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. 333-25239
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,
1998 to the Partnership's final prospectus dated April 30, 1997.
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
1
<PAGE>
Smith Barney
Diversified Futures Fund L.P. II
January 1998
The net asset value for the Smith Barney Diversified Futures Fund L.P. II was
$1,114.95, down 0.8% for the month of January. Uncertainty in the financial and
commodity markets created a volatile trading environment for the Fund's
advisors.
Solid gains were posted by the Fund's advisors as German, French and U.S. bond
prices rose amid a host of global events, including benign inflation news. In
the currency markets, profits generated in the Swiss Franc and Deutsche Mark
failed to offset losses incurred mainly in the Japanese Yen, where a short
position suffered as investor confidence was restored in Asia. Trading was also
unprofitable from short positions in the Japanese Nikkei which gained in tandem
with the Japanese Yen.
In the base and precious metal markets, the Fund's advisors experienced gains
from positions in silver and nickel as the price of these metals rose. Advisors
experienced losses as the price of gold rose, which offset gains from silver and
nickel, leading to a generally negative contribution from this sector.
In the grains and oilseeds markets, the Fund's advisors trading was unprofitable
in corn and the soybean complex.
In the energy markets, advisors experienced substantial gains from positions in
crude oil as tensions in the Middle East lifted prices.
Important Notes From the General Partner
Effective January 31, 1998, Chesapeake Capital Corp. was replaced as an advisor
to the Fund. Assets previously allocated to Chesapeake have been allocated to a
new advisor to the Fund, Campbell & Co. For further information, please contact
your Smith Barney Financial Consultant.
Smith Barney Futures Management Inc.
<PAGE>
Smith Barney
Diversified Futures Fund L.P. II
Account Statement
For the Period January 1,
Through January 31, 1998
Percent
of Average
Net Assets
----------
Realized gains from trading $ 3,032,259 2.69 %
Change in unrealized gains/losses
from trading (3,381,884) (3.00)
------------- ---------
(349,625) (0.31)
Add, Brokerage commissions
and clearing fees ($21,514) 656,108 0.58
------------- ---------
Net realized and unrealized losses (1,005,733) (0.89)
Interest Income 395,571 0.35
------------- ---------
(610,162) (0.54)
------------- ---------
Less, Expenses:
Management fees 261,637 0.23
Other expenses 18,219 0.02
------------- ---------
279,856 0.25
------------- ---------
Net Loss (890,018) (0.79)%
=========
Additions (1,735.2460 L.P. units at
December 31, 1997 net asset value
per unit of $1,123.76) 1,950,000
Additions (8.0088 G.P. units at
December 31, 1997 net asset value
per unit of $1,123.76) 9,000
Redemptions (525.3493 units at
January 31, 1998 net asset value
per unit of $1,114.95) (585,738)
-------------
Increase in net assets 483,244
Net Assets, December 31, 1997 111,579,691
=============
Net Assets, January 31, 1998 $ 112,062,935
=============
Net asset value per unit $ 1,114.95
($112,062,935/100,509.6754units) =============
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
3
