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 January 31, 1997 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
January 1997
The net asset value of the Smith Barney Diversified Futures Fund L.P. II was
$1,152.40 at the end of January, up $27.34 or 2.4% from the close of 1996. After
a period of volatility in December, several market trends that had fueled
performance in 1996 reasserted themselves to provide profitable results in
January.
The continued strength of the U.S. dollar and further decline in the price of
gold were the primary profit generators for the advisors in January. The
Japanese yen continued to decline against the U.S. dollar to yield gains for the
advisors' positions. Bearish economic news from Germany and France also provided
opportunities for the advisors to profit in short positions in these currencies.
These positive returns offset losses in the choppy British and minor currency
markets.
Short positions in gold resulted in substantial gains for the advisors as the
precious metal continued its relentless decline in world markets.
Gains were also generated in the financial interest rate futures sector and
coffee markets. Profits from long positions in the Japanese, French, German, and
Australian bond markets offset losses incurred from erratic prices in the U.S.
interest rate markets. Substantial gains from long positions in coffee were
enough to net a profit in the soft markets.
In the commodity markets, positions in the energy markets were unprofitable as
crude oil reversed its year long uptrend, a trend which boosted the Fund's
performance throughout much of 1996. Positions in the grain and livestock
markets resulted in losses.
Smith Barney Futures Management Inc.
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Smith Barney
Diversified Futures Fund L.P. II
Account Statement
For the Period January 1,
Through January 31, 1997
Percent
of Average
Net Assets
-----------
Realized losses from trading $ (698,241) (1.17)%
Change in unrealized gains/losses
from trading 2,826,971 4.75
-------------- -----------
2,128,730 3.58
Less, Brokerage commissions
and clearing fees ($10,045) 366,808 0.62
-------------- -----------
Net realized and unrealized gains 1,761,922 2.96
Interest Income 211,706 0.36
-------------- -----------
1,973,628 3.32
-------------- -----------
Less, Expenses:
Management fees 151,447 0.25
Incentive fees 290,884 0.50
Other expenses 8,576 0.01
-------------- -----------
450,907 0.76
-------------- -----------
Net Income 1,522,721 2.56 %
===========
Additions (6,484.6319 L.P. units at
December 31, 1996 net asset value
per unit of $1,125.06) 7,295,600
Additions (62.2189 G.P. units at
December 31, 1996 net asset value
per unit of $1,125.06) 70,000
Redemptions (296.6407 L.P. units at
January 31, 1997 net asset value
per unit of $1,152.40) (341,849)
--------------
Increase in net assets 8,546,472
Net Assets, December 31, 1996 55,298,002
==============
Net Assets, January 31, 1997 $ 63,844,474
==============
Net asset value per unit $ 1,152.40
($63,844,474/55,401.2826 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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