities Exchange Act of 1934, asamended, against the Citigroup defendants. The Citigroup defendantsfiled a motion to dismiss in March  2004, which motion wasgranted by the District Court in October  2004. The court deniedlead plaintiff's request for leave to appeal.

The courthad also previously denied lead plaintiff's motion for leave toamend. No appeal was yet timely while the remainder of the caseremained pending. On April 15, 2005, as part of a global settlementinvolving all defendants, Citigroup entered into a memorandum ofunderstanding to settle this case. The amount to be paid in settlementis covered by existing litigation reserves.

WorldCom-RelatedLitigation

Citigroup, Citigroup Global Markets and certainexecutive officers and current and former employees have been named asdefendants -- along with twenty-two other investment banks, certaincurrent and former WorldCom officers and directors, andWorldCom's former auditors -- in a consolidated class actionbrought on behalf of individuals and entities who purchased or acquiredpublicly traded securities of WorldCom between April 29, 1999 and June25, 2002 in In Re: Worldcom, Inc. Securities Litigation. Theclass action complaint asserts claims against Citigroup Global Marketsunder (i) Sections 11 and 12(a)(2) of the Securities Act of 1933, asamended, in connection with certain bond offerings in which it servedas underwriter, and (ii) Sections 10(b) and 20(a) of the SecuritiesExchange Act of 1934, as amended, and Rule 10b-5 promulgated underSection 10(b), alleging that it participated in the preparation and/orissuance of misleading WorldCom registration statements anddisseminated misleading research reports concerning WorldCom stock. In2003, the district court denied Citigroup Global Markets' motionto dismiss the consolidated class action complaint and granted theplaintiffs' motion for class certification.

Pursuant to anorder entered May 28, 2003, the District Court consolidatedapproximately seventy-eight individual actions with the class actionfor pretrial proceedings. The claims asserted in these individualactions are substantially similar to the claims alleged in the classaction and assert state and federal securities law claims based onCitigroup Global Markets' research reports concerning WorldComand/or Citigroup Global Markets' role as an underwriter inWorldCom offerings. Plaintiffs in certain of these actions filedmotions to remove their cases to state court. The District Court deniedthese motions and its rulings were upheld on appeal.

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

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

6

----

On September 17, 2004, Weinstein, et al.v. Ebbers, et al., an alleged class action against Citigroup GlobalMarkets and others brought on behalf of holders of WorldCom securitiesasserting claims based on, among other things, Citigroup GlobalMarkets' research reports concerning WorldCom, was dismissed withprejudice in its entirety by the United States District Court for theSouthern District of New York. The plaintiffs noticed an appeal of thedismissal to the United States Court of Appeals for the Second Circuiton October 15, 2004. The parties have reached an agreement in principleon the terms of a settlement of this action.

Citigroup andCitigroup Global Markets, along with a number of other defendants, havesettled Retirement Systems of Alabama, et al. v. J.P. Morgan Chase& Co., et al., a WorldCom individual action that had beenremanded to the Circuit Court of Montgomery County, Alabama. Thesettlement became final on September 30, 2004.

On June 28, 2004,the United States District Court for the Southern District of New Yorkdismissed all claims under the Securities Act of 1933, as amended, andcertain claims under the Securities Exchange Act of 1934 in In Re:Targets Securities Litigation, an alleged class action againstCitigroup and Citigroup Global Markets and certain former employees,leaving only claims under the 1934 Act for purchases of Targeted GrowthEnhanced Terms Securities With Respect to the Common Stock of MCIWorldCom, Inc. ("TARGETS") after July 30,1999. On October 20, 2004, the parties signed a Memorandum ofUnderstanding setting forth the terms of a settlement of all remainingclaims in this action. The settlement was preliminarily approved by theCourt on January 11, 2005.

A fairness hearing was held onNovember 5, 2004 in connection with the proposed class settlementbetween plaintiffs and the Citigroup-related defendants in In Re:Worldcom, Inc. Securities Litigation.

Citigroup, along withother financial institutions and other defendants, entered intosettlements resolving certain claims against Citigroup-relateddefendants in a number of WorldCom-related actions. The settlementamounts are covered by existing litigation reserves.

GlobalCrossing

On or about January 28, 2003, the lead plaintiff in aconsolidated alleged class action in the United States District Courtfor the Southern District of New York (In Re: Global Crossing, Ltd.Securities Litigation) filed a consolidated complaint on behalf ofpurchasers of the securities of Global Crossing and Asia GlobalCrossing, which names as defendants, among others, Citigroup, CitigroupGlobal Markets, Citigroup Global Markets Holdings Inc. and certainexecutive officers and current and former employees. The alleged classaction complaint asserts claims under the federal securities lawsalleging that the defendants issued research reports without areasonable basis in fact and failed to disclose conflicts of interestwith Global Crossing in connection with published investment research.On March 22, 2004, the lead plaintiff amended its consolidatedcomplaint to add claims on behalf of purchasers of the securities ofAsia Global Crossing. The added claims assert causes of action underthe federal securities laws and common law in connection with CitigroupGlobal Markets' research reports about Global Crossing and AsiaGlobal Crossing and for Citigroup Global Markets' roles as aninvestment banker for Global Crossing and as an underwriter in theGlobal Crossing and Asia Global Crossing offerings. TheCitigroup-related defendants moved to dismiss all of the claims againstthem on July 2, 2004. In March 2005, the plaintiffs and theCitigroup-related defendants reached a settlement of all claims againstthe Citigroup-related defendants, including both research andunderwriting claims and claims concerning losses in both GlobalCrossing and Asia Global Crossing, for a total of $75 million. TheCourt granted preliminary approval of the settlement on March 8,2005.

In addition, on or about January 27, 2004, the GlobalCrossing Estate Representative filed in the United States BankruptcyCourt for the Southern District of New York (i) an adversary proceedingasserting claims against, among others, Citigroup, Citigroup GlobalMarkets and certain executive officers and current and formeremployees, under federal bankruptcy law and common law in connectionwith Citigroup Global Markets' research reports about GlobalCrossing and for its role as an underwriter in Global Crossingofferings, and (ii) an adversary proceeding against Citigroup andseveral other financial institutions seeking to rescind the payment ofa $1 billion loan made to a subsidiary of Global Crossing. TheCitigroup-related defendants moved to dismiss the former action on June26, 2004, and the latter on 

7

----

May 28, 2004. The plaintiffs and theCitigroup-related defendants have since entered into a definitivesettlement agreement in the In Re: Global Crossing, Ltd. SecuritiesLitigation; the settlement was preliminarily approved by the Courton March 8, 2005. The amount to be paid in settlement is covered byexisting litigation reserves.

In addition, actions assertingclaims against Citigroup and certain of its affiliates relating to itsGlobal Crossing research reports are pending in numerous arbitrationsaround the country. These arbitration proceedings assert claims thatare substantially similar to the claims asserted in the alleged classaction.

Adelphia Communications Corporation

On July 6,2003, an adversary proceeding was filed by the Official Committee ofUnsecured Creditors on behalf of Adelphia Communications Corporationagainst certain lenders and investment banks, including CitigroupGlobal Markets, Citibank, N.A., Citicorp USA, Inc., and CitigroupFinancial Products, Inc. (together, the "CitigroupParties"). The complaint alleges that the CitigroupParties and numerous other defendants committed acts in violation ofthe Bank Holding Company Act and the common law. The complaint seeksequitable relief and an unspecified amount of compensatory and punitivedamages. In November 2003, a similar adversary proceeding was filed bythe Equity Holders Committee of Adelphia. In June 2004, motions todismiss were filed with respect to the complaints of the OfficialCommittee of Unsecured Creditors and the Equity Holders Committee. Themotions are currently pending.

In addition, Citigroup GlobalMarkets is among the underwriters named in numerous civil actionsbrought to date by investors in Adelphia debt securities in connectionwith Adelphia securities offerings between September 1997 and October2001. Three of the complaints also asserted claims against Citigroupand Citibank, N.A. All of the complaints alleged violations of federalsecurities laws, and certain of the complaints also alleged violationsof state securities laws and the common law. The complaints soughtunspecified damages. In December 2003, a second amended complaint wasfiled and consolidated before the same judge of the United StatesDistrict Court for the Southern District of New York.

In May andJuly of 2005, the United States District Court for the SouthernDistrict of New York dismissed several claims on statute of limitationsgrounds in the class and individual actions being coordinated underIn Re: Adelphia Communications Corporation Securities andDerivatives Litigation. With the exception of one individual actionthat was dismissed with prejudice, the court granted the class andindividual plaintiffs leave to re-plead certain of those claims thecourt found to be time-barred. Additional motions to dismiss the classcomplaint and the remaining individual complaints on other groundsremain pending.

Mutual Funds

Citigroup and certain ofits affiliates have been named in several class action litigationspending in various federal district courts arising out of allegedviolations of the federal securities laws, the Investment Company Actand the common law (including breach of fiduciary duty and unjustenrichment). The claims concern practices in connection with the saleof mutual funds, including allegations involving market timing, revenuesharing, incentive payments for the sale of proprietary funds,undisclosed breakpoint discounts for the sale of certain classes offunds, inappropriate share class recommendations and inappropriate fundinvestments. The litigations involving market timing have beenconsolidated under the MDL rules in the United States District Courtfor the District of Maryland, and the litigations involving revenuesharing, incentive payment and other issues have been consolidated inthe United States District Court for the Southern District of New York.The plaintiffs in these litigations generally seek unspecifiedcompensatory damages, rescissionary damages, injunctive relief, costsand fees. In the principal market timing cases that name Citigroup, alead plaintiff has been appointed but that plaintiff has not yet filedan amended complaint. In the cases concerning revenue sharing,incentive payment and other issues, the lead plaintiff filed aconsolidated and amended complaint on December 15, 2004.

Severalissues in the mutual fund industry have come under the scrutiny offederal and state regulators. Citigroup has received subpoenas andother requests for information from various government regulatorsregarding market timing, financing, fees, sales practices and othermutual fund issues in 

8

----

connection with various investigations.Citigroup is cooperating with all such reviews. Additionally, CitigroupGlobal Markets has entered into a settlement agreement with the SECwith respect to revenue sharing and sales of classes of funds.

On May 31, 2005, Citigroup announced that Smith Barney FundManagement LLC and Citigroup Global Markets completed a settlement withthe SEC resolving an investigation by the SEC into matters relating toarrangements between certain Smith Barney mutual funds, an affiliatedtransfer agent and an unaffiliated sub-transfer agent. Under the termsof the settlement, Citigroup agreed to pay fines totaling $208.1million. The settlement, in which Citigroup neither admitted nor deniedany wrongdoing or liability, includes allegations of willful misconductby Smith Barney Fund Management LLC and Citigroup Global Markets infailing to disclose aspects of the transfer agent arrangements tocertain mutual fund investors.

Research Analyst Litigation

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

On September 27, 2005, Citigroupentered into a memorandum of agreement settling all claims against theCitigroup-related defendants in In Re: Salomon Analyst AT&TLitigation, a class action alleging research analyst conflicts ofinterest. The settlement amount is covered by existing litigationreserves. The settlement is subject to judicial approval.

Inaddition to the alleged research class actions, several individualactions have been filed against Citigroup and Citigroup Global Marketsrelating to, among other things, research on Qwest CommunicationsInternational, Inc. These actions allege violations of state andfederal securities laws in connection with Citigroup GlobalMarkets' publication of research about Qwest and its underwritingof Qwest securities.

Two alleged class actions against CitigroupGlobal Markets asserting common law claims in connection with publishedinvestment research on behalf of Citigroup Global Markets customershave been dismissed by United States District Courts, one of which wasaffirmed by the United States Court of Appeals for the Ninth Circuit,and one of which is pending on appeal to the United States Courts ofAppeals for the Third Circuit. Plaintiffs in the Ninth Circuit casehave sought review by the United States Supreme Court; their requestfor an appeal to that Court is pending.

On September 22, 2005,Citigroup reached an agreement-in-principle to settle all claimsagainst the Citigroup-related defendants in Norman v. Salomon SmithBarney, et al., a class action asserting violations of theInvestment Advisers Act of 1940 and various common law claims inconnection with certain investors who maintained guided portfoliomanagement accounts at Smith Barney. The settlement amount is coveredby existing litigation reserves. The settlement is subject to judicialapproval.

On August 17, 2005, in Disher v. Citigroup GlobalMarkets Inc., the United States Court of Appeals for the SeventhCircuit reversed the district court's grant of plaintiffs'motion to remand the case to state court, and directed the districtcourt to dismiss the case as preempted under the Securities Litigation

9

----

Uniform Standards Act("SLUSA"). The United States Supreme Courthas granted review in another case involving SLUSA that may affect theSeventh Circuit's dismissal of the Disher matter.

InSturm, et al. v. Citigroup, et al., an NASD arbitration seekingsignificant compensatory and punitive damages, claimants'asserted common law claims, including fraud, arising out of allegedresearch analyst conflicts of interest related to Citigroup GlobalMarkets research coverage of WorldCom.

SupervisoryInvestigation

In May 2003, the SEC, NYSE and NASD issued asubpoena and letters to Citigroup Global Markets requesting documentsand information with respect to their continuing investigation ofindividuals in connection with the supervision of the research andinvestment banking departments of Citigroup Global Markets. Otherparties to the Research Settlement have received similar subpoenas andletters.

West Virginia Attorney General Suit

On June23, 2003, the West Virginia Attorney General filed an action againstCitigroup Global Markets and nine other firms that were parties to theResearch Settlement. The West Virginia Attorney General alleges thatthe firms violated the West Virginia Consumer Credit and Protection Actin connection with their research activities and seeks monetarypenalties.

Citigroup Shareholder Litigation

In July2002, Citigroup, Citigroup Global Markets and certain officers werenamed as defendants in an alleged class action filed in the UnitedStates District Court for the Southern District of New York, brought onbehalf of purchasers of Citigroup common stock between July 24, 1999and July 23, 2002. The complaint seeks unspecified compensatory andpunitive damages for alleged violations of Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934, and for common law fraud. Fourteenvirtually identical complaints have been filed and consolidated. Thecomplaints allege that Citigroup misstated the extent of itsEnron-related exposure, and that Citigroup's stock price fellonce the true extent of Citigroup's Enron involvements becameknown. Plaintiffs filed an amended complaint on March 10, 2003, whichincorporated the allegations in the 15 separate actions and added newmaterial as well. The amended complaint focuses on certain transactionsbetween Citigroup and Enron and alleged analyst conflicts of interest.The class period for the consolidated amended complaint is July 24,1999 to December 11, 2002. On June 2, 2003, Citigroup filed a motion todismiss the consolidated amended complaint. Plaintiffs' responsewas filed on July 30, and Citigroup's reply was filed on October3, 2003. On August 10, 2004, Judge Swain granted Citigroup'smotion to dismiss the consolidated amended complaint. The plaintiffsfiled a notice of appeal in October 2004.

NASD Settlement

In November 2004, Citigroup Global Markets entered into a finalagreement with the NASD to resolve the NASD's investigation intocertain of its selling practices. Without admitting or denying anyallegations or findings, Citigroup Global Markets accepted certainfactual findings by the NASD that it (i) sold units in two managedfutures funds to 45 customers for whom the investment was not suitable,(ii) failed to maintain records disclosing the basis upon which itsinvestor suitability determinations were made and (iii) failed toadequately disclose the risks of investing in managed futures productson its website. Citigroup Global Markets consented to a censure and afine of $275,000 and offered to redeem the investment of the customersfor whom investment in the two managed futures funds was found notsuitable.

In the course of its business, Citigroup GlobalMarkets, as a major futures commission merchant and broker-dealer, is aparty to various claims and routine regulatory investigations andproceedings that the General Partner believes do not have a materialeffect on the business of Citigroup Global Markets.

Item4.    Submission of Matters to a Vote of SecurityHolders.

There were no matters submitted to the securityholders for a vote during the last fiscal year covered by thisreport.

10

----

PART II

Item5.    Market for Registrant's Common Equity, RelatedStockholder Matters and Issuer Purchases of EquitySecurities.

(a)    Market Information. ThePartnership has issued no stock. There is no public market for theRedeemable Units of Limited Partnership Interest.

(b)    Holders. The number of holders of Redeemable Unitsof Limited Partnership Interest as of December 31, 2005 was 737.

(c)    Distribution. The Partnership did not declare adistribution in 2005 or 2004.

(d)    Use of Proceeds.There were no additional sales of Redeemable Units in the years endedDecember 31, 2005 and 2004. For the twelve months ended December 31,2003, there were additional sales of 57,621.1285 Redeemable Unitstotaling $94,258,000 and General Partner contributions representing313.0352 Unit equivalents totaling $475,000.

Proceeds from thesale of additional Redeemable Units are used in the trading ofcommodity interests including futures contracts, options and forwardcontracts.

Item 6.    Selected FinancialData.

Net realized and unrealized trading gains (losses),interest income, net income (loss) and increase (decrease) in Net AssetValue per Redeemable Unit for the years ended December 31, 2005, 2004,2003, and the period from March 25, 2002 (date Partnership wasorganized) to December 31, 2002, and total assets at December 31, 2005,2004, 2003, and 2002 were asfollows:

|                                                                                                                                                                       |  |        |             |         |  |        |             |                                                                                |  |        |             |        |  |        |            |        |  |  |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------|-------------|---------|--|--------|-------------|--------------------------------------------------------------------------------|--|--------|-------------|--------|--|--------|------------|--------|--|--|
|                                                                                                                                                                  |  | 2005   |             | 2004    |  | 2003   |             | Periodfrom March 25, 2002 (date Partnership wasorganized) to December 31, 2002 |
| Realized andunrealized trading gains (losses), net of brokerage commissions(including clearing fees) of $4,339,107, $6,785,010, $5,845,292, and$1,073,575respectively |  | $      | (26,368,251 | )  |  | $      | 1,825,629   |                                                                           |  | $      | 25,659,625  |   |  | $      | 12,429,661 |   |
| Interestincome                                                                                                                                                        |  |   | 2,190,070   |    |  |   | 1,271,443   |                                                                           |  |   | 829,712     |   |  |   | 247,745    |   |
|                                                                                                                                                                  |  | $      | (24,178,181 | )  |  | $      | 3,097,072   |                                                                           |  | $      | 26,489,337  |   |  | $      | 12,677,406 |   |
| Netincome (loss) before Incentive Fee toAdvisor                                                                                                                       |  | $      | (26,526,994 | )  |  | $      | (388,341    | )                                                                         |  | $      | 23,516,370  |   |  | $      | 12,067,837 |   |
| Netincome (loss) available for pro rata distribution to partners                                                                                                      |  | $      | (26,526,994 | )  |  | $      | (3,215,332  | )                                                                         |  | $      | 18,957,935  |   |  | $      | 9,706,515  |   |
| Increase(decrease) in Net Asset Value per RedeemableUnit                                                                                                              |  | $      | (372.72     | )  |  | $      | (24.06      | )                                                                         |  | $      | 309.07      |   |  | $      | 497.79     |   |
| Totalassets                                                                                                                                                           |  | $      | 76,143,091  |    |  | $      | 138,246,357 |                                                                           |  | $      | 163,570,882 |   |  | $      | 60,120,802 |   |
|                                                                                                                                                                       |

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

Overview

ThePartnership aims to achieve substantial capital appreciation throughspeculative trading in U.S. and international markets for currencies,interest rates, stock indices, agricultural and energy products andprecious and base metals. The Partnership may employ futures, optionson futures, and forward, spot and swap contracts in those markets.

The General Partner manages all business of the Partnership. TheGeneral Partner has delegated its responsibility for the investment ofthe Partnership's assets to Graham. The General Partner employs a

11

----

team of approximately 20 professionals whoseprimary emphasis is on attempting to maintain quality control among theadvisors to the Partnerships operated or managed by the GeneralPartner. A full-time staff of due diligence professionals useproprietary technology and on-site evaluations to monitor new andexisting futures money managers. The accounting and operations staffprovide processing of trading activity and reporting to limitedpartners and regulatory authorities. In selecting the Advisor for thePartnership, the General Partner considered past performance, tradingstyle, volatility of markets traded and fee requirements.

Responsibilities of the General Partnerinclude:

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

|              |                                                       |
|--------------|-------------------------------------------------------|
| •  | selection, appointment andtermination of the Advisor; |

|              |                                            |
|--------------|--------------------------------------------|
| •  | negotiationof the management agreement;and |

|              |                                        |
|--------------|----------------------------------------|
| •  | monitoring the activity of theAdvisor. |

In addition, the General Partner prepares the books andrecords and provides the administrative and compliance services thatare required by law or regulation from time to time in connection withoperation of the Partnership. These services include the preparation ofrequired books and records and reports to limited partners, governmentagencies and regulators; computation of net asset value; calculation offees; effecting subscriptions, redemptions and limited partnercommunications; and preparation of offering documents and salesliterature.

The General Partner shall seek the best prices andservices available in its commodity futures brokerage transactions. TheGeneral Partner reviews at least annually, the brokerage rates chargedto commodity pools similar to the Partnership to determine that thebrokerage fee the Partnership pays is competitive with other rates.

The K4 Program was developed in 1998 and commenced tradingoperations in January 1999. The K4 Program uses a mathematical model toidentify certain price patterns that have very specific characteristicsindicating that there is a high probability that a significantdirectional move will occur. The K4 Program will normally enter or exita position only when a significant price and volatility spike takesplace. K4 will normally maintain a neutral position in 50% ofthe markets in the portfolio.

The K4 Program trades inapproximately 65 markets including foreign exchange, global interestrates, stock index futures, agricultural futures, metals andenergy.

In addition to the K4 Program, as of December 31, 2005,Graham trades the following futures programs for the Partnership: itsGlobal Diversified Program, the Graham Selective Trading Program, theProprietary Matrix Program, the K5 Program and the Fed PolicyProgram.

Graham's success depends to a great extent uponthe occurrence of market conditions favorable to its trading strategy.Factors such as lack of major price trends or increased governmentalcontrol of, or participation in, the markets, may reduce Graham'sability to trade profitably in the future.

As a managed futuresPartnership, the Partnership's performance is dependent upon thesuccessful trading of the Partnership's Advisor to achieve thePartnership's objectives. It is the business of theGeneral Partner to monitor the Advisor's performance toassure compliance with the Partnership's trading policies and todetermine if the Advisor's performance is meeting thePartnership's objectives. Based on 2005 results, the GeneralPartner continues to believe the Advisor and the trading of the K4Program have met the Partnership's objectives and expects tocontinue to allocate the Partnership's assets to the Advisor andthis program unless otherwise indicated.

(a)    Liquidity.

The Partnership does not engagein sales of goods or services. Its only assets are its equity in itscommodity futures trading account, consisting of cash and cashequivalents, net unrealized appreciation (depreciation) on open futurescontracts and interest receivable. Because of the low margin depositsnormally required in commodity futures trading, relatively small pricemovements may result in substantial losses to the Partnership. Suchsubstantial losses could lead to a material loss inliquidity.

12

----

To minimize this risk relating to lowmargin deposits, the Partnership follows certain trading policies,including:

|           |                                                                                                                                                                                                                                                                                                                                                    |
|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (i)  | The Partnership invests itsassets only in commodity interests that the Advisor believes are tradedin sufficient volume to permit ease of taking and liquidatingpositions. Sufficient volume, in this context, refers to a level ofliquidity that the Advisor believes will permit it to enter and exittrades without noticeably moving the market. |

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

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

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

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

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

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

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

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

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

13

----

The General Partner monitors and controlsthe Partnership's risk exposure on a daily basis throughfinancial, credit and risk management monitoring systems, andaccordingly believes that it has effective procedures for evaluatingand limiting the credit and market risks to which the Partnership issubject. These monitoring systems allow the General Partner tostatistically analyze actual trading results with risk adjustedperformance indicators and correlation statistics. In addition, on-linemonitoring systems provide account analysis of futures, forwards andoptions positions by sector, margin requirements, gain and losstransactions and collateral positions. (See also "Item 8.Financial Statements and Supplementary Data" forfurther information on financial instrument risk included in the notesto the financial statements.)

Other than the risks inherent incommodity futures and swaps trading, the Partnership knows of notrends, demands, commitments, events or uncertainties which will resultin or which are reasonably likely to result in the Partnership'sliquidity increasing or decreasing in any material way. The LimitedPartnership Agreement provides that the General Partner may, in itsdiscretion, cause the Partnership to cease trading operations andliquidate all open positions under certain circumstances including adecrease in Net Asset Value per Redeemable Unit to less than $400 as ofthe close of business on any business day.

(b)    Capitalresources.

(i)    The Partnership has made no materialcommitments for capital expenditures.

(ii)    ThePartnership's capital consists of the capital contributions ofthe partners as increased or decreased by gains or losses on tradingand by expenses, interest income, redemptions of Redeemable Units anddistributions of profits, if any. Gains or losses on trading cannot bepredicted. Market moves in commodities are dependent upon fundamentaland technical factors which the Advisors may or may not be able toidentify, such as changing supply and demand relationships, weather,government agricultural, commercial and trade programs and policies,national and international political and economic events and changes ininterest rates. Partnership expenses consist of, among other things,commissions, advisory fees and administrative fees. The level of theseexpenses is dependent upon the level of trading and the ability of theAdvisors to identify and take advantage of price movements in thecommodity markets, in addition to the level of Net Assets maintained.In addition, the amount of interest income payable by CGM is dependentupon interest rates over which the Partnership has no control.

No forecast can be made as to the level of redemptions in any givenperiod. A limited partner may require the Partnership to redeem hisRedeemable Units at their Net Asset Value as of the last day of a monthon 10 days' notice to the General Partner. For the purpose of aredemption, any accrued liability for reimbursement of offering andorganization expenses for the Initial Offering Period will not reduceNet Asset Value per Redeemable Unit. There is no fee charged to limitedpartners in connection with redemptions. For the year ended December31, 2005, 20,954.2801 Redeemable Units were redeemed totaling$29,117,138. For the year ended December 31, 2004, 14,668.7146Redeemable Units were redeemed totaling $24,724,362. For the year endedDecember 31, 2003, 11,659.7972 Redeemable Units were redeemed totaling$18,748,824.

There were no additional sales of Redeemable Unitsfor the years ended December 31, 2005 and 2004. For the year endedDecember 31, 2003, there were additional sales of 57,621.1285Redeemable Units totaling $94,258,000 and General Partner contributionsrepresenting 313.0352 Unit equivalents totaling $475,000.

(c)    Results of Operations.

For the year endedDecember 31, 2005, the Net Asset Value per Redeemable Unit decreased21.1% from $1,764.08 to $1,391.36. For the year ended December31, 2004, the Net Asset Value per Redeemable Unit decreased 1.3%from $1,788.14 to $1,764.08. For the year ended December 31, 2003, theNet Asset Value per Redeemable Unit increased 20.9% from$1,479.07 to $1,788.14.

The Partnership experienced net tradinglosses of $22,029,144 before commissions and expenses in 2005. Losseswere primarily attributable to the trading of currencies, U.S. interestrates, metals, energy, grains, non-U.S. interest rates, and indices andwere partially offset by gains recognized in the trading ofsofts.

The year 2005 was characterized by several events thatmade it extraordinarily difficult for the Advisor's program totrade successfully and to retain profits when earned. Nearly allsectors experienced 

14

----

these conditions with the currency andinterest rate markets generating the greatest losses for thePartnership. The tone for the year was set in January and maintainedthrough most of the first quarter. In fact, 17% of theyear's decline of 21% occurred in the firstquarter.

After a prolonged decline in 2004, the U.S. dollardefied expectations for further weakness and rallied in Januaryresulting in substantial losses at the beginning of the new year. Whilethe dollar's strength through the second and third quartersprovided some profits, interest rate markets became highly volatile asthe U.S. Fed's mixed signals to the marketplace combined withstrength in global interest rates to make the U.S. interest ratemarkets choppy and resulted in losses for the Advisor'sprogram.

The energy markets experienced prolonged trends overseveral months and the Advisor built substantial positions in thedirection of those trends. Several dramatic reversals of those trendsled to losses. Crude oil and natural gas prices increased dramaticallyreaching their peaks after Hurricanes Katrina and Rita. Prices hadrisen so much, so quickly, however, that a not unexpected reaction wasfor prices to trade in a wide range over the latter four months of theyear. These types of markets were not conducive to profitable tradingfor the advisor's trend-following strategies.

Profitabletrading over the last half of the year in precious and base metalstrading offset most but not all of the losses incurred earlier in theyear in these markets. Of particular note was the price of gold whichrose to over $500 an ounce by the end of the year. Base metals such aszinc, copper and aluminum also experienced substantial price increasesas global demand and speculative trading spurred prices.

Profitswere made in Japanese and European stock market index trading but wereoffset by losses in U.S. stock index positions, which were fairlydirectionless for the year. While some recovery of profits occurred inthe last four months of the year, the reversal of the U.S.dollar's year-long rise in late December along with the collapsein natural gas prices resulted in the Fund's net asset value perunit ending the year down approximately 21.1%.

ThePartnership experienced net trading gains of $8,610,639 beforecommissions and expenses in 2004. Gains were primarily attributable tothe trading of currencies, U.S. interest rates, livestock, metals andindices and were partially offset by losses recognized in the tradingof energy, non-U.S. interest rates and softs.

Trading resultsfor the year 2004 can be described in three distinct periods: the firstthree months of the year produced positive results of nearly 8%with trends carrying over from late 2003, the next five months whichsaw trend disruptions and produced losses of over 24%, and theperiod September through December which experienced a recovery periodwith profits of over 17% but from a lower base. Overall, thePartnership ended the year essentially flat with a decline ofapproximately 1.3% in the net asset value per unit. The resultsfor the year were heavily influenced by two historic trends: thedecline in the value of the U.S. dollar versus major currencies and therun-up in the price of crude oil to over $50 a barrel.

The yearstarted strongly with many of the trends from late 2003 continuing intoearly 2004. Notably lower interest rates in both U.S. and other majorcountries fostered strong global economic growth and pressuredcommodity prices. These resulted in upward trends in many sectors,especially energy, metals and grains and provided profitable tradingopportunities for the Partnership's advisor. These trendspersisted into early March when economic indicators in the U.S. andChina suggested rising inflation and markets reversed with higherinterest rates, collapsing commodity prices and the dollarreversal.

This began a protracted period of tentative andconflicting trends across many sectors. As expected in the nature oftrend-following, the strength of profitable trends is often followed bytemporary but often severe periods of losses. April though August wassuch a period the Partnership's advisor adjusted positions fromwhat had been profitable, long-term trends to choppy, directionless andvolatile markets. Particularly treacherous and thus unprofitable wastrading in currencies, U.S. and Asian interest rates and global stockindices while energy and grains provided some offsetting profits. Thefundamental economic concerns hanging over these markets were furtherexacerbated by the uncertainty surrounding the tightly contested U.S.presidential election.

With the year looking dismal going intothe fall, the price of crude oil resumed its climb to $50 a barrelbrought on by a deteriorating security situation in Iraq, Saudi Arabiapolitical turmoil, and renewed 

15

----

threats of terrorism. Long positions in theenergy sector provided profits to the Partnership through the end ofthe third quarter and into the beginning of the fourth quarter. Laterin the fourth quarter the U.S. dollar resumed its slide toward $1.40 tothe euro, base metals prices rose and interest rates declined allgenerally favorable to the advisor's positions. Global stockmarkets in particular surged along with declining interest rates whichproduced a profitable December for the Partnership. During the fourthquarter, the Partnership's advisor recovered much of the earlierperiod's losses and ended the year with a net slight decline innet asset value per unit.

The Partnership experienced net tradinggains of $31,504,917 before commissions and expenses in 2003. Gainswere primarily attributable to the trading of currencies, energy,grains, U.S. and non-U.S. interest rates, livestock, softs and indicesand were partially offset by losses recognized in the trading ofmetals.

Commodity markets are highly volatile. Broad pricefluctuations and rapid inflation increase the risks involved incommodity trading, but also increase the possibility of profit. Theprofitability of the Partnership depends on the existence of majorprice trends and the ability of the Advisor to identify those pricetrends correctly. 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 Advisor is ableto identify them, the Partnership expects to increase capital throughoperations.

(d)    Operational Risk

ThePartnership is directly exposed to market risk and credit risk, whicharise in the normal course of its business activities. Slightly lessdirect, but of critical importance, are risks pertaining to operationaland back office support. This is particularly the case in a rapidlychanging and increasingly global environment with increasingtransaction volumes and an expansion in the number and complexity ofproducts in the marketplace.

Such risks include:

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

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

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

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

(e)    Critical Accounting Policies.

The preparation of financial statements in conformity withaccounting principles generally accepted in the United States ofAmerica requires estimates and assumptions that affect the reportedamounts of assets and liabilities, revenues and expenses, and relateddisclosures of contingent assets and liabilities in the financialstatements and accompanying notes.

All commodity interests(including derivative financial instruments and derivative commodityinstruments) are used for trading purposes. The commodity interests arerecorded on trade date and open 

16

----

contracts are recorded in the statement offinancial condition at fair value on the last business day of theperiod, which represents market value for those commodity interests forwhich market quotations are readily available or other measures of fairvalue deemed appropriate by management of the General Partner for thosecommodity interests and foreign currencies for which market quotationsare not readily available, including dealer quotes for swaps andcertain option contracts. Investments in commodity interestsdenominated in foreign currencies are translated into U.S. dollars atthe exchange rates prevailing on the last business day of the period.Realized gains (losses) and changes in unrealized values on commodityinterests and foreign currencies are recognized in the period in whichthe contract is closed or the changes occur and are included in netgains (losses) on trading of commodity interests.

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 datesof 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 statement of income andexpenses and partners' capital.

The General Partnerbelieves that the accounting policies that will be most critical to thePartnership's financial condition and results of operationsrelate to the valuation of the Partnership's positions. Themajority of the Partnership's positions will be exchange-tradedfutures contracts, which will be valued daily at settlement pricespublished by the exchanges. If applicable, the Partnership's spotand forward foreign currency contracts will also be valued at publisheddaily settlement prices or at dealers' quotes. The GeneralPartner expects that under normal circumstances substantially all ofthe Partnership's assets will be valued by objective measures andwithout difficulty.

Item 7A.    Quantitative andQualitative Disclosures About Market Risk.

Introduction

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

The risk to the limited partners that have purchasedinterests in the Partnership is limited to the amount of their capitalcontributions to the Partnership and their share of Partnership assetsand undistributed profits. This limited liability is a consequence ofthe organization of the Partnership as a limited partnership underapplicable law.

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

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

Value at Risk is ameasure of the maximum amount which the Partnership could reasonably beexpected to lose in a given market sector. However, the inherentuncertainty of the Partnership's speculative trading and therecurrence in the markets traded by the Partnership of market movementsfar exceeding expectations could result in actual trading ornon-trading losses far beyond the indicated Value at Risk or thePartnership's experience to date (i.e., "risk ofruin"). In light of the foregoing as well as the risks anduncertainties intrinsic to all future projections, the inclusion of thequantification in this section 

17

----

should not be considered to constitute anyassurance or representation that the Partnership's losses in anymarket sector will be limited to Value at Risk or by thePartnership's attempts to manage its market risk.

Quantifying the Partnership's Trading Value at Risk

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

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

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

The fair value of the Partnership'sfutures and forward positions does not have any optionality component.However, the Advisor may trade commodity options. The Value at Riskassociated with options is reflected in the following table as themargin requirement attributable to the instrument underlying eachoption. Where this instrument is a futures contract, the futuresmargin, and where this instrument is a physical commodity, thefutures-equivalent maintenance margin has been used. This calculationis conservative in that it assumes that the fair value of an optionwill decline by the same amount as the fair value of the underlyinginstrument, whereas, in fact, the fair values of the options traded bythe Partnership in almost all cases fluctuate to a lesser extent thanthose of the underlying instruments.

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

18

----

The Partnership's Trading Value atRisk in Different Market Sectors

The following table indicatesthe trading Value at Risk associated with the Partnership's openpositions by market category as of December 31, 2005, and the highest,lowest and average value at any point during the year and the averagevalue for the twelve months ended December 31, 2005. All open positiontrading risk exposures of the Partnership have been included incalculating the figures set forth below. As of December 31, 2005, thePartnership's total capitalization was $69,726,554.

December 31,2005

|                        |  |               |           |                         |  |                  |         |                  |  |                       |            |        |  |        |         |        |  |        |           |        |  |  |
|------------------------|--|---------------|-----------|-------------------------|--|------------------|---------|------------------|--|-----------------------|------------|--------|--|--------|---------|--------|--|--------|-----------|--------|--|--|
| MarketSector           |  | Value at Risk |           | % ofTotalCapitalization |  | HighValue atRisk |         | LowValue at Risk |  | Average Value atRisk* |
| Currencies:            |  |          |      |                    |  |             |    |             |  |                  |       |   |  |   |    |   |  |   |      |   |
| –OTC             |  | $             | 1,253,682 |                    |  |             | 1.80    | %           |  | $                     | 7,450,935  |   |  | $      | 339,241 |   |  | $      | 2,539,913 |   |
| Energy                 |  |          | 151,950   |                    |  |             | 0.22    | %           |  |                  | 1,851,125  |   |  |   | 22,500  |   |  |   | 407,419   |   |
| Grains                 |  |          | 20,725    |                    |  |             | 0.03    | %           |  |                  | 293,400    |   |  |   | 5,400   |   |  |   | 30,327    |   |
| InterestRatesU.S.      |  |          | 843,650   |                    |  |             | 1.21    | %           |  |                  | 1,945,400  |   |  |   | 56,093  |   |  |   | 859,838   |   |
| InterestRates Non-U.S. |  |          | 781,208   |                    |  |             | 1.12    | %           |  |                  | 4,742,211  |   |  |   | 222,627 |   |  |   | 1,564,487 |   |
| Metals                 |  |          |      |                    |  |             |    |             |  |                  |       |   |  |   |    |   |  |   |      |   |
| –ExchangeTraded  |  |          | 1,500     |                    |  |             | — | **          |  |                  | 642,617    |   |  |   | 1,500   |   |  |   | 136,000   |   |
| –OTC             |  |          | 182,882   |                    |  |             | 0.26    | %           |  |                  | 1,961,440  |   |  |   | 40,700  |   |  |   | 631,387   |   |
| Softs                  |  |          | 50,475    |                    |  |             | 0.07    | %           |  |                  | 199,831    |   |  |   | 8,000   |   |  |   | 76,583    |   |
| Indices                |  |          | 2,788,922 |                    |  |             | 4.00    | %           |  |                  | 15,462,251 |   |  |   | 99,501  |   |  |   | 4,606,617 |   |
| Total                  |  | $             | 6,074,994 |                    |  |             | 8.71    | %           |  |                  |       |   |  |   |    |   |  |   |      |   |
|                        |

|  |
|--|
|  |  |
|  |

|  |                                                  |
|--|--------------------------------------------------|
|  | *Annual average based on month-end value at risk |

|  |                   |
|--|-------------------|
|  | ** Dueto rounding |

As of December 31, 2004, the Partnership'stotal capitalization was $125,370,686.

December 31,2004

|                                  |  |               |            |                          |  |                   |        |                   |  |                      |            |        |  |        |         |        |  |        |           |        |  |  |
|----------------------------------|--|---------------|------------|--------------------------|--|-------------------|--------|-------------------|--|----------------------|------------|--------|--|--------|---------|--------|--|--------|-----------|--------|--|--|
| MarketSector                     |  | Value at Risk |            | % ofTotal Capitalization |  | High Value atRisk |        | Low Value at Risk |  | AverageValue atRisk* |
| Currencies:                      |  |          |       |                     |  |              |   |              |  |                 |       |   |  |   |    |   |  |   |      |   |
| –Over-the-counterContracts |  | $             | 5,565,841  |                     |  |              | 4.44   | %            |  | $                    | 5,565,841  |   |  | $      | 4,456   |   |  | $      | 705,744   |   |
| Energy                           |  |          | 297,500    |                     |  |              | 0.24   | %            |  |                 | 2,690,000  |   |  |   | 68,000  |   |  |   | 1,216,842 |   |
| InterestratesU.S.                |  |          | 1,567,950  |                     |  |              | 1.25   | %            |  |                 | 3,913,100  |   |  |   | 180,100 |   |  |   | 2,417,500 |   |
| InterestratesNon-U.S.            |  |          | 3,441,755  |                     |  |              | 2.74   | %            |  |                 | 7,093,441  |   |  |   | 234,668 |   |  |   | 4,218,699 |   |
| Metals                           |  |          |       |                     |  |              |   |              |  |                 |       |   |  |   |    |   |  |   |      |   |
| –Exchange TradedContracts  |  |          | 342,000    |                     |  |              | 0.27   | %            |  |                 | 537,000    |   |  |   | 246,000 |   |  |   | 407,000   |   |
| –Over-the-counterContracts |  |          | 837,725    |                     |  |              | 0.67   | %            |  |                 | 1,939,055  |   |  |   | 45,225  |   |  |   | 269,563   |   |
| Softs                            |  |          | 147,400    |                     |  |              | 0.12   | %            |  |                 | 287,222    |   |  |   | 8,289   |   |  |   | 85,806    |   |
| Indices                          |  |          | 14,446,332 |                     |  |              | 11.52  | %            |  |                 | 14,477,773 |   |  |   | 168,124 |   |  |   | 5,640,488 |   |
| Total                            |  | $             | 26,646,503 |                     |  |              | 21.25  | %            |  |                 |       |   |  |   |    |   |  |   |      |   |
|                                  |

|  |
|--|
|  |  |
|  |

|  |                                                  |
|--|--------------------------------------------------|
|  | *Annual average based on month-end value at risk |

MaterialLimitations on Value at Risk as an Assessment of Market Risk

The face value of the market sector instruments held by thePartnership is typically many times the applicable maintenance marginrequirement (margin requirements generally range between 2% and15% of contract face value) as well as many times thecapitalization of the Partnership. The magnitude of thePartnership's open positions creates a "risk ofruin" not typically found in most other investmentvehicles. Because of the size of its positions, certain marketconditions — unusual, but historically recurring from time totime — could cause the Partnership to incur severe losses over ashort period of time. The foregoing Value at Risk table — as wellas the past performance of the Partnership — give no indicationof this "risk of ruin."

Non-TradingRisk

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

19

----

Materiality as used in this section,"Qualitative and Quantitative Disclosures About MarketRisk," is based on an assessment of reasonably possiblemarket movements and the potential losses caused by such movements,taking into account the leverage, optionality and multiplier featuresof the Partnership's market sensitive instruments.

Qualitative Disclosures Regarding Primary Trading RiskExposures

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

The following were the primarytrading risk exposures of the Partnership as of December 31, 2005, bymarket sector.

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

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

StockIndices. The Partnership's primary equity exposure is toequity price risk in the G-8 countries. The stock index futures tradedby the Partnership are limited to futures on broadly based indices. Asof December 31, 2005, the Partnership's primary exposures were inthe EUREX and Chicago Mercantile Exchange stock indices. The GeneralPartner anticipates little, if any, trading in non-G-8 stock indices.The Partnership is primarily exposed to the risk of adverse pricetrends or static markets in the major U.S., European and Japaneseindices. (Static markets would not cause major market changes but wouldmake it difficult for the Partnership to avoid being"whipsawed" into numerous small losses.)

Metals. The Partnership's primary metal marketexposure is to fluctuations in the price of base metals Copper,Aluminum and Nickel.

Softs. The Partnership'sprimary commodities exposure is to agricultural price movements whichare often directly affected by severe or unexpected weather conditions.Cocoa, coffee and sugar accounted for the substantial bulk of thePartnership's commodity exposure as of December 31, 2005.

Energy. The Partnership's primary energy marketexposure is to natural gas and oil price movements, often resultingfrom political developments in the Middle East. Oil prices can bevolatile and substantial profits and losses have been and are expectedto continue to be experienced in this market.

20

----

Qualitative Disclosures RegardingNon-Trading Risk Exposure

The following were the onlynon-trading risk exposures of the Partnership as of December 31,2005.

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

Qualitative DisclosuresRegarding Means of Managing Risk Exposure

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

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

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

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

21

----

Item8.    Financial Statements and Supplementary Data.

SALOMON SMITH BARNEY FAIRFIELD FUTURES FUND L.P.

INDEX TOFINANCIALSTATEMENTS

|                                                                                               |  |             |  |  |  |  |
|-----------------------------------------------------------------------------------------------|--|-------------|--|--|--|--|
|                                                                                          |  | PageNumber  |
| Oath orAffirmation                                                                            |  | F-2         |
| Management'sReport on Internal Control over FinancialReporting                                |  | F-3         |
| Reports of IndependentRegistered Public Accounting Firm                                       |  | F-4 -F-5    |
| FinancialStatements:                                                                          |  |        |
| Statements of Financial Condition atDecember 31, 2005 and 2004                                |  | F-6         |
| CondensedSchedules of Investments at December 31, 2005 and 2004                               |  | F-7 -F-8    |
| Statements of Income and Expenses for the yearsended December 31, 2005, 2004 and 2003         |  | F-9         |
| Statements of Changes inPartners' Capital for the years ended December 31, 2005, 2004 and2003 |  | F-10        |
| Statements of Cash Flows for theyears ended December 31, 2005, 2004 and 2003                  |  | F-11        |
| Notes to FinancialStatements                                                                  |  | F-12 - F-16 |
| Selected UnauditedQuarterly FinancialData                                                     |  | F-17        |
|                                                                                               |

F-1

----

To theLimited Partners ofSalomon Smith Barney Fairfield Futures FundL.P.

To the best of the knowledge and belief of theundersigned, the information contained herein is accurate andcomplete.

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

|  | By: Daniel R.McAuliffe, Jr. |
|--|-----------------------------|

|  | Chief Financial Officer andDirectorCitigroup Managed Futures LLCGeneral Partner, SalomonSmith Barney Fairfield Futures Fund L.P. |
|--|----------------------------------------------------------------------------------------------------------------------------------|

|  | Citigroup Managed Futures LLC731 LexingtonAvenue25th FloorNew York, N.Y.10022212-559-2011 |
|--|-------------------------------------------------------------------------------------------|

F-2

----

Management's Report on InternalControl overFinancial Reporting

The management of SalomonSmith Barney Fairfield Futures Fund L.P. (the"Partnership"), Citigroup Managed FuturesLLC, is responsible for establishing and maintaining adequate internalcontrol over financial reporting. The Partnership's internalcontrol system was designed to provide reasonable assurance to thePartnership's management and Board of Directors regarding thepreparation and fair presentation of published financial statements inaccordance with U.S. generally accepted accounting principles. Allinternal control systems, no matter how well designed, have inherentlimitations. Therefore, even those systems determined to be effectivecan provide only reasonable assurance with respect to financialstatement preparation and presentation.

Management maintains acomprehensive system of controls intended to ensure that transactionsare executed in accordance with management's authorization,assets are safeguarded, and financial records are reliable. Managementalso takes steps to see that information and communication flows areeffective and to monitor performance, including performance of internalcontrol procedures.

The Partnership's management assessedthe effectiveness of the Partnership's internal control overfinancial reporting as of December 31, 2005 based on the criteria setforth by the Committee of Sponsoring Organizations of the TreadwayCommission (COSO) in Internal Control-Integrated Framework. Based onthis assessment, management believes that, as of December 31, 2005, thePartnership's internal control over financial reporting iseffective.

Management's assessment of the effectiveness ofthe Company's internal control over financial reporting as ofDecember 31, 2005 has been audited by KPMG LLP, the Partnership'sindependent registered public accounting firm, as stated in theirreports appearing on the following pages, which express unqualifiedopinions on management's assessment and on the effectiveness ofthe Partnership's internal control over financial reporting as ofDecember 31, 2005.

F-3

----

Report of Independent Registered PublicAccounting Firm

To the Partners ofSalomon SmithBarney Fairfield Futures Fund L.P.:

We have auditedmanagement's assessment, included in the accompanyingManagement's Report on Internal Control Over FinancialReporting, that Salomon Smith Barney Fairfield Futures Fund L.P.(the "Partnership") maintained effectiveinternal control over financial reporting as of December 31, 2005,based on criteria established in Internal Control—IntegratedFramework issued by the Committee of Sponsoring Organizations ofthe Treadway Commission ("COSO"). ThePartnership's management is responsible for maintaining effectiveinternal control over financial reporting and for its assessment of theeffectiveness of internal control over financial reporting. Ourresponsibility is to express an opinion on management'sassessment and an opinion on the effectiveness of thePartnership's internal control over financial reporting based onour audit.

We conducted our audit in accordance with thestandards of the Public Company Accounting Oversight Board (UnitedStates). Those standards require that we plan and perform the audit toobtain reasonable assurance about whether effective internal controlover financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control overfinancial reporting, evaluating management's assessment, testingand evaluating the design and operating effectiveness of internalcontrol, and performing such other procedures as we considerednecessary in the circumstances. We believe that our audit provides areasonable basis for our opinion.

A partnership'sinternal control over financial reporting is a process designed toprovide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles. Apartnership's internal control over financial reporting includesthose policies and procedures that (1) pertain to the maintenance ofrecords that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the partnership; (2)provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts andexpenditures of the partnership are being made only in accordance withauthorizations of management and directors of the partnership; and (3)provide reasonable assurance regarding prevention or timely detectionof unauthorized acquisition, use, or disposition of thepartnership's assets that could have a material effect on thefinancial statements.

Because of its inherentlimitations, internal control over financial reporting may not preventor detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controlsmay become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures maydeteriorate.

In our opinion, management'sassessment that Salomon Smith Barney Fairfield Futures Fund L.P.maintained effective internal control over financial reporting as ofDecember 31, 2005, is fairly stated, in all material respects, based oncriteria established in Internal Control—IntegratedFramework issued by COSO. Also, in our opinion, the Partnershipmaintained, in all material respects, effective internal control overfinancial reporting as of December 31, 2005, based on criteriaestablished in Internal Control—Integrated Frameworkissued by COSO.

We also have audited, in accordance withthe standards of the Public Company Accounting Oversight Board (UnitedStates), the statements of financial condition of the Partnership,including the condensed schedules of investments, as of December 31,2005 and 2004, and the related statements of income and expenses,changes in partners' capital, and cash flows for each of theyears in the three-year period ended December 31, 2005, and our reportdated March 13, 2006 expressed an unqualified opinion on thosefinancialstatements.

|  |
|--|
|  |  |
|  |

New York, NewYorkMarch 13, 2006

F-4

----

Report of Independent Registered PublicAccounting Firm

To the Partners of Salomon SmithBarney Fairfield Futures Fund L.P.:

We have audited theaccompanying statements of financial condition of Salomon Smith BarneyFairfield Futures Fund L.P. (the"Partnership"), including the condensedschedules of investments, as of December 31, 2005 and 2004, and therelated statements of income and expenses, changes in partners'capital, and cash flows for each of the years in the three-year periodended December 31, 2005. These financial statements are theresponsibility of the Partnership's management. Ourresponsibility is to express an opinion on these financial statementsbased on our audits.

We conducted our audits inaccordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we planand perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis forour opinion.

In our opinion, the financial statementsreferred to above present fairly, in all material respects, thefinancial position of Salomon Smith Barney Fairfield Futures Fund L.P.as of December 31, 2005 and 2004, and the results of its operations,changes in its partners' capital, and its cash flows for each ofthe years in the three-year period ended December 31, 2005, inconformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of thePublic Company Accounting Oversight Board (United States), theeffectiveness of the Partnership's internal control overfinancial reporting as of December 31, 2005, based on criteriaestablished in Internal Control—Integrated Frameworkissued by the Committee of Sponsoring Organizations of the TreadwayCommission ("COSO"), and our report datedMarch 13, 2006 expressed an unqualified opinion on management'sassessment of, and the effective operation of, internal control overfinancial reporting.

|  |
|--|
|  |  |
|  |

NewYork, New York March 13, 2006

F-5

----

Salomon Smith Barney FairfieldFutures Fund L.P.Statements of Financial ConditionDecember31, 2005 and2004

|                                                                                                                                        |  |        |            |        |  |        |             |        |  |  |
|----------------------------------------------------------------------------------------------------------------------------------------|--|--------|------------|--------|--|--------|-------------|--------|--|--|
|                                                                                                                                   |  | 2005   |            | 2004   |
| Assets:                                                                                                                                |  |   |       |   |  |   |        |   |
| Equityin commodity futures tradingaccount:                                                                                             |  |   |       |   |  |   |        |   |
| Cash (restricted $6,668,033and $29,455,643 in 2005 and 2004, respectively) (Note3c)                                                    |  | $      | 73,279,574 |   |  | $      | 129,515,744 |   |
| Netunrealized appreciation on open futurespositions                                                                                    |  |   | —    |   |  |   | 2,936,841   |   |
| Unrealizedappreciation on open forwardcontracts                                                                                        |  |   | 2,834,674  |   |  |   | 5,771,456   |   |
|                                                                                                                                   |  |   | 76,114,248 |   |  |   | 138,224,041 |   |
| Interestreceivable (Note3c)                                                                                                            |  |   | 28,843     |   |  |   | 22,316      |   |
|                                                                                                                                   |  | $      | 76,143,091 |   |  | $      | 138,246,357 |   |
| Liabilitiesand Partners'Capital:                                                                                                       |  |   |       |   |  |   |        |   |
| Liabilities:                                                                                                                           |  |   |       |   |  |   |        |   |
| Netunrealized depreciation on open futurespositions                                                                                    |  | $      | 142,543    |   |  | $      | —     |   |
| Unrealizeddepreciation on open forwardcontracts                                                                                        |  |   | 2,138,247  |   |  |   | 7,345,959   |   |
| Accruedexpenses:                                                                                                                       |  |   |       |   |  |   |        |   |
| Commissions (Note3c)                                                                                                                   |  |   | 282,296    |   |  |   | 498,924     |   |
| Managementfees (Note3b)                                                                                                                |  |   | 124,908    |   |  |   | 220,823     |   |
| Administrativefees (Note3a)                                                                                                            |  |   | 31,227     |   |  |   | 55,206      |   |
| Professionalfees                                                                                                                       |  |   | 30,375     |   |  |   | 28,251      |   |
| Other                                                                                                                                  |  |   | 14,871     |   |  |   | 16,541      |   |
| Redemptionspayable (Note5)                                                                                                             |  |   | 3,652,070  |   |  |   | 4,709,967   |   |
|                                                                                                                                   |  |   | 6,416,537  |   |  |   | 12,875,671  |   |
| Partners'Capital (Notes 1 and 5):                                                                                                      |  |   |       |   |  |   |        |   |
| General Partner,864.9335 Unit equivalents outstanding in 2005 and  2004                                                                |  |   | 1,203,434  |   |  |   | 1,525,816   |   |
| LimitedPartners, 49,249.2016 and 70,203.4817 Redeemable Units of LimitedPartnership Interest outstanding in 2005 and 2004,respectively |  |   | 68,523,120 |   |  |   | 123,844,870 |   |
|                                                                                                                                   |  |   | 69,726,554 |   |  |   | 125,370,686 |   |
|                                                                                                                                   |  | $      | 76,143,091 |   |  | $      | 138,246,357 |   |
|                                                                                                                                        |

Seeaccompanying notes to financial statements.

F-6

----

Salomon Smith BarneyFairfield FuturesFund L.P.Condensed Schedule of InvestmentsDecember 31,2005

|                                                  |  |           |            |                      |  |        |        |         |  |  |
|--------------------------------------------------|--|-----------|------------|----------------------|--|--------|--------|---------|--|--|
|                                             |  | FairValue |            | % ofPartners'Capital |
| FuturesContractsPurchased                        |  |      |       |                 |  |   |   |    |
| Energy                                           |  | $         | 37,644     |                 |  |   | 0.05   | %  |
| Grains                                           |  |      | (3,900     | )               |  |   | (0.01  | )  |
| Indices                                          |  |      | 87,398     |                 |  |   | 0.13   |    |
| InterestRatesNon-U.S.                            |  |      | 127,540    |                 |  |   | 0.18   |    |
| Softs                                            |  |      | 27,082     |                 |  |   | 0.04   |    |
| Metals                                           |  |      | 1,140      |                 |  |   | 0.00   | *  |
| Totalfutures contractspurchased                  |  |      | 276,904    |                 |  |   | 0.39   |    |
| FuturesContractsSold                             |  |      |       |                 |  |   |   |    |
| Energy                                           |  |      | 25,660     |                 |  |   | 0.04   |    |
| Grains                                           |  |      | (45,605    | )               |  |   | (0.07  | )  |
| Indices                                          |  |      | 10,035     |                 |  |   | 0.01   |    |
| InterestRates U.S.                               |  |      | (365,184   | )               |  |   | (0.52  | )  |
| InterestRatesNon-U.S.                            |  |      | 25,874     |                 |  |   | 0.04   |    |
| Softs                                            |  |      | (70,227    | )               |  |   | (0.10  | )  |
| Totalfutures contractssold                       |  |      | (419,447   | )               |  |   | (0.60  | )  |
| UnrealizedAppreciation on ForwardContracts       |  |      |       |                 |  |   |   |    |
| Currencies                                       |  |      | 1,186,790  |                 |  |   | 1.70   |    |
| Metals                                           |  |      | 1,647,884  |                 |  |   | 2.37   |    |
| Totalunrealized appreciation on forwardcontracts |  |      | 2,834,674  |                 |  |   | 4.07   |    |
| UnrealizedDepreciation on ForwardContracts       |  |      |       |                 |  |   |   |    |
| Currencies                                       |  |      | (1,046,650 | )               |  |   | (1.50  | )  |
| Metals                                           |  |      | (1,091,597 | )               |  |   | (1.57  | )  |
| Totalunrealized depreciation on forwardcontracts |  |      | (2,138,247 | )               |  |   | (3.07  | )  |
| Totalfair value                                  |  | $         | 553,884    |                 |  |   | 0.79   | %  |
|                                                  |

Percentages are based onPartners' capital unless otherwise indicated

* Dueto rounding

See accompanying notes to financialstatements.

F-7

----

Salomon Smith BarneyFairfield FuturesFund L.P.Condensed Schedule of InvestmentsDecember 31,2004

|                                                   |  |           |            |                      |  |        |        |         |  |  |
|---------------------------------------------------|--|-----------|------------|----------------------|--|--------|--------|---------|--|--|
|                                              |  | FairValue |            | % ofPartners'Capital |
| FuturesContracts Purchased                        |  |      |       |                 |  |   |   |    |
| InterestRates U.S.                                |  | $         | 458,014    |                 |  |   | 0.37   | %  |
| Interest Rates Non-U.S.                           |  |      | 133,530    |                 |  |   | 0.10   |    |
| Metals                                            |  |      | (244,360   | )               |  |   | (0.19  | )  |
| Softs                                             |  |      | 107,831    |                 |  |   | 0.09   |    |
| Indices                                           |  |      | 2,184,390  |                 |  |   | 1.74   |    |
| Total futures contractspurchased                  |  |      | 2,639,405  |                 |  |   | 2.11   |    |
|                                              |  |      |       |                 |  |   |   |    |
| Futures ContractsSold                             |  |      |       |                 |  |   |   |    |
| Energy                                            |  |      | 274,150    |                 |  |   | 0.22   |    |
| Interest Rates U.S.                               |  |      | 102,760    |                 |  |   | 0.08   |    |
| Interest RatesNon-U.S.                            |  |      | (79,474    | )               |  |   | (0.06  | )  |
| Total futures contractssold                       |  |      | 297,436    |                 |  |   | 0.24   |    |
|                                              |  |      |       |                 |  |   |   |    |
| UnrealizedAppreciation on ForwardContracts        |  |      |       |                 |  |   |   |    |
| Currencies                                        |  |      | 4,769,286  |                 |  |   | 3.80   |    |
| Metals                                            |  |      | 1,002,170  |                 |  |   | 0.80   |    |
| Total unrealized appreciation on forwardcontracts |  |      | 5,771,456  |                 |  |   | 4.60   |    |
|                                              |  |      |       |                 |  |   |   |    |
| UnrealizedDepreciation on ForwardContracts        |  |      |       |                 |  |   |   |    |
| Currencies                                        |  |      | (6,082,616 | )               |  |   | (4.85  | )  |
| Metals                                            |  |      | (1,263,343 | )               |  |   | (1.01  | )  |
| Total unrealized depreciation on forwardcontracts |  |      | (7,345,959 | )               |  |   | (5.86  | )  |
| Total fair value                                  |  | $         | 1,362,338  |                 |  |   | 1.09   | %  |
|                                                   |

Percentages arebased on Partners' capital unless otherwise indicated

See accompanying notes to financialstatements.

F-8

----

Salomon Smith BarneyFairfield FuturesFund L.P.Statements of Income and Expensesfor the years endedDecember 31, 2005 and 2004 and2003

|                                                                                                                        |  |        |             |         |  |        |            |         |  |        |            |        |  |  |
|------------------------------------------------------------------------------------------------------------------------|--|--------|-------------|---------|--|--------|------------|---------|--|--------|------------|--------|--|--|
|                                                                                                                   |  | 2005   |             | 2004    |  | 2003   |
| Income:                                                                                                                |  |   |        |    |  |   |       |    |  |   |       |   |
| Netgains (losses) on trading of commodityinterests:                                                                    |  |   |        |    |  |   |       |    |  |   |       |   |
| Realizedgains (losses) on closed positions and foreigncurrencies                                                       |  | $      | (21,220,690 | )  |  | $      | 18,246,977 |    |  | $      | 24,151,280 |   |
| Netunrealized gains (losses) on openpositions                                                                          |  |   | (808,454    | )  |  |   | (9,636,338 | )  |  |   | 7,353,637  |   |
|                                                                                                                   |  |   | (22,029,144 | )  |  |   | 8,610,639  |    |  |   | 31,504,917 |   |
| Interestincome (Note3c)                                                                                                |  |   | 2,190,070   |    |  |   | 1,271,443  |    |  |   | 829,712    |   |
|                                                                                                                   |  |   | (19,839,074 | )  |  |   | 9,882,082  |    |  |   | 32,334,629 |   |
| Expenses:                                                                                                              |  |   |        |    |  |   |       |    |  |   |       |   |
| Brokeragecommissions including clearing fees of $123,532, $184,032 and $209,012,respectively (Note3c)                  |  |   | 4,339,107   |    |  |   | 6,785,010  |    |  |   | 5,845,292  |   |
| Managementfees (Note3b)                                                                                                |  |   | 1,787,438   |    |  |   | 2,705,964  |    |  |   | 2,295,848  |   |
| Administrativefees (Note3a)                                                                                            |  |   | 446,860     |    |  |   | 676,491    |    |  |   | 573,962    |   |
| Incentivefees (Note3b)                                                                                                 |  |   | —     |    |  |   | 2,826,991  |    |  |   | 4,558,435  |   |
| Professionalfees                                                                                                       |  |   | 88,394      |    |  |   | 82,576     |    |  |   | 93,792     |   |
| Otherexpenses                                                                                                          |  |   | 26,121      |    |  |   | 20,382     |    |  |   | 9,365      |   |
|                                                                                                                   |  |   | 6,687,920   |    |  |   | 13,097,414 |    |  |   | 13,376,694 |   |
| Netincome(loss)                                                                                                        |  | $      | (26,526,994 | )  |  | $      | (3,215,332 | )  |  | $      | 18,957,935 |   |
| Netincome (loss) per Redeemable Unit of Limited Partnership Interest andGeneral Partner Unit equivalent (Notes 1 and7) |  | $      | (372.72     | )  |  | $      | (24.06     | )  |  | $      | 309.07     |   |
|                                                                                                                        |

Seeaccompanying notes to financialstatements.

F-9

----

Salomon Smith BarneyFairfieldFutures Fund L.P.Statements of Changes in Partners'Capitalfor the years ended December 31, 2005 and 2004 and2003

|                                                                                                                                             |  |                 |             |                |  |        |           |         |  |        |             |         |  |  |
|---------------------------------------------------------------------------------------------------------------------------------------------|--|-----------------|-------------|----------------|--|--------|-----------|---------|--|--------|-------------|---------|--|--|
|                                                                                                                                        |  | LimitedPartners |             | GeneralPartner |  | Total  |
| Partners' capital atDecember  31,2002                                                                                                       |  | $               | 57,551,973  |           |  | $      | 816,296   |    |  | $      | 58,368,269  |    |
| Netincome                                                                                                                                   |  |            | 18,702,605  |           |  |   | 255,330   |    |  |   | 18,957,935  |    |
| Saleof 57,621.1285 Redeemable Units of Limited Partnership Interest andGeneral Partner's contribution representing 313.0352 Unitequivalents |  |            | 94,258,000  |           |  |   | 475,000   |    |  |   | 94,733,000  |    |
| Redemptionof 11,659.7972 Redeemable Units of Limited PartnershipInterest                                                                    |  |            | (18,748,824 | )         |  |   | —   |    |  |   | (18,748,824 | )  |
| Partners'capital at December  31,2003                                                                                                       |  |            | 151,763,754 |           |  |   | 1,546,626 |    |  |   | 153,310,380 |    |
| Netloss                                                                                                                                     |  |            | (3,194,522  | )         |  |   | (20,810   | )  |  |   | (3,215,332  | )  |
| Redemptionof 14,668.7146 Redeemable Units of Limited PartnershipInterest                                                                    |  |            | (24,724,362 | )         |  |   | —   |    |  |   | (24,724,362 | )  |
| Partners'capital at December 31,2004                                                                                                        |  |            | 123,844,870 |           |  |   | 1,525,816 |    |  |   | 125,370,686 |    |
| Netloss                                                                                                                                     |  |            | (26,204,612 | )         |  |   | (322,382  | )  |  |   | (26,526,994 | )  |
| Redemption of 20,954.2801 Redeemable Units of LimitedPartnershipInterest                                                                    |  |            | (29,117,138 | )         |  |   | —   |    |  |   | (29,117,138 | )  |
| Partners' capital atDecember 31, 2005                                                                                                       |  | $               | 68,523,120  |           |  | $      | 1,203,434 |    |  | $      | 69,726,554  |    |
|                                                                                                                                             |

Net AssetValue Per RedeemableUnit:

|       |  |   |          |        |  |  |
|-------|--|---|----------|--------|--|--|
| 2003: |  | $ | 1,788.14 |   |
| 2004: |  | $ | 1,764.08 |   |
| 2005: |  | $ | 1,391.36 |   |
|       |

Seeaccompanying notes to financial statements.

F-10

----

Salomon Smith Barney FairfieldFutures Fund L.P.Statements of Cash Flowsfor the years endedDecember 31, 2005 and 2004 and2003

|                                                                                                 |  |        |             |         |  |        |             |         |  |        |             |         |  |  |
|-------------------------------------------------------------------------------------------------|--|--------|-------------|---------|--|--------|-------------|---------|--|--------|-------------|---------|--|--|
|                                                                                            |  | 2005   |             | 2004    |  | 2003   |
| Cashflows from operatingactivities:                                                             |  |   |        |    |  |   |        |    |  |   |        |    |
| Netincome(loss)                                                                                 |  | $      | (26,526,994 | )  |  | $      | (3,215,332  | )  |  | $      | 18,957,935  |    |
| Adjustmentsto reconcile net income (loss) to net cash provided by (used in)operatingactivities: |  |   |        |    |  |   |        |    |  |   |        |    |
| Changesin operating assets andliabilities:                                                      |  |   |        |    |  |   |        |    |  |   |        |    |
| (Increase)decrease in restrictedcash                                                            |  |   | 22,787,610  |    |  |   | (6,927,628  | )  |  |   | (16,237,202 | )  |
| (Increase)decrease in net unrealized appreciation on open futurespositions                      |  |   | 2,936,841   |    |  |   | 4,087,794   |    |  |   | (2,443,655  | )  |
| (Increase)decrease in unrealized appreciation on open forwardcontracts                          |  |   | 2,936,782   |    |  |   | 3,659,953   |    |  |   | (9,304,284  | )  |
| (Increase)decrease in interestreceivable                                                        |  |   | (6,527      | )  |  |   | (5,220      | )  |  |   | 28,987      |    |
| Increase(decrease) in net unrealized depreciation on open futurespositions                      |  |   | 142,543     |    |  |   | —     |    |  |   | —     |    |
| Increase (decrease) in unrealized depreciation on openforwardcontracts                          |  |   | (5,207,712  | )  |  |   | 1,888,591   |    |  |   | 4,394,302   |    |
| Accruedexpenses:                                                                                |  |   |        |    |  |   |        |    |  |   |        |    |
| Increase(decrease) incommissions                                                                |  |   | (216,628    | )  |  |   | (105,365    | )  |  |   | 378,583     |    |
| Increase(decrease) in managementfees                                                            |  |   | (95,915     | )  |  |   | (46,633     | )  |  |   | 167,606     |    |
| Increase(decrease) in administrativefees                                                        |  |   | (23,979     | )  |  |   | (11,658     | )  |  |   | 41,901      |    |
| Increase(decrease) in incentivefees                                                             |  |   | —     |    |  |   | (2,810,786  | )  |  |   | 2,719,053   |    |
| Increase(decrease) in due toCGM                                                                 |  |   | —     |    |  |   | (14,614     | )  |  |   | (23,849     | )  |
| Increase(decrease) inother                                                                      |  |   | (1,670      | )  |  |   | 13,431      |    |  |   | 261         |    |
| Increase(decrease) in professionalfees                                                          |  |   | 2,124       |    |  |   | (22,127     | )  |  |   | 5,864       |    |
| Netcash provided by (used in) operatingactivities                                               |  |   | (3,273,525  | )  |  |   | (3,509,594  | )  |  |   | (1,314,498  | )  |
| Cashflows from financingactivities:                                                             |  |   |        |    |  |   |        |    |  |   |        |    |
| Proceedsfrom additions – LimitedPartners                                                  |  |   | —     |    |  |   | —     |    |  |   | 94,258,000  |    |
| Proceedsfrom additions – GeneralPartner                                                   |  |   | —     |    |  |   | —     |    |  |   | 475,000     |    |
| Paymentsfor redemptions – LimitedPartners                                                 |  |   | (30,175,035 | )  |  |   | (21,000,032 | )  |  |   | (17,924,576 | )  |
| Netcash provided by (used in) financingactivities                                               |  |   | (30,175,035 | )  |  |   | (21,000,032 | )  |  |   | 76,808,424  |    |
| Netchange incash                                                                                |  |   | (33,448,560 | )  |  |   | (24,509,626 | )  |  |   | 75,493,926  |    |
| Unrestrictedcash, at beginning ofyear                                                           |  |   | 100,060,101 |    |  |   | 124,569,727 |    |  |   | 49,075,801  |    |
| Unrestrictedcash, at end ofyear                                                                 |  | $      | 66,611,541  |    |  | $      | 100,060,101 |    |  | $      | 124,569,727 |    |
|                                                                                                 |

Seeaccompanying notes to financialstatements.

F-11

----

SalomonSmith BarneyFairfield Futures Fund L.P.Notes to FinancialStatements

|          |                          |
|----------|--------------------------|
| 1.  | PartnershipOrganization: |

Salomon Smith Barney Fairfield Futures Fund L.P.(the "Partnership") is a limited partnershipwhich was organized under the partnership laws of the State of New Yorkon March 25, 2002 to engage in the speculative trading of a diversifiedportfolio of commodity interests including futures contracts, optionsand forward contracts. The commodity interests that are traded by thePartnership are volatile and involve a high degree of market risk.

Between April 15, 2002 (commencement of the offering period) andJune 4, 2002, 12,423 redeemable units of Limited Partnership Interest("Redeemable Units") and 125 Units of GeneralPartnership Interest were sold at $1,000 per Redeemable Unit. Theproceeds of the initial offering were held in an escrow account untilJune 5, 2002, at which time they were remitted to the Partnership fortrading. The Partnership was authorized to sell 50,000 Redeemable Unitsof Limited Partnership Interest during its initial offering period. ThePartnership is not currently offering Redeemable Units.

Citigroup Managed 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 CitigroupInc.

The General Partner and each limited partner share in theprofits and losses of the Partnership in proportion to the amount ofpartnership interest owned by each except that no limited partner shallbe liable for obligations of the Partnership in excess of their initialcapital contribution and profits, if any, net of distributions.

The Partnership will be liquidated upon the first to occur of thefollowing: December 31, 2022; the Net Asset Value of a Redeemable Unitdecreases to less than $400 per Redeemable Unit as of the close of anybusiness day; a decline in net assets after trading commences to lessthan $1,000,000, or under certain other circumstances as defined in theLimited Partnership Agreement.

|          |                     |
|----------|---------------------|
| 2.  | AccountingPolicies: |

|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| a.  | All commodity interests(including derivative financial instruments and derivative commodityinstruments) are used for trading purposes. The commodity interests arerecorded on trade date and open contracts are recorded in thestatements of financial condition at fair value on the last businessday of the year, which represents market value for those commodityinterests for which market quotations are readily available.Investments in commodity interests denominated in foreign currenciesare translated into U.S. dollars at the exchange rates prevailing onthe last business day of the year. Realized gains (losses) and changesin unrealized gains (losses) on open positions are recognized in theperiod in which the contract is closed or the changes occur and areincluded in net gains (losses) on trading of commodity interests. |

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

|          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| c.  | The preparation of financialstatements in conformity with accounting principles generally acceptedin the United States of America requires management to make estimatesand assumptions that affect the reported amounts of assets andliabilities, disclosure of contingent assets and liabilities at thedate of the financial statements and reported amounts of revenues andexpenses during the reporting period. Actual results could differ fromthese estimates. |

|          |                                                                                            |
|----------|--------------------------------------------------------------------------------------------|
| d.  | Certain prior periodamounts have been reclassified to conform to current yearpresentation. |

F-12

----

SalomonSmith BarneyFairfield Futures Fund L.P.Notes to FinancialStatements

|          |             |
|----------|-------------|
| 3.  | Agreements: |

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

The General Partner administersthe business and affairs of the Partnership including selecting one ormore advisors to make trading decisions for the Partnership. ThePartnership will pay the General Partner an administrative fee equal to0.5% of adjusted net assets per year, payable monthly. Month-endNet Assets, for the purpose of calculating administrative fees are NetAssets, as defined in the Limited Partnership Agreement, prior to thereduction of redemptions and incentive fees.

|          |                       |
|----------|-----------------------|
| b.  | Management Agreement: |

TheGeneral Partner, on behalf of the Partnership, has entered into aManagement Agreement with Graham Capital Management L.P. (the"Advisor"), a registered commodity tradingadvisor. The Advisor is not affiliated with the General Partner or CGMand is not responsible for the organization or operation of thePartnership. The Partnership will pay the Advisor a monthly managementfee equal to 1/6 of 1% (2% per year) of month-end NetAssets allocated to the Advisor. Month-end Net Assets, for the purposeof calculating management fees are Net Assets, as defined in theLimited Partnership Agreement, prior to the reduction of redemptionsand incentive fees.

In addition, the Partnership willpay the Advisor an incentive fee payable quarterly equal to 20%of the New Trading Profits earned by the Advisor for the Partnership,as defined in the Management Agreement.

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

ThePartnership has entered into a Customer Agreement which provides thatthe Partnership will pay CGM a monthly brokerage fee equal to4.5% per year of adjusted net assets. Month-end Net Assets, forthe purpose of calculating commissions are Net Assets, as defined inthe Limited Partnership Agreement, prior to the reduction of accruedexpenses and redemptions payable. CGM will pay a portion of brokeragefees to its financial consultants who have sold Redeemable Units inthis Partnership. Brokerage fees will be paid for the life of thePartnership, although the rate at which such fees are paid may bechanged. The Partnership will pay for National Futures Associationfees, exchange, clearing, user, give-up and floor brokerage fees. Allof the Partnership's assets are deposited in thePartnership's account at CGM. The Partnership's cash isdeposited by CGM in segregated bank accounts to the extent required byCommodity Futures Trading Commission regulations. At December 31, 2005and 2004, the amount of cash held for margin requirements was$6,668,033 and $29,455,643, respectively. CGM has agreed to pay thePartnership interest on 80% of the average daily equity in thePartnership's account during each month (i.e., the sum of thedaily U.S. dollar cash balance in such accounts divided by the numberof calendar days in that month). Interest is earned at the 30-dayTreasury bill rate determined weekly by CGM. Interest is paid to thePartnership based on the average noncompetitive yield on 3-month U.S.Treasury bills maturing in 30 days (or on the maturity date closestthereto) from the date on which such weekly rate is determined. TheCustomer Agreement between the Partnership and CGM gives thePartnership the legal right to net unrealized gains and losses. TheCustomer Agreement may be terminated upon notice by either party.

|          |                     |
|----------|---------------------|
| 4.  | Trading Activities: |

The Partnershipwas formed for the purpose of trading contracts in a variety ofcommodity interests, including derivative financial instruments andderivative commodity instruments. The results of thePartnership's trading activities are shown in the statements ofincome and expenses.

F-13

----

SalomonSmith BarneyFairfield Futures Fund L.P.Notes to FinancialStatements

All of the commodity interests owned bythe Partnership are held for trading purposes. The average fair valueduring the years ended December 31, 2005 and 2004, based on a monthlycalculation, was $(10,724) and $4,356,763, respectively.

|          |                                |
|----------|--------------------------------|
| 5.  | Distributions and Redemptions: |

Distributions of profits, if any, will be made at the solediscretion of the General Partner and at such times as the GeneralPartner may decide. A limited partner may require the Partnership toredeem their Redeemable Units at their redemption value per RedeemableUnit as of the last day of each month ending at least three monthsafter their issuance on ten days notice to the General Partner. For thepurpose of a redemption, any accrued liability for reimbursement ofoffering and organization expenses for the initial offering period willnot reduce redemption value per Redeemable Unit. There is no feecharged to limited partners in connection with redemptions.

|          |                 |
|----------|-----------------|
| 6.  | Offering Costs: |

Offering costs ofapproximately $50,000 relating to the issuance and marketing of thePartnership's Redeemable Units offered were initially paid byCGM. These costs will be reimbursed to CGM by the Partnership over thefirst 24 months of trading commencing with the month immediatelyfollowing the first twelve month period of operations (together withinterest at the prime rate quoted by JPMorgan Chase & Co.).

As of the year ended December 31, 2004, all of these costs have beenreimbursed to CGM by the Partnership. In addition, the Partnership hasrecorded interest expense of $121 and $1,137 for the years endedDecember 31, 2004 and 2003, respectively, which is included in otherexpenses.

|          |                       |
|----------|-----------------------|
| 7.  | Financial Highlights: |

Changes in the Net Asset Value per Redeemable Unit of Partnershipinterest for the years ended December  31, 2005, 2004 and 2003were asfollows:

|                                                                                            |  |        |          |         |  |        |          |         |  |        |          |         |  |  |
|--------------------------------------------------------------------------------------------|--|--------|----------|---------|--|--------|----------|---------|--|--------|----------|---------|--|--|
|                                                                                       |  | 2005   |          | 2004    |  | 2003   |
| Netrealized and unrealized gains(losses)*                                                  |  | $      | (370.85  | )  |  | $      | 36.91    |    |  | $      | 415.49   |    |
| Interestincome                                                                             |  |   | 35.14    |    |  |   | 16.13    |    |  |   | 12.54    |    |
| Expenses**                                                                                 |  |   | (37.01   | )  |  |   | (77.10   | )  |  |   | (118.96  | )  |
| Increase(decrease) for theperiod                                                           |  |   | (372.72  | )  |  |   | (24.06   | )  |  |   | 309.07   |    |
| Netasset value per Redeemable Unit, beginning ofyear                                       |  |   | 1,764.08 |    |  |   | 1,788.14 |    |  |   | 1,479.07 |    |
| Netasset value per Redeemable Unit, end ofyear                                             |  | $      | 1,391.36 |    |  | $      | 1,764.08 |    |  | $      | 1,788.14 |    |
| Redemption/subscriptionvalue per Redeemable Unit versus net asset value per RedeemableUnit |  |   | —  |    |  |   | —  |    |  |   | 0.15     |    |
| Redemption/subscriptionvalue per Redeemable Unit, end ofyear***                            |  | $      | 1,391.36 |    |  | $      | 1,764.08 |    |  | $      | 1,788.29 |    |
|                                                                                            |

|  |
|--|
|  |  |
|  |

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

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

|     |                                                                                                                                                                                             |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *** | For thepurpose of a redemption/subscription, any remaining accrued liabilityfor reimbursement of offering costs will not reduceredemption/subscription Net Asset Value per Redeemable Unit. |

F-14

----

SalomonSmith BarneyFairfield Futures Fund L.P.Notes to FinancialStatements

|                                             |  |        |         |          |  |        |        |          |  |        |        |          |  |  |
|---------------------------------------------|--|--------|---------|----------|--|--------|--------|----------|--|--------|--------|----------|--|--|
|                                        |  | 2005   |         | 2004     |  | 2003   |
| Ratiosto average net assets:                |  |   |    |     |  |   |   |     |  |   |   |     |
| Netinvestment loss before incentivefees**** |  |   | (5.0    | )%  |  |   | (6.7   | )%  |  |   | (7.4   | )%  |
| Operatingexpenses                           |  |   | 7.4     | %   |  |   | 7.6    | %   |  |   | 8.2    | %   |
| Incentivefees                               |  |   | — |     |  |   | 2.1    | %   |  |   | 4.2    | %   |
| Totalexpenses                               |  |   | 7.4     | %   |  |   | 9.7    | %   |  |   | 12.4   | %   |
| Totalreturn:                                |  |   |    |     |  |   |   |     |  |   |   |     |
| Total return beforeincentivefees            |  |   | (21.1   | )%  |  |   | 0.9    | %   |  |   | 24.5   | %   |
| Incentivefees                               |  |   | — |     |  |   | (2.2   | )%  |  |   | (3.6   | )%  |
| Totalreturn after incentivefees             |  |   | (21.1   | )%  |  |   | (1.3   | )%  |  |   | 20.9   | %   |
|                                             |

|  |
|--|
|  |  |
|  |

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

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

|          |                             |
|----------|-----------------------------|
| 8.  | Financial Instrument Risks: |

In thenormal course of its business, the Partnership is party to financialinstruments with off-balance sheet risk, including derivative financialinstruments and derivative commodity instruments. These financialinstruments may include forwards, futures and options, whose values arebased upon an underlying asset, index, or reference rate, and generallyrepresent future commitments to exchange currencies or cash flows, topurchase or sell other financial instruments at specific terms atspecified future dates, or, in the case of derivative commodityinstruments, to have a reasonable possibility to be settled in cash,through physical delivery or with another financial instrument. Theseinstruments may be traded on an exchange or over-the-counter("OTC"). Exchange traded instruments arestandardized and include futures and certain option contracts. OTCcontracts are negotiated between contracting parties and includeforwards and certain options. Each of these instruments is subject tovarious risks similar to those related to the underlying financialinstruments including market and credit risk. In general, the risksassociated with OTC contracts are greater than those associated withexchange traded instruments because of the greater risk of default bythe counterparty to an OTC contract.

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

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

The General Partner monitors and controls thePartnership's risk exposure on a daily basis through financial,credit and risk management monitoring systems, and accordingly believesthat it has effective procedures for evaluating and limiting the creditand market risks to which the Partnership is subject. These monitoringsystems allow the General Partner to statistically analyze actualtrading results with risk adjusted performance indicators andcorrelation statistics. In addition, on-line monitoring systems

F-15

----

SalomonSmith BarneyFairfield Futures Fund L.P.Notes to FinancialStatements

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 December 31, 2005. However, dueto the nature of the Partnership's business, these instrumentsmay not be held to maturity.

F-16

----

Selectedunaudited quarterly financial data for the years ended December 31,2005 and December 31, 2004 is summarized below:

|                                                                                                                     |  |                                                        |            |                                                       |  |                                                   |         |                                                      |  |   |            |         |  |   |             |         |  |  |
|---------------------------------------------------------------------------------------------------------------------|--|--------------------------------------------------------|------------|-------------------------------------------------------|--|---------------------------------------------------|---------|------------------------------------------------------|--|---|------------|---------|--|---|-------------|---------|--|--|
|                                                                                                                |  | Forthe period from October 1, 2005 to December 31,2005 |            | For the period from July 1, 2005 to September30, 2005 |  | For the period from April 1, 2005 to June30, 2005 |         | For the period from January 1, 2005 to March31, 2005 |
| Net realized and unrealized tradinggains (losses) net of brokerage commissions and clearing feesplus interestincome |  | $                                                      | (698,510   | )                                                |  | $                                                 | 921,264 |                                                 |  | $ | (3,896,762 | )  |  | $ | (20,504,173 | )  |
| Netincome(loss)                                                                                                     |  | $                                                      | (1,161,562 | )                                                |  | $                                                 | 309,521 |                                                 |  | $ | (4,479,063 | )  |  | $ | (21,195,890 | )  |
| Increase(decrease) in Net Asset Value perUnit                                                                       |  | $                                                      | (23.22     | )                                                |  | $                                                 | 8.49    |                                                 |  | $ | (58.18     | )  |  | $ | (299.81     | )  |
|                                                                                                                     |

|                                                                                                                      |  |                                                        |            |                                                       |  |                                                   |            |                                                      |  |   |             |         |  |   |            |        |  |  |
|----------------------------------------------------------------------------------------------------------------------|--|--------------------------------------------------------|------------|-------------------------------------------------------|--|---------------------------------------------------|------------|------------------------------------------------------|--|---|-------------|---------|--|---|------------|--------|--|--|
|                                                                                                                 |  | Forthe period from October 1, 2004 to December 31,2004 |            | For the period from July 1, 2004 to September30, 2004 |  | For the period from April 1, 2004 to June30, 2004 |            | For the period from January 1, 2004 to March31, 2004 |
| Net realized and unrealized trading gains(losses) net of brokerage commissions and clearing fees plus interestincome |  | $                                                      | 20,990,319 |                                                  |  | $                                                 | (7,051,935 | )                                               |  | $ | (26,300,054 | )  |  | $ | 15,458,742 |   |
| Net income (loss)                                                                                                    |  | $                                                      | 20,170,631 |                                                  |  | $                                                 | (7,816,607 | )                                               |  | $ | (27,174,692 | )  |  | $ | 11,605,336 |   |
| Increase (decrease) in Net Asset Value perUnit                                                                       |  | $                                                      | 268.51     |                                                  |  | $                                                 | (98.05     | )                                               |  | $ | (332.06     | )  |  | $ | 137.54     |   |
|                                                                                                                      |

F-17

----

PART III

Item9.    Changes in and Disagreements with Accountants on Accountingand Financial Disclosure.

None

Item9A.    Controls and Procedures.

Based on theirevaluation of the Partnership's disclosure controls andprocedures as of year end the Chief Executive Officer and ChiefFinancial Officer have concluded that such controls and procedures areeffective.

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

Management's Report on internalcontrol over financial reporting and KPMG LLP's related opinionare included in the Partnership's annual financial statementsunder "Item 8. Financial Statements and SupplementaryData."

Item 9B.    OtherInformation

The Partnership previously filed report(s) asan "accelerate filer" (as defined in Rule12b-2 of the Exchange Act). The Partnership has been advised by SECStaff that it is not an accelerated filer and that it is not,therefore, required to file as such.

Item10.    Directors and Executive Officers of theRegistrant.

The Partnership has no officers or directorsand its affairs are managed by its General Partner, Citigroup ManagedFutures LLC. Investment decisions are made by Graham CapitalManagement.

The Partnership has not adopted a code of ethicsthat applies to officers because it has no officers.

Item11.    Executive Compensation.

The Partnership hasno directors or officers. Its affairs are managed by Citigroup ManagedFutures LLC, its General Partner. CGM, an affiliate of the GeneralPartner, is the commodity broker for the Partnership and receivesbrokerage commissions for such services, as described under"Item 1. Business." Brokeragecommissions and clearing fees of $4,339,107 were earned for the yearended December 31, 2005. Management fees of $1,787,438 were earned bythe Advisor for the year ended December 31, 2005. Administrative feesof $446,860 were earned by the Advisor for the year ended December 31,2005.

Item 12.    Security Ownership of CertainBeneficial Owners and Management.

(a)    Securityownership of certain beneficial owners. As of February 28, 2006,one beneficial owner who is neither a director nor executive officerowns more than five percent (5%) of the outstanding RedeemableUnits issued by the Registrant asfollows:

|                                                                                                 |  |                                                                                            |  |                                          |  |                 |  |  |  |  |  |  |  |  |
|-------------------------------------------------------------------------------------------------|--|--------------------------------------------------------------------------------------------|--|------------------------------------------|--|-----------------|--|--|--|--|--|--|--|--|
| Titleof Class                                                                                   |  | Name and Address of BeneficialOwner                                                        |  | Amount and Nature of BeneficialOwnership |  | Percent ofClass |
| Redeemable Units of     Limited Partnership    Interest |  | JVA Enterprises Holdings, LLCMr. MarkBugge3133 Orchard Vista Dr.Grand Rapids, MI49546-7033 |  | 3,189.6823 RedeemableUnits               |  | 6.51%           |
|                                                                                                 |

(b)    Security ownership of management. Under the termsof the Limited Partnership Agreement, the Partnership's affairsare managed by the General Partner. The General Partner owns Units ofgeneral partnership interest equivalent to 864.9335 Units(1.73%) of Limited Partnership Interest as of December 31,2005.

Principals who own Redeemable Units of thePartnership:

22

----

*David J. Vogel                     35 Redeemable Units

(c)    Changes in control. None.

Item13.    Certain Relationship and Related Transactions.

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

Item 14.    PrincipalAccountant Fees and Services.

(1)    AuditFees. The aggregate fees billed for each of the last two fiscalyears for professional services rendered by KPMG LLP for the audit ofthe Partnership's annual financial statements, review offinancial statements included in the Partnership's Forms 10-Q and10-K and other services normally provided in connection with regulatoryfilings or engagements are as follows:

2005                $47,000

2004                $59,840

(2)    Audit-Related Fees. None

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

2005                $7,606

2004                $5,136

(4)    All Other Fees. None.

(5)    NotApplicable.

(6)    Not Applicable.

23

----

PART IV

Item15.    Exhibits and Financial Statement Schedules.

|                |                       |
|----------------|-----------------------|
| (a) (1)   | Financial Statements: |

Statements of Financial Condition at December 31, 2005 and2004.

Condensed Schedules of Investments at December 31,2005 and 2004.

Statements of Income and Expenses for theyears ended December 31, 2005, 2004 and 2003.

Statementsof Changes in Partners' Capital for the years ended December 31,2005, 2004 and 2003.

Statements of Cash Flows for theyears ended December 31, 2005, 2004 and 2003.

Notes toFinancial Statements.

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

3.1 – Limited Partnership Agreement (filed as Exhibit3.1 to the Registration Statement on Form S-1 (File No. 333-24923) andincorporated herein by reference).

3.2 –Certificate of Limited Partnership of the Partnership as filed in theoffice of the Secretary of State of the State of New York (filed asExhibit 3.2 to the Registration Statement on Form S-1 (File No.333-24923) and incorporated herein by reference).

10.1– Customer Agreement between the Partnership and Smith Barney(filed as Exhibit 10.1 to the Registration Statement on Form S-1 (FileNo. 333-24923) and incorporated herein by reference).

10.2 – Subscription Agreement (filed as Exhibit 10.2to the Registration Statement on Form S-1 (File No. 333-24923) andincorporated herein by reference).

10.3 – EscrowInstructions relating to escrow of subscription funds (filed as Exhibit10.3 to the Registration Statement on Form S-1 (File No. 333-24923) andincorporated herein by reference).

10.4 –Management Agreement among the Partnership, the General Partner andJohn W. Henry & Company Inc. (filed as Exhibit 10.4 to theRegistration Statement on Form S-1 (File No. 333-24923) andincorporated herein by reference).

10.5 – Letterextending the Management Agreement between the General Partner andGraham Capital Management L.P. for 2002 (previously filed).

10.6 – Letter extending the Management Agreementbetween the General Partner and Graham Capital Management L.P. for 2003(previously filed).

10.7 – Letter extending theManagement Agreement between the General Partner and Graham CapitalManagement L.P. for 2004 (previously filed).

10.8 –Letter extending the Management Agreement between the General Partnerand Graham Capital Management L.P. for 2005 (filedherein).

16.1 – Letter from PricewaterhouseCoopersLLP (previously filed).

The exhibits required to befiled by Item 601 of regulation S-K are incorporated herein byreference

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

Exhibit 31.2 – Rule 13a-14(a)/15d-14(a) Certification(Certification of Chief Financial Officer and Director)

24

----

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

Exhibit 32.2 – Section 1350 Certification(Certification of Chief Financial Officer and Director)

Supplemental Information To Be Furnished With Reports Filed PursuantTo Section 15(d) Of The Act by Registrants Which Have Not RegisteredSecurities Pursuant To Section 12 Of the Act.

AnnualReport to Limited Partners

No proxy material has been sent toLimited Partners.

25

----

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of theSecurities Exchange Act of 1934, the Registrant has duly caused thisannual report on Form 10-K to be signed on its behalf by theundersigned, thereunto duly authorized, in the City of New York andState of New York on the 29th day of March 2006.

Salomon Smith Barney Fairfield Futures Fund L.P.

|           |                                                        |
|-----------|--------------------------------------------------------|
| By:  | /s/ CitigroupManaged Futures LLC(General Partner) |

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

Pursuant to the requirements of the Securities Exchange Actof 1934, this annual report on Form 10-K has been signed below by thefollowing persons on behalf of the Registrant and in the capacities andon the date indicated.

|                                                                                        |  |                                                    |  |  |  |  |
|----------------------------------------------------------------------------------------|--|----------------------------------------------------|--|--|--|--|
| /s/ David J. VogelDavid J. VogelPresident andDirector                                  |  | /s/ Shelley UllmanShelleyUllmanDirector            |
|                                                                                   |  |                                               |
| /s/Daniel R. McAuliffe, Jr. Daniel R. McAuliffe, Jr.ChiefFinancial Officer andDirector |  | /s/ JenniferMagroJennifer MagroDirector            |
|                                                                                   |  |                                               |
| /s/Maureen O'TooleMaureen O'TooleDirector                                              |  | /s/ Jerry PascucciJerryPascucciDirector            |
|                                                                                   |  |                                               |
|                                                                                   |  | /s/Ihor RakowskyIhor RakowskySecretary andDirector |
|                                                                                        |

26

----