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, 2003

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 Citigroup Managed Futures LLC
                             399 Park Ave. - 7th Fl.
                            New York, New York 10022
              (Address and Zip Code of principal executive offices)

                                 (212) 559-2011
              (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: Redeemable 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 Act).


                                     Yes         No   X
                                                    -----

Limited Partnership Redeemable Units with an aggregate value of $70,801,821 were
outstanding  and  held by  non-affiliates  as of the  last  business  day of the
registrant's most recently completed second fiscal quarter.

As of February 29, 2004,  41,776.5290 Limited Partnership  Redeemable 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
redeemable units of Limited Partnership Interest in the Partnership ("Redeemable
Units")  were  offered  to the  public.  A  Registration  Statement  on Form S-1
relating to the public offering  became  effective on October 29, 1993 (File No.
033-68074).  Between  October 29, 1993 and January 11, 1994,  75,615  Redeemable
Units were sold to the public at $1,000 per  Redeemable  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 Redeemable Units were registered on a Registration Statement on Form S-1
effective February 17, 1994 (File No. 033-75056). Sales of additional Redeemable
Units and additional general partner contributions and redemptions of Redeemable
Units for the year ended  December  31, 2003 are  reported in the  Statement  of
Partners'  Capital  on  page  F-9  under  "Item  8.  Financial   Statements  and
Supplementary Data."

     Citigroup  Managed  Futures LLC,  formerly Smith Barney Futures  Management
LLC, acts as the general partner (the "General Partner") of the Partnership. The
Partnership's  commodity  broker  is  Citigroup  Global  Markets  Inc.  ("CGM"),
formerly  Salomon Smith Barney Inc. CGM is an affiliate of the General  Partner.
The General  Partner is wholly owned by Citigroup  Global Markets  Holdings Inc.
("CGMHI"),  formerly Salomon Smith Barney Holdings Inc., which is the sole owner
of CGM. CGMHI 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 CGM. As of December 31, 2003,  all  commodity  trading
decisions are made for the Partnership by Campbell & Company, Inc. ("Campbell"),
Willowbridge  Associates,  Inc.  ("Willowbridge"),   Winton  Capital  Management
("Winton") and Graham Capital  Management  L.P.  ("Graham")  (collectively,  the
"Advisors").  None of the Advisors is affiliated  with one another,  the General
Partner  or CGM.  The  Advisors  are not  responsible  for the  organization  or
operation of the Partnership. Stonebrook Structured Products, LLC ("Stonebrook")
was terminated as an Advisor to the Partnership on January 31, 2003.

     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 Redeemable 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").

     Pursuant to the terms of the management  agreements  with each Advisor (the
"Management Agreements"), the Partnership pays Campbell, Graham and Willowbridge
a  monthly  management  fee equal to 1/6 of 1% (2% per  year) of  month-end  Net

                                       2
<PAGE>

Assets allocated to the Advisor as of the end of each month. Winton will receive
a monthly  management fee equal to 1/12 of 1.50% (1.50% per year),  of month-end
Net Assets  allocated to the Advisor as of the end of each month.  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 to the Partnership in each calendar quarter.

     The  Partnership  has  entered  into a  Customer  Agreement  with  CGM (the
"Customer  Agreement")  which provides that the  Partnership  pays CGM a monthly
brokerage  fee  equal to 11/24 of 1% (5.5%  per year) of  month-end  Net  Assets
allocated to the Advisors 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
accrued expenses and redemptions  payable.  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  Redeemable  Units.  CGM pays a portion of its brokerage
fees to its financial  consultants  who have sold  Redeemable  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  CGM  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,  CGM 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 CGM 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.  The Customer  Agreement may be terminated  upon
notice by either party.

     (b)  Financial  information  about  industry  segments.  The  Partnership's
business  consists  of  only  one  segment,  speculative  trading  of  commodity
interests.  The Partnership  does not engage in sales of goods or services.  The
Partnership's net income (loss) from operations for the years ended December 31,
2003, 2002,  2001, 2000 and 1999 is set forth under "Item 6. Selected  Financial
Data". The Partnership's capital as of December 31, 2003 was $71,727,346.

     (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.

     (e)  Available  information.  The  Partnership  does not  have an  Internet
address.  The Partnership will provide paper copies of its annual report on Form
10-K,  quarterly  reports  on Form  10-Q,  current  reports  on Form 8-K and any
amendments to these reports free of charge upon request.


                                       3
<PAGE>

Item 2.  Properties.

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

Item 3.   Legal Proceedings.

     This section  describes  the major pending  legal  proceedings,  other than
ordinary routine  litigation  incidental to the business,  to which CGMHI 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.

     CGM is a New York  corporation  with its principal place of business at 388
Greenwich  St., New York, New York 10013.  CGM 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.  CGM 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 CGM or any of its individual  principals within the
past five years that  management  believes  may have a material  impact on CGM's
ability to act as an FCM. In the ordinary course of its business, CGM is a party
to various claims and regulatory inquiries.

Settlement of Certain Legal and Regulatory Matters

     On April  28,  2003,  CGM  announced  final  agreements  with the SEC,  the
National Association of Securities Dealers ("NASD"), the New York Stock Exchange
("NYSE")  and the New York  Attorney  General to resolve on a civil basis all of
their  outstanding  investigations  into its  research  and IPO  allocation  and
distribution practices (the "Research  Settlement").  To effectuate the Research
Settlement,  the SEC filed a Complaint  and Final  Judgment in the United States
District Court for the Southern District of New York. On October 31, 2003, final
judgment was entered against CGM and nine other  investment  banks. The NASD has
accepted the Letter of Acceptance,  Waiver and Consent  entered into with CGM in
connection with the Research Settlement.  In May 2003, the NYSE advised CGM that
the Hearing Panel's Decision, in which it accepted the Research Settlement,  had
become  final.  As required by the  Research  Settlement,  CGM has entered  into
separate settlement  agreements with 48 states and various U.S.  territories and
is in settlement negotiations with the remaining 2 states.

 Enron Corp.

     In April 2002, Citigroup was named as a defendant along with, among others,
commercial and/or  investment  banks,  certain current and former Enron officers
and directors,  lawyers and accountants in a putative  consolidated class action
complaint  that was filed in the United States  District  Court for the Southern
District of Texas seeking unspecified damages. The 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, as
amended, and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as
amended.  Citigroup's  motion to dismiss  the  complaint  was denied in December
2002,  and Citigroup  filed an answer in January  2003. In May 2003,  plaintiffs
filed an amended  consolidated  class action  complaint,  and Citigroup  filed a
motion  to  dismiss  in  June  2003.   Plaintiffs   filed  a  motion  for  class
certification in May 2003.  Discovery is proceeding pending the Court's decision
on class certification.

                                        4
<PAGE>

     Additional  actions have been filed  against  Citigroup  and certain of its
affiliates,  including  CGM,  along with other  parties,  including  (i) actions
brought by a number of pension  and  benefit  plans,  investment  funds,  mutual
funds, and other individual and  institutional  investors in connection with the
purchase  of  Enron  and  Enron-related  equity  and debt  securities,  alleging
violations  of  various  state  and  federal   securities   laws,  state  unfair
competition statutes,  common law fraud,  misrepresentation,  unjust enrichment,
breach of fiduciary duty, conspiracy, and other violations of state law; (ii) an
action by banks that  participated  in two Enron  revolving  credit  facilities,
originally  alleging fraud, gross negligence,  breach of implied duties,  aiding
and abetting and civil conspiracy in connection with defendants'  administration
of a credit facility with Enron; the Court granted Citigroup's motion to dismiss
with respect to all claims except for certain  claims of aiding and abetting and
civil  conspiracy;  (iii) an action brought by several funds in connection  with
secondary market purchases of Enron debt securities,  alleging violations of the
federal  securities law,  including Section 11 of the Securities Act of 1933, as
amended, and claims for fraud and  misrepresentation;  (iv) a series of putative
class  actions  by  purchasers  of  NewPower  Holdings  common  stock,  alleging
violations of the federal securities law, including Section 11 of the Securities
Act of 1933,  as amended,  and Section 10(b) of the  Securities  Exchange Act of
1934,  as  amended;  (v) a putative  class  action  brought by clients of CGM in
connection with research reports concerning Enron,  alleging breach of contract;
(vi) 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; (vii) an action brought by the Attorney General of
Connecticut  in  connection  with  various  commercial  and  investment  banking
services  provided  to Enron;  (viii) an action  brought  by  purchasers  in the
secondary  market of Enron  bank  debt,  alleging  claims  for common law fraud,
conspiracy,  gross negligence,  negligence and breach of fiduciary duty; (ix) an
action  brought by an  investment  company,  alleging  that  Enron  fraudulently
induced  it to  enter  into a  commodity  sales  contract;  (x)  five  adversary
proceedings  filed by Enron in its chapter 11 bankruptcy  proceedings to recover
alleged  preferential  payments and fraudulent  transfers  involving  Citigroup,
certain of its affiliates and other entities,  and to disallow or to subordinate
claims  that  Citigroup  and other  entities  have  filed  against  Enron;  (xi)
third-party  actions  brought by former Enron officers and  directors,  alleging
violation of state  securities and other laws and a right to  contribution  from
Citigroup,  in  connection  with claims  under state  securities  and common law
brought  against the officers and  directors  and others;  and (xii) a purported
class action brought on behalf of Connecticut municipalities, alleging violation
of state statutes,  conspiracy to commit fraud,  aiding and abetting a breach of
fiduciary  duty  and  unjust  enrichment.  Several  of  these  cases  have  been
consolidated or coordinated with the NEWBY action and are now generally inactive
pending the Court's decision on the pending motion on class certification.

Dynegy Inc.

     On June 6, 2003,  the  complaint in a  pre-existing  putative  class action
pending in the United States  District Court for the Southern  District of Texas
(IN RE:  DYNEGY INC.  SECURITIES  LITIGATION)  brought by purchasers of publicly
traded debt and equity  securities of Dynegy Inc. was amended to add  Citigroup,
Citibank and CGM as  defendants.  The plaintiffs  allege  violations of Sections
10(b) and 20(a) of the Securities Exchange Act of 1934, as amended,  against the
Citigroup defendants.

WorldCom, Inc.

     Citigroup,  CGM and  certain  executive  officers  and  current  and former
employees have been named as defendants--along  with twenty-two other investment
banks,  certain  current  and  former  WorldCom  officers  and  directors,   and
WorldCom's former  auditors--in a consolidated class action brought on behalf of
individuals and entities who purchased or acquired publicly traded securities of
WorldCom  between  April  29,  1999  and June 25,  2002  (IN RE:  WORLDCOM  INC.
SECURITIES  LITIGATION). The class action  complaint  asserts claims against CGM

                                       5
<PAGE>

under (i) Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, in
connection  with certain bond offerings in which it served as  underwriter,  and
(ii)  Sections  10(b)  and  20(a) of the  Securities  Exchange  Act of 1934,  as
amended,  and Rule 10b-5  promulgated  under  Section  10(b),  alleging  that it
participated  in  the  preparation   and/or  issuance  of  misleading   WorldCom
registration  statements and disseminated misleading research reports concerning
WorldCom  stock.  On May 19, 2003,  the Court denied CGM's motion to dismiss the
consolidated class action complaint.  On October 24, 2003, the Court granted the
plaintiffs'  motion for class  certification.  On December 31, 2003,  the United
States Court of Appeals for the Second Circuit  granted CGM's  petition  seeking
leave for an interlocutory appeal of the class certification order. The District
Court has scheduled trial to begin in January 2005.

     Pursuant to an order entered May 28, 2003, the District Court  consolidated
approximately  seventy  individual  actions  with the class  action for pretrial
proceedings.  Certain  individual  plaintiffs have appealed the district court's
order denying their motions to remand.  The claims asserted in these  individual
actions are substantially  similar to the claims alleged in the class action and
assert state and federal  securities law claims based on CGM's research  reports
concerning WorldCom and/or CGM's role as an underwriter in WorldCom offerings.

     Numerous other actions  asserting claims against CGM in connection with its
research  reports about  WorldCom  and/or its role as an  investment  banker for
WorldCom are pending in other federal and state courts.  These actions have been
remanded to various state courts,  are pending in other federal courts,  or have
been  conditionally  transferred  to the United  States  District  Court for the
Southern  District  of New York to be  consolidated  with the class  action.  In
addition,  actions  asserting  claims  against  Citigroup  and  certain  of  its
affiliates  relating to its  WorldCom  research  reports are pending in numerous
arbitrations  around the country.  These arbitration  proceedings  assert claims
that are substantially similar to the claims asserted in the class action.

Global Crossing

     On or about January 28, 2003,  lead  plaintiff in a  consolidated  putative
class action in the  Redeemable  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 Asia Global  Crossing,  which names as  defendants,  among  others,
Citigroup,  CGM,  CGMHI and certain  executive  officers  and current and former
employees.  The putative  class action  complaint  asserts  claims against these
Citigroup  defendants  under (i) Sections 11,  12(a)(2) and 15 of the Securities
Act of 1933,  as amended,  and Section 14(a) of the  Securities  Exchange Act of
1934, as amended and Rule 14A-9A  promulgated  thereunder,  in  connection  with
certain  offerings in which CGM served as  underwriter  and in  connection  with
certain  transactions  in which CGM issued fairness  opinions,  and (ii) Section
10(b) and 20(a) of the  Securities  Exchange Act of 1934,  as amended,  and Rule
10b-5  promulgated  thereunder,   alleging  that  they  disseminated  misleading
research  reports  concerning  Global  Crossing  and Asia Global  Crossing.  The
Citigroup-related defendants have moved to dismiss these claims.

     In addition,  actions asserting claims against Citigroup and certain of its
affiliates  relating  to its Global  Crossing  research  reports  are pending in
numerous arbitrations around the country.  These arbitration  proceedings assert
claims that are  substantially  similar to the claims  asserted in the  putative
class action.


                                       6
<PAGE>


Adelphia Communications Corporation

     On  July 6,  2003,  an  adversary  proceeding  was  filed  by the  Official
Committee   of  Unsecured   Creditors  on  behalf  of  Adelphia   Communications
Corporation  against  certain  lenders  and  investment  banks,  including  CGM,
Citibank,  N.A.,  Citicorp USA, Inc.,  and Citigroup  Financial  Products,  Inc.
(together,  the Citigroup  Parties).  The  complaint  alleges that the Citigroup
Parties and numerous  other  defendants  committed acts in violation of the Bank
Holding Company Act and the common law. The complaints seek equitable relief and
an unspecified amount of compensatory and punitive damages.  In November 2003, a
similar  adversary  proceeding  was filed by the  Equity  Holders  Committee  of
Adelphia.

     In addition,  CGM is among the underwriters named in numerous civil actions
brought to date by investors in Adelphia  debt  securities  in  connection  with
Adelphia securities  offerings between September 1997 and October 2001. Three of
the complaints also assert claims against Citigroup Inc. and Citibank,  N.A. All
of the complaints allege  violations of federal  securities laws, and certain of
the complaints  also allege  violations of state  securities laws and the common
law. The complaint seeks unspecified damages. In December 2003, a second amended
complaint  was filed and  consolidated  before the same judge of the  Redeemable
United States District Court for the Southern District of New York.

Mutual Funds

     In 2003,  several  issues in the mutual fund  industry  have come under the
scrutiny of federal and state regulators. The Company has received subpoenas and
other requests for  information  from various  government  regulators  regarding
market timing,  fees, sales practices and other mutual fund issues in connection
with various  investigations,  including an  investigation by the Securities and
Exchange  Commission and a United States  Attorney into the  arrangements  under
which we became the  transfer  agent for many of the  mutual  funds in the Smith
Barney fund complex. CGM is cooperating fully with all such reviews.

Research

     Since May 2002,  Citigroup,  CGM and certain executive officers and current
and former  employees  have been named as defendants in numerous  putative class
action complaints,  individual actions, and arbitration demands by purchasers of
various  securities,   alleging  that  they  violated  federal  securities  law,
including Sections 10 and 20 of the Securities Exchange Act of 1934, as amended,
and  certain  state  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 AT&T Corp., Winstar Communications, Inc., Rhythm NetConnections, Inc.,
Level 3 Communications, Inc., Metromedia Fiber Network, Inc., XO Communications,
Inc., Williams Communications Group Inc., and Qwest Communications International
Inc. The putative  class  actions  relating to research of these  companies  are
pending  before a single  judge in the  United  States  District  Court  for the
Southern  District  of New York  for  coordinated  proceedings.  The  Court  has
consolidated  these  actions  into  separate  proceedings  corresponding  to the
companies  named  above.   On  January  30,  2004,   plaintiffs  in  the  Rhythm
NetConnections,   Inc.  action   voluntarily   dismissed  their  complaint  with
prejudice.

     In addition,  actions asserting claims against Citigroup and certain of its
affiliates  relating to its research  reports on these  companies are pending in
numerous arbitrations around the country.  These arbitration  proceedings assert
claims that are  substantially  similar to the claims  asserted in the class and
individual actions.

                                       7
<PAGE>

     Three  additional  putative  class  actions are  pending in federal  courts
against  Citigroup and certain of its affiliates,  including CGM, and certain of
their current and former  directors,  officers and  employees,  along with other
parties,  on behalf of persons who  maintained  accounts with CGM. These actions
assert, 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.  In all three of
these  actions,  the  Citigroup-related  defendants  have moved to  dismiss  the
complaints.  In two of these putative class actions,  these motions were granted
and appeals are now pending.

     In May 2003,  the SEC,  NYSE and NASD issued a subpoena  and letters to CGM
requesting   documents  and  information   with  respect  to  their   continuing
investigation  of individuals in connection with the supervision of the research
and  investment  banking  departments  of CGM.  Other  parties  to the  Research
Settlement have received similar subpoena and letters.

     On June 23,  2003,  the West  Virginia  Attorney  General  filed an  action
against CGM and nine other firms that were parties to the  Research  Settlement.
The West  Virginia  Attorney  General  alleges that the firms  violated the West
Virginia  Consumer  Credit and Protection Act in connection  with their research
activities and seeks monetary penalties. CGM and the other defendants have moved
to dismiss the action.

Other

     In April 2002,  consolidated  amended complaints were filed against CGM and
other  investment  banks named in numerous  putative  class actions filed in the
United States  District  Court for the Southern  District of New York,  alleging
violations  of certain  federal  securities  laws  (including  Section 11 of the
Securities Act of 1933, as amended, and Section 10(b) of the Securities Exchange
Act of 1934,  as amended)  with respect to the  allocation of shares for certain
initial  public  offerings and related  aftermarket  transactions  and damage to
investors caused by allegedly  biased research analyst reports.  On February 19,
2003, the Court issued an opinion denying  defendants'  motion to dismiss.  Also
filed in the  Southern  District of New York  against  CGM and other  investment
banks were several putative class actions that were  consolidated  into a single
class action, alleging violations of certain federal and state antitrust laws in
connection with the allocation of shares in initial public offerings when acting
as underwriters.  On November 3, 2003, the Court granted CGM's motion to dismiss
the consolidated amended complaint in the antitrust case.

     Additional  lawsuits containing similar claims to those described above may
be filed in the future.

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.

                                       8

<PAGE>

                                     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  Redeemable  Units  of  Limited
          Partnership Interest.

     (b)  Holders.  The  number  of  holders  of  Redeemable  Units  of  Limited
          Partnership Interest as of December 31, 2003 was 3,011.

     (c)  Distribution.  The  Partnership did not declare a distribution in 2003
          or 2002.

     (d)  Use of Proceeds.  For the twelve months ended December 31, 2003, there
          were additional sales of 5.7407 Redeemable Units totaling $8,940.  For
          the twelve months ended December 31, 2002, there were additional sales
          of 9.1776  Redeemable  Units totaling  $11,163.  For the twelve months
          ended  December  31,  2001,  there  were  additional  sales of 20.7023
          Redeemable Units totaling $24,751.

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


Item 6. Selected Financial Data. Realized and unrealized trading gains (losses),
interest  income,  net income (loss) and increase  (decrease) in Net Asset Value
per Redeemable Unit for the years ended December 31, 2003,  2002, 2001, 2000 and
1999 and total assets at December 31, 2003,  2002,  2001,  2000 and 1999 were as
follows:

<TABLE>
<CAPTION>
<S>                                         <C>            <C>                <C>            <C>            <C>
                                          2003            2002             2001            2000            1999
                                     -----------    ------------    --------------   -------------    --------------
Realized and unrealized trading
gains (losses) net of brokerage
commissions and clearing fees of
$4,367,509, $3,930,667, $4,686,916,
$5,795,482 and $7,950,768,
respectively                       $  13,380,995   $  16,374,175    $  (2,355,466)   $  (8,911,325)   $  (8,806,023)

Interest income                          575,911         816,470        2,044,447        4,241,957        4,687,547
                                     -----------    ------------    --------------   -------------    --------------
                                   $  13,956,906   $  17,190,645    $    (311,019)   $  (4,669,368)   $  (4,118,476)

Net income (loss)                  $  10,180,158   $  12,647,726    $  (3,195,464)   $  (7,766,838)   $  (9,063,470)
                                     -----------    ------------    --------------   -------------    --------------
Increase (decrease) in Net Asset
Value per Redeemable Unit          $      218.21   $      257.21    $      (52.73)   $      (89.14)   $      (94.66)
                                     -----------    ------------    --------------   -------------    --------------
Total assets                       $  75,961,490   $  71,191,000    $  67,123,600    $  83,024,864    $ 120,563,424
                                     -----------    ------------    --------------   -------------    --------------
</TABLE>

                                       9
<PAGE>

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

Overview

     The Partnership aims to achieve  substantial capital  appreciation  through
speculative trading,  directly and indirectly, in U.S. and international markets
for currencies,  interest rates, stock indices, agricultural and energy products
and precious and base metals.  The Partnership  may employ  futures,  options on
futures, and forward contracts in those markets.

     The General  Partner manages all business of the  Partnership.  The General
Partner has delegated its responsibility for the investment of the Partnership's
assets to Campbell & Company, Inc. ("Campbell"), Graham Capital Management, L.P.
("Graham"), Winton Capital Management ("Winton"),  Willowbridge Associates, Inc.
("Willowbridge")  and  Stonebrook   Structured  Products,   LLC  ("Stonebrook"),
(collectively,  the "Advisors").  Stonebrook was terminated as an Advisor to the
partnership  on  January  31,  2003.  The  General  Partner  employs  a team  of
approximately  15  professionals  whose  primary  emphasis is on  attempting  to
maintain  quality  control  among the advisors to the  Partnerships  operated or
managed by the General Partner. A full-time staff of due diligence professionals
use  state-of-the-art  technology  and  on-site  evaluations  to monitor new and
existing  futures money  managers.  The accounting and operations  staff provide
processing of trading  activity and reporting to limited partners and regulatory
authorities. In selecting the Advisors for the Partnership,  the General Partner
considered past performance, trading style, volatility of markets traded and fee
requirements.

     Responsibilities of the General Partner include:

     o    due diligence examinations of the Advisors;

     o    selection, appointment and termination of the Advisors;

     o    negotiation of the management agreements; and

     o    monitoring the activity of the Advisors.

     In  addition,  the  General  Partner  prepares  the books and  records  and
provides the administrative and compliance  services that are required by law or
regulation  from time to time in connection  with operation of the  Partnership.
These services include the preparation of required books and records and reports
to limited  partners,  government  agencies and  regulators;  computation of net
asset value;  calculation  of fees;  effecting  subscriptions,  redemptions  and
limited partner communications;  and preparation of offering documents and sales
literature.

     The General  Partner  seeks the best prices and  services  available in its
commodity futures brokerage  transactions.  The General Partner reviews at least
annually,  the  brokerage  rates  charged  to  commodity  pools  similar  to the
Partnership  to determine  whether the  brokerage  fee the  Partnership  pays is
competitive with other rates.

     The  programs  traded by each  Advisor  on behalf of the  Partnership  are:
Campbell - Financial,  Metal & Energy Large  Portfolio  ("FME Large"),  Graham -
Global Diversified Program ("GDP") and Graham Selective Trading Program ("GST"),
Winton  -  Diversified  Program,  and  Willowbridge  - Argo and  Vulcan  Trading
Systems.  Stonebrook  traded its Volatility Hedge Program until January 31, 2003
when Stonebrook was terminated as an Advisor to the Partnership.  As of December

                                       10
<PAGE>

31, 2003,  the  Partnership's  assets were  allocated  among the Advisors in the
following approximate  percentages:  Campbell, 32%, Graham, 36%, Winton, 15% and
Willowbridge, 17%.

Graham Capital Management, L.P.

     Graham currently  trades both GDP and GST on behalf of the Partnership.  Of
the Partnership's  assets allocated to Graham, 45% is currently traded using GDP
and 55% is currently traded using GST, each of which is described below.

     Graham  trades  actively in both U.S.  and foreign  markets,  primarily  in
futures contracts,  forward contracts,  spot contracts and associated derivative
instruments  such as options and swaps.  Graham engages in exchange for physical
transactions,  which  involve  the  exchange  of  a  futures  position  for  the
underlying  physical  commodity  without making an open competitive  trade on an
exchange.  Graham at times  will  trade  certain  instruments,  such as  forward
foreign  currency  contracts,  as a substitute  for futures or options traded on
futures exchanges.

     Graham's   trading   systems  rely  primarily  on  technical   rather  than
fundamental  information  as the  basis for their  trading  decisions.  Graham's
systems  are  based on the  expectation  that  they can over  time  successfully
anticipate  market events using  quantitative  mathematical  models to determine
their trading  activities,  as opposed to attempting  properly to forecast price
trends using subjective analysis of supply and demand.

     GDP utilizes multiple  computerized  trading models designed to participate
in potential profit  opportunities  during sustained price trends.  This program
features broad diversification in both financial and non-financial  markets. The
strategies that are utilized are primarily  long-term in nature and are intended
to generate  significant returns over time with an acceptable degree of risk and
volatility.  The  computer  models on a daily  basis  analyze  the recent  price
action,  the relative strength and the risk  characteristics  of each market and
compare  statistically  the  quantitative  results  of  this  data to  years  of
historical data on each market. GDP trades in approximately 80 markets.

     GST uses a mathematical  model to identify certain price patterns that have
very specific characteristics indicating that there is a high probability that a
significant  directional  move will occur.  Although  the program does not trade
against the market trend, it is not a true trend-following system inasmuch as it
will  only  participate  in  specific  types  of  market  moves  that  meet  the
restrictive  criteria of the model.  In general,  this program will  participate
only in  significant  market  moves  that  are  characterized  by a  substantial
increase in volatility.  As a result,  it frequently  will not  participate in a
market  trend  in which  virtually  all  trend-following  systems  would  have a
position. GST trades in approximately 70 markets.

Campbell & Company, Inc.

     Campbell  trades its FME Large  Portfolio for the  Partnership.  Campbell's
trading models are designed to detect and exploit medium-term to long-term price
changes,   while  also  applying  risk   management  and  portfolio   management
principles.

     Campbell  believes  that  utilizing  multiple  trading  models  provides an
important  level  of  diversification,  and is  most  beneficial  when  multiple
contracts  of each market are traded.  Every  trading  model may not trade every
market.  It is possible that one trading model may signal a long position  while
another  trading  model  signals  a short  position  in the same  market.  It is
Campbell's  intention to offset those signals to reduce unnecessary trading, but
if the signals are not  simultaneous,  both trades will be taken and since it is
unlikely that both positions would prove profitable, in retrospect,  one or both

                                       11
<PAGE>

trades will appear to have been  unnecessary.  It is Campbell's policy to follow
trades signaled by each trading model independently of the other models.

Willowbridge Associates, Inc.

     Willowbridge trades the Partnership's  assets allocated to it in accordance
with its Select Investment  Program,  whereby the General Partner determined the
initial   allocation  of  the   Partnership's   assets  among  one  or  more  of
Willowbridge's  strategies and may determine subsequent  reallocations (if any).
Of the  Partnership's  assets allocated to Willowbridge,  0% is currently traded
using the Vulcan  Trading  System and 100% is  currently  traded  using the Argo
Trading System, each of which is described below.

     For each of these  systems,  risk is managed on a market by market level as
well as on an overall  portfolio  level.  On the market  level,  risk is managed
primarily by utilizing proprietary volatility filters. When these filters detect
a certain excessive level of volatility in the markets traded,  they will signal
that the systems should no longer be trading in the markets in which the filters
have detected excessive volatility.  In this way, the systems do not participate
in markets in which there are extremes in market action. On the portfolio level,
risk is  managed  by  utilizing  a  proprietary  portfolio  cutback  rule.  When
cumulative  profits  have reached a certain  level,  this rule  determines  that
positions  should be halved  across the entire  portfolio.  In this way, risk is
reduced while  allowing the systems to continue to  participate  in the markets,
albeit at a reduced  level.  After the  portfolio  has been traded at half,  the
portfolio  cutback rule will then determine when to increase  positions to again
trade at the full level.

     The  Vulcan  Trading  System,   which  commenced  trading  in  1988,  is  a
computerized  technical trading system. It is not a trend-following  system, but
does ride a trend when the  opportunity  arises.  Vulcan  uses the  concepts  of
pattern recognition,  support/resistance  levels, and counter-trend liquidations
in making  trading  decisions.  In effect,  Vulcan is more akin to a  systematic
technical  charting system,  as opposed to most computer systems which are based
on pure trend-following calculations.

     The Vulcan  System is based on general  technical  trading  principles.  It
applies  these  principles  to  a  diversified   portfolio  of  commodities  and
currencies.  Given that the system is based on  general  principles,  the system
parameters  used  are  the  same  for all  items  in the  portfolio  and are not
optimized.   In  this  manner,  the  Vulcan  System  minimizes  the  problem  of
data-fitting.

     The  Argo  Trading  System  commenced  trading  in 1988.  Argo  essentially
incorporates Vulcan's concepts of pattern recognition, support/resistance levels
and counter-trend  liquidations to trade a portfolio similar to Vulcan. However,
Argo has a  relatively  slower time  horizon than Vulcan and attempts to capture
longer-term price moves.

     Pattern   recognition,    support/resistance   levels   and   counter-trend
liquidations are defined as follows:

     Pattern recognition is the ability to identify patterns that appear to have
acted as precursors of price advances or declines in the past.

     A support level is a previous  low--a price level under the current  market
price at which point buying  interest is expected to be  sufficiently  strong to
overcome selling pressure.

     A  resistance  level is a previous  high--a  price  level over the  current
market  price at which point  selling  pressure  is expected to overcome  buying
pressure and a price advance is expected to be turned back.

                                       12
<PAGE>

     A  counter-trend  liquidation  is the  closing  out of a  position  after a
significant  price  move  on  the  assumption  that  the  market  is  due  for a
correction.

Winton Capital Management Limited

     Winton trades its  Diversified  Program on behalf of the  Partnership.  The
Diversified  Program trades  approximately  95 futures and forward  contracts on
United States and non-United States exchanges and markets.

     Winton employs a fully  computerized,  technical,  trend-following  trading
system developed by its principals. This system tracks the daily price movements
from these markets  around the world,  and carries out certain  computations  to
determine  each day how long or short the  portfolio  should be in an attempt to
maximize profit within a certain range of risk. If rising prices in a particular
market are anticipated,  a long position will be established in that market;  if
prices in a particular  market are  expected to fall,  a short  position in that
market will be established.

     Technical  analysis refers to analysis based on data intrinsic to a market,
such as price and volume.  In contrast,  fundamental  analysis relies on factors
external to a market,  such as supply and demand.  The Winton Program employs no
fundamental factors.

     A  trend-following  system is one that  attempts to take  advantage  of the
observable  tendency  of the markets to trend,  and to tend to make  exaggerated
movements  in both upward and  downward  directions  as a result of such trends.
These  exaggerated  movements are largely explained as a result of the influence
of crowd psychology or the "herd instinct" among market participants.

     A   trend-following   system  does  not   anticipate  a  trend.   In  fact,
trend-following  systems are frequently unprofitable for long periods of time in
particular  markets or market groups, and occasionally they are unprofitable for
periods  of more  than a year.  However,  the  principals  believe  that such an
approach will, in the long term, be profitable.

     Trade selection is not subject to  intervention by Winton's  principals and
therefore  is not  subject  to  the  influences  of  individual  judgment.  As a
mechanical  trading system,  the Winton model embodies all the expert  knowledge
required to analyze market data and direct trades,  thus eliminating the risk of
basing a trading program on one  indispensable  person.  Equally as important is
the fact that mechanical systems can be tested in simulation for long periods of
time and the model's empirical characteristics can be measured.

     The system's  output is rigorously  adhered to in trading the portfolio and
intentionally  no  importance is given to any external or  fundamental  factors.
While it may be seen as unwise to ignore  information of obvious value,  such as
that pertaining to political or economic developments,  Winton believes that the
disadvantage  of  this  approach  is  far  outweighed  by the  advantage  of the
discipline that rigorous  adherence to such a system  instills.  Winton believes
that  significant  profits may be realized by the Winton system by holding on to
positions  for much  longer  than  conventional  wisdom  would  dictate.  Winton
believes  that a  trader  who  pays  attention  to  day-to-day  events  could be
distracted from the chance of fully capitalizing on such trends.

     The Winton  system  trades in all liquid  U.S.  and  non-U.S.  futures  and
forward  contracts.  Forward markets  include major  currencies and precious and
base  metals,  the  latter  two  categories  being  traded on the  London  Metal
Exchange.  Winton seeks out new  opportunities to add additional  markets to the
portfolio, with the goal of increasing the portfolio's diversification.

     Winton  believes  that taking  positions in a variety of unrelated  markets

                                       13
<PAGE>

will, over time,  decrease system  volatility.  By employing a sophisticated and
systematic method for placing orders in a wide array of markets, Winton believes
that profits can be realized over time.

     No assurance is given that an Advisor's  trading program will be profitable
or that it will not experience losses.

     (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 and cash equivalents,  net unrealized  appreciation  (depreciation) on open
futures  positions,  unrealized  appreciation  on  open  forward  contracts  and
interest  receivable.  Because of the low margin deposits  normally  required in
commodity  futures  trading,  relatively  small  price  movements  may result in
substantial  losses to the Partnership.  Such substantial losses could lead to a
material loss in liquidity.

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

     (i) The Partnership  invests its assets only in commodity interests that an
Advisor  believes are traded in  sufficient  volume to permit ease of taking and
liquidating positions.  Sufficient volume, in this context, refers to a level of
liquidity  that the  Advisor  believes  will  permit it to enter and exit trades
without noticeably moving the market.

     (ii)  No  Advisor  will  initiate  additional  positions  in any  commodity
interest if these  positions  would  result in aggregate  positions  requiring a
margin of more than 66 2/3% of the  Partnership's  net assets  allocated to that
Advisor.

     (iii) 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 clearinghouse, the physical
commodity position is fully hedged.

     (iv) The Partnership will not employ the trading  technique  commonly known
as  "pyramiding",  in which the speculator uses  unrealized  profits on existing
positions  as margin for the  purchases or sale of  additional  positions in the
same or related commodities.

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

     (vi) The Advisors 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.

     (vii) The Partnership will not permit the churning of its commodity trading
account.  The term  "churning"  refers to the  practice of entering  and exiting
trades with a frequency  unwarranted  by  legitimate  efforts to profit from the
trades, driven by the desire to generate commission income.

     In the normal  course of business,  the  Partnership  is party to financial
instruments  with  off-balance  sheet  risk,   including   derivative  financial
instruments and derivative commodity  instruments.  These financial  instruments

                                       14
<PAGE>

include  forwards,  futures,  options and swaps,  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 specified 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,  swaps and  certain  options.  Each of these  instruments  is
subject to various risks similar to those relating 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  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 statements 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 CGM.

     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.  (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 General Partner may, in its discretion,  cause the Partnership
to cease  trading  operations  and liquidate  all open  positions  under certain
circumstances  including a decrease in Net Asset  Value per  Redeemable  Unit to
less than $400 as of the close of business on any business day.

     (b) Capital Resources.

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

     (ii) The Partnership's capital consists of the capital contributions of the
partners  as  increased  or  decreased  by gains or  losses  on  trading  and by
expenses,  interest income, redemptions of Redeemable Units and distributions of
profits, if any. Gains or losses on trading cannot be predicted. Market moves in
commodities  are dependent  upon  fundamental  and  technical  factors which the
Advisors may or may not be able to identify,  such as changing supply and demand
relationships,  weather, government agricultural,  commercial and trade programs

                                       15
<PAGE>

and  policies,  national and  international  political  and economic  events and
changes in interest rates.  Partnership expenses consist of, among other things,
brokerage,  advisory and  administrative  fees.  The level of these  expenses is
dependent  upon the level of trading and the ability of the Advisors to identify
and take advantage of price movements in the commodity  markets,  in addition to
the level of Net Assets maintained.  In addition,  the amount of interest income
payable by CGM 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 their  Redeemable 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, 2003,  4,164.0183 Redeemable Units
were  redeemed  totaling  $6,523,699.  For the year  ended  December  31,  2002,
9,179.2695  Redeemable Units were redeemed  totaling  $10,965,683.  For the year
ended  December 31, 2001,  9,178.3060  Redeemable  Units were redeemed  totaling
$10,959,595.

     The Partnership  ceased to offer  Redeemable Units effective April 1, 1996.
Additional sales of 5.7407  Redeemable Units totaling $8,940 for the year ending
December 31, 2003,  9.1776 Redeemable Units totaling $11,163 for the year ending
December 31, 2002 and 20.7023  Redeemable  Units  totaling  $24,751 for the year
ending December 31, 2001, represent  additional  Redeemable 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, 2003,  the Net Asset Value per  Redeemable
Unit increased  15.4% from  $1,418.43 to $1,636.64.  For the year ended December
31, 2002, the Net Asset Value per Redeemable Unit increased 22.1% from $1,161.22
to  $1,418.43.  For the year ended  December 31,  2001,  the Net Asset Value per
Redeemable Unit decreased 4.3% from $1,213.95 to $1,161.22.

     The  Partnership  experienced  net  trading  gains  of  $17,748,504  before
commissions  and  expenses in 2003.  Gains were  primarily  attributable  to the
trading of currencies,  grains, livestock, metals and indices and were partially
offset by losses recognized in the trading of energy, U.S. and non-U.S. interest
rates, softs and lumber.

     On a very broad basis, the year 2003 can be divided into three periods: the
time leading up to and shortly  after the Iraq War (January  through  May),  the
transition to greater world  economic  growth (June  through  October),  and the
renewed dollar decline (November and December).

     The Iraq war was the  focus for much of the  first  half of the year.  With
uncertainty  concerning when hostilities  would begin and the possible impact of
these events,  investors showed a desire to move to a defensive and conservative
stance.  Equity  markets  moved  lower,  as did the dollar  against  other major
currencies.  Gold prices rose,  bond  markets  rallied,  and the energy  markets
exhibited a risk premium  concerning  potential supply  disruptions.  This was a
continuation of many of the trends carried over from 2002.  During the first two
months of the year, the Advisors had strong performance, up nearly 19%.

     Just prior to the  inception  of the  hostilities  in Iraq,  several of the
Advisors  reduced  leverage in expectation of higher  volatility in the markets.
Markets were more  volatile  with a reduction of liquidity in response to events
in March. During this period, bond prices declined, the dollar stabilized, crude
oil prices declined  significantly,  and the stock market started to rally. Even
with this  reduced  leverage  the markets  were  volatile  and prior trends were
disrupted leading to losses for the month of March. Positions returned to normal

                                       16
<PAGE>

leverage in late April and May saw a substantial  recovery in the  Partnership's
performance  with profits coming from short dollar,  long interest rate and long
commodity positions.

     In a transition to economic recovery and growth, the major markets began to
reflect  changing  expectations  in the  middle of June.  Consistently  positive
macroeconomic  news led to the  unexpected  pronouncement  of no further  easing
actions  by the  European  Central  Bank  and the  U.S.  Federal  Reserve  Bank.
Consequently,  there was a trend change,  as interest rates moved up off 40 year
lows and the dollar rallied reversing the decline from earlier in the year.

     While  there were  gains in stock  index  futures  trading,  the  Advisors'
exposure in these markets has been  relatively  low; hence they were not able to
make a substantial  impact on  performance.  In addition to the negative  market
action in  interest  rates and  currencies,  there  were  further  increases  in
volatility in the energy sector and growing volatility within a relatively tight
range for many agricultural  markets.  The second quarter ended unprofitably and
this  carried  through  the summer  and into the early  fall as the  Partnership
alternated between profits and losses on a monthly basis.

     The  final  period of 2003 was  marked by  another  decline  in the  dollar
beginning in late November.  The dollar began a new significant  decline against
both the euro and yen. This led to  significant  fourth quarter  profits,  which
boosted  performance for many of the Advisors and the Partnership ended the year
up 15.4%.

     In the General Partner's  opinion,  the Advisors continue to employ trading
methods and produce  results  consistent  with the objectives of the Partnership
and expectations for the Advisors'  programs.  The General Partner  continues to
monitor the Advisors'  performance on a daily, weekly,  monthly and annual basis
to assure these objectives are met.

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

     It should be noted that 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
global environment with increasing  transaction  volumes and an expansion in the
number and complexity of products in the marketplace.

                                       17
<PAGE>

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

     (e) Critical Accounting Policies.

     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,  revenues  and  expenses,  and related  disclosures  of
contingent  assets and liabilities in the financial  statements and accompanying
notes.

     All commodity interests  (including  derivative  financial  instruments and
derivative commodity  instruments) are used for trading purposes.  The commodity
interests  are  recorded on trade date and open  contracts  are  recorded in the
statements of financial  condition at fair value on the last business day of the
period,  which represents  market value for those commodity  interests for which
market  quotations are readily  available or other measures of fair value deemed
appropriate by management of the General Partner for those  commodity  interests
and foreign  currencies for which market  quotations are not readily  available,
including dealer quotes for swaps and certain option  contracts.  Investments in
commodity  interests  denominated in foreign currencies are translated into U.S.
dollars at the exchange rates prevailing on the last business day of the period.
Realized gains (losses) and changes in unrealized values on commodity  interests
and foreign  currencies  are  recognized  in the period in which the contract is
closed or the changes occur and are included in net gains (losses) on trading of
commodity interests.

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

                                       18
<PAGE>

     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.  Swap contracts
generally will be valued by reference to published settlement prices or dealers'
quotes in related markets or other measures of fair value deemed  appropriate by
the General Partner. 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.

     The risk to the  limited  partners  that have  purchased  interests  in the
Partnership  is  limited  to the amount of their  capital  contributions  to the
Partnership  and their share of Partnership  assets and  undistributed  profits.
This limited  liability is a consequence of the  organization of the Partnership
as a limited partnership under applicable law.

     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. Consequently, it is not possible
to predict how a particular future market scenario will affect performance,  and
the Partnership's  past performance is not necessarily  indicative of its future
results.

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

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).

                                       19
<PAGE>

     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  and
unrealized).

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

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

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

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

                                       20
<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, 2003 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, 2003, the Partnership's total capitalization
was approximately $71,727,346.


                                December 31, 2003
<TABLE>
<CAPTION>
<S>                                        <C>               <C>                  <C>               <C>           <C>
                                                                                          Year to Date
                                                                            ---------------------------------------------
                                                         % of Total             High               Low
Market Sector                          Value at Risk    Capitalization      Value at Risk     Value at Risk      Average*
--------------------------------------------------------------------------------------------------------------------------
Currencies
-Exchange Traded Contracts              $1,549,590             2.16%           $1,594,443        $352,353       $1,216,549
-OTC Contracts                           1,184,457             1.65%            1,610,335         766,266        1,107,265
Energy                                   2,205,700             3.08%            2,554,300         125,200        1,314,797
Grains                                     344,461             0.48%              524,832         193,841          368,879
Interest rates U.S.                        786,100             1.10%            1,346,600          89,950          637,283
Interest rates Non-U.S.                  1,256,380             1.75%            3,238,751         535,816        1,470,425
Livestock                                   45,065             0.06%              182,200          21,410           68,886
Metals
 - Exchange Traded Contracts               334,400             0.47%              409,400          76,600          265,392
 - OTC Contracts                           423,765             0.59%              676,175          36,750          353,390
Softs                                      143,156             0.20%              537,712          89,942          278,701
Indices                                  3,064,676             4.27%            3,991,683         120,907        2,007,311
Lumber                                       2,800             0.00%**             12,000           1,100            2,613
                                        ----------            -----
Total                                  $11,340,550            15.81%
                                        ----------            -----
</TABLE>

*  Monthly average based on month-end value at risk.
** Due to rounding
                                       21
<PAGE>


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>            <C>
                                                                                            Year to Date
                                                                             --------------------------------------------
                                                            % of Total            High             Low
Market Sector                              Value at Risk   Capitalization    Value at Risk    Value at Risk      Average*
-------------------------------------------------------------------------------------------------------------------------
Currencies
-Exchange Traded Contracts                  $ 1,180,345            1.73%        $2,717,416        $506,770      $1,344,004
-OTC Contracts                                  857,002            1.26%         1,440,741         679,944       1,034,009
Energy                                        2,200,600            3.23%         2,523,100         171,800       1,715,450
Grains                                          265,962            0.39%           741,782          93,826         298,781
Interest rates U.S.                             746,000            1.10%         1,238,000         180,300         833,025
Interest rates Non-U.S.                       2,151,659            3.16%         3,004,497         549,484       2,126,307
Livestock                                        46,800            0.07%           124,650          15,350          56,800
Metals
 - Exchange Traded Contracts                    191,200            0.28%           953,900          90,100         303,200
 - OTC Contracts                                 98,125            0.14%           689,975          75,875         385,781
Softs                                           216,363            0.32%           490,238         149,845         348,721
Indices                                         281,850            0.41%         2,838,322         231,546       1,054,190
Lumber                                           12,000            0.02%            26,200           1,300           8,350
                                              ---------            -----
Total                                        $8,247,906           12.11%
                                             ----------           ------
</TABLE>

* Quarterly average

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.

                                       22
<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, 2003, by market sector.

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-8 countries.
However,  the Partnership also takes futures positions on the government debt of
smaller nations -- e.g., Australia.

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  U.S.  dollar-based  Partnership  in
expressing Value at Risk in a functional currency other than U.S. dollars.

Stock Indices. The Partnership's primary equity exposure is to equity price risk
in the G-8  countries.  The stock index futures  traded by the  Partnership  are
limited to futures on broadly  based  indices.  As of  December  31,  2003,  the
Partnership's  primary exposures were in the ERX DAX and CME E-MINI S&P500 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.

                                       23
<PAGE>

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.

Qualitative Disclosures Regarding Non-Trading Risk Exposure

     The following were the only  non-trading  risk exposures of the Partnership
as of December 31, 2003.

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 U.S. 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 into  certain  positions 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.

     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.


                                       24
<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

Independent Auditors' Report                                         F-3 - F-4

Financial Statements:
Statements of Financial Condition at December 31, 2003 and 2002.        F-5

Condensed Schedules of Investments at December 31, 2003 and 2002.    F-6 - F-7

Statements of Income and Expenses for the years ended
December 31, 2003, 2002 and 2001.                                       F-8

Statements of Partners' Capital for the years ended
December 31, 2003, 2002 and 2001.                                      F-9

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

Selected Unaudited Quarterly Financial Data.                           F-15

<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
       Citigroup Managed Futures LLC
       General Partner, Smith Barney Diversified Futures Fund L.P.


Citigroup Managed Futures LLC
399 Park Avenue
7th Floor
New York, N.Y. 10022
212-559-2011


                                      F-2
<PAGE>

                          Independent Auditors' Report

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

We have audited the  accompanying  statements  of  financial  condition of Smith
Barney Diversified Futures Fund L.P. (the Partnership),  including the condensed
schedules  of  investments,  as of December  31, 2003 and 2002,  and the related
statements  of income and  expenses,  and  partners'  capital for the years 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  audits.  The  statements  of income and  expenses  and
partners'  capital of the  Partnership for the year ended December 31, 2001 were
audited by other  auditors  whose  report dated  February 28, 2002  expressed an
unqualified opinion on those statements.

We conducted our audits 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  audits  provide  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,  2003 and 2002,  and the results of its
operations  and its  partners'  capital for the years then ended,  in conformity
with accounting principles generally accepted in the United States of America.

/s/ KPMG LLP
    KPMG LLP
    New York, New York
    February 27, 2004

                                      F-3
<PAGE>

                         Report of Independent Auditors

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

In our  opinion,  the  accompanying  statements  of income and  expenses  and of
partners' capital present fairly, in all material respects, the results of Smith
Barney  Diversified  Futures Fund L.P.'s  operations for the year 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 audit. We conducted our audit
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 audit provides a reasonable  basis
for our opinion.

/s/ PricewaterhouseCoopers LLP
    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, 2003 and 2002

<TABLE>
<CAPTION>
<S>                                                                                    <C>                    <C>
                                                                                       2003                  2002
                                                                                 --------------        --------------
Assets:
Equity in commodity futures trading account:
   Cash (restricted $13,379,393 and $10,243,181 in 2003 and 2002,
      respectively) (Note 3c)                                                      $67,983,573           $64,057,301
   Net unrealized appreciation on open futures positions                             3,677,203             5,178,692
   Unrealized appreciation on open forward contracts                                 4,260,481             1,901,689
                                                                                 --------------        --------------
                                                                                    75,921,257            71,137,682
  Interest receivable (Note 3c)                                                         40,233                53,318
                                                                                 --------------        --------------
                                                                                   $75,961,490           $71,191,000
                                                                                 --------------        --------------
Liabilities and Partners' Capital:
Liabilities:
  Unrealized depreciation on open forward contracts                              $   2,298,360         $   2,126,027
  Accrued expenses:
   Commissions (Note 3c)                                                               344,098               320,817
   Management fees (Note 3b)                                                           119,768               143,470
   Incentive fees (Note 3b)                                                            761,281                55,035
   Professional fees                                                                    34,038                65,161
   Other                                                                                 7,420                 6,271
  Redemptions payable (Note 5)                                                         669,179               412,272
                                                                                 --------------        --------------
                                                                                     4,234,144             3,129,053
                                                                                 -------------           ------------
Partners' capital (Notes 1 and 5)
  General Partner, 1,276.7484 Unit equivalents outstanding in
    2003 and 2002                                                                    2,089,578             1,810,978
  Limited Partners, 42,549.0942 and 46,707.3718 Redeemable Units of
    Limited Partnership Interest outstanding in 2003 and 2002,
    respectively                                                                    69,637,768            66,250,969
                                                                                 -------------           ------------
                                                                                    71,727,346            68,061,947
                                                                                 --------------        --------------
                                                                                   $75,961,490           $71,191,000
                                                                                 --------------        --------------
</TABLE>


See accompanying notes to financial statements.

                                      F-5
<PAGE>
                   Smith Barney Diversified Futures Fund L.P.
                        Condensed Schedule of Investments
                                December 31, 2003
<TABLE>
<CAPTION>
<S>                                                         <C>                                                      <C>
Sector                                             Contract                                                      Fair Value
----------                                         ---------                                                     -----------
Currencies                                         Futures contracts purchased 2.31%                             $1,653,934
                                                   Futures contracts sold (0.14)%                                  (100,293)
                                                                                                                   ---------
                                                     Total futures contracts 2.17%                                1,553,641

                                                   Unrealized appreciation on forward contracts 2.65%             1,897,711
                                                   Unrealized depreciation on forward contracts (1.56)%          (1,116,272)
                                                                                                                   ---------
                                                     Total forward contracts 1.09%                                  781,439
                                                                                                                 -----------
     Total Currencies 3.26%                                                                                       2,335,080
                                                                                                                 -----------

Total Energy (0.11)%                               Futures contracts purchased (0.11)%                              (76,535)
                                                                                                                 -----------
Grains                                             Futures contracts purchased 0.95%                                680,144
                                                   Futures contracts sold (0.09)%                                   (66,550)
                                                                                                                 -----------
     Total Grains 0.86%                                                                                             613,594
                                                                                                                 -----------
Total Interest Rates U.S. (0.17)%                  Futures contracts purchased (0.17)%                             (119,927)
                                                                                                                 -----------
Interest Rates Non-U.S.                            Futures contracts purchased 0.22%                                159,634
                                                   Futures contracts sold (0.04)%                                   (28,643)
                                                                                                                 -----------
     Total Interest Rates Non-U.S. 0.18%                                                                            130,991
                                                                                                                 -----------
Livestock                                          Futures contracts purchased (0.02)%                              (13,500)
                                                   Futures contracts sold 0.01%                                       9,408
                                                                                                                   ---------
     Total Livestock (0.01)%                                                                                         (4,092)
                                                                                                                 -----------
Total Lumber 0.01%                                 Futures contracts purchased 0.01%                                  6,402
                                                                                                                 -----------
Metals                                             Futures contracts purchased 0.58%                                413,768
                                                   Futures contracts sold (0.00)% *                                  (1,550)
                                                                                                                 -----------
                                                     Total futures contracts 0.58%                                  412,218

                                                   Unrealized appreciation on forward contracts 3.29%             2,362,770
                                                   Unrealized depreciation on forward contracts (1.65)%          (1,182,088)
                                                                                                                   ---------
                                                     Total forward contracts 1.64%                                1,180,682
                                                                                                                 -----------
     Total Metals 2.22%                                                                                           1,592,900
                                                                                                                 -----------
Softs                                              Futures contracts purchased (0.14)%                              (99,050)
                                                   Futures contracts sold 0.03%                                      22,953
                                                                                                                   ---------
     Total Softs (0.11)%                                                                                            (76,097)
                                                                                                                 -----------
Indices                                            Futures contracts purchased 1.67%                              1,195,478
                                                   Futures contracts sold 0.06%                                      41,530
                                                                                                                   ---------
     Total Indices 1.73%                                                                                          1,237,008
                                                                                                                 -----------
Total Fair Value 7.86%                                                                                           $5,639,324
                                                                                                                  ---------
                                                              Investments      % of Investments
                  Country Composition                        at Fair Value       at Fair Value
                 ----------------------------            ------------------ -------------------

                 Australia                                $    57,663               1.02%
                 Canada                                        35,485               0.63
                 France                                        33,586               0.60
                 Germany                                      312,479               5.54
                 Hong Kong                                      3,903               0.07
                 Italy                                        (10,477)             (0.19)
                 Japan                                         27,224               0.48
                 Spain                                        113,433               2.01
                 United Kingdom                             1,411,139              25.02
                 United States                              3,654,889              64.82
                                                         ------------------ -------------------
                                                            $5,639,324             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, 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
                                                                                                                  ---------
                                                              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-7
<PAGE>
                                  Smith Barney
                          Diversified Futures Fund L.P.
                        Statements of Income and Expenses
                               for the years ended
                        December 31, 2003, 2002 and 2001
<TABLE>
<CAPTION>
<S>                                                            <C>                    <C>                    <C>
                                                                 2003                  2002                 2001
                                                           ------------          -----------          ------------
Income:
  Net gains (losses) on trading of commodity
   interests:
   Realized gains on closed positions and foreign
    currencies                                              $17,063,534           $17,151,149            $4,746,492
   Change in unrealized gains (losses) on
    open positions                                              684,970             3,153,693            (2,415,042)
                                                             ------------          -----------          ------------
                                                             17,748,504            20,304,842             2,331,450
  Interest income (Note 3c)                                     575,911               816,470             2,044,447
                                                             ------------          -----------          ------------
                                                             18,324,415            21,121,312             4,375,897
                                                             ------------          -----------          ------------
Expenses:
  Brokerage commissions including clearing fees
   of $147,603, $163,483 and $343,071, respectively
   (Note 3c)                                                  4,367,509             3,930,667             4,686,916
  Management fees (Note 3b)                                   1,448,067             1,591,520             2,042,475
  Incentive fees (Note 3b)                                    2,258,395             2,865,987               726,162
  Professional fees                                              61,800                73,032                79,297
  Other expenses                                                  8,486                12,380                36,511
                                                             ------------          -----------          ------------
                                                              8,144,257             8,473,586             7,571,361
                                                             ------------          -----------          ------------
Net income (loss)                                           $10,180,158           $12,647,726           $(3,195,464)
                                                            ------------          -----------          ------------
Net income (loss) per Redeemable Unit of Limited
  Partnership Interest and General Partner Unit
  equivalent (Notes 1 and 6)                                    $218.21               $257.21               $(52.73)
                                                            ------------          -----------          ------------
</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, 2003, 2002 and 2001

<TABLE>
<CAPTION>
<S>                                                           <C>                 <C>             <C>
                                                            Limited           General
                                                            Partners          Partner             Total
                                                        ------------    --------------     --------------
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 Redeemable Units of Limited
  Partnership Interest                                        24,751                --             24,751
Redemption of 9,178.3060 Redeemable 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 Redeemable Units of Limited
  Partnership Interest                                        11,163                --             11,163
Redemption of 8,407.0871 Redeemable 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
Net income                                                 9,901,558           278,600         10,180,158
Sale of 5.7407 Redeemable Units of Limited
  Partnership Interest                                         8,940                --              8,940
Redemption of 4,164.0183 Redeemable Units
  of Limited Partnership Interest                         (6,523,699)               --         (6,523,699)
                                                        ------------    --------------     --------------
Partners' capital at December 31, 2003                   $69,637,768        $2,089,578        $71,727,346
                                                        ------------    --------------     --------------
</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  redeemable  units of Limited
     Partnership  Interest  ("Redeemable  Units")  during its  initial  offering
     period.

     Citigroup  Managed  Futures LLC,  formerly Smith Barney Futures  Management
     LLC,  acts  as  the  general   partner  (the  "General   Partner")  of  the
     Partnership. The Partnership's commodity broker is Citigroup Global Markets
     Inc. ("CGM"), formerly Salomon Smith Barney Inc. CGM is an affiliate of the
     General  Partner.  The General Partner is wholly owned by Citigroup  Global
     Markets  Holdings Inc.  ("CGMHI"),  formerly  Salomon Smith Barney Holdings
     Inc., which is the sole owner of CGM. CGMHI 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  Redeemable  Unit
     decreases  to less  than  $400 per  Redeemable  Unit 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 statements 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  statements  of  financial  condition  and marked to
          market daily.  When the Partnership  purchases an option,  the premium
          paid is recorded as an asset in the  statements 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"),  Stonebrook
          Structured Products,  LLC ("Stonebrook") and Willowbridge  Associates,
          Inc. ("Willowbridge"),  (collectively,  the "Advisors"), each of which
          are registered  commodity trading advisors.  Stonebrook was terminated
          as an Advisor to the Partnership on January 31, 2003. The Advisors are
          not affiliated  with one another,  are not affiliated with the General
          Partner  or CGM 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 it as of the end of
          each  month.  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.

                                      F-11
<PAGE>

     c.   Customer Agreement

          The Partnership  has entered into a Customer  Agreement which provides
          that the  Partnership  will pay CGM 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 accrued
          expenses and redemptions  payable. CGM will pay a portion of brokerage
          fees to its financial  consultants who have sold  Redeemable  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 CGM. The Partnership's  cash is deposited by
          CGM in segregated  bank  accounts to the extent  required by Commodity
          Futures Trading Commission regulations. At December 31, 2003 and 2002,
          the amount of cash held for margin  requirements  was  $13,379,393 and
          $10,243,181,  respectively.  CGM 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 CGM 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 CGM 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 statements 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,  2003 and 2002,  based on a monthly  calculation,  was  $4,386,216  and
     $4,063,172, 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  Redeemable
     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 Redeemable  Unit of Limited  Partnership
     Interest  for the years  ended  December  31,  2003,  2002 and 2001 were as
     follows:

<TABLE>
<CAPTION>
<S>                                                           <C>              <C>             <C>
                                                              2003             2002            2001
                                                           ---------       ---------        ---------
    Net realized and unrealized gains (losses)*             $286.97         $330.00          $(39.24)
    Interest income                                           12.43           15.57            32.68
    Expenses**                                               (81.19)         (88.36)          (46.17)
                                                          ---------       ---------        ---------
    Increase (decrease) for the year                         218.21          257.21           (52.73)
    Net asset value per Redeemable Unit,
     beginning of year                                     1,418.43        1,161.22         1,213.95
                                                          ---------       ---------        ---------
    Net asset value per Redeemable Unit,
     end of year                                          $1,636.64       $1,418.43        $1,161.22
                                                           ---------       ---------        ---------

    *    Includes brokerage commissions
    **   Excludes brokerage commissions

    Ratios to average net assets :
     Net investment loss before incentive fees***             (7.4)%           (7.5)%           (6.6)%
                                                             -----           -------           ------

     Operating expenses                                        8.2%             8.8%             9.4%
     Incentive fees                                            3.1%             4.5%             1.0%
                                                             ----           -------           ------
     Total expenses                                           11.3%            13.3%            10.4%
                                                             -----           -------           ------

    Total return:
     Total return before incentive fees                       19.0%            27.3%            (3.4)%
     Incentive fees                                           (3.6)%           (5.2)%           (0.9)%
                                                             ------           -------           ------
     Total return after incentive fees                        15.4%            22.1%            (4.3)%
                                                             -----           -------           ------
</TABLE>

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

     The above ratios may vary for individual  investors  based on the timing of
     capital  transactions  during  the year.  Additionally,  these  ratios  are
     calculated for the Limited Partner class using the Limited  Partners' share
     of income, expenses and average net assets.

                                      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 statements 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 CGM.

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, 2003.
However, due to the nature of the Partnership's business,  these instruments may
not be held to maturity.


                                      F-14



<PAGE>

Selected  unaudited  quarterly  financial  data for the years ended December 31,
2003 and 2002 are summarized below:

<TABLE>
<CAPTION>
<S>                                             <C>                    <C>                      <C>                  <C>
                                        For the period from     For the period from     For the period from   For the period from
                                        October 1, 2003 to        July 1, 2003 to        April 1, 2003 to     January 1, 2003 to
                                         December 31, 2003      September 30, 2003        June 30, 2003         March 31, 2003

Net realized and unrealized trading
 gains (losses) net of brokerage
 commissions and clearing fees
 including interest income                       $ 7,116,170             $ (3,308,315)           $ 2,478,366          $ 7,670,685

Net Income (loss)                                $ 6,002,299             $ (3,665,355)           $ 1,599,820          $ 6,243,394

Increase (decrease) in Net Asset
 Value per Redeemable Unit                          $ 135.19                 $ (79.85)               $ 33.34             $ 129.53

                                        For the period from     For the period from     For the period from   For the period from
                                        October 1, 2002 to        July 1, 2002 to        April 1, 2002 to     January 1, 2002 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 Redeemable Unit                          $ (36.33)                $ 259.57                $ 96.98             $ (63.01)
</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 audit of the year 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 year.

     The audit report of PricewaterhouseCoopers  LLP on the financial statements
of the  Partnership  as of and for the  year  ended  December  31,  2001 did not
contain any adverse  opinion or disclaimer  of opinion,  nor was it qualified or
modified as to uncertainty, audit scope, or accounting principle.

Item 9A. Controls and Procedures.

     Based on their  evaluation  of the  Partnership's  disclosure  controls and
procedures  as of year end the  Chief  Executive  Officer  and  Chief  Financial
Officer of the General  Partner 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 during the fourth
quarter of 2003.

                                       25
<PAGE>


                                    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,  Citigroup  Managed  Futures  LLC. At December  31,  2003,
investment  decisions  were made by  Campbell & Company,  Inc.,  Winton  Capital
Management, Graham Capital Management L.P., and Willowbridge Associates, Inc.

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

Item 11.  Executive Compensation.

     The  Partnership  has no directors or officers.  Its affairs are managed by
Citigroup  Managed  Futures LLC, its General  Partner.  CGM, an affiliate of the
General  Partner,  is the  commodity  broker for the  Partnership  and  receives
brokerage  commissions for such services, as described under "Item 1. Business."
Brokerage commissions and clearing fees of $4,367,509 were earned by CGM for the
year ended December 31, 2003.  Management  fees and incentive fees of $1,448,067
and  $2,258,395,  respectively,  were earned by the  Advisors for the year ended
December 31, 2003.

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  Redeemable  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 Unit equivalents (2.9%) as of December 31, 2003.

     (c) Changes in control. None.

Item 13.   Certain Relationship and Related Transactions.

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


Item 14. Principal Accountant Fees and Services.

     (1) Audit Fees.  The aggregate  fees billed for each of the last two fiscal
years  for  professional  services  rendered  by KPMG  LLP for the  audit of the
Partnership's  annual  financial  statements,  review  of  financial  statements
included in the Partnership's Forms 10-Q and other services normally provided in
connection with regulatory filings or engagements are as follows:

2003     $31,136
2002     $35,267

                                       26
<PAGE>

     (2) Audit-Related Fees. None.

     (3) Tax Fees.  The  aggregate  fees  billed for each of the last two fiscal
years for professional  services rendered by KPMG LLP for tax compliance and tax
advice  given  in  the  preparation  of  the  Partnership's  Schedule  K1s,  the
preparation  of the  Partnership's  Form 1065 and  preparation  of all State Tax
Returns are as follows:

2003     $4,809
2002     $4,809

     (4) All Other Fees. None.

     (5) Not Applicable.

     (6) Not Applicable.

                                       27
<PAGE>

                                     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, 2003 and 2002.

               Condensed Schedules of Investments at December 31, 2003 and 2002.

               Statements  of Income and Expenses  for the years ended  December
               31, 2003, 2002 and 2001.

               Statements of Partners'  Capital for the years ended December 31,
               2003, 2002 and 2001.

               Notes to Financial Statements.

          (2)  Financial  Statement  Schedules:  Financial Data Schedule for the
               year ended December 31, 2003.

          (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).

          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).


                                       28
<PAGE>

          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).

          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.  (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).

                                      29
<PAGE>

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

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

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

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

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

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

          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. (previously filed).

          10.37- Letter terminating  Stonebrook  Structured  Products LLC (filed
               herein).

          10.38- 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).

          16.1 - Letter from PricewaterhouseCoopers (filed herein).

               The exhibits  required to be filed by Item 601 of regulation  S-K
               are incorporated herein by reference

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

                                       30
<PAGE>

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

          32.1 - Section 1350  Certification  (Certification  of  President  and
               Director)

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




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



                                       31


<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.




                                       32
<PAGE>


                                   SIGNATURES



     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the Registrant has duly caused this annual report on Form
10-K to be signed on its behalf by the  undersigned,  thereunto duly authorized,
in the City of New York and State of New York on the 29th day of March 2004.



SMITH BARNEY DIVERSIFIED FUTURES FUND L.P.

By:      Citigroup Managed Futures 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                                     Shelley Ullman
    President and Director                             Director


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


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

                                       33
<PAGE>

                                                                    Exhibit 31.1

                                  CERTIFICATION

I, David J. Vogel, certify that:

1. I have reviewed  this Annual Report on Form 10-K of Smith Barney  Diversified
Futures Fund L.P. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial  condition and results of operations of the registrant as of, and for,
the periods presented in this report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)  designed  such  disclosure  controls  and  procedures,  or caused  such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that material information relating to the registrant, is made known to us
by others within those  entities,  particularly  during the period in which this
report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     c) disclosed in this report any change in the registrant's internal control
over  financial  reporting  that occurred  during the  registrant's  most recent
fiscal quarter (the registrant's  fourth fiscal quarter in the case of an annual
report) that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors (or persons performing the equivalent functions):

     a) all significant  deficiencies  and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's  internal control over
financial reporting.


Date: March 29, 2004
                                               /s/ David J. Vogel
                                                   David J. Vogel
                                                   Citigroup Managed Futures LLC
                                                   President and Director

                                       34
<PAGE>

                                                                    Exhibit 31.2

                                  CERTIFICATION


I, Daniel R. McAuliffe, Jr., certify that:

1. I have reviewed  this Annual Report on Form 10-K of Smith Barney  Diversified
Futures Fund L.P. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact  necessary to make the statements
made, in light of the  circumstances  under which such statements were made, not
misleading with respect to the period covered by this report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information included in this report, fairly present in all material respects the
financial  condition and results of operations of the registrant as of, and for,
the periods presented in this report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a)  designed  such  disclosure  controls  and  procedures,  or caused  such
disclosure  controls and  procedures to be designed  under our  supervision,  to
ensure that material information relating to the registrant, is made known to us
by others within those  entities,  particularly  during the period in which this
report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures and presented in this report our conclusions  about the effectiveness
of the disclosure  controls and procedures,  as of the end of the period covered
by this report based on such evaluation; and

     c) disclosed in this report any change in the registrant's internal control
over  financial  reporting  that occurred  during the  registrant's  most recent
fiscal quarter (the registrant's  fourth fiscal quarter in the case of an annual
report) that has  materially  affected,  or is  reasonably  likely to materially
affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent  evaluation of internal  control over  financial  reporting,  to the
registrant's  auditors  and the audit  committee  of the  registrant's  board of
directors (or persons performing the equivalent functions):

     a) all significant  deficiencies  and material  weaknesses in the design or
operation of internal  control over  financial  reporting  which are  reasonably
likely  to  adversely  affect  the  registrant's  ability  to  record,  process,
summarize and report financial information; and

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's  internal control over
financial reporting.


Date: March 29, 2004

                                        /s/ Daniel R. McAuliffe, Jr.
                                            Daniel R. McAuliffe, Jr.
                                            Citigroup Managed Futures LLC
                                            Chief Financial Officer and Director

                                       35
<PAGE>

                                                                    Exhibit 32.1





                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002





In connection  with the Annual Report of Smith Barney  Diversified  Futures Fund
L.P. (the  "Partnership")  on Form 10-K for the year ending December 31, 2003 as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"),  I, David J.  Vogel,  President  and  Director of  Citigroup  Managed
Futures LLC, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss.
906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Partnership.




/s/ David J. Vogel
    David J. Vogel
    Citigroup Managed Futures LLC
    President and Director


Date: March 29, 2004


                                       36
<PAGE>

                                                                    Exhibit 32.2



                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002





In connection  with the Annual Report of Smith Barney  Diversified  Futures Fund
L.P. (the  "Partnership")  on Form 10-K for the year ending December 31, 2003 as
filed with the  Securities  and  Exchange  Commission  on the date  hereof  (the
"Report"), I, Daniel R. McAuliffe,  Jr., Chief Financial Officer and Director of
Citigroup  Managed  Futures LLC,  certify,  pursuant to 18 U.S.C.  ss. 1350,  as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that:

     (1) The Report fully  complies  with the  requirements  of section 13(a) or
15(d) of the
         Securities Exchange Act of 1934; and

     (2)  The  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Partnership.





/s/ Daniel R. McAuliffe, Jr.
    Daniel R. McAuliffe, Jr.
    Citigroup Managed Futures LLC
    Chief Financial Officer and Director



Date: March 29,2004

                                       37
<PAGE>
                      Smith Barney Futures Management LLC
                         388 Greenwich Street, 7th Floor
                          New York, New York 10013-2396






June 11, 2002



Campbell & Company, Inc.
Court Tower Building, Towson
210 West Pennsylvania Avenue
Suite 770
Baltimore, MD 212104


Attn: Mrs. Theresa D. Becks

         Re:      Management Agreement Renewals

Dear Mrs. Becks:

We are  writing  with  respect  to your  management  agreements  concerning  the
commodity pools to which reference is made below (the "Management  Agreements").
We are extending the term of the Management Agreements through June 30, 2003 and
all other provisions of the Management Agreements will remain unchanged.

o        Smith Barney Potomac Futures  Fund L.P.
o        Smith Barney Diversified Futures Fund L.P.
o        Smith Barney Diversified Futures Fund L.P. II
o        Smith Barney Global Markets Futures Fund
o        Smith Barney Global Diversified Futures Fund L.P.
o        Smith Barney Diversified 2000 Futures Fund L.P.
o        Smith Barney Campbell F.M. and Energy Fund plc
o        AURORA 2001

Please  acknowledge  receipt of this  modification  by signing  one copy of this
letter and returning it to the attention of Mr. Daniel  McAuliffe at the address
above or fax to  212-723-8985.  If you have any  questions  I can be  reached at
212-723-5435.

Very truly yours,

SMITH BARNEY FUTURES MANAGEMENT LLC


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


CAMPBELL & COMPANY, INC.


By:    /s/ Theresa Becks
        -------------------------
Print Name:  Theresa Becks


DRMcA/sr
<PAGE>
                                  Smith Barney Futures Management LLC
                                    388 Greenwich Street, 7th Floor
                                     New York, New York 10013-2396

June 11, 2002



Willowbridge Associates Inc.
101 Morgan Lane - Suite 180
Plainsboro, N.J. 08536

Attention:  Ms. Bonnie Huff / Ms. Janet Boyer

         Re:      Management Agreement Renewals

Dear Ms. Huff and Ms. Boyer:

We are  writing  with  respect  to your  management  agreements  concerning  the
commodity pools to which reference is made below (the "Management  Agreements").
We are extending the term of the Management Agreements through June 30, 2003 and
all other provisions of the Management Agreements will remain unchanged.

o        Salomon Smith Barney Orion Futures Fund L.P.
o        Smith Barney Principal Plus Futures Fund L.P. II
o        Smith Barney Diversified Futures Fund L.P.
o        Smith Barney Diversified Futures Fund L.P. II
o

Please  acknowledge  receipt of this  modification  by signing  one copy of this
letter and returning it to the attention of Mr. Daniel  McAuliffe at the address
above or fax to  212-723-8985.  If you have any  questions  I can be  reached at
212-723-5435.

Very truly yours,

SMITH BARNEY FUTURES MANAGEMENT LLC


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

        WILLOWBRIDGE ASSOCIATES INC

By:      /s/ Bonnie Huff
       -------------------------
Print Name:  Bonnie Huff
DRMcA/sr

<PAGE>
                       Smith Barney Futures Management LLC
                         388 Greenwich Street, 7th Floor
                          New York, New York 10013-2396

June 11, 2002


Graham Capital Management, L.P.
Stamford Harbour Park
333 Ludlow Street
Stamford, Ct. 06902

Attention:  Mr. Kenneth G.  Tropin

         Re:      Management Agreement Renewal

Dear Mr. Tropin:

We are  writing  with  respect  to your  management  agreements  concerning  the
commodity pools to which reference is made below (the "Management  Agreements").
We are extending the term of the Management Agreements through June 30, 2003 and
all other provisions of the Management Agreements will remain unchanged.

o        Smith Barney Global Markets Futures Fund
o        Smith Barney Diversified Futures Fund L.P. II
o        Smith Barney Diversified Futures Fund L.P.
o        Salomon Smith Barney Diversified 2000 Futures Fund L.P.
o        AURORA 2001

Please  acknowledge  receipt of this  modification  by signing  one copy of this
letter and returning it to the attention of Mr. Daniel  McAuliffe at the address
above or fax to  212-723-8985.  If you have any  questions  I can be  reached at
212-723-5435.

Very truly yours,

SMITH BARNEY FUTURES MANAGEMENT LLC


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

         Graham Capital Management L.P.

By:      /s/ Kenneth Tropin
         -------------------------
Print Name:  Kenneth Tropin
DRMcA/sr

<PAGE>
                                       Smith Barney Futures Management LLC
                                          388 Greenwich Street, 7th Floor
                                           New York, New York 10013-2396

June 11, 2002


Winton Capital Management
1a. St. Mary Abbot's Place
Kensington, London W86LS, U.K.

Attention:  Mr. Martin Hunt

         Re:      Management Agreement Renewals

Dear Mr. Kemp:

We are  writing  with  respect  to your  management  agreements  concerning  the
commodity pools to which reference is made below (the "Management  Agreements").
We are extending the term of the Management Agreements through June 30, 2003 and
all other provisions of the Management Agreements will remain unchanged.

o        Smith Barney Principal Plus Futures Fund L.P. II
o        Smith Barney Diversified Futures Fund L.P.
o        AURORA 2001
Please  acknowledge  receipt of this  modification  by signing  one copy of this
letter and returning it to the attention of Mr. Daniel  McAuliffe at the address
above or fax to  212-723-8985.  If you have any  questions  I can be  reached at
212-723-5435.

Very truly yours,

SMITH BARNEY FUTURES MANAGEMENT LLC


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

         WINTIN CAPITAL MANAGEMENT
        -------------------------
By:      /s/ Martin Hunt

Print Name:  Martin Hunt

DRMcA/sr
<PAGE>
                      Smith Barney Futures Management LLC
                         388 Greenwich Street, 7th Floor
                          New York, New York 10013-2396

June 11, 2002



Stonebrook Structured Products LLC
17 State Street  38th Floor
New York, N.Y. 10004

Attention:  Mr. Jerome Abernathy

         Re:      Management Agreement Renewals

Dear Mr. Abernathy:

We are  writing  with  respect  to your  management  agreements  concerning  the
commodity pools to which reference is made below (the "Management  Agreements").
We are extending the term of the Management Agreements through June 30, 2003 and
all other provisions of the Management Agreements will remain unchanged.

o        Smith Barney Diversified Futures Fund L.P.
o        Salomon Smith Barney Equity Plus Futures Fund L.P.
o        Smith Barney Diversified Futueres Fund L.P. II
o        Smith Barney Stonebrook FX Fund plc.

Please  acknowledge  receipt of this  modification  by signing  one copy of this
letter and returning it to the attention of Mr. Daniel  McAuliffe at the address
above or fax to  212-723-8985.  If you have any  questions  I can be  reached at
212-723-5435.

Very truly yours,

SMITH BARNEY FUTURES MANAGEMENT LLC


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

         STONEBROOK STRUCTURED PRODUCTS LLC

By:      /s/ Jerome Abernathy
         -------------------------
Print Name:  Jerome Abernathy
DRMcA/sr


<PAGE>
                       Smith Barney Futures Management LLC
                         388 Greenwich Street, 7th Floor
                          New York, New York 10013-2396



January 31, 2003



Stonebrook Structured Procucts LLC
17 State Street
New York, New York 10004

Attn: Mr. Jerome Abernathy

Re:      SB Diversified Futures Fund (Acct. #258-43075)
         SB Diversified Futures Fund II (Acct. #258-58075)

Dear Mr. Abernathy:

     Please liquidate all of your positions in the above  referenced  account in
an orderly fashion beginning  immediately.  This will effectively terminate your
management  agreement  with this entity.  Thank you for your service and we look
forward to the possibility of working together in the future.

     If you  have  any  questions,  please  call  myself  or  Jennifer  Magro at
(212)723-5413.

Very truly yours,


/s/ Daniel R. McAuliffe, Jr.
    Daniel R. McAuliffe, Jr.
    Chief Financial Officer


DRMcA/sr