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,
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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<PAGE>
Smith Barney
Diversified Futures Fund L.P. II
December 1997
The net asset value for the Smith Barney Diversified Futures Fund L.P. II was
$1,123.76, up $58.79 or 5.5% for the month of December.
In the currency markets, substantial profits were generated in the Japanese Yen
and Australian Dollar, as they continued to decline against most major
currencies. Additional gains were also realized from positions in the Deutsche
Mark. Profits were earned by the Fund's positions in the Japanese Government
Bond and U.S. interest rate contracts as global interest rates continued to
decline.
In the base and precious metal markets, the Fund's advisors experienced gains
from positions in gold, as it declined about 3%. In like manner, positions in
silver enhanced the overall monthly performance as the metal rose over 13% due
to increased global demand.
In the energy markets, advisors experienced substantial gains from positions in
crude oil as energy prices moved lower amid concerns of increased OPEC
production quotas and the reduced tensions in the Middle East. Unseasonably warm
temperatures in Europe and the U.S. also kept pressure on prices.
We appreciate your continued investment in the Fund and look forward to serving
your managed futures investment needs in 1998. For more information on this Fund
or information about other Smith Barney managed futures programs, please contact
your Smith Barney Financial Consultant.
Important Notes From the General Partner
Smith Barney Holdings Inc., the parent company of Smith Barney Futures
Management Inc. ("SBFMI") has merged with Salomon Brothers Holding Inc. The
parent company of SBFMI is now called Salomon Smith Barney Holdings Inc.
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 December 1,
Through December 31, 1997
Percent
of Average
Net Assets
----------
Realized gains from trading $ 6,704,724 6.14%
Change in unrealized gains/losses
from trading (167,237) (0.15)
------------- ---------
6,537,487 5.99
Less, Brokerage commissions
and clearing fees ($12,936) 654,228 0.60
------------- ---------
Net realized and unrealized gains 5,883,259 5.39
Interest Income 383,130 0.35
------------- ---------
6,266,389 5.74
------------- ---------
Less, Expenses:
Management fees 263,105 0.24
Incentive fees 18,146 0.02
Other expenses 94,148 0.08
------------- ---------
375,399 0.34
------------- ---------
Net Income 5,890,990 5.40%
=========
Additions (4,502.4743 L.P. units at
November 30, 1997 net asset value
per unit of $1,064.97) 4,795,000
Additions (40.3767 G.P. units at
November 30, 1997 net asset value
per unit of $1,064.97) 43,000
Redemptions (925.8194 units at
December 31, 1997 net asset value
per unit of $1,123.76) (1,040,399)
-------------
Increase in net assets 9,688,591
Net Assets, November 30, 1997 101,891,101
=============
Net Assets, December 31, 1997 $ 111,579,692
=============
Net asset value per unit $ 1,123.76
=============
($111,579,692/99,291.7699 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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