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,
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
October 1997
After a month of extraordinary volatility in the global equity markets, we are
pleased to report that the net asset value for the Smith Barney Diversified
Futures Fund L.P. II was essentially unchanged for the month of October.
Although profits were made in many financial markets, trading in the traditional
commodity sectors was more difficult.
In the global interest rate markets, advisors achieved substantial gains from
positions in U.S. Treasuries as investors seeking safety in the midst of
volatile equity markets drove bond prices higher. In the currency markets,
profits were generated in the British pound and Swiss franc. Smaller gains were
realized in international stock market indices, particularly the Japanese Nikkei
which declined as a result of Japan's exposure to weakening Southeast Asian
economies.
In the grains and oilseeds markets, trading was unprofitable, however, small
profits were made in the softs markets from positions in sugar.
Trading in the base and precious metals markets was mixed as losses from
positions in silver offset gains from positions in gold. In the energy markets,
positions in crude oil resulted in losses as prices rose due to renewed tensions
in the Middle East.
In this uncertain and volatile environment, the opportunity to diversify with an
alternative asset class that often performs quite differently from traditional
investments remains compelling.
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 October 1,
Through October 31, 1997
Percent
of Average
Net Assets
----------
Realized losses from trading $ (4,887,752) (4.89)%
Change in unrealized gains/losses
from trading 5,920,041 5.92
------------ ---------
1,032,289 1.03
Less, Brokerage commissions
and clearing fees ($14,008) 562,532 0.56
------------ ---------
Net realized and unrealized gains 469,757 0.47
Interest Income 308,638 0.31
------------ ---------
778,395 0.78
------------ ---------
Less, Expenses:
Management fees 235,784 0.24
Other expenses 124,001 0.12
------------ ---------
359,785 0.36
------------ ---------
Net Income 418,610 0.42%
=========
Additions (2,951.7054 L.P. units at
September 30, 1997 net asset value
per unit of $1,058.71) 3,125,000
Additions (19.8355 G.P. units at
September 30, 1997 net asset value
per unit of $1,058.71) 21,000
Redemptions (1,619.1837 units at
October 31, 1997 net asset value
per unit of $1,063.12) (1,721,387)
-----------
Increase in net assets 1,843,223
Net Assets, September 30, 1997 97,435,350
===========
Net Assets, October 31, 1997 $ 99,278,573
===========
Net asset value per unit $ 1,063.12
===========
($99,278,573/93,384.3790 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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