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 August 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
August 1997
The net asset value of the Smith Barney Diversified Futures Fund L.P. II was
$1,063.41 at the end of August, down 7.5% from the close of July. August proved
to be a difficult trading month as the Fund's advisors experienced losses in
many of the markets that provided profitable results in July.
A turnaround in global bull market for bonds resulted in losses for advisors'
positions in these markets, most notably in the U.S. 30-year bond. In the
currency markets, trading was also unprofitable mainly for advisors positions in
the Deutsche mark and British pound. Volatility in global equity markets caused
small losses for advisors' positions in international stock market indices.
In the energy markets, losses occurred in long positions as crude oil prices
were pressured downward partly due to the recent return of Iraqi oil to world
markets. Trading in the precious and base metals markets also led to losses
during the month.
Trading losses in the grains markets offset profits generated in the softs
markets from positions in coffee and cotton.
One of the benefits of managed futures is that if trends continue in the
opposite direction of current positions, advisors can reverse positions and
participate in those new trends once they become established and identifiable.
As usual, patience and perspective are important in any long-term investment.
Important Note from the General Partner:
The following changes in the principals of the General Partner became
effective in May 1997. Shelley Ullman and Maureen O'Toole each were
appointed as Senior Vice President; Philip M. Waterman, Jr. resigned his
positions as Vice Chairman and Director.
Smith Barney Futures Management Inc.
<PAGE>
Smith Barney
Diversified Futures Fund L.P. II
Account Statement
For the Period August 1,
Through August 31, 1997
Percent
of Average
Net Assets
----------
Realized losses from trading $ (286,750) (0.29)%
Change in unrealized gains/losses
from trading (7,226,836) (7.22)
------------- ---------
(7,513,586) (7.51)
Add, Brokerage commissions
and clearing fees ($16,111) 562,914 0.56
------------- ---------
Net realized and unrealized losses (8,076,500) (8.07)
Interest Income 342,108 0.34
------------- ---------
(7,734,392) (7.73)
------------- ---------
Less, Expenses:
Management fees 227,387 0.22
Incentive fees (159,599) (0.16)
Other expenses 93,003 0.09
------------- ---------
160,791 0.15
------------- ---------
Net Loss (7,895,183) (7.88)%
=========
Additions (3,043.3005 L.P. units at
July 31, 1997 net asset value
per unit of $1,149.41) 3,498,000
Redemptions (2,682.4510 units at
August 31, 1997 net asset value
per unit of $1,063.41) (2,852,545)
-------------
Decrease in net assets (7,249,728)
Net Assets, July 31, 1997 102,016,970
=============
Net Assets, August 31, 1997 $ 94,767,242
=============
Net asset value per unit $ 1,063.41
=============
($94,767,242/89,116.5631 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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