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, 2002

     Commission File Number 0-26132

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

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

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

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

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]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Acts).

                                                        Yes       No   X
                                                           ----      ----

Limited   Partnership   Units  with  an  aggregate  value  of  $59,584,792  were
outstanding  and  held by  non-affiliates  as of the  last  business  day of the
registrants most recently completed second fiscal quarter.

As of February 28, 2003, 46,276.4142 Limited Partnership Units were outstanding.

                       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,
2002 are reported in the Statement of Partners'  Capital on page F-9 under "Item
8. Financial Statements and Supplementary Data."


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<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 per Unit falls below $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, 2002, all commodity  trading  decisions are made for the
Partnership by Campbell & Company, Inc. ("Campbell"),  Willowbridge  Associates,
Inc.  ("Willowbridge"),  Winton Capital  Management  ("Winton"),  Graham Capital
Management   L.P.   ("Graham")   and   Stonebrook   Structured   Products,   LLC

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<PAGE>

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

     Pursuant  to  the  terms  of the  Management  Agreements  (the  "Management
Agreements"), the Partnership pays Campbell, Dominion, Graham and Willowbridge a
monthly  management  fee equal to 1/6 of 1% (2% per year) of Net Assets,  Winton
will receive a monthly  management  fee equal to 1/12 of 1.50% (1.50% per year),
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.


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<PAGE>

     The  Partnership  has  entered  into a  Customer  Agreement  with  SSB (the
"Customer  Agreement")  which provides that the  Partnership  pays 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.

     (b)  Financial  information  about  industry  segments.  The  Partnership's


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<PAGE>

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,
2002, 2001,  2000, 1999 and 1998 is set forth under "Item 6. Selected  Financial
Data". The Partnership capital as of December 31, 2002 was $68,061,947.

         (c)   Narrative description of business.
               See Paragraphs (a) and (b) above.
               (i) 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. ("SSBHI") 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.

     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


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<PAGE>

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 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 County. SSB and the remaining  brokerage firms settled with
Orange County in mid 1999. SSB paid $1,333,333 to settle this matter.

     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


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<PAGE>

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  Internal  Revenue
Service  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 its lawsuit.

     In November 1998, a class action  complaint was filed in the U.S.  District
Court for the Middle  District  of Florida  (Dwight  Brock as Clerk for  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.  In
November  1999,  SSB moved to dismiss the amended  complaint.  In May 2001,  the
parties reached and the court preliminarily approved a tentative settlement. SSB
paid  $1,063,457 to settle this matter and in September 2001, the court approved
the settlement.

     In  connection  with the  Louisiana  and Florida  matters,  the IRS and SEC
conducted an industry-wide investigation into the pricing of Treasury securities
in  advanced  refunding  transactions.  In April  2000,  SSB and  several  other

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<PAGE>

broker-dealers  entered into a settlement with the IRS and the SEC.  Thereafter,
the plaintiffs filed voluntary discontinuances.

     In December  1998,  SSB was one of 28 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  allegations,  agreed to an order which
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 SEC
Rules  15c1-2,  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.

     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.).  The complaint  included  allegations  that, while acting as
prime broker for the hedge fund,  SSB breached its  contracts  with  plaintiffs,
misused their monies and engaged in tortious  conduct,  including  breaching its
fiduciary  duties.  SSB asked the court to dismiss  the  complaint  in full.  In
October  1999,  the court  dismissed  the tort claims,  including  the breach of
fiduciary  duty claims.  The court allowed the breach of contract and conversion
claims  to  stand.   In  December   1999,  SSB  filed  an  answer  and  asserted

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counterclaims  against the investment advisor. In response to plaintiff's motion
to strike out 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.  In August 2002, SSB
filed a motion for summary judgment.

     In April 2002,  numerous class action complaints were filed against Salomon
Smith  Barney  and other  investment  banks in the U.S.  District  Court for the
Southern District of New York alleging  violations of certain federal securities
laws  (including  Section 11 of the  Securities Act of 1933 and Section 10(b) of
the  Securities  Exchange Act of 1934) with respect to the  allocation of shares
for certain initial public  offerings and related  aftermarket  transactions and
damage to investors  caused by allegedly  biased research  analyst  reports.  On
February 19, 2003, the court issued an opinion denying the defendants' motion to
dismiss. Also pending in the Southern District of New York against SSB and other
investment banks are several alleged class actions which have been  consolidated
into a single  class action  alleging  violations  of certain  federal and state
antitrust  laws in connection  with the  allocation of shares in initial  public
offerings  underwritten  by such parties.  The  defendants in these actions have
moved to dismiss the  consolidated  amended  complaint but the court has not yet
rendered a decision on those motions.

     In April 2002,  Citigroup  and, in one case,  SSB were named as  defendants


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along with, among others,  commercial and/or  investment banks,  certain current
and former Enron officers and directors,  lawyers and accountants in two alleged
consolidated  class action complaints that were filed in the U.S. District Court
for the Southern  District of Texas  seeking  unspecified  damages.  One action,
brought on behalf of individuals who purchased Enron securities  (Newby,  et al.
v.  Enron  Corp.,  et al.),  alleges  violations  of  Sections  11 and 15 of the
Securities Act of 1933 and Sections  10(b) and 20(a) of the Securities  Exchange
Act of 1934 and the other action,  brought on behalf of current and former Enron
employees  (Tittle,  et al. v. Enron Corp., et al.), alleges violations of ERISA
and RICO, as well as negligence and civil conspiracy.  On May 8, 2002, Citigroup
and SSB filed  motions to dismiss the  complaints.  On December  19,  2002,  the
motions to dismiss the Newby  complaint  were denied.  The motion to dismiss the
complaint in Tittle remains pending.

     Since April 2002,  SSB and  several  other  broker  dealers  have  received
subpoenas  and/or  requests  for  information  from  various   governmental  and
self-regulatory agencies and Congressional  committees,  including the NASD Inc.
which has raised  issues about SSB's  internal  e-mail  retention  practices and
research  on Winstar  Communications,  Inc.  With  respect to  Winstar,  SSB has
entered into a settlement  agreement.  SSB agreed to pay a penalty in the amount
of $5 million and did not admit to any  wrongdoing.  With  respect to other such
matters,  on December 20, 2002,  Citigroup and a number of other  broker/dealers


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reached a  settlement-in-principle  with the SEC,  the NASD  Inc.,  the New York
Stock  Exchange (the "NYSE") and the Attorney  General of New York of all issues
raised   in  their   research,   initial   public   offerings   allocation   and
spinning-related  inquiries.  In addition,  with respect to issues raised by the
NASD,  the NYSE and the SEC  about  SSB's  and  other  firms'  e-mail  retention
practices,  SSB and several other  broker/dealers and the NASD, the NYSE and the
SEC entered into a settlement  agreement in December  2002.  SSB agreed to pay a
penalty in the amount of $1.65  million and did not admit to any  allegation  of
wrongdoing.

     Since May 2002, Citigroup,  SSB and certain principals,  executive officers
and current and former  employees  have been named as  defendants in a number of
alleged  class  action  complaints  filed in the  U.S.  District  Court  for the
Southern District of New York by purchasers of various securities  alleging they
violated federal  securities law, including Sections 10 and 20 of the Securities
Exchange Act of 1934 by issuing  research  reports without  reasonable basis and
failing  to  disclose   conflicts  of  interest  in  connection  with  published
investment research,  including Global Crossing,  WorldCom, Inc., AT&T, Winstar,
Rhythm Net Connections,  Level 3  Communications,  MetroMedia Fiber Network,  XO
Communications  and  Williams  Communications  Group  Inc.  Nearly  all of these
actions are pending  before a single  judge in the U.S.  District  Court for the
Southern  District  of New York  for  coordinated  proceedings.  The  court  has
consolidated  these actions into nine separate  categories  corresponding to the
companies named above.

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     Additional  actions have been filed  against  Citigroup  and certain of its
affiliates,  including  SSB, and certain of their current and former  directors,
officers and employees, along with other parties,  including: (1) three putative
class actions filed in state courts and federal  courts on behalf of persons who
maintained accounts with SSB asserting,  among other things,  common law claims,
claims under state  statutes,  and claims under the  Investment  Advisers Act of
1940,  for  allegedly  failing  to provide  objective  and  unbiased  investment
research and investment management,  seeking, among other things, return of fees
and  commissions;  (2)  approximately  fifteen  actions filed in different state
courts by  individuals  asserting,  among  other  claims,  common law claims and
claims under state  securities  laws,  for allegedly  issuing  research  reports
without  a  reasonable  basis  in fact and for  allegedly  failing  to  disclose
conflicts of interest with  companies in connection  with  published  investment
research,  including Global Crossing and WorldCom,  Inc.; (3) approximately five
actions  filed in different  state  courts by pension and other funds  asserting
common law claims and  statutory  claims under,  among other  things,  state and
federal  securities  laws,  for allegedly  issuing  research  reports  without a
reasonable  basis in fact and for  allegedly  failing to disclose  conflicts  of
interest  with  companies in  connection  with  published  investment  research,
including WorldCom,  Inc. and Qwest  Communications  International Inc.; and (4)
more than two hundred  arbitrations  asserting  common law claims and  statutory
claims  under,  among other  things,  state and  federal  securities  laws,  for


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allegedly  issuing  research  reports without a reasonable basis in fact and for
allegedly failing to disclose conflicts of interest with companies in connection
with published investment research.

     In July 2002,  Citigroup,  SSB and various of its affiliates and certain of
their officers and other employees were named as defendants,  along with,  among
others,  commercial and/or  investment  banks,  certain current and former Enron
officers and directors, lawyers and accountants in an alleged class action filed
in the U.S.  District  Court for the Southern  District of New York on behalf of
purchasers  of the Yosemite  Notes and Enron  Credit-Linked  Notes,  among other
securities (Hudson Soft Co., Ltd v. Credit Suisse First Boston  Corporation,  et
al.). The complaint  alleges  violations of RICO and of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and seeks unspecified damages.

     Additional  actions have been filed  against  Citigroup  and certain of its
affiliates, including SSB, along with other parties, including (i) three actions
brought in state courts by state pension  plans for alleged  violations of state
securities  law and common law fraud and  unjust  enrichment;  (ii) an action by
banks that  participated  in two Enron  revolving  credit  facilities,  alleging
fraud,  gross  negligence  and  breach  of  implied  duties in  connection  with
defendants'  administration  of a credit  facility  with Enron;  (iii) an action
brought by several funds in connection with secondary  market purchases of Enron
Corp. debt securities  alleging  violations of federal securities law, including
Section  11  of  the   Securities   Act  of  1933,  and  claims  for  fraud  and

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misrepresentation;  (iv) a series of  alleged  class  actions by  purchasers  of
NewPower  Holdings common stock alleging  violations of federal  securities law,
including  Section 11 of the  Securities  Act of 1933 and  Section  10(b) of the
Securities  Exchange Act of 1934; (v) an action brought by two investment  funds
in connection with purchases of Enron-related  securities for alleged violations
of state securities and unfair competition  statutes;  (vi) an action brought by
several  investment  funds and fund owners in connection with purchases of notes
of the Osprey I and Osprey II Trusts for alleged  violation of state and federal
securities  laws  and  claims  for  common  law  fraud,   misrepresentation  and
conspiracy;  (vii) an action brought by several investment funds and fund owners
in connection  with  purchases of notes of the Osprey I and Osprey II Trusts for
alleged  violation  of  state  and  federal  securities  laws and  state  unfair
competition laws and claims for common law fraud and  misrepresentation;  (viii)
an action  brought by the Attorney  General of  Connecticut  in connection  with
various  commercial and investment  banking services  provided to Enron;  (ix) a
putative  class action  brought by clients of SSB in  connection  with  research
reports  concerning Enron,  alleging breach of contract;  (x) actions brought by
several  investment  funds in  connection  with  the  purchase  of notes  and/or
certificates of the Osprey Trusts, the Marlin Trust, and the Marlin Water trust,
as well as the  purchase of other Enron or  Enron-related  securities,  alleging

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violation of state and federal  securities laws, and common law civil conspiracy
and fraud;  (xi) an action brought by a retirement  and health  benefits plan in
connection  with the  purchase of certain  Enron  notes,  alleging  violation of
federal  securities law,  including Section 11 of the Securities Act of 1933, as
amended,  violations of state securities and unfair  competition law, and common
law fraud and  breach of  fiduciary  duty;  and (xii) an action  brought  by two
broker/dealers  in  connection  with the  purchase  of certain  notes,  alleging
violation of federal and state securities laws. Several of these cases have been
consolidated  with the Newby action and stayed  pending the Court's  decision on
the pending motions of certain defendants to dismiss Newby.

     Additionally,  Citigroup and certain of its affiliates, including SSB, have
provided   substantial   information  to,  and  have  entered  into  substantive
discussions  with, the Securities and Exchange  Commission  regarding certain of
their  transactions with Enron and a transaction with Dynegy Inc.  Citigroup and
certain of its  affiliates,  including  SSB,  also have  received  subpoenas and
requests for information from various other regulatory and governmental agencies
and Congressional  committees, as well as from the Special Examiner in the Enron
bankruptcy, regarding certain transactions and business relationships with Enron
and  its  affiliates.   Citigroup  and  such  affiliates,   including  SSB,  are
cooperating fully with all such requests.

     Citigroup  and SSB are involved in a number of lawsuits  arising out of the
underwriting  of debt  securities  of  WorldCom,  Inc.  These  lawsuits  include
putative class actions filed in July 2002 by alleged purchasers of WorldCom debt

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securities in the United States District Court for the Southern  District of New
York (Above  Paradise  Investments  Ltd. V.  Worldcom,  Inc., et al.;  Municipal
Police Employees Retirement System Of Louisiana V. Worldcom,  Inc., et al.), and
in the United States  District  Court for the Southern  District of  Mississippi
(Longacre  Master Fund V. Worldcom,  Inc., et al.).  These putative class action
complaints assert violations of federal  securities law,  including  Sections 11
and 12 of the Securities Act of 1933, as amended,  and seek unspecified  damages
from the underwriters.

     On October 11, 2002,  the Above  Paradise and  Municipal  Police  Employees
lawsuits filed in the United States District Court for the Southern  District of
New York were  superseded by the filing of a consolidated  putative class action
complaint in the United States  District Court for the Southern  District of New
York  (In  Re  Worldcom,  Inc.  Securities  Litigation).   In  the  consolidated
complaint,  in addition to the claims of violations by the  underwriters  of the
federal  securities law,  including  Sections 11 and 12 of the Securities Act of
1933,  as amended,  the  plaintiffs  allege  violations  of Section 10(b) of the
Securities  Exchange  Act of  1934,  as  amended,  and  Rule  10b-5  promulgated
thereunder,  by SSB arising out of alleged conflicts of interest of SSB and Jack
Grubman.  The plaintiffs continue to seek unspecified  compensatory  damages. In
addition to the consolidated  class action  complaint,  the Southern District of
Mississippi  class  action  has  been  transferred  by  the  Judicial  Panel  on
MultiDistrict  Litigation to the Southern  District of New York for  centralized
pre-trial proceedings with other WorldCom-related actions.


                                       17
<PAGE>

     In addition to the several putative class actions that have been commenced,
certain  individual  actions have been filed in various federal and state courts
against  Citigroup and SSB, along with other parties,  concerning  WorldCom debt
securities  including individual state court actions brought by approximately 18
pension  funds  and  other  institutional   investors  in  connection  with  the
underwriting of debt securities of WorldCom alleging violations of Section 11 of
the Securities Act of 1933, as amended,  and, in one case, violations of various
state  securities  laws and common law fraud.  Most of these  actions  have been
removed to federal court and have been  transferred to the Southern  District of
New York for  centralized  pre-trial  proceedings  with  other  WorldCom-related
actions.

     A putative  class action on behalf of  participants  in  WorldCom's  401(k)
salary savings plan and those  WorldCom  benefit plans covered by ERISA alleging
violations of ERISA and common law fraud  (Emanuele V. Worldcom,  Inc., Et Al.),
which was  commenced  in the United  States  District  Court for the District of
Columbia,  also has been  transferred  by the  Judicial  Panel on  MultiDistrict
Litigation  to the  Southern  District  of New  York for  centralized  pre-trial
proceedings with other  WorldCom-related  actions.  In December 2002, the claims
against SSB and the other underwriters were dismissed without prejudice.

     On or about January 27, 2003,  lead  plaintiff in a  consolidated  putative

                                       18
<PAGE>

class action in the United States  District Court for the District of New Jersey
(In Re  AT&T  Corporation  Securities  Litgation)  sought  leave  to  amend  its
complaint on behalf of purchasers of AT&T common stock asserting claims against,
among others, AT&T Corporation,  to add as named defendants  Citigroup,  SSB and
certain executive  officers and current and former  employees,  asserting claims
under federal  securities laws for allegedly  issuing research reports without a
reasonable  basis in fact and for  allegedly  failing to disclose  conflicts  of
interest with AT&T in connection with published investment research.

     On or about January 28, 2003,  lead  plaintiff in a  consolidated  putative
class action in the United States  District  Court for the Southern  District of
New  York  (In  Re  Global  Crossing,   Ltd.  Securities   Litigation)  filed  a
consolidated  complaint  on behalf of  purchasers  of the  securities  of Global
Crossing  and  its  subsidiaries,  which  names  as  defendants,  among  others,
Citigroup,  SSB and certain executive officers and current and former employees,
asserting  claims under federal  securities laws for allegedly  issuing research
reports without a reasonable basis in fact and for allegedly failing to disclose
conflicts  of  interest  with  Global  Crossing  in  connection  with  published
investment research.

     SSBHI  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 in which SSBHI's broker-dealer  subsidiaries have been named, arising in

                                       19
<PAGE>

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  SSBHI'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 SSBHI 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, 2002 was 3,200.

          (c)  Distribution.  The  Partnership did not declare a distribution in
               2002 or 2001.

          (d)  Use of Proceeds:  For the twelve months ended  December 31, 2002,
               there were additional sales of 9.1776 Units totaling $11,163. For
               the twelve months ended December 31, 2001,  there were additional
               sales of 20.7023 Units  totaling  $24,751.  For the twelve months

                                       20
<PAGE>

               ended December 31, 2000,  there were additional  sales of 49.4149
               Units totaling $61,337.

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

                                       21
<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, 2002,  2001,  2000,  1999 and 1998 and
total assets at December 31, 2002, 2001, 2000, 1999 and 1998 were as follows:

<TABLE>
<CAPTION>
<S>                                 <C>               <C>             <C>                 <C>           <C>
                                   2002               2001             2000             1999           1998

Realized and unrealized
 trading gains (losses) net
 of brokerage commissions
 and clearing fees of
 $3,930,667, $4,686,916,
 $5,795,482, $7,950,768,
 and $8,540,127,
 respectively                 $  16,374,175    $  (2,355,466)   $  (8,911,325)   $  (8,806,023)   $  11,635,004


Interest income                     816,470        2,044,447        4,241,957        4,687,547        5,203,988


                              $  17,190,645    $    (311,019)   $  (4,669,368)   $  (4,118,476)   $  16,838,992

Net income (loss)             $  12,647,726    $  (3,195,464)   $  (7,766,838)   $  (9,063,470)   $   9,913,148


Increase(decrease) in Net
 Asset Value per Unit         $      257.21    $      (52.73)   $      (89.14)   $      (94.66)   $       99.32


Total assets                  $  69,064,973    $  67,123,600    $  83,024,864    $ 120,563,424    $ 146,464,780
</TABLE>

                                       22
<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

                                       23
<PAGE>

"pyramiding,"  in which the  speculator  uses  unrealized  profits  on  existing
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

                                       24
<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.



                                       25
<PAGE>

     (b) Capital resources. (i) The Partnership has made no material commitments
for capital expenditures as of the end of the latest fiscal period.

     (ii) The Partnership's capital consists of the capital contributions of the
partners as  increased  or  decreased  by gains or losses on  commodity  futures
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.  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, 2002,  9,179.2695  Units were redeemed  totaling
$10,965,683.  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
                                       26
<PAGE>

Units were redeemed totaling $29,303,982.

     The Partnership  ceased to offer Units effective April 1, 1996.  Additional
sales of 9.1776 Units  totaling  $11,163 for the year ending  December 31, 2002,
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,  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,  2002,  the Net  Asset  Value  per Unit
increased  22.1% from  $1,161.22 to $1,418.43.  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.

     The  Partnership  experienced  net  trading  gains  of  $20,304,842  before
commissions  and  expenses in 2002.  Gains were  primarily  attributable  to the
trading of U.S. and non-U.S. interest rates, currencies,  livestock, indices and
grains and were partially offset by losses  recognized in the trading of energy,
softs and metals.

     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



                                       27
<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.

     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
support.  This is particularly  the case in a rapidly  changing and increasingly

                                       28
<PAGE>

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

                                       29
<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.

     (e) Critical Accounting Policies

The General  Partner  believes  that the  accounting  policies that will be most
critical to the  Partnership's  financial  condition  and results of  operations
relate to the  valuation  of the  Partnership's  positions.  The majority of the
Partnership's positions will be exchange-traded futures contracts, which will be
valued daily at settlement prices published by the exchanges. If applicable, the
Partnership's spot and forward foreign currency contracts will also be valued at
published daily  settlement  prices or at dealers'  quotes.  The General Partner
expects that under normal  circumstances  substantially all of the Partnership's
assets will be valued by objective measures and without difficulty.

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.

                                       30
<PAGE>


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

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

                                       31
<PAGE>

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
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


                                       32
<PAGE>

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.

     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

                                       33
<PAGE>

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.


                                       34
<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, 2002 and the
highest and lowest value at any point during the year. All open position trading
risk exposures of the Partnership  have been included in calculating the figures
set forth below. As of December 31, 2002, the Partnership's total capitalization
was approximately $68,061,947.

                                December 31, 2002

<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        $ 1,180,345         1.73%        $2,717,416     $  506,770
-OTC Contracts                        857,002         1.26%         1,440,741        679,944
Energy                              2,200,600         3.23%         2,523,100        171,800
Grains                                265,962         0.39%           741,782         93,826
Interest rates U.S.                   746,000         1.10%         1,238,000        180,300
Interest rates Non-U.S.             2,151,659         3.16%         3,004,497        549,484
Livestock                              46,800         0.07%           124,650         15,350
Metals
 - Exchange Traded Contracts          191,200         0.28%           953,900         90,100
 - OTC Contracts                       98,125         0.14%           689,975         75,875
Softs                                 216,363         0.32%           490,238        149,845
Indices                               281,850         0.41%         2,838,322        231,546
Lumber                                 12,000         0.02%            26,200          1,300
                                    ---------         ----
Total                              $8,247,906        12.11%
                                    ---------        -----
</TABLE>

                                       35
<PAGE>

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>


                                       36
<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.


                                       37
<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, 2002, by market sector.

                                       38
<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.


                                       39
<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
limited to futures on broadly  based  indices.  As of  December  31,  2002,  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.  Corn and wheat accounted for the  substantial  bulk of the
Partnership's commodity exposure as of December 31, 2002.

     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.


                                       40
<PAGE>

Qualitative Disclosures Regarding Non-Trading Risk Exposure

     The following were the only  non-trading  risk exposures of the Partnership
as of December 31, 2002.

     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.


                                       41
<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.

                                       42
<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

     Reports of Independent Accountants.                  F-3 - F-4

     Financial Statements:
     Statements of Financial Condition at
     December 31, 2002 and 2001.                            F-5

     Condensed Schedules of Investments at
     December 31, 2002 and 2001.                          F-6 - F-7

     Statements of Income and Expenses
     for the years ended December 31, 2002
     2001 and 2000.                                          F-8

     Statements of Partners' Capital for
     the years ended December 31, 2002,
     2001 and 2000.                                          F-9

     Notes to Financial Statements.                      F-10 - F-14

     Selected unaudited quarterly financial
     data.                                                   F-15






                                       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:    /s/ Daniel R. McAuliffe, Jr.
           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 Auditors

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

We have  audited the  accompanying  statement  of  financial  condition of Smith
Barney Diversified Futures Fund L.P. (the Partnership),  including the condensed
schedule of investments,  as of December 31, 2002, and the related statements of
income and  expenses,  and  partners'  capital  for the year then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audit.  The financial  statements of the Partnership as of December 31, 2001
and for the  years  ended  December  31,  2001 and 2000  were  audited  by other
auditors whose report dated  February 28, 2002 expressed an unqualified  opinion
on those statements.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  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.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Smith  Barney  Diversified
Futures Fund L.P. as of December 31, 2002, and the results of its operations and
changes in its partners'  capital for the year then ended,  in  conformity  with
accounting principles generally accepted in the United States of America.

KPMG LLP
New York, New York
March 7, 2003

                                      F-3
<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 the results of its operations for each of the two 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-4
<PAGE>



                                  Smith Barney
                          Diversified Futures Fund L.P.
                        Statements of Financial Condition
                           December 31, 2002 and 2001

<TABLE>
<CAPTION>
<S>                                                                                     <C>                  <C>
                                                                                       2002                  2001
Assets:
Equity in commodity futures trading account:
   Cash (restricted $10,243,181 and $8,487,086 in 2002 and 2001,
   respectively) (Note 3c)                                                         $64,057,301           $63,493,595
   Net unrealized appreciation on open positions*                                    4,954,354             2,703,661
   Commodity options owned, at fair value (cost $0 and $1,752,250
     in 2002 and 2001, respectively)                                                        --               849,250
                                                                                 -------------         -------------
                                                                                    69,011,655            67,046,506
  Interest receivable                                                                   53,318                77,094
                                                                                 -------------         -------------
                                                                                   $69,064,973           $67,123,600
                                                                                 --------------        --------------

Liabilities and Partners' Capital:
Liabilities:
  Accrued expenses:
   Commissions (Note 3c)                                                             $ 320,817             4 308,245
   Management fees (Note 3b)                                                           143,470               153,342
   Incentive fees (Note 3b)                                                             55,035                     -
   Professional fees                                                                    65,161                63,828
   Other                                                                                 6,271                11,854
  Redemptions payable (Note 5)                                                         412,272               217,590
                                                                                 -------------         -------------
                                                                                     1,003,026               754,859
                                                                                 -------------         -------------
Partners' capital (Notes 1 and 5):
  General Partner, 1,276.7484 and 2,048.9308 Units equivalents
    outstanding in 2002 and 2001, respectively                                       1,810,978             2,379,259
  Limited Partners, 46,707.3718 and 55,105.2813 Units of Limited
    Partnership Interest outstanding in 2002 and 2001, respectively                 66,250,969            63,989,482
                                                                                 -------------         -------------
                                                                                    68,061,947            66,368,741
                                                                                 -------------         -------------
                                                                                   $69,064,973           $67,123,600
                                                                                 --------------        --------------
</TABLE>


  * Forward contracts included in this balance are presented gross in the
    accompanying Condensed Schedule of Investments.
  See accompanying notes to financial statements.

                                      F-5
<PAGE>
                   Smith Barney Diversified Futures Fund L.P.
                        Condensed Schedule of Investments
                                December 31, 2002
<TABLE>
<CAPTION>
<S>                                                     <C>                                                          <C>
Sector                                             Contract                                                      Fair Value

Currencies                                         Futures contracts purchased 2.42%                             $1,648,464
                                                   Futures contracts sold 0.06%                                      39,145
                                                                                                                 ----------
                                                     Total futures contracts 2.48%                                1,687,609

                                                   Unrealized appreciation on forward contracts 2.64%             1,794,109
                                                   Unrealized depreciation on forward contracts (2.12)%          (1,442,027)
                                                                                                                 ----------
                                                     Total forward contracts 0.52%                                  352,082
                                                                                                                 ----------

     Total Currencies 3.00%                                                                                       2,039,691
                                                                                                                 ----------

Total Energy 0.82%                                 Futures contracts purchased 0.82%                                559,848
                                                                                                                 ----------

Grains                                             Futures contracts purchased (0.03)%                              (17,701)
                                                   Futures contracts sold 0.31%                                     211,274
                                                                                                                 ----------
     Total Grains 0.28%                                                                                             193,573
                                                                                                                 ----------

Total Interest Rates U.S. 0.74%                    Futures contracts purchased 0.74%                                504,413
                                                                                                                 ----------

Interest Rates Non-U.S.                            Futures contracts purchased 2.39%                              1,626,124
                                                   Futures contracts sold (0.02)%                                   (14,486)
                                                                                                                 ----------
     Total Interest Rates Non-U.S. 2.37%                                                                          1,611,638
                                                                                                                 ----------

Total Livestock 0.03%                              Futures contracts purchased 0.03%                                 20,199
                                                                                                                 ----------

Metals                                             Futures contracts purchased 0.39%                                267,635
                                                   Futures contracts sold 0.00% *                                       (38)
                                                                                                                 ----------
                                                     Total Futures contracts 0.39%                                  267,597
                                                   Unrealized appreciation on forward contracts 0.16%               107,580
                                                   Unrealized depreciation on forward contracts (1.00)%            (684,000)
                                                                                                                 ----------
                                                     Total forward contracts (0.84)%                               (576,420)
                                                                                                                 ----------
     Total Metals (0.45)%                                                                                          (308,823)
                                                                                                                 ----------

Softs                                              Futures contracts purchased 0.22%                                154,672
                                                   Futures contracts sold 0.04%                                      26,226
                                                                                                                 ----------
     Total Softs 0.26%                                                                                              180,898
                                                                                                                 ----------

Indices                                            Futures contracts purchased (0.05)%                              (39,594)
                                                   Futures contracts sold 0.28%                                     192,753
                                                                                                                 ----------
     Total Indices 0.23%                                                                                            153,159
                                                                                                                 ----------

Total Lumber 0.00% *                               Futures contracts sold 0.00% *                                      (242)
                                                                                                                 ----------

Total Fair Value 7.28%                                                                                           $4,954,354
                                                                                                                  ---------
</TABLE>
<TABLE>
<CAPTION>
<S>              <C>                                             <C>                   <C>
                                                           Investments         % of Investments
             Country Composition                          at Fair Value           at Fair Value
           ----------------------                        ----------------        --------------
           Australia                                        $    122,881                2.48%
           Canada                                                 79,168                1.60
           France                                                 (5,648)              (0.11)
           Germany                                               688,910               13.90
           Hong Kong                                              36,610                0.74
           Japan                                                 169,176                3.41
           Spain                                                  (4,767)              (0.10)
           United Kingdom                                        137,533                2.78
           United States                                       3,730,491               75.30
                                                              ----------              -------
                                                              $4,954,354              100.00%
                                                               =========              =======
</TABLE>
Percentages are based on Partners' capital unless otherwise indicated
* Due to rounding
See accompanying notes to financial statements.
                                      F-6
<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 accompanying notes to financial statements.
                                      F-7
<PAGE>



                                  Smith Barney
                          Diversified Futures Fund L.P.
                        Statements of Income and Expenses
                               for the years ended
                        December 31, 2002, 2001 and 2000


<TABLE>
<CAPTION>
<S>                                                              <C>                 <C>                    <C>
                                                               2002                  2001                  2000
Income:
  Net gains (losses) on trading of commodity
   interests:
   Realized gains (losses) on closed positions and
    foreign currencies                                      $17,151,149            $4,746,492           $(2,183,567)
   Change in unrealized gains (losses) on
    open positions                                            3,153,693            (2,415,042)             (932,276)
                                                           ------------          ------------          ------------
                                                             20,304,842             2,331,450            (3,115,843)
  Interest income                                               816,470             2,044,447             4,241,957
                                                           ------------          ------------          ------------
                                                             21,121,312             4,375,897             1,126,144
                                                           ------------          ------------          ------------
Expenses:
  Brokerage commissions including clearing fees
   of $163,483, $343,071 and $267,538, respectively
   (Note 3c)                                                  3,930,667             4,686,916             5,795,482
  Management fees (Note 3b)                                   1,591,520             2,042,475             2,741,877
  Incentive fees (Note 3b)                                    2,865,987               726,162               290,312
  Professional fees                                              73,032                79,297                27,264
  Other expenses                                                 12,380                36,511                38,017
                                                           ------------          ------------          ------------
                                                              8,473,586             7,571,361             8,892,952
                                                           ------------          ------------          ------------
Net income (loss)                                           $12,647,726           $(3,195,464)          $(7,766,838)
                                                            ------------          -----------          ------------

Net income (loss) per Unit of Limited Partnership
  Interest and General Partner Unit equivalent
  (Notes 1 and 6)                                                $257.21              $(52.73)              $(89.14)
                                                            ------------          -----------          ------------
</TABLE>




See accompanying notes to financial statements.

                                      F-8
<PAGE>



                                  Smith Barney
                          Diversified Futures Fund L.P.
                         Statements of Partners' Capital
                               for the years ended
                        December 31, 2002, 2001 and 2000

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

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
Net income                                                12,216,008           431,718         12,647,726
Sale of 9.1776 Units of Limited
  Partnership Interest                                        11,163                --             11,163
Redemption of 8,407.0871 Units of Limited
  Partnership Interest and 772.1824 Units
  of General Partnership Interest                         (9,965,684)         (999,999)       (10,965,683)
                                                          -----------       -----------       -----------
Partners' capital at December 31, 2002                   $66,250,969        $1,810,978        $68,061,947
                                                          ----------        ----------         ----------
</TABLE>



See accompanying notes to financial statements.

                                      F-9
<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  their  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  gains  (losses) on open  positions
          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
          Partnership  writes an option,  the premium  received is recorded as a
          liability in the statement of financial condition and marked to market
          daily. When the Partnership  purchases an option,  the premium paid is
          recorded  as an asset in the  statement  of  financial  condition  and
          marked to market daily.


                                      F-10
<PAGE>




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

     d.   The preparation of financial  statements in conformity with accounting
          principles generally accepted in the United States of America requires
          management to make estimates and assumptions  that affect the reported
          amounts of assets and liabilities, disclosure of contingent 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.

     e.   Certain  prior  period  amounts have been  reclassified  to conform to
          current year presentation.

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"),   Willowbridge   Associates,   Inc.
     ("Willowbridge") and Stonebrook  Structured  Products,  LLC ("Stonebrook"),
     (collectively,  the  "Advisors"),  each of which are  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,  Graham and Willowbridge a monthly management fee equal to 1/6 of
     1% (2% per year) of Net Assets  allocated  to the Advisors as of the end of
     each month.  Winton will receive a monthly  management fee equal to 1/12 of
     1.5% (1.5% 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  total  Net  Assets of the  Partnership
     determined on a monthly basis by the General Partner. Month-end Net Assets,
     for the purpose of calculating  management fees are Net Assets,  as defined
     in the Limited Partnership Agreement, prior to the reduction of redemptions
     and incentive fees.

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


                                      F-11
<PAGE>




      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.  Month-end Net Assets, for
          the purpose of calculating  commissions are Net Assets,  as defined in
          the  Limited  Partnership  Agreement,  prior to the  reduction  of all
          liabilities  of the  Partnership.  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 fees as well as
          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, 2002 and 2001, the amount of
          cash held for margin  requirements  was  $10,243,181  and  $8,487,086,
          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.

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,  2002 and 2001,  based on a monthly  calculation,  was  $4,063,172  and
     $3,898,076, respectively.

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 their 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-12
<PAGE>




6.  Financial Highlights:

     Changes in the net asset  value per Unit of  Partnership  interest  for the
     years ended December 31, 2002, 2001 and 2000 were as follows:





<TABLE>
<CAPTION>
<S>                                                          <C>             <C>              <C>
                                                             2002             2001            2000

    Net realized and unrealized gains (losses)*             $330.00         $(39.24)        $(103.90)
    Interest income                                           15.57           32.68            54.09
    Expenses**                                               (88.36)         (46.17)          (39.33)
                                                          ---------       ---------        ---------
    Increase (decrease) for year                             257.21          (52.73)          (89.14)
    Net asset value per Unit, beginning of year            1,161.22        1,213.95         1,303.09
                                                          ---------       ---------        ---------
    Net asset value per Unit, end of year                 $1,418.43       $1,161.22        $1,213.95
                                                           ---------       ---------        ---------
</TABLE>

    *    Includes brokerage commissions
    **   Excludes brokerage commissions
<TABLE>
<CAPTION>
<S>                                                             <C>             <C>

    Ratios to average net assets :
     Net investment loss before incentive fees***               (7.5)%          (6.6)%
     Incentive fees                                             (4.5)%          (1.0)%
                                                              ------          ------
     Net investment loss after incentive fees                  (12.0)%          (7.6)%
                                                              ------          -------


     Net income before incentive fees****                       24.3%            5.4%
     Incentive fees****                                         (4.5)%          (1.0)%
                                                              ------          ------
     Net income after incentive fees****                        19.8%            4.4%
                                                              ------          -------


     Operating expenses                                          8.8%            9.4%
     Incentive fees                                              4.5%            1.0%
                                                              ------          ------
     Total expenses                                             13.3%           10.4%
                                                              ------          -------

    Total return:
     Total return before incentive fees                         27.3%           (3.4)%
     Incentive fees                                             (5.2)%          (0.9)%
                                                              ------          ------
     Total return after incentive fees                          22.1%           (4.3)%
                                                              ------          -------
</TABLE>

     *** Interest income less total expenses (exclusive of incentive fees)
     **** Supplemental information not required
     The above ratios may vary for individual  investors  based on the timing of
     capital transactions during the year.



                                      F-13
<PAGE>




7.  Financial Instrument Risks:

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

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

     Credit risk is the possibility  that a loss may occur due to the failure of
     a counterparty to perform according to the terms of a contract. Credit risk
     with respect to exchange  traded  instruments is reduced to the extent that
     an  exchange  or  clearing  organization  acts  as a  counterparty  to  the
     transactions.  The Partnership's  risk of loss in the event of counterparty
     default is typically limited to the amounts  recognized 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 majority of these  instruments  mature  within one year of December 31,
     2002.  However,  due to the  nature of the  Partnership's  business,  these
     instruments may not be held to maturity.

8.  Subsequent Events:

     Stonebrook  Structured  Products,  LLC, was terminated as an Advisor to the
     Partnership on January 31, 2003.




                                      F-14
<PAGE>

Selected  unaudited  quarterly  financial  data for the years ended December 31,
2002 and December 31, 2001 is summarized below:

<TABLE>
<CAPTION>
<S>                                                 <C>                <C>              <C>               <C>
                                               For the period    For the period   For the period    For the period
                                                   from               from             from               from
                                              October 1, 2002     July 1, 2002      April 1, 2002    January 31, 2002
                                                     to               to                 to                to
                                             December 31, 2002  September 30, 2002   June 30, 2002    March 31, 2002
Net realized and unrealized trading
 gains (losses) net of brokerage
 commissions and clearing fees
 including interest income                        $(1,397,807)     $16,127,782      $ 5,619,177      $(3,158,507)

Net Income (loss)                                 $(1,881,979)     $13,154,546      $ 4,973,961      $(3,598,802)

Increase (decrease) in Net Asset
 Value per Unit                                   $(    36.33)     $    259.57      $     96.98      $(    63.01)

                                               For the period    For the period   For the period    For the period
                                                   from               from             from               from
                                              October 1, 2001     July 1, 2001      April 1, 2001    January 31, 2001
                                                     to               to                 to                to
                                             December 31, 2001  September 30, 2001   June 30, 2001    March 31, 2001

Net realized and unrealized trading
 gains (losses) net of brokerage
 commissions and clearing fees
 including interest income                        $(3,896,180)     $ 6,291,216      $(5,423,517)     $ 2,717,462

Net Income (loss)                                 $(4,403,236)     $ 5,421,399      $(5,489,618)     $ 1,275,991

Increase (decrease) in Net Asset Value per Unit   $(    76.67)     $     90.38      $(    87.04)     $     20.60
</TABLE>

                                      F-15





<PAGE>

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

     PricewaterhouseCoopers  LLP was previously the principal accountant for the
Partnership.  On July 9, 2002,  that firm was dismissed as principal  accountant
and KPMG LLP was  engaged  as  principal  accountant.  The  decision  to  change
accountants was approved by the general partner of the Partnership.

     In  connection  with the audits of the two fiscal years ended  December 31,
2001,   and   through   July  9,  2002,   there  were  no   disagreements   with
PricewaterhouseCoopers  LLP on any matter of accounting principles or practices,
financial  statement  disclosure,   or  auditing  scope  or  procedures,   which
disagreements  if not resolved to their  satisfaction  would have caused them to
make  reference  thereto in their reports on the financial  statements  for such
years.

     The audit reports of PricewaterhouseCoopers LLP on the financial statements
of the  Partnership as of and for the years ended December 31, 2001 and 2000 did
not  contain  any  adverse  opinion  or  disclaimer  of  opinion,  nor were they
qualified or modified as to uncertainty, audit scope, or accounting principle.

                                    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, 2002
investment  decisions  were made by  Campbell & Company,  Inc.,  Winton  Capital
Management,  Graham Capital Management L.P., Willowbridge Associatees,  Inc. and

                                       43
<PAGE>

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 $3,930,667 were earned for the year
ended  December 31, 2002.  Management  fees and incentive fees of $1,591,520 and
$2,865,987,  respectively,  were  earned  by the  Advisors  for the  year  ended
December 31, 2002.

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  1,276.7484  Units (2.7%) of Limited  Partnership  Interest as of
December 31, 2002.

     (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


                                       44
<PAGE>

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."

Item 14. Control and Procedures

     Based on their  evaluation  of the  Partnership's  disclosure  controls and
procedures  as of a date within 90 days of the filing of this report,  the Chief
Executive  Officer and Chief Financial Officer have concluded that such controls
and procedures are effective.

     There were no significant changes in the Partnership's internal controls or
in other factors that could significantly affect such controls subsequent to the
date of their evaluation.

                                     PART IV

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

          (a) (1) Financial Statements:

                    Statements  of Financial  Condition at December 31, 2002 and
                    2001.

                    Statements  of  Income  and  Expenses  for the  years  ended
                    December 31, 2002, 2001 and 2000.

                    Statements of Partners' Capital for the years ended December
                    31, 2002, 2001 and 2000.

               (2)  Financial Statement  Schedules:  Financial Data Schedule for
                    the year ended December 31, 2002.




                                       45
<PAGE>

          (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).

               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).


                                       46
<PAGE>

               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).

               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).




                                       47
<PAGE>

               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).

               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.



                                       48
<PAGE>

                    (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).

               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).

                                       49
<PAGE>

               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.
                    (previously filed).

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

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

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

               10.35-  Letter  terminating  Dominion  Capital  Management,  Inc.
                    (filed herein).

               10.36- Letters  extending  Management  Agreements with Campbell &
                    Co., Inc.,  Willowbridge  associates,  Inc.,  Winton Capital
                    Management,  Stonebrook Structured Products,  LLC and Graham
                    Capital Management L.P. (filed herein).


                                       50

<PAGE>

                    99.1 Certificate of Chief Executive Officer.

                    99.2 Certificate of Chief Financial Officer.

                (b) Report on Form 8-K: None Filed.


                                       51
<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
No proxy material has been sent to Limited Partners.




                                       52
<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 27th day of March 2003.


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
                                       53
<PAGE>
    TYPE>                                          EX-27
    DESCRIPTION>                                   FINANCIAL DATA SCHEDULE
TEXT>
ARTICLE>                                           5
CIK>                                               0000911503
NAME>                                Smith Barney Diversified Futures Fund L.P.
<TABLE>
<S>                                                   <C>
PERIOD-TYPE>                                       12-MONTHS
FISCAL-YEAR-END>                                   DEC-31-2002
PERIOD-START>                                      JAN-01-2002
PERIOD-END>                                        DEC-31-2002
CASH>                                                      64,057,301
SECURITIES>                                                 4,954,354
RECEIVABLES>                                                   53,318
ALLOWANCES>                                                         0
INVENTORY>                                                          0
CURRENT-ASSETS>                                            69,064,973
PP&E>                                                               0
DEPRECIATION>                                                       0
TOTAL-ASSETS>                                              69,064,973
CURRENT-LIABILITIES>                                        1,003,026
BONDS>                                                              0
PREFERRED-MANDATORY>                                                0
PREFERRED>                                                          0
COMMON>                                                             0
OTHER-SE>                                                  68,061,947
TOTAL-LIABILITY-AND-EQUITY>                                69,064,973
SALES>                                                              0
TOTAL-REVENUES>                                            21,121,312
CGS>                                                                0
TOTAL-COSTS>                                                        0
OTHER-EXPENSES>                                             8,473,586
LOSS-PROVISION>                                                     0
INTEREST-EXPENSE>                                                   0
INCOME-PRETAX>                                             12,647,726
INCOME-TAX>                                                         0
INCOME-CONTINUING>                                                  0
DISCONTINUED>                                                       0
EXTRAORDINARY>                                                      0
CHANGES>                                                            0
NET-INCOME>                                                12,647,726
EPS-PRIMARY>                                                   257.21
EPS-DILUTED>                                                        0
</TABLE>