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 December 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
December 1996
The net asset value of the Smith Barney Diversified Futures Fund L.P. II was
$1,125.06 at the end of 1996, down 0.8% for December but up 12.5% for the year.
In December, many of the markets that had been primarily responsible for the
profitable run of the last part of the year turned volatile, resulting in a
slight profit giveback for the month. Earlier in the month, several of the
Fund's advisors scaled back their exposure to these markets so that increased
volatility was reduced as a threat to the profitable progress the Fund made
during the year.
The profitable trends affecting global interest rate and long U.S. dollar
positions were shaken by Alan Greenspan's comments regarding the "irrational
exuberance" in the U.S. stock market and remained jittery throughout the month.
This effectively marked the onset of a consolidation phase of recent trends.
Such conditions are to be expected after the 20.6% increase the Fund has
experienced since the end of August. Overall, trading in the financial, currency
and stock index futures markets was slightly unprofitable for the month.
Offsetting the losses attributable to the financial markets were profits in many
commodity sectors. The continued surge in crude oil prices and rising prices in
related energy products were the primary contributors to profits. Declining
prices for agricultural products and precious metals also produced profits for
the advisors' short positions.
We are pleased with the Fund's first year performance in the face of a historic
bull stock market and low interest rate environment. We appreciate your
continued investment in the Fund and look forward to serving your managed
futures investment needs in 1997. For more information on this Fund or
information about other Smith Barney managed futures programs, please contact
your Smith Barney Financial Consultant.
Smith Barney Futures Management Inc.
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Smith Barney
Diversified Futures Fund L.P. II
Account Statement
For the Period December 1,
Through December 31, 1996
Percent
of Average
Net Assets
------------
Realized gains from trading $ 5,700,566 10.89 %
Change in unrealized gains/losses
from trading (6,012,717) (11.49)
-------------- ------------
(312,151) (0.60)
Add, Brokerage commissions
and clearing fees ($10,437) 333,450 0.64
-------------- ------------
Net realized and unrealized losses (645,601) (1.24)
Interest Income 178,663 0.34
-------------- ------------
(466,938) (0.90)
-------------- ------------
Less, Expenses:
Management fees 133,127 0.25
Incentive fees (158,305) (0.31)
Other expenses 5,164 0.01
-------------- ------------
(20,014) (0.05)
-------------- ------------
Net Loss (446,924) (0.85)%
============
Additions (5,670.4258 L.P. units at
November 30, 1996 net asset value
per unit of $1,134.13) 6,431,000
Additions (53.7857 G.P. units at
November 30, 1996 net asset value
per unit of $1,134.13) 61,000
Redemptions (129.0847 units at
December 31, 1996 net asset value
per unit of $1,125.06) (145,229)
--------------
Increase in net assets 5,899,847
Net Assets, November 30, 1996 49,398,155
==============
Net Assets, December 31, 1996 $ 55,298,002
==============
Net asset value per unit $ 1,125.06
($55,298,002/49,151.0725 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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