UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                  Annual Report Pursuant to Section 13 or 15(d)

                     of the Securities Exchange Act of 1934

                      For the year ended December 31, 2001

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

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

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

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

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

Securities registered pursuant to Section 12(b) of the Act:  None
                                                             ----
Securities registered pursuant to Section 12(g) of the Act:  Units
                                                             of Limited
                                                             Partnership
                                                             Interest
                                                             (Title of Class)

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

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

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

As of February 28, 2002,  Limited  Partnership  Units with an aggregate value of
$58,713,138 were outstanding and held by non-affiliates.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None




<PAGE>




                                     PART I

Item 1. Business.


     (a) General development of business.  Smith Barney Diversified Futures Fund
L.P.  ("Partnership") is a limited  partnership  organized under the partnership
laws of the  State of New  York,  on August  13,  1993 to engage in  speculative
trading of a diversified  portfolio of commodity  interests,  including  futures
contracts,  options and forwards. The commodity interests that are traded by the
Partnership  are  volatile  and  involve  a high  degree  of  market  risk.  The
Partnership commenced trading operations on January 12, 1994. A total of 150,000
Units of Limited Partnership Interest in the Partnership  ("Units") were offered
to the  public.  A  Registration  Statement  on Form S-1  relating to the public
offering  became  effective  on October 29, 1993.  Between  October 29, 1993 and
January  11,  1994,  75,615  Units  were sold to the  public at $1,000 per Unit.
Proceeds of the offering  were held in an escrow  account and were  transferred,
along with the general  partner's  contribution of $781,000 to the Partnership's
trading account on January 12, 1994 when the Partnership  commenced trading.  An
additional 150,000 Units were registered on a Registration Statement on Form S-1
effective  February 17, 1994. Sales of additional  Units and additional  general
partner  contributions  and redemptions of Units for the year ended December 31,
2001 are reported in the Statement of Partners'  Capital on page F-6 under "Item
8. Financial Statements and Supplementary Data."



                                       2
<PAGE>




     The general partner has agreed to make capital contributions, if necessary,
so that its general partnership  interest will be equal to the greater of (i) an
amount to entitle it to 1% of each material item of  Partnership  income,  loss,
deduction  or  credit  and  (ii)  the  greater  of  (a)  1%  of  the   partners'
contributions  to the  Partnership  or (b)  $25,000.  The  Partnership  will  be
liquidated upon the first of the following to occur:  December 31, 2013; the net
asset  value  of a Unit  decreases  to less  than  $400 as of the  close  of any
business  day;  or  under  certain  circumstances  as  defined  in  the  Limited
Partnership Agreement of the Partnership (the "Limited Partnership Agreement").

     Smith  Barney  Futures  Management  LLC acts as the  general  partner  (the
"General  Partner") of the Partnership.  The  Partnership's  commodity broker is
Salomon Smith Barney Inc.  ("SSB").  SSB is an affiliate of the General Partner.
The  General  Partner is wholly  owned by Salomon  Smith  Barney  Holdings  Inc.
("SSBHI"), which is the sole owner of SSB. SSBHI is a wholly owned subsidiary of
Citigroup Inc.

     The Partnership's  trading of futures,  forwards and options contracts,  if
applicable,  on  commodities  is done on United  States of America  and  foreign
commodity  exchanges.  It engages in such trading through a commodity  brokerage
account maintained with SSB.

     As of December 31, 2001, all commodity  trading  decisions are made for the
Partnership by Campbell & Company, Inc. ("Campbell"),  Willowbridge  Associates,



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<PAGE>
Inc.  ("Willowbridge"),  Winton Capital  Management  ("Winton"),  Graham Capital
Management L.P.  ("Graham"),  Dominion Capital Management Inc.  ("Dominion") and
Stonebrook   Structured   Products,   LLC  ("Stonebrook")   (collectively,   the
"Advisors").  None of the Advisors is affiliated  with one another,  the General
Partner  or SSB.  The  Advisors  are not  responsible  for the  organization  or
operation of the Partnership.  Bridgewater  Associates  Inc.("Bridgewater")  was
terminated as Advisors to the Partnership on March 1, 2001.

     Pursuant  to  the  terms  of the  Management  Agreements  (the  "Management
Agreements"),  the  Partnership  pays  Campbell,  Dominion,  Winton,  Graham and
Willowbridge  a monthly  management  fee equal to 1/6 of 1% (2% per year) of Net
Assets  allocated  to the  Advisor as of the end of each  month.  For the period
January  1,  2000  through  February  29,  2000,  Stonebrook  was paid a monthly
management fee equal to 1/16 of 1% (0.75% per year) of a fixed notional  account
size of  $75,000,000.  Effective  March 1, 2000,  Stonebrook  receives a monthly
management fee equal to 1/20 of 1% (0.60% per year) of a fixed notional  account
size  determined on a monthly  basis by the General  Partner.  In addition,  the
Partnership is obligated to pay each Advisor, except Stonebrook,  20% of the New
Trading Profits, as defined in the Management Agreements, earned by each Advisor
to the  Partnership  in each calendar  quarter.  Stonebrook  does not receive an
incentive  fee.  For the  period  January 1, 2000  through  June 30,  2000,  the
Partnership  was  obligated  to pay John W.  Henry &  Company,  Inc.  a  monthly
management  fee equal to 1/3 of 1% (4% per year) and an  incentive  fee  payable
quarterly equal to 15% of the New Trading Profits,  as defined in the Management
Agreement.


                                       4
<PAGE>

     The  Partnership  has  entered  into a  Customer  Agreement  with  SSB (the
"Customer Agreement") which provides that the Partnership will pay SSB a monthly
brokerage  fee equal to 11/24 of 1% of  month-end  Net Assets  allocated  to the
Advisors (5.5% per year) in lieu of brokerage  commissions on a per trade basis.
Persons investing $1,000,000 or more will pay a reduced brokerage fee of 7/24 of
1% of month-end Net Assets (3.5% per year),  receiving the differential  between
this reduced fee and 5.5% per year in the form of additional  Units.  SSB pays a
portion of its brokerage fees to its financial  consultants  who have sold Units
and who are registered as associated  persons with the Commodity Futures Trading
Commission (the "CFTC").  The Partnership pays for National Futures  Association
("NFA")  fees,  exchange  and  clearing  fees,  give-up  and user fees and floor
brokerage fees. The Customer Agreement between the Partnership and SSB gives the
Partnership the legal right to net unrealized  gains and losses.  Brokerage fees
will be paid for the life of the  Partnership,  although  the rate at which such
fees are paid may be changed.

     In addition,  SSB pays the Partnership interest on 80% of the average daily
equity  maintained  in cash in its  account  during  each month at a 30-day U.S.
Treasury bill rate determined weekly by SSB based on the average non-competitive
yield on 3-month U.S.  Treasury bills maturing in 30 days from the date on which
such weekly rate is determined.


                                       5
<PAGE>

     (b)  Financial  information  about  industry  segments.  The  Partnership's
business  consists  of  only  one  segment,  speculative  trading  of  commodity
interests.  The Partnership  does not engage in sales of goods or services.  The
Partnership's net income (loss) from operations for the years ended December 31,
2001, 2000,  1999, 1998 and 1997 is set forth under "Item 6. Selected  Financial
Data". The Partnership capital as of December 31, 2001 was $66,368,741.

         (c)  Narrative description of business.
              See Paragraphs (a) and (b) above.
              (i) through (x) - Not applicable.
              (xi) through (xii) - Not applicable.
              (xiii) - The Partnership has no employees.

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

Item 2.  Properties.

     The Partnership  does not own or lease any properties.  The General Partner
operates out of facilities provided by its affiliate, SSB.

Item 3.  Legal Proceedings.

     This section  describes  the major pending  legal  proceedings,  other than
ordinary routine litigation  incidental to the business,  to which Salomon Smith
Barney Holdings Inc.  ("SSBH") or its subsidiaries is a party or to which any of
their  property is  subject.  There are no material  legal  proceedings  pending
against the Partnership or the General Partner.


                                       6
<PAGE>

     Salomon  Smith  Barney  Inc.  ("SSB")  is a New York  corporation  with its
principal place of business at 388 Greenwich St., New York, New York 10013.  SSB
is registered as a broker-dealer and futures  commission  merchant ("FCM"),  and
provides futures  brokerage and clearing  services for  institutional and retail
participants  in the  futures  markets.  SSB and  its  affiliates  also  provide
investment banking and other financial services for clients worldwide.

     There have been no  administrative,  civil or criminal actions pending,  on
appeal or concluded  against SSB or any of its individual  principals within the
past five years that  management  believes  may have a material  impact on SSB's
ability to act as an FCM. In the ordinary course of its business, SSB is a party
to various claims and regulatory  inquiries.  Proceedings  deemed to be material
for  purposes  of  Commodity  Futures  Trading  Commission  ("CFTC")  disclosure
requirements are:

     In September 1992,  Harris Trust and Savings Bank (as trustee for Ameritech
Pension Trust ("APT"), Ameritech Corporation,  and an officer of Ameritech filed
suit  against  Salomon   Brothers  Inc.  ("SBI")  and  Salomon  Brothers  Realty
Corporation  ("SBRC") in the U.S.  District  Court for the Northern  District of
Illinois  (Harris Trust Savings Bank, not individually but solely as trustee for
the Ameritech  Pension  Trust,  Ameritech  Corporation  and John A. Edwardson v.
Salomon  Brothers Inc and Salomon  Brothers  Realty  Corp.).  The second amended
complaint alleges that three purchases by APT from defendants  of  participation


                                       7
<PAGE>

interests  in net cash flow or resale  proceeds  of three  portfolios  of motels
owned by Motels of America, Inc. ("MOA"), as well as a fourth purchase by APT of
a similar  participation  interest in a portfolio  of motels owned by Best Inns,
Inc. ("Best"),  violated the Employee  Retirement Income Security Act ("ERISA"),
and  that  APT's  purchase  of the  participation  interests  in the  third  MOA
portfolio  and in the Best  portfolio  violated  the  Racketeer  Influenced  and
Corrupt  Organization Act ("RICO") and the Illinois Consumer Fraud and Deceptive
Practices  Act  ("Consumer  Fraud  Act"),  and  constituted   fraud,   negligent
misrepresentation,  breach of contract and unjust  enrichment.  SBI had acquired
the participation interests when it purchased principal mortgage notes issued by
MOA and Best to finance  purchases  of motel  portfolios;  95% of three of those
interests  and 100% of the fourth were sold to APT for a total of  approximately
$20.9 million.  Plaintiffs'  second amended  complaint seeks judgment (a) on the
ERISA claims for the approximately  $20.9 million purchase price, for rescission
and for  disgorgement of profits,  as well as other relief,  and (b) on the RICO
and state law claims in the amount of $12.3 million, with damages trebled to $37
million on the RICO  claims  and  punitive  damages in excess of $37  million on
certain of the state law claims as well as other  relief.  Following  motions by
defendants,  the court dismissed the RICO, Consumer Fraud Act, fraud,  negligent
misrepresentation,  breach of contract,  and unjust enrichment claims. The court
also found that defendants  were not ERISA  fiduciaries and dismissed two of the
three claims based on that allegation. Defendants moved for summary judgment on


                                       8
<PAGE>

plaintiffs' only remaining claim,  which alleged an ERISA violation.  The motion
was denied, and defendants appealed to the U.S. Court of Appeals for the Seventh
Circuit.  In July  1999,  the U. S.  Court of Appeals  for the  Seventh  Circuit
reversed the denial of defendants' motion for summary judgment and dismissed the
sole remaining ERISA claim against the Company.  Plaintiffs filed a petition for
certiorari  with the U. S. Supreme Court  seeking  review of the decision of the
Court of  Appeals,  which was  granted  in  January  2000.  After  hearing  oral
argument,  on June 12, 2000,  the U.S.  Supreme Court reversed the U.S. Court of
Appeals for the Seventh Circuit's  judgment,  which had overturned the denial of
defendants'  motion for summary  judgment and dismissed the sole remaining ERISA
claim  against the Company,  and  remanded  the matter to the circuit  court for
further proceedings.  Subsequently, the circuit court remanded the matter to the
U.S.   District  Court  for  the  Northern  District  of  Illinois  for  further
proceedings.

     Both the Department of Labor and the Internal  Revenue Service ("IRS") have
advised SBI that they were or are reviewing the  underlying  transactions.  With
respect to the IRS,  SSBH, SBI and SBRC have consented to extensions of time for
the  assessment  of  excise  taxes  that  may be  claimed  with  respect  to the
transactions  for the years 1987,  1988 and 1989.  In August 1996,  the IRS sent
SSBH,  SBI and SBRC what appeared to be draft  "30-day  letters" with respect to
the  transactions and SSBH, SBI and SBRC were given an opportunity to comment on
whether the IRS should issue 30-day letters,  which would actually  commence the



                                       9
<PAGE>
assessment  process.  In October 1996, SSBH, SBI and SBRC submitted a memorandum
setting  forth reasons why the IRS should not issue such 30-day  letters.  Since
that time, the IRS has not issued such 30-day letters to SSBH, SBI or SBRC.

     In December  1996, a complaint  seeking  unspecified  monetary  damages was
filed by Orange County,  California against numerous brokerage firms,  including
SSB,  in the U.S.  Bankruptcy  Court for the  Central  District  of  California.
(County  of Orange  et al v.  Bear  Stearns  & Co.  Inc.  et al.) The  complaint
alleged,  among other things,  that the  brokerage  firms  recommended  and sold
unsuitable  securities to Orange Count.  SSB and the remaining  brokerage  firms
settled with Orange County in mid 1999.

     In June  1998,  complaints  were filed in the U.S.  district  Court for the
Eastern District of Louisiana in two actions (Board of  Liquidations,  City Debt
of the City of New  Orleans v. Smith  Barney  Inc,  et ano.  and The City of New
Orleans v. Smith Barney Inc. et ano.),  in which the City of New Orleans seeks a
determination that Smith Barney Inc. and another underwriter will be responsible
for any  damages  that the City may incur in the event the IRS denies tax exempt
status to the  City's  General  Obligation  Refunding  Bonds  Series  1991.  The
complaints  were  subsequently  amended.  SSB has asked the court to dismiss the
amended   complaints.   The  Court  denied  the  motion  but  stayed  the  case.
Subsequently, the city withdrew the lawsuit.

     In November  1998, a class action  complaint was filed in the United States
District Court  for the  Middle District of  Florida (Dwight Brock  as Clerk for


                                       10
<PAGE>

Collier County v. Merrill Lynch, et al.). The Complaint  alleged that,  pursuant
to a nationwide conspiracy, 17 broker-dealer defendants,  including SSB, Charged
excessive  mark-ups in connection with advanced  refunding  transactions.  Among
other relief,  plaintiffs sought compensatory and punitive damages,  restitution
and/or  rescission of the  transactions  and  disgorgement of alleged  excessive
profits.  In October 1999, the plaintiff filed a second amended  complaint.  SSB
has asked the court to dismiss the amended  complaint.  In  November  1999,  SSB
moved to dismiss the amended  complaint.  In May 2001, the parties reached,  and
the court preliminarily approved, a tentative settlement. In September 2001, the
court approved the settlement.

     In connection with the Louisiana and Florida matters,  the IRS and SEC have
been  conducting and  industry-wide  investigation  into the pricing of Treasury
securities  in advanced  refunding  transactions,  In April 2000 SSB and several
other broker-dealers entered into a settlement with the IRS and the SEC.

     In December  1998,  SSB was one of  twenty-eight  market  making firms that
reached a settlement  with the SEC in the matter titled In the Matter of Certain
Market Making  Activities on NASDAQ.  As part of the  settlement of that matter,
SSB,  without  admitting or denying the factual  allegation,  agreed to an order
that  required  that it: (i) cease and desist  from  committing  or causing  any
violations of Sections  15(c)(1) and (2) of the Securities  Exchange Act of 1934
and Rules 15cl -2,  15c2-7 and 17a-3  thereunder,  (ii) pay  penalties  totaling
approximately  $760,000,  and (iii) submit certain policies and procedures to an
independent consultant for review.


                                       11
<PAGE>

     In March 1999, a complaint seeking in excess of $250 million was filed by a
hedge fund and its  investment  advisor  against SSB in the Supreme Court of the
State of New York,  County of New York (MKP Master  Fund,  LDC et al. v. Salomon
Smith Barney  Inc.).  Plaintiffs  allege that while acting as their prime broker
SSB breached its contracts with  plaintiffs,  converted  plaintiffs'  monies and
engaged in tortious  conduct,  including  breaching  its  fiduciary  duties.  In
October 1999, the court dismissed plaintiffs' tort claims,  including the breach
of  fiduciary  duty claims,  but allowed the breach of contract  and  conversion
claims  to  stand.   In  December   1999,  SSB  filed  an  answer  and  asserted
counterclaims  against the investment advisor. In response to plaintiffs' motion
to strike the  counterclaims,  in January  2000,  SSB amended its  counterclaims
against  the  investment  advisor  to  seek  indemnification  and  contribution.
Plaintiffs  moved to strike SSB's  amended  counterclaims  in February  2000. In
September   2000,  the  court  denied   plaintiffs'   motion  to  dismiss  SSB's
counterclaims based on indemnification and contribution. Discovery is ongoing.

     SSBH and various subsidiaries have also been named as defendants in various
matters  incident to and typical of the  businesses  in which they are  engaged.
These include numerous civil actions,  arbitration proceedings and other matters



                                       12
<PAGE>
in which  SSBH's  broker-dealer  subsidiaries  have been  named,  arising in the
normal  course  of  business  out  of  activities  as a  broker  and  dealer  in
securities,  as an  underwriter  of  securities,  as  an  investment  banker  or
otherwise.  In the  opinion  of  SSBH's  management,  none of these  actions  is
expected  to have a  material  adverse  effect  on the  results  of  operations,
consolidated financial condition or liquidity of SSBH and its subsidiaries.

Item 4.  Submission of Matters to a Vote of Security Holders.

     There were no matters  submitted to the security  holders for a vote during
the last fiscal year covered by this report.

                                     PART II

Item 5.  Market for  Registrant's  Common  Equity and  Related  Security  Holder
         Matters.

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

               (b)  Holders.   The   number  of  holders  of  Units  of  Limited
                    Partnership Interest as of December 31, 2001 was 3,676.

               (b)  Distribution. The Partnership did not declare a distribution
                    in 2001 or 2000.

               (c)  Use of Proceeds:  For the twelve  months ended  December 31,
                    2001,  there were additional sales of 20.7023 Units totaling
                    $24,751.  For the twelve  months  ended  December  31, 2000,
                    there  were  additional  sales  of  49.4149  Units  totaling
                    $61,337.  For the twelve  months  ended  December  31, 1999,
                    there  were  additional  sales  of  88.1293  Units  totaling
                    $120,344.

                                       13
<PAGE>

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

                                       14
<PAGE>





Item 6. Selected Financial Data. Realized and unrealized trading gains (losses),
interest  income,  net income (loss) and increase  (decrease) in Net Asset Value
per Unit for the years ended December 31, 2001,  2000,  1999,  1998 and 1997 and
total assets at December 31, 2001, 2000, 1999, 1998 and 1997 were as follows:

<TABLE>
<CAPTION>
<S>                                      <C>            <C>                 <C>              <C>             <C>
                                        2001               2000           1999             1998             1997
                                    -------------   -------------    -------------     ------------     ------------
Realized and unrealized trading
 gains(losses) net of brokerage
 commissions and clearing fees
 of $4,686,916, $5,795,482,
 $7,950,768, $8,540,127, and
 $9,893,999,
 respectively                      $  (2,355,466)   $  (8,911,325)   $  (8,806,023)   $  11,635,004   $   5,083,043


Interest income                        2,044,447        4,241,957        4,687,547        5,203,988       6,331,875
                                   -------------    -------------    -------------    -------------   -------------

                                   $    (311,019)   $  (4,669,368)   $  (4,118,476)   $  16,838,992   $  11,414,918
                                   =============    =============    =============    =============   =============
Net income (loss)                  $  (3,195,464)   $  (7,766,838)   $  (9,063,470)   $   9,913,148   $   5,525,809
                                   =============    =============    =============    =============   =============

Increase (decrease) in Net
 Asset Value per Unit              $      (52.73)   $      (89.14)   $      (94.66)   $       99.32   $       48.07
                                   =============    =============    =============    =============   =============

Total assets                       $  67,123,600    $  83,024,864    $ 120,563,424    $ 146,464,780   $ 154,556,541
                                   =============    =============    =============    =============   =============
</TABLE>



                                       15
<PAGE>



Item 7. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations.

     (a)  Liquidity.  The  Partnership  does  not  engage  in  sales of goods or
services.  Its only  assets  are its  equity in its  commodity  futures  trading
account,  consisting of cash, net unrealized appreciation (depreciation) on open
positions and interest  receivable.  Because of the low margin deposits normally
required in commodity  trading,  relatively  small price movements may result in
substantial  losses to the Partnership.  Such substantial losses could lead to a
material decrease in liquidity.  To minimize this risk, the Partnership  follows
certain policies including:

     (1)  Partnership  funds are invested only in commodity  interests which are
traded in sufficient volume to permit,  in the opinion of the Advisors,  ease of
taking and liquidating positions.

     (2) The Partnership diversifies its positions among various commodities.

     (3) No Advisor  initiates  additional  positions  in any  commodity if such
additional  positions  would result in aggregate  positions for all  commodities
requiring as margin more than 66-2/3% of the  Partnership's  assets allocated to
the Advisor.

     (4) The Partnership may occasionally accept delivery of a commodity. Unless
such  delivery is disposed of promptly  by  retendering  the  warehouse  receipt
representing  the  delivery to the  appropriate  clearing  house,  the  physical
commodity position will be fully hedged.

     (5) The Partnership does not employ the trading technique commonly known as
"pyramiding," in  which  the speculator  uses  unrealized  profits  on existing


                                       16
<PAGE>

positions as margin for the purchase or sale of additional positions in the same
or related commodities.

     (6)  The  Partnership  does  not  utilize   borrowings   except  short-term
borrowings if the Partnership takes delivery of any cash commodities.

     (7) The Advisor may, from time to time,  employ trading  strategies such as
spreads  or  straddles  on  behalf  of the  Partnership.  The term  "spread"  or
straddle"   describes  a  commodity  futures  trading  strategy   involving  the
simultaneous  buying and selling of futures  contracts on the same commodity but
involving different delivery dates or markets and in which the trader expects to
earn a profit from a widening or narrowing of the difference  between the prices
of the two contracts.

     The Partnership is party to financial  instruments with  off-balance  sheet
risk,  including  derivative  financial  instruments  and  derivative  commodity
instruments,  in the normal course of its business.  These financial instruments
may  include  forwards,  futures  and  options,  whose  value is  based  upon an
underlying  asset,  index,  or reference  rate, and generally  represent  future
commitments to exchange  currencies or cash flows,  or to purchase or sell other
financial  instruments  at specified  terms at specified  future dates.  Each of
these  instruments  is subject to various risks similar to those relating to the
underlying financial  instruments  including market and credit risk. The General
Partner monitors and controls the Partnership's risk exposure on a  daily  basis

                                       17
<PAGE>

through financial, credit and risk management monitoring systems and accordingly
believes that it has effective procedures for evaluating and limiting the credit
and  market  risks to which  the  Partnership  is  subject.  (See  also  Item 8.
Financial   Statements  and  Supplementary  Data.  for  further  information  on
financial instrument risk included in the notes to financial statements.)

     Other than the risks inherent in commodity  trading,  the Partnership knows
of no trends, demands, commitments, events or uncertainties which will result in
or  which  are  reasonably  likely  to  result  in the  Partnership's  liquidity
increasing or decreasing in any material way. The Limited Partnership  Agreement
provides that the  Partnership  will cease trading  operations and liquidate all
open positions upon the first to occur of the following:  (i) December 31, 2013;
(ii) the vote to dissolve the  Partnership by limited  partners owning more than
50% of the Units; (iii) assignment by the General Partner of all of its interest
in the  Partnership or withdrawal,  removal,  bankruptcy or any other event that
causes the General  Partner to cease to be a general  partner under the New York
Revised Limited Partnership Act unless the Partnership is continued as described
in the  Limited  Partnership  Agreement;  (iv) net asset value per Unit falls to
less than $400 as of the end of any trading  day; or (v) the  occurrence  of any
event which shall make it unlawful for the  existence of the  Partnership  to be
continued.



                                       18
<PAGE>



     (b) Capital resources. (i) The Partnership has made no material commitments
for capital expenditures.

     (ii) The Partnership's capital consists of the capital contributions of the
partners as increased or decreased by gains or losses on commodity trading,  and
by expenses, interest income, redemptions of Units and distributions of profits,
if any. Gains or losses on commodity  trading cannot be predicted.  Market moves
in commodities are dependent upon  fundamental  and technical  factors which the
Partnership  may or may not be  able  to  identify.  Partnership  expenses  will
consist of, among other things, commissions, management fees and incentive fees.
The level of these  expenses  is  dependent  upon the level of  trading  and the
ability of the Advisors to identify and take advantage of price movements in the
commodity  markets,  in  addition  to the  level of net  assets  maintained.  In
addition,  the  amount of  interest  income  payable  by SSB is  dependent  upon
interest rates over which the Partnership has no control.

     No forecast can be made as to the level of redemptions in any given period.
A limited  partner may cause all of his Units to be redeemed by the  Partnership
at the Net Asset  Value  thereof  as of the last day of each  month on ten days'
written notice to the General  Partner.  No fee will be charged for redemptions.
For the year ended December 31, 2001,  9,178.3060  Units were redeemed  totaling
$10,959,595.  For the year  ended  December  31,  2000,  23,914.7410  Units were
redeemed totaling $29,303,982. For the year ended December 31, 1999, 12,865.1295
Units were redeemed totaling $17,452,603.

                                       19
<PAGE>

     The Partnership  ceased to offer Units effective April 1, 1996.  Additional
sales of 20.7023 Units  totaling  $24,751 for the year ending  December 31, 2001
and 49.4149  Units  totaling  $61,337 for the year ending  December 31, 2000 and
88.1293 Units totaling $120,344 for the year ending December 31, 1999, represent
additional Units offered as the differential  between the ordinary brokerage fee
and the reduced brokerage fee to existing limited partners investing  $1,000,000
or more.

         (c) Results of Operations.

     For the  year  ended  December  31,  2001,  the Net  Asset  Value  per Unit
decreased  4.3% from  $1,213.95 to  $1,161.22.  For the year ended  December 31,
2000,  the Net Asset Value per Unit  decreased 6.8% from $1,303.09 to $1,213.95.
For the year ended  December  31, 1999,  the Net Asset Value per Unit  decreased
6.8% from $1,397.75 to $1,303.09.

     The  Partnership   experienced  net  trading  gains  of  $2,331,450  before
commissions  and  expenses in 2001.  Gains were  primarily  attributable  to the
trading of commodity futures in U.S. and non- U.S. interest rates,  indices and


                                       20
<PAGE>

grains and were partially offset by losses  recognized in the trading of energy,
livestock, softs and metals.

     The  Partnership  experienced  net  trading  losses  of  $3,115,843  before
commissions  and  expenses for the year ended  December  31,  2000.  Losses were
primarily attributable to the trading in currencies,  U.S. and non-U.S. interest
rates, grains, livestock, indices, metals and softs and were partially offset by
gains recognized in the trading of energy products.

     The   Partnership   experienced  net  trading  losses  of  $855,255  before
commissions  and expenses in 1999.  Losses were  primarily  attributable  to the
trading of non-U.S. interest rates, metals, softs, livestock, indices and grains
and were  partially  offset by gains  recognized  in the trading of  currencies,
energy and U.S. interest rates.

     Commodity markets are highly volatile.  Broad price  fluctuations and rapid
inflation  increase the risks involved in commodity  trading,  but also increase
the possibility of profit.  The profitability of the Partnership  depends on the
existence  of major  price  trends and the  ability of the  Advisors to identify
those price  trends  correctly.  Price  trends are  influenced  by,  among other
things,  changing  supply  and  demand  relationships,   weather,  governmental,
agricultural,   commercial  and  trade  programs  and  policies,   national  and
international  political and economic  events and changes in interest  rates. To
the extent that market trends exist and the Advisors are able to identify  them,
the Partnership expects to increase capital through operations.

          (d) Operational Risk

     The Partnership is directly  exposed to market risk and credit risk,  which
arise in the normal course of its business activities. Slightly less direct, but
of critical  importance,  are risks  pertaining to  operational  and back office



                                       21
<PAGE>
support.  This is particularly  the case in a rapidly  changing and increasingly
global environment with increasing  transaction  volumes and an expansion in the
number and complexity of products in the marketplace.

Such risks include:

Operational/Settlement  Risk - the risk of financial  and  opportunity  loss and
legal liability attributable to operational problems, such as inaccurate pricing
of transactions,  untimely trade execution,  clearance and/or settlement, or the
inability to process large volumes of  transactions.  The Partnership is subject
to increased  risks with respect to its trading  activities  in emerging  market
securities,  where clearance,  settlement, and custodial risks are often greater
than  in  more  established  markets.  Technological  Risk - the  risk  of  loss
attributable to technological limitations or hardware failure that constrain the
Partnership's   ability  to  gather,   process,   and  communicate   information
efficiently and securely, without interruption, to customers, among units within
the Partnership, and in the markets where the Partnership participates.

Legal/Documentation  Risk - the risk of loss attributable to deficiencies in the
documentation  of  transactions  (such  as  trade  confirmations)  and  customer
relationships  (such as master  netting  agreements)  or errors  that  result in
noncompliance  with  applicable  legal and  regulatory  requirements.

Financial  Control  Risk - the  risk  of loss  attributable  to  limitations  in
financial  systems and controls.  Strong  financial  systems and controls ensure
that assets are safeguarded, that transactions are executed in  accordance with


                                       22
<PAGE>

management's   authorization,   and  that  financial   information  utilized  by
management and  communicated to external  parties,  including the  Partnership's
unitholders, creditors, and regulators, is free of material errors.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk Introduction

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

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

     The  Partnership  rapidly  acquires  and  liquidates  both  long and  short
positions  in a wide  range of  different  markets.  Conse-  quently,  it is not
possible  to  predict  how  a  particular  future  market  scenario  will affect


                                       23
<PAGE>

performance,   and  the  Partnership's   past  performance  is  not  necessarily
indicative of its future results.

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

Quantifying the Partnership's Trading Value at Risk

     The following  quantitative  disclosures regarding the Partnership's market
risk exposures contain  "forward-looking  statements"  within the meaning of the
safe harbor from civil  liability  provided for such  statements  by the Private
Securities  Litigation  Reform  Act of 1995  (set  forth in  Section  27A of the
Securities Act of 1933 and Section 21E of the Securities  Exchange Act of 1934).
All  quantitative  disclosures in this section are deemed to be  forward-looking
statements  for purposes of the safe harbor except for  statements of historical



                                       24
<PAGE>
fact (such as the terms of  particular  contracts  and the number of market risk
sensitive instruments held during or at the end of the reporting period).

     The Partnership's risk exposure in the various market sectors traded by the
Advisors is quantified below in terms of Value at Risk. Due to the Partnership's
mark-to-market  accounting, any loss in the fair value of the Partnership's open
positions  is directly  reflected  in the  Partnership's  earnings  (realized or
unrealized).

     Exchange  maintenance margin requirements have been used by the Partnership
as the measure of its Value at Risk.  Maintenance margin requirements are set by
exchanges  to equal or exceed  the  maximum  losses  reasonably  expected  to be
incurred  in the fair value of any given  contract  in  95%-99%  of any  one-day
intervals.  The  maintenance  margin  levels  are  established  by  dealers  and
exchanges  using  historical  price  studies as well as an assessment of current
market  volatility  (including the implied  volatility of the options on a given
futures contract) and economic fundamentals to provide a probabilistic  estimate
of the maximum expected near-term one-day price fluctuation.  Maintenance margin
has been used rather than the more generally  available initial margin,  because
initial margin  includes a credit risk component  which is not relevant to Value
at Risk.

     In the case of market sensitive  instruments  which are not exchange traded
(almost  exclusively  currencies  in the case of the  Partnership),  the  margin
requirements  for the  equivalent  futures  positions have been used as Value at
Risk. In those rare cases in which a futures-equivalent margin is not available,
dealers' margins have been used.


                                       25
<PAGE>

     The fair value of the Partnership's  futures and forward positions does not
have any optionality component. However, certain of the Advisors trade commodity
options. The Value at Risk associated with options is reflected in the following
table as the margin requirement  attributable to the instrument  underlying each
option.  Where this instrument is a futures  contract,  the futures margin,  and
where  this  instrument  is  a  physical   commodity,   the   futures-equivalent
maintenance  margin has been used.  This  calculation is conservative in that it
assumes  that the fair value of an option will decline by the same amount as the
fair value of the underlying  instrument,  whereas,  in fact, the fair values of
the options traded by the  Partnership in almost all cases fluctuate to a lesser
extent than those of the underlying instruments.

     In quantifying the Partnership's  Value at Risk, 100% positive  correlation
in the different  positions  held in each market risk category has been assumed.
Consequently,  the margin  requirements  applicable to the open  contracts  have
simply been added to determine each trading category's  aggregate Value at Risk.
The  diversification  effects  resulting  from the fact  that the  Partnership's
positions  are  rarely,  if  ever,  100%  positively  correlated  have  not been
reflected.



                                       26
<PAGE>



The Partnership's Trading Value at Risk in Different Market Sectors

     The following table indicates the trading Value at Risk associated with the
Partnership's  open  positions by market  category as of December 31, 2001.  All
open position  trading risk exposures of the  Partnership  have been included in
calculating  the  figures  set  forth  below.  As  of  December  31,  2001,  the
Partnership's total capitalization was approximately $66,368,741.




                                December 31, 2001
<TABLE>
<CAPTION>
<S>                                 <C>          <C>                  <C>           <C>
                                                                    Year to  Date
                                                 % of Total         High              Low
Market Sector                  Value at Risk    Capitalization   Value at Risk   Value at Risk
-----------------------------------------------------------------------------------------------
Currencies
-Exchange Traded Contracts     $1,438,612       2.17%           $2,016,783    $  683,915
-OTC Contracts                  1,444,918       2.18%            1,828,788        53,800
Energy                          1,413,300       2.13%            2,065,852       247,200
Grains                            313,294       0.47%              683,174         9,200
Interest rates U.S.               191,325       0.29%            1,522,884       146,035
Interest rates Non-U.S.           725,240       1.09%            3,638,563       669,473
Livestock                          77,824       0.12%              243,220         3,600
Metals
 - Exchange Traded Contracts      264,800       0.40%              426,200        63,000
 - OTC Contracts                  103,400       0.16%              504,650        24.450
Softs                             223,514       0.33%              438,420        28,700
Indices                         1,508,367       2.27%            2,779,410       227,165
Lumber                              3,900       0.01%               20,200           950
                             ------------      ------
Total                         $ 7,708,494      11.62%
                             ============      ======
</TABLE>


                                       27
<PAGE>



As  of  December  31,  2000,  the   Partnership's   total   capitalization   was
approximately $80,499,049.



                                December 31, 2000

<TABLE>
<CAPTION>
<S>                                <C>            <C>               <C>              <C>
                                                                    Year to  Date
                                                % of Total          High             Low
Market Sector                  Value at Risk    Capitalization   Value at Risk   Value at Risk
-----------------------------------------------------------------------------------------------
Currencies
-Exchange Traded Contracts     $1,036,320        1.29%           $2,346,347     $  211,754
-OTC Contracts                    534,174        0.66%            3,722,194        534,174
Energy                            794,200        0.99%            5,401,200        562,400
Grains                             79,900        0.10%            1,183,900         17,150
Interest rates U.S.               745,550        0.93%            2,104,984        197,900
Interest rates Non-U.S.         2,209,842        2.74%            6,211,403      1,114,191
Livestock                          38,980        0.05%              115,375          9,600
Metals (Exchange Traded and
 OTC Contracts)                   188,650        0.23%            1,916,625        188,650
Softs                              64,500        0.08%            1,489,882         16,500
Indices                         1,594,597        1.98%            2,703,115        358,641
                               ----------       ------
Total                          $7,286,713        9.05%
                               ==========       ======
</TABLE>


                                       28
<PAGE>



Material Limitations on Value at Risk as an Assessment of Market Risk

     The face value of the market sector  instruments held by the Partnership is
typically  many times the  applicable  maintenance  margin  requirement  (margin
requirements  generally range between 2% and 15% of contract face value) as well
as, many times,  the  capitalization  of the  Partnership.  The magnitude of the
Partnership's  open  positions  creates a "risk of ruin" not typically  found in
most other investment  vehicles.  Because of the size of its positions,  certain
market  conditions -- unusual,  but historically  recurring from time to time --
could cause the  Partnership to incur severe losses over a short period of time.
The  foregoing  Value at Risk  table -- as well as the past  performance  of the
Partnership -- give no indication of this "risk of ruin."

Non-Trading Risk

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

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


                                       29
<PAGE>



Qualitative Disclosures Regarding Primary Trading Risk Exposures

     The following  qualitative  disclosures  regarding the Partnership's market
risk  exposures  - except  for (i)  those  disclosures  that are  statements  of
historical fact and (ii) the  descriptions  of how the  Partnership  manages its
primary market risk exposures - constitute forward-looking statements within the
meaning of Section 27A of the  Securities  Act and Section 21E of the Securities
Exchange Act. The  Partnership's  primary  market risk  exposures as well as the
strategies  used and to be used by the  General  Partner  and the  Advisors  for
managing such exposures are subject to numerous uncertainties, contingencies and
risks, any one of which could cause the actual results of the Partnership's risk
controls to differ materially from the objectives of such strategies. Government
interventions,  defaults and expropriations,  illiquid markets, the emergence of
dominant fundamental factors,  political upheavals,  changes in historical price
relationships,  an influx of new market  participants,  increased regulation and
many  other  factors  could  result in  material  losses as well as in  material
changes to the risk exposures and the management  strategies of the Partnership.
There can be no assurance that the Partnership's  current market exposure and/or
risk  management  strategies  will  not  change  materially  or  that  any  such
strategies will be effective in either the short- or long- term.  Investors must
be  prepared  to  lose  all or  substantially  all of  their  investment  in the
Partnership

     The following were the primary trading risk exposures of the Partnership as
of December 31, 2001, by market sector.


                                       30
<PAGE>



     Interest  Rates.  Interest rate movements  directly affect the price of the
futures  positions held by the Partnership and indirectly the value of its stock
index and currency positions.  Interest rate movements in one country as well as
relative  interest  rate  movements  between  countries  materially  impact  the
Partnership's profitability. The Partnership's primary interest rate exposure is
to interest rate  fluctuations in the United States and the other G-7 countries.
However,  the Partnership also takes futures positions on the government debt of
smaller nations -- e.g.,  Australia.  The General Partner  anticipates  that G-7
interest rates will remain the primary market  exposure of the  Partnership  for
the foreseeable future.

     Currencies.  The  Partnership's  currency  exposure  is  to  exchange  rate
fluctuations,  primarily  fluctuations  which  disrupt  the  historical  pricing
relationships   between   different   currencies  and  currency   pairs.   These
fluctuations  are  influenced  by interest rate changes as well as political and
general  economic  conditions.  The General Partner does not anticipate that the
risk profile of the Partnership's  currency sector will change  significantly in
the future.  The currency  trading Value at Risk figure includes  foreign margin
amounts  converted into U.S.  dollars with an incremental  adjustment to reflect
the exchange rate risk inherent to the  dollar-based  Partnership  in expressing
Value at Risk in a functional currency other than dollars.

                                       31
<PAGE>

     Stock Indices. The Partnership's primary equity exposure is to equity price
risk in the G-7 countries. The stock index futures traded by the Partnership are
by law limited to futures on broadly based indices. As of December 31, 2001, the
Partnership's  primary  exposures were in the S&P500,  NASDAQ and Nikkei (Japan)
stock indices. The Partnership is primarily exposed to the risk of adverse price
trends or static  markets in the major  U.S.,  European  and  Japanese  indices.
(Static markets would not cause major market changes but would make it difficult
for the Partnership to avoid being "whipsawed" into numerous small losses.)

     Metals. The Partnership's  primary metal market exposure is to fluctuations
in the price of gold and silver. Although certain of the Advisors will from time
to time trade base metals such as aluminum  and  copper,  the  principal  market
exposures of the Partnership have consistently been in the precious metals, gold
and silver. The General Partner anticipates that gold and silver will remain the
primary metals market exposure for the Partnership.

     Softs. The Partnership's  primary  commodities  exposure is to agricultural
price  movements  which  are often  directly  affected  by severe or  unexpected
weather  conditions.  Cocoa,  corn,  soybean meal and soybeans accounted for the
substantial  bulk of the  Partnership's  commodity  exposure as of December  31,
2001.

     Energy. The Partnership's  primary energy market exposure is to gas and oil
price movements, often resulting from political developments in the Middle East.
Oil prices can be volatile and substantial  profits and losses have been and are
expected to continue to be experienced in this market.


                                       32
<PAGE>

Qualitative Disclosures Regarding Non-Trading Risk Exposure

     The following were the only  non-trading  risk exposures of the Partnership
as of December 31, 2001.

     Foreign  Currency  Balances.  The  Partnership's  primary foreign  currency
balances are in Japanese yen, Euro dollar,  British pounds and Swiss francs. The
Advisor regularly converts foreign currency balances to dollars in an attempt to
control the Partnership's non-trading risk.

     Qualitative Disclosures Regarding Means of Managing Risk Exposure.

     The General Partner monitors and controls the  Partnership's  risk exposure
on a daily  basis  through  financial,  credit  and risk  management  monitoring
systems and accordingly believes that it has effective procedures for evaluating
and limiting the credit and market  risks to which the  Partnership  is subject.
The General Partner monitors the Partnership's performance and the concentration
of  its  open  positions,   and  consults  with  the  Advisors   concerning  the
Partnership's  overall risk profile. If the General Partner felt it necessary to
do so, the General  Partner could  require  certain of the Advisors to close out
individual  positions as well as enter certain positions traded on behalf of the
Partnership. However, any such intervention would be a highly unusual event. The
General  Partner  primarily  relies on the Advisors'  own risk control  policies
while maintaining a general  supervisory  overview of the  Partnership's  market
risk exposures.


                                       33
<PAGE>

     Each Advisor applies its own risk management  policies to its trading.  The
Advisors often follow  diversification  guidelines,  margin limits and stop loss
points to exit a  position.  The  Advisors'  research of risk  management  often
suggests ongoing modifications to their trading programs.

     As part of the General  Partner's  risk  management,  the  General  Partner
periodically  meets with the Advisors to discuss  their risk  management  and to
look for any material  changes to the  Advisors'  portfolio  balance and trading
techniques.  The  Advisors  are  required to notify the  General  Partner of any
material changes to their programs.



                                       34
<PAGE>





Item 8.    Financial Statements and Supplementary Data.





                   SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.
                          INDEX TO FINANCIAL STATEMENTS


                                                       Page
                                                     Number

    Oath of Affirmation                               F-2

    Report of Independent Accountants.                F-3

    Financial Statements:
    Statement of Financial Condition at
    December 31, 2001 and 2000.                       F-4

    Condensed Schedule of Investments at
    December 31, 2001                                 F-5

    Statement of Income and Expenses
    for the years ended December 31, 2001
    2000 and 1999.                                    F-6

    Statement of Partners' Capital for
    the years ended December 31, 2001,
    2000 and 1999.                                    F-7

    Notes to Financial Statements.                 F-8 - F-12




                                       F-1



<PAGE>


                          To The Limited Partners of
                                  Smith Barney
                          Diversified Futures Fund L.P.

To the best of the knowledge and belief of the undersigned, the information
contained herein is accurate and complete.






By:    Daniel R. McAuliffe, Jr.
       Chief Financial Officer and Director
       Smith Barney Futures Management LLC
       General Partner, Smith Barney
       Diversified Futures Fund L.P.


       Smith Barney Futures Management LLC
       388 Greenwich Street
       7th Floor
       New York, N.Y.  10013
       212-723-5424



                                      F-2

<PAGE>


                        Report of Independent Accountants

To the Partners of
   Smith Barney Diversified Futures Fund L.P.:

In our opinion, the accompanying statement of financial condition, including the
condensed  schedule of  investments,  and the related  statements  of income and
expenses and of partners' capital present fairly, in all material respects,  the
financial position of Smith Barney Diversified Futures Fund L.P. at December 31,
2001 and 2000,  and the results of its operations for each of the three years in
the period ended  December 31, 2001, in conformity  with  accounting  principles
generally accepted in the United States of America.  These financial  statements
are  the   responsibility  of  the  management  of  the  General  Partner;   our
responsibility  is to express an opinion on these financial  statements based on
our audits. We conducted our audits of these financial  statements in accordance
with  auditing  standards  generally  accepted in the United  States of America,
which require that we plan and perform the audit to obtain reasonable  assurance
about whether the financial  statements  are free of material  misstatement.  An
audit includes examining,  on a test basis,  evidence supporting the amounts and
disclosures in the financial  statements,  assessing the  accounting  principles
used and  significant  estimates made by the management of the General  Partner,
and evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.


PricewaterhouseCoopers LLP
New York, New York
February 28, 2002

                                      F-3
<PAGE>


                                  Smith Barney
                          Diversified Futures Fund L.P.
                        Statement of Financial Condition
                           December 31, 2001 and 2000

<TABLE>
<CAPTION>

                                                                                       2001                  2000
<S>                                                                                    <C>                    <C>
Assets:
Equity in commodity futures trading account:
   Cash (Note 3c)                                                                  $63,493,595           $78,497,039
   Net unrealized appreciation on open positions                                     2,703,661             4,215,703
   Commodity options owned, at fair value (cost $1,752,250 and $0
     in 2001 and 2000, respectively)                                                   849,250                    --
                                                                                 -------------           -----------
                                                                                    67,046,506            82,712,742
  Interest receivable                                                                   77,094               312,122
                                                                                 -------------           -----------
                                                                                   $67,123,600           $83,024,864
                                                                                 =============           ===========


Liabilities and Partners' Capital:
Liabilities:
  Accrued expenses:
   Commissions                                                                        $308,245              $376,655
   Management fees                                                                     153,342               159,510
   Incentive fees                                                                            -               290,312
   Professional fees                                                                    63,828                69,352
   Other                                                                                11,854                 6,388
  Redemptions payable (Note 5)                                                         217,590             1,623,598
                                                                                 -------------         -------------
                                                                                       754,859             2,525,815
                                                                                 -------------         -------------
Partners' capital (Notes 1, 5 and 6):
  General Partner, 2,048.9308 Unit equivalents outstanding
    in 2001 and 2000                                                                 2,379,259             2,487,300
  Limited Partners, 55,105.2813 and 64,262.8850 Units of Limited
    Partnership Interest outstanding in 2001 and 2000, respectively                 63,989,482            78,011,749
                                                                                 -------------         -------------
                                                                                    66,368,741            80,499,049
                                                                                 -------------         -------------
                                                                                   $67,123,600           $83,024,864
                                                                                 ============            ===========
</TABLE>




See notes to financial statements.


                                      F-4
<PAGE>


                   Smith Barney Diversified Futures Fund L.P.
                        Condensed Schedule of Investments
                                December 31, 2001
<TABLE>
<CAPTION>
<S>                                                   <C>                                                           <C>
Sector                                             Contract                                                      Fair Value

Energy                                             Futures contracts purchased - (0.06)%                         $  (40,499)
                                                   Futures contracts sold - (0.19)%                                (126,734)
                                                                                                                 ----------
     Total Energy - (0.25)%                                                                                        (167,233)
                                                                                                                 ----------

Grains                                             Futures contracts purchased - (0.01)%                             (4,000)
                                                   Futures contracts sold - 0.42%                                   280,846
                                                                                                                 ----------
     Total Grains - 0.41%                                                                                           276,846
                                                                                                                 ----------

Interest Rates U.S.                                Futures contracts purchased - 0.07%                               48,625
                                                   Futures contracts sold - 0.03%                                    14,496
                                                                                                                 ----------
     Total Interest Rates U.S. - 0.10%                                                                               63,121
                                                                                                                 ----------

Interest Rates Non-U.S.                            Futures contracts purchased - (0.19)%                           (129,572)
                                                   Futures contracts sold - 0.29%                                   194,860
                                                                                                                 ----------
     Total Interest Rates Non-U.S. - 0.10%                                                                           65,288
                                                                                                                 ----------

Livestock                                          Futures contracts purchased - 0.06%                               42,050
                                                   Futures contracts sold - (0.08)%                                 (57,934)
                                                                                                                 ----------
     Total Livestock - (0.02)%                                                                                      (15,884)
                                                                                                                 ----------

Metals                                             Futures contracts purchased -  0.12%                              82,041
                                                   Futures contracts sold - (0.55)%                                (365,357)
                                                                                                                 ----------
     Total Metals - (0.43)%                                                                                        (283,316)
                                                                                                                 ----------

Currencies                                         Exchange contracts purchased - 0.75%                             501,553
                                                   Exchange contracts sold - 1.38%                                  914,350
                                                                                                                 ----------
                                                     Total Exchange - 2.13%                                       1,415,903

                                                   Over the counter contracts purchased - 0.20%                     132,886
                                                   Over the counter contracts sold - 1.47%                          974,655
                                                                                                                 ----------
                                                     Total Over the counter - 1.67%                               1,107,541
                                                                                                                 ----------
     Total Currencies - 3.80%                                                                                     2,523,444
                                                                                                                 ----------

Softs                                              Futures contracts purchased - 0.19%                              125,707
                                                   Futures contracts sold - (0.02)%                                 (14,192)
                                                                                                                 ----------
     Total Softs - 0.17%                                                                                            111,515
                                                                                                                 ----------

Indices                                            Futures contracts purchased - 0.21%                              140,713
                                                   Futures contracts sold - (0.01)%                                  (5,850)
                                                                                                                 ----------
     Total Indices - 0.20%                                                                                          134,863
                                                                                                                 ----------

Total Lumber - (0.01)%                             Futures contracts sold - (0.01)%                                  (4,983)
                                                                                                                 ----------

Total Fair Value on Future and Forwards - 4.07%                                                                   2,703,661
                                                                                                                 ----------

Total Currencies - 1.28%                           Commodity options owned - 1.28%                                  849,250
                                                                                                                 ----------

Total Investments - 5.35%                                                                                        $3,552,911
                                                                                                                  =========
</TABLE>
<TABLE>
<CAPTION>
<S>               <C>                      <C>                    <C>
                                        Investments         % of Investments
           Country Composition         at Fair Value          at Fair Value
           --------------------        -------------          -------------
           Australia                 $     18,429                0.52%
           Canada                          22,325                0.63%
           France                          24,533                0.69%
           Germany                        144,855                4.08%
           Hong Kong                        3,976                0.11%
           Italy                            1,696                0.05%
           Japan                          (73,301)              (2.06)%
           Spain                           (5,828)              (0.16)%
           United Kingdom                (432,138)             (12.16)%
           United States                3,848,364              108.32%
                                        ----------             -------
                                       $3,552,911              100.00%
                                        =========              ======
</TABLE>
Percentages are based on Partners' capital unless otherwise indicated
See notes to financial statements.
                                      F-5
<PAGE>


                                  Smith Barney
                          Diversified Futures Fund L.P.
                        Statement of Income and Expenses
                               for the years ended
                        December 31, 2001, 2000 and 1999


<TABLE>
<CAPTION>

                                                                 2001                  2000                 1999
<S>                                                              <C>                   <C>                   <C>
Income:
  Net gains (losses) on trading of commodity interests:
   Realized gains (losses) on closed positions               $4,746,492           $(2,183,567)           $3,152,375
   Change in unrealized losses on open positions             (2,415,042)             (932,276)           (4,007,630)
                                                           ------------          ------------          ------------
                                                              2,331,450            (3,115,843)             (855,255)
  Less, Brokerage commissions including clearing fees
   of $343,071, $267,538 and $237,946, respectively
   (Note 3c)                                                 (4,686,916)           (5,795,482)           (7,950,768)
                                                           ------------          ------------          ------------
  Net realized and unrealized losses                         (2,355,466)           (8,911,325)           (8,806,023)
  Interest income                                             2,044,447             4,241,957             4,687,547
                                                           ------------          ------------          ------------
                                                               (311,019)           (4,669,368)           (4,118,476)
                                                           ------------          ------------          ------------
Expenses:
  Management fees (Note 3b)                                   2,042,475             2,741,877             4,128,925
  Incentive fees (Note 3b)                                      726,162               290,312               668,443
  Professional fees                                              79,297                27,264               123,075
  Other expenses                                                 36,511                38,017                24,551
                                                           ------------          ------------          ------------
                                                              2,884,445             3,097,470             4,944,994
                                                           ------------          ------------          ------------
Net loss                                                    $(3,195,464)          $(7,766,838)          $(9,063,470)
                                                            ===========             =========             =========
Net loss per Unit of Limited Partnership Interest and
  General Partner Unit equivalent (Notes 1 and 6)               $(52.73)              $(89.14)             $(94.66)
                                                                 ======                 =====                =====
</TABLE>



See notes to financial statements.


                                      F-6
<PAGE>


                                  Smith Barney
                          Diversified Futures Fund L.P.
                         Statement of Partners' Capital
                               for the years ended
                        December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
<S>                                                        <C>                <C>                 <C>
                                                         Limited            General
                                                        Partners            Partner             Total

Partners' capital at December 31, 1998                  $141,040,368        $2,863,893       $143,904,261
Net loss                                                  (8,869,518)         (193,952)        (9,063,470)
Sale of 88.1293 Units of Limited
  Partnership Interest                                       120,344                --            120,344
Redemption of 12,865.1295 Units of
  Limited Partnership Interest                           (17,452,603)               --        (17,452,603)
                                                    ----------------    --------------     --------------
Partners' capital at December 31, 1999                   114,838,591         2,669,941        117,508,532
Net loss                                                  (7,584,197)         (182,641)        (7,766,838)
Sale of 49.4149 Units of Limited
  Partnership Interest                                        61,337                --             61,337
Redemption of 23,914.7410 Units of
  Limited Partnership Interest                           (29,303,982)               --        (29,303,982)
                                                    ----------------    --------------     --------------
Partners' capital at December 31, 2000                    78,011,749         2,487,300         80,499,049
Net loss                                                  (3,087,423)         (108,041)        (3,195,464)
Sale of 20.7023 Units of Limited
  Partnership Interest                                        24,751                --             24,751
Redemption of 9,178.3060 Units of
  Limited Partnership Interest                           (10,959,595)               --        (10,959,595)
                                                    ----------------    --------------     --------------
Partners' capital at December 31, 2001                   $63,989,482        $2,379,259        $66,368,741
                                                    ----------------    --------------     --------------
</TABLE>




See notes to financial statements.


                                      F-7
<PAGE>


                                  Smith Barney
                          Diversified Futures Fund L.P.
                          Notes to Financial Statements


1.   Partnership Organization:

     Smith Barney Diversified Futures Fund L.P. (the "Partnership") is a limited
     partnership  which was  organized on August 13, 1993 under the  partnership
     laws of the  State of New York to engage in the  speculative  trading  of a
     diversified  portfolio of commodity  interests including futures contracts,
     options and forward contracts.  The commodity  interests that are traded by
     the  Partnership are volatile and involve a high degree of market risk. The
     Partnership  was  authorized  to sell  300,000  Units  during  its  initial
     offering  period.  Smith Barney Futures  Management LLC acts as the general
     partner (the  "General  Partner")  of the  Partnership.  The  Partnership's
     commodity broker is Salomon Smith Barney Inc. ("SSB").  SSB is an affiliate
     of the  General  Partner.  The General  Partner is wholly  owned by Salomon
     Smith Barney Holdings Inc. ("SSBHI"), which is the sole owner of SSB. SSBHI
     is a wholly owned subsidiary of Citigroup Inc.

     The  General  Partner  and each  limited  partner  share in the profits and
     losses of the  Partnership  in  proportion  to the  amount  of  partnership
     interest  owned by each except that no limited  partner shall be liable for
     obligations  of  the   Partnership   in  excess  of  his  initial   capital
     contribution and profits, if any, net of distributions.

     The  Partnership  will be  liquidated  upon the first of the  following  to
     occur:  December 31, 2013;  the net asset value of a Unit decreases to less
     than  $400  as  of  the  close  of  any  business  day;  or  under  certain
     circumstances as defined in the Limited Partnership Agreement.

2.  Accounting Policies:

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

  b. The  partnership  may  purchase and write  (sell)  options.  An option is a
     contract  allowing,  but not  requiring,  its  holder to buy (call) or sell
     (put) a  specific  or  standard  commodity  or  financial  instrument  at a
     specified  price during a specified time period.  The option premium is the
     total price paid or received for the option contract.  When the fund writes
     an option, the premium received is recorded as a liability in the statement
     of financial  condition and marked to market daily. When the fund purchases
     an option,  the premium  paid is recorded as an asset in the  statement  of
     financial condition and marked to market daily.

  c. Income taxes have not been provided as each partner is individually  liable
     for the  taxes,  if any,  on his  share  of the  Partnership's  income  and
     expenses.

  d. The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles in the United  States of America  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and  liabilities at the date of the financial  statements
     and the  reported  amounts of revenues and  expenses  during the  reporting
     period. Actual results could differ from these estimates.

                                      F-8
<PAGE>

3.  Agreements:

  a. Limited Partnership Agreement:

     The Limited  Partnership  Agreement provides that the General Partner shall
     manage the business of the Partnership  and may make all trading  decisions
     for the Partnership.

  b. Management Agreements:

     The General Partner has entered into Management  Agreements with Campbell &
     Co.,  Inc.  ("Campbell"),  Winton  Capital  Management  ("Winton").  Graham
     Capital  Management L.P.  ("Graham"),  Dominion  Capital  Management,  Inc.
     ("Dominion"), Willowbridge Associates, Inc. ("Willowbridge") and Stonebrook
     Structured Products,  LLC ("Stonebrook"),  (collectively,  the "Advisors"),
     registered commodity trading advisors. The Advisors are not affiliated with
     one another, are not affiliated with the General Partner or SSB and are not
     responsible  for the  organization  or  operation of the  Partnership.  The
     Partnership will pay Campbell,  Dominion, Winton, Graham and Willowbridge a
     monthly  management  fee  equal to 1/6 of 1% (2% per  year)  of Net  Assets
     allocated  to the  Advisor  as of the end of each  month.  Stonebrook  will
     receive a monthly  management  fee equal to 1/20 of 1% (0.60%  per year) of
     the fixed  notional  account  size  determined  on a  monthly  basis by the
     General  Partner.  In addition,  the  Partnership  is obligated to pay each
     Advisor  20% of the New  Trading  Profits,  as  defined  in the  Management
     Agreements,  earned by each Advisor for the  Partnership  in each  calendar
     quarter.   Stonebrook  does  not  receive  an  incentive  fee.  Bridgewater
     Associates,  Inc. was terminated as an Advisor to the  Partnership on March
     1, 2001.

  c. Customer Agreement

     The Partnership  has entered into a Customer  Agreement which provides that
     the Partnership  will pay SSB a monthly  brokerage fee equal to 11/24 of 1%
     (5.5% per year) of month-end Net Assets in lieu of brokerage commissions on
     a per trade basis.  Persons investing $1,000,000 or more will pay a reduced
     brokerage  fee of 7/24 of 1% of  month-end  Net  Assets  (3.5%  per  year),
     receiving  the  differential  between this reduced fee and 5.5% per year in
     the form of additional  Units.  SSB will pay a portion of brokerage fees to
     its financial  consultants who have sold Units in this offering.  Brokerage
     fees  will be paid for the life of the  Partnership,  although  the rate at
     which  such  fees are paid may be  changed.  The  Partnership  will pay for
     National  Futures  Association  ("NFA")  fees,  exchange,  clearing,  user,
     give-up  and floor  brokerage  fees.  All of the  Partnership's  assets are
     deposited in the Partnership's  account at SSB. The  Partnership's  cash is
     deposited  by SSB in  segregated  bank  accounts to the extent  required by
     Commodity Futures Trading Commission regulations.  At December 31, 2001 and
     2000,  the amount of cash held for margin  requirements  was $8,487,086 and
     $8,447,742, respectively. SSB has agreed to pay the Partnership interest on
     80% of the average daily equity  maintained  in cash in its account  during
     each month at a 30-day U.S.  Treasury  bill rate  determined  weekly by SSB
     based on the average  noncompetitive  yield on 3-month U.S.  Treasury bills
     maturing in 30 days from the date on which such weekly rate is  determined.
     The  Customer   Agreement   between  the  Partnership  and  SSB  gives  the
     Partnership  the  legal  right to net  unrealized  gains  and  losses.  The
     Customer Agreement may be terminated upon notice by either party.


                                      F-9
<PAGE>

4.  Trading Activities:

     The  Partnership  was formed for the  purpose  of  trading  contracts  in a
     variety of commodity interests,  including derivative financial instruments
     and  derivative  commodity  instruments.  The results of the  Partnership's
     trading  activities are shown in the statement of income and expenses.  All
     of the commodity  interests  owned by the  Partnership are held for trading
     purposes.  The average fair value during the years ended  December 31, 2001
     and 2000,  based on a monthly  calculation,  was $3,898,076 and $3,287,910,
     respectively.  The  fair  value  of these  commodity  interests,  including
     options  thereon,  if  applicable,  at  December  31,  2001  and  2000  was
     $3,552,911 and $4,215,703, respectively.


                                              Fair Market Value
                                              December 31, 2000
    Currencies:
        -Exchange Traded Contracts               $2,468,848
        -OTC Contracts                              (30,488)
    Energy                                          249,658
    Grains                                           70,445
    Interest Rates U.S.                             836,897
    Interest Rates Non-U.S.                         405,108
    Livestock                                        42,390
    Metals
        -Exchange Traded Contracts                    7,210
        -OTC Contracts                              (12,525)
    Softs                                            45,386
    Indices                                         132,774
    Lumber                                               --
                                              -------------
    Total                                        $4,215,703
                                              -------------


5.   Distributions and Redemptions:

     Distributions  of profits,  if any, will be made at the sole  discretion of
     the General Partner and at such times as the General Partner may decide.  A
     limited  partner may require the  Partnership  to redeem his Units at their
     Net Asset Value as of the last day of each month on 10 days'  notice to the
     General Partner. No fee will be charged for redemptions.

                                      F-10
<PAGE>


6.  Financial Highlights:

     Changes in the net asset  value per Unit of  Partnership  interest  for the
     years ended December 31, 2001, 2000 and 1999 were as follows:

<TABLE>
<CAPTION>
<S>                                                            <C>            <C>              <C>
                                                              2001             2000            1999
                                                            ------           ------           ------

    Net realized and unrealized losses                      $(39.24)       $(103.90)         $(92.07)
    Interest income                                           32.68           54.09            48.30
    Expenses                                                 (46.17)         (39.33)          (50.89)
                                                          ---------       ---------        ---------
    Decrease for year                                        (52.73)         (89.14)          (94.66)
    Net asset value per Unit, beginning of year            1,213.95        1,303.09         1,397.75
                                                          ---------       ---------        ---------
    Net asset value per Unit, end of year                 $1,161.22       $1,213.95        $1,303.09
                                                           ========        ========         ========
    Ratios to Average Net Assets :
    Net income before incentive fee                             5.4%
    Incentive fee                                              (1.0)%
                                                               ----
    Net income after incentive fee                              4.4%
                                                               ====

    Operating expenses                                          9.4%
    Incentive fee                                               1.0%
                                                                ----
    Total expenses and incentive fee                           10.4%
                                                               ====
    Net income after incentive fee
    Total return before incentive fee                          (3.4)%
    Incentive fee                                              (0.9)%
                                                               ----
    Total return after incentive fee                           (4.3)%
                                                                ===
</TABLE>

7.  Financial Instrument Risks:

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

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

     Credit risk is the possibility  that a loss may occur due to the failure of
     a counterparty to perform according to the terms of a contract. Credit risk
     with respect to exchange  traded  instruments is reduced to the extent that

                                      F-11
<PAGE>

     an  exchange  or  clearing  organization  acts  as a  counterparty  to  the
     transactions.  The Partnership's  risk of loss in the event of counterparty
     default is typically limited to the amounts  recognized in the statement of
     financial condition and not represented by the contract or notional amounts
     of the instruments.  The Partnership has credit risk and concentration risk
     because the sole  counterparty or broker with respect to the  Partnership's
     assets is SSB.

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

     The  notional  or   contractual   amounts  of  these   instruments,   while
     appropriately not recorded in the financial statements,  reflect the extent
     of the  Partnership's  involvement  in these  instruments.  The majority of
     these instruments mature within one year of December 31, 2001. However, due
     to the nature of the Partnership's  business,  these instruments may not be
     held to maturity.

8.  Subsequent Events:

     On January 1, 2002 there were additional sales representing 0.7621 Units of
     Limited  Partnership  Interest  totaling  $885  and  on  January  31,  2002
     additional  redemptions  representing 264.3321 Units of Limited Partnership
     Interest totaling $299,480.

     Dominion  Capital  Management,  Inc.  was  terminated  as an Advisor to the
     Partnership on February 15, 2002.


                                      F-12



<PAGE>





Item  9.  Changes  in and  Disagreements  with  Accountants  on  Accounting  and
          Financial Disclosure.

     During the last two fiscal  years and any  subsequent  interim  period,  no
independent  accountant who was engaged as the principal accountant to audit the
Partnership's financial statements has resigned or was dismissed.

                                    PART III

Item 10.  Directors and Executive Officers of the Registrant.

     The Partnership has no officers or directors and its affairs are managed by
its General Partner,  Smith Barney Futures  Management LLC. At December 31, 2001
investment  decisions were be made by Campbell & Company,  Inc.,  Winton Capital
Management,  Graham Capital Management L.P., Dominion Capital Management,  Inc.,
Willowbridge   Associatees,   Inc.  and  Stonebrook  Structured  Products,   LLC
(collectively the "Advisors").

Item 11. Executive Compensation.

     The  Partnership  has no directors or officers.  Its affairs are managed by
Smith Barney Futures  Management LLC, its General Partner.  SSB, an affiliate of
the General  Partner,  is the commodity  broker for the Partnership and receives
brokerage  commissions for such services, as described under "Item 1. Business."
Brokerage  commissions  and clearing fees of $4,686,916 were earned for the year
ended  December 31, 2001.  Management  fees and incentive fees of $2,042,475 and
$726,162,  respectively, were earned by the Advisors for the year ended December
31, 2001.



                                       35
<PAGE>



Item 12. Security Ownership of Certain Beneficial Owners and Management.

     (a). Security ownership of certain beneficial owners. The Partnership knows
of no person who beneficially owns more than 5% of the Units outstanding.

     (b).  Security  ownership  of  management.  Under the terms of the  Limited
Partnership  Agreement,  the  Partnership's  affairs  are managed by the General
Partner.  The  General  Partner  owns  Units  of  general  partnership  interest
equivalent  to  2,048.9308  Units (3.6%) of Limited  Partnership  Interest as of
December 31, 2001. (c). Changes in control. None.

Item 13. Certain Relationship and Related Transactions.

     Salomon Smith Barney Inc. and Smith Barney Futures  Management LLC would be
considered  promoters for purposes of item 404 (d) of Regulation S-K. The nature
and the amounts of compensation  each promoter will receive from the Partnership
are set forth under "Item 1. Business",  "Item 11. Executive  Compensation," and
"Item 8. Financial Statements and Supplementary Data."

                                     PART IV

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

         (a) (1)    Financial Statements:

                    Statement  of  Financial  Condition at December 31, 2001 and
                    2000.



                                       36
<PAGE>



                    Statement  of  Income  and  Expenses  for  the  years  ended
                    December  31,  2001,  2000 and 1999.  Statement of Partners'
                    Capital  for the years ended  December  31,  2001,  2000 and
                    1999.

               (2)  Financial Statement  Schedules:  Financial Data Schedule for
                    the year ended December 31, 2001.

               (3)  Exhibits:

               3.1  - Limited Partnership Agreement (filed as Exhibit 3.1 to the
                    Registration  Statement  on Form S-1 (File No.  33-75056 and
                    incorporated herein by reference).

               3.2  - Certificate of Limited  Partnership of the  Partnership as
                    filed in the office of the County  Clerk of New York  County
                    on  October   13,   1993   (filed  as  Exhibit  3.2  to  the
                    Registration  Statement on Form S-1 (File No.  33-75056) 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  (File  No.   33-75056)  and   incorporated   herein  by
                    reference).

               10.3-Escrow  Instructions  relating  to  escrow  of  subscription
                    funds (filed as Exhibit 10.3 to the  Registration  Statement
                    on Form S-1 (File No. 33-75056) and  incorporated  herein by
                    reference).

               10.5-Management  Agreement  among the  Partnership,  the  General
                    Partner and Campbell & Company,  Inc. (filed as Exhibit 10.5
                    to  the  Registration   Statement  on  Form  S-1  (File  No.
                    33-75056) and incorporated herein by reference).


                                       37
<PAGE>

               10.6-Management  Agreement  among the  Partnership,  the  General
                    Partner and Colorado  Commodity  Management Corp.  (filed as
                    Exhibit 10.6 to the Registration Statement on Form S-1 (File
                    No. 33-75056) and incorporated herein by reference).

               10.7-Management  Agreement  among the  Partnership,  the  General
                    Partner and John W. Henry & Company,  Inc. (filed as Exhibit
                    10.7 to the  Registration  Statement  on Form S-1  (File No.
                    33-75056) and incorporated herein by reference).

               10.8-Management  Agreement  among the  Partnership,  the  General
                    Partner and Hyman Beck & Company  (filed as Exhibit  10.8 to
                    the  Registration  Statement on Form S-1 (File No. 33-75056)
                    and  incorporated  herein by reference).

               10.9-Letter  dated  May 19,  1994  from the  General  Partner  to
                    Colorado  Commodities   Management  Corp.   terminating  the
                    Management Agreement (previously filed).

               10.10- Management  Agreement among the  Partnership,  the General
                    Partner and Chesapeake Capital Corp. (previously filed).

               10.11- Letters extending Management Agreements with John W. Henry
                    & Company, Inc., Hyman Beck & Company,  Campbell & Co., Inc.
                    and Chesapeake Capital Corp. (previously filed).


                                       38
<PAGE>

               10.12- Management  Agreement among the  Partnership,  the General
                    Partner and Abraham Trading Co. (previously filed).

               10.13- Management  Agreement among the  Partnership,  the General
                    Partner and Rabar Market Research Inc. (previously filed).

               10.14- Management  Agreement among the  Partnership,  the General
                    Partner and AIS Futures Management, Inc. (previously filed).

               10.15- Letter dated  October 1, 1996 from the General  Partner to
                    Hyman Beck & Company  terminating  the Management  Agreement
                    (previously filed).

               10.16- Management  Agreement among the  Partnership,  the General
                    Partner and Telesis  Management Inc. (filed as Exhibit 10.16
                    to the Form 10-K for the year ended December 31, 1997).

               10.17- Letter  terminating  Management  Agreement with Chesapeake
                    Capital Corporation (filed as Exhibit 10.17 to the Form 10-K
                    for the year ended December 31, 1997).

               10.18-  Letter  terminating  Management  Agreement  with  Abraham
                    Trading Co. (filed as Exhibit 10.18 to the Form 10-K for the
                    year ended December 31, 1997).

               10.19- Management  Agreement  among the  Partnership  the General
                    Partner and  Trendview  Management,  Inc.  (filed as Exhibit
                    10.19 to the  Form  10-K for the  year  ended  December  31,
                    1997).


                                       39
<PAGE>

               10.20- Letters  extending  Management  Agreements with Campbell &
                    Co., Chesapeake Capital Corp., John W. Henry & Company Inc.,
                    AIS Futures Management L.L.C., Abraham Trading Co. and Rabar
                    Market  Research  Inc.  (filed as Exhibit  10.20 to the Form
                    10-K for the year ended December 31, 1997).

               10.21-  Letter   terminating   AIS   Futures   Management,   Inc.
                    (previously filed).

               10.22- Letter  terminating  Telesis  Management Inc.  (previously
                    filed).

               10.23- Letters  extending  Management  Agreements with Campbell &
                    Co.,  John W. Henry & Company  Inc.,  Rabar Market  Research
                    Inc. and Trendview Management Inc. (previously filed).

               10.24- Management  Agreement  among the  Partnership  the General
                    Partner and Willowbridge Associates,  Inc. (filed as Exhibit
                    10.24 to the  Form  10-K for the  year  ended  December  31,
                    1999).

               10.25- Management  Agreement  among the  Partnership  the General
                    Partner and Stonebrook  Capital  Management,  Inc. (filed as
                    Exhibit  10.25 to the Form 10-K for the year ended  December
                    31, 1999).



                                       40
<PAGE>





               10.26- Letters  extending  Management  Agreements with Campbell &
                    Co.,  Inc.,  John W.  Henry &  Company  Inc.,  Rabar  Market
                    Research  Inc. and  Trendview  Management  Inc.  (previously
                    filed).

               10.27- Letters  terminating  John W. Henry & Company Inc.,  Rabar
                    Market   Research   Inc.  and  Trendview   Management   Inc.
                    (previously filed).

               10.28- Management  Agreement among the  Partnership,  the General
                    Partner and Bridgewater Associates, Inc. (previously filed).

               10.29- Management  Agreement among the  Partnership,  the General
                    Partner and Dominion Capital  Management,  Inc.  (previously
                    filed).

               10.30- Letters  extending  Management  Agreements with Campbell &
                    Co.,  Inc.,  Willowbridge  Associates,  Inc. and  Stonebrook
                    Structured Products, LLC (previously filed).

               10.31- Letter  terminating  Bridgewater  Associates,  Inc. (filed
                    herein).

               10.32- Management  Agreement among the  Partnership,  the General
                    Partner and Winton Capital Management (filed herein).

               10.33- Management  Agreement among the  Partnership,  the General
                    Partner and Graham Capital Management L.P. (filed herein).

                                       41
<PAGE>

               10.34- Letters  extending  Management  Agreements with Campbell &
                    Co., Inc., Willowbridge  Associates,  Inc., Dominion Capital
                    Management,  Inc. and Stonebrook  Structured  Products,  LLC
                    (filed herein).

            (b) Reports on 8-K:   None Filed.



                                       42
<PAGE>



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




Annual Report to Limited Partners



                                       43
<PAGE>




                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Registrant has duly caused this annual report on Form
10-K to be signed on its behalf by the  undersigned,  thereunto duly authorized,
in the City of New York and State of New York on the 29th day of March 2002.


SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.


By:       Smith Barney Futures Management LLC
          (General Partner)



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


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


/s/ David J. Vogel                                       /s/ Shelley Ullman
------------------------------                           -----------------------
David J. Vogel                                            Director
Director, Principal Executive
Officer and President



/s/ Maureen O'Toole                                      /s/ Steve J. Keltz
--------------------------                               -----------------------
Maureen O'Toole                                           Secretary and Director
Director



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


                                       44