Smith Barney Futures Management Inc.
390 Greenwich Street
New York, NY 10013
By EDGAR
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
RE: Smith Barney Diversified Futures Fund L.P. II
Supplement to Registration Statement on Form S-1
File No. 333-3538
Ladies and Gentlemen:
On Behalf of Smith Barney Diversified Futures Fund L.P. II (the "Partnership") I
am transmitting herewith for filing, pursuant to Rule 424 (b) (3) of the
Securities Act of 1933, as amended, a Supplement dated October 31, 1996 to the
Partnership's final prospectus dated May 31, 1996.
Should you have any questions, please telephone me at 723-5424.
Very truly yours,
/s/ Daniel A. Dantuono
Daniel A. Dantuono
Chief Financial Officer and
Director
Enclosures
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Smith Barney
Diversified Futures Fund L.P. II
October 1996
The net asset value of the Smith Barney Diversified Futures Fund L.P. II
was $1,071.38 per unit at the close of October, up an impressive $81.77 or 8.3%
from the end of September. After a period of volatile and difficult trading
conditions during the summer months, a period of strong trends that began in
late September extended through October to produce solid gains for the Fund's
advisors.
The most significant gains were generated in the interest rate markets
which saw declining U.S., European, and Asian interest rates. The resulting rise
in bond prices produced considerable profits for the advisors' long positions.
The currency markets witnessed the British pound sustain its ascent versus other
major European and Asian currencies and the resurgent U.S. dollar gain against
the Japanese yen. Trading in these markets also provided substantial gains for
the Fund's advisors.
Further profits were generated in the agricultural markets where reports of
greater supply and weaker demand prompted several price contractions that
yielded siginificant profits for the advisors' short positions. Notable
agricultural contracts in October included corn, which dropped by approximately
9%, and wheat which experienced a 14% drop in price.
Price retracement in the energy markets against recent trends resulted in
small losses for the Fund.
The market conditions for late September and October reinforce the value of
diversification and the importance of a portfolio being properly positioned to
take advantage of major trends when they occur.
Smith Barney Futures Management Inc.
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Smith Barney
Diversified Futures Fund L.P. II
Account Statement
For the Period October 1,
Through October 31, 1996
Percent
of Average
Net Assets
------------
Realized gains from trading $ 1,220,131 2.85%
Change in unrealized gains/losses
from trading 3,239,174 7.56
-------------- ------------
4,459,305 10.41
Less, Brokerage commissions
and clearing fees ($5,826) 257,712 0.60
-------------- ------------
Net realized and unrealized gains 4,201,593 9.81
Interest Income 139,925 0.32
-------------- ------------
4,341,518 10.13
-------------- ------------
Less, Expenses:
Management fees 109,194 0.25
Incentive fees 631,887 1.47
Offering expenses 93,501 0.23
Other expenses 12,279 0.03
-------------- ------------
846,861 1.98
-------------- ------------
Net Income 3,494,657 8.15%
============
Additions (1,814.8564 L.P. units at
October 1, 1996 net asset value
per unit of $989.61) 1,796,000
Additions (15.1575 G.P. units at
October 1, 1996 net asset value
per unit of $989.61) 15,000
Redemptions (493.9120 units at
October 31, 1996 net asset value
per unit of $1,071.38) (529,167)
--------------
Increase in net assets 4,776,490
Net Assets, September 30, 1996 40,484,141
==============
Net Assets, October 31, 1996 $ 45,260,631
==============
Net asset value per unit $ 1,071.38
($45,260,631/42,245.1848 units) ==============
To the best of the knowledge and belief of the undersigned, the information
contained herein is accurate and complete.
By: /s/ Daniel A. Dantuono
Daniel A. Dantuono
Chief Financial Officer
Smith Barney
Futures Management Inc.
General Partner, Smith Barney
Diversified Futures Fund L.P. II
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