UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                  Annual Report Pursuant to Section 13 or 15(d)

                     of the Securities Exchange Act of 1934

                      For the year ended December 31, 2002

                         Commission File Number 0-22489
                                     -------

                SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II
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             (Exact name of registrant as specified in its charter)

                New York                                 13-3862967
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           (State or other jurisdiction of            (I.R.S. Employer
           incorporation or organization)            Identification No.)

                     c/o Smith Barney Futures Management LLC
                           388 Greenwich St. - 7th Fl.
                            New York, New York 10013
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              (Address and Zip Code of principal executive offices)

                                 (212) 723-5424
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              (Registrant's telephone number, including area code)

   Securities registered pursuant to Section 12(b) of the Act: None
   Securities registered pursuant to Section 12(g) of the Act: Units of Limited
                                                               Partnership
                                                               Interest
                                                               ----------------
                                                               (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                              Yes   X    No
                                   -----     ------

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K [X]

Indicate  by check mark  whether  the  registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Acts).

                               Yes        No   X
                                    -----     -----

Limited   Partnership   Units  with  an  aggregate  value  of  $14,033,484  were
outstanding  and  held by  non-affiliates  as of the  last  business  day of the
registrants most recently completed second fiscal quarter.

As of February 28, 2003, 9,379.0000 Limited Partnership Units were outstanding.


                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>

                                     PART I

Item 1. Business.
        ---------

     (a) General  development of business.  Smith Barney  Principal Plus Futures
Fund L.P. II (the "Partnership") is a limited partnership  organized on November
16, 1995 under the  partnership  laws of the State of New York. The  Partnership
engages in speculative  trading of commodity  interests,  including contracts on
foreign currencies,  commodity options and commodity futures contracts including
futures  contracts on United States  Treasury and other  financial  instruments,
foreign currencies and stock indices. The Partnership maintains a portion of its
assets  in  principal  amounts  stripped  from  U.S.  Treasury  Bonds  under the
Treasury's  STRIPS program ("Zero  Coupons") which payments will be due November
15, 2003. The  Partnership  uses the Zero Coupons and its other assets to margin
its commodities account.
     A total of 60,000 Units of Limited Partnership  Interest in the Partnership
(the  "Units")  were offered to the public.  Between April 3, 1996 and August 8,
1996,  19,897 Units were sold to the public at $1,000 per Unit.  Proceeds of the
offering along with the General Partners'  contribution of $203,000 were held in
escrow until August 9, 1996 at which time an aggregate of $20,100,000 was turned
over to the Partnership and the Partnership commenced trading operations.
     The general partner has agreed to make capital contributions, if necessary,
so that its general partnership  interest will be equal to the greater of (i) an
amount to entitle it to 1% of each material item of  Partnership  income,  loss,
deduction  or  credit  and  (ii)  the  greater  of  (a)  1%  of  the   partners'


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<PAGE>

contributions  to the  Partnership  or (b)  $25,000.  The  Partnership  will  be
liquidated upon the first of the following to occur:  November 15, 2003; the net
asset  value per Unit falls below $400 as of the close of any  business  day; or
under certain  circumstances as defined in the Limited Partnership  Agreement of
the Partnership (the "Limited Partnership Agreement").
     Smith  Barney  Futures  Management  LLC acts as the  general  partner  (the
"General  Partner") of the Partnership.  The  Partnership's  commodity broker is
Salomon Smith Barney Inc.  ("SSB").  SSB is an affiliate of the General Partner.
The  General  Partner is wholly  owned by Salomon  Smith  Barney  Holdings  Inc.
("SSBHI"), which is the sole owner of SSB. SSBHI is a wholly owned subsidiary of
Citigroup Inc.
     The Partnership's  trading of futures,  forwards and options contracts,  if
applicable,  on  commodities  is done on United  States of America  and  foreign
commodity  exchanges.  It engages in such trading through a commodity  brokerage
account maintained with SSB.
     Under the Limited  Partnership  Agreement of the Partnership  (the "Limited
Partnership  Agreement"),  the General  Partner  administers  the  business  and
affairs of the  Partnership.  As of December 31,  2002,  all  commodity  trading
decisions are made for the Partnership by Winton Capital  Management  ("Winton")
and   Willowbridge   Associates   Inc.   ("Willowbridge")   (collectively,   the
"Advisors").  Neither of the Advisors is affiliated  with the General Partner or
SSB. The Advisors are not responsible  for the  organization or operation of the
Partnership.


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<PAGE>

     Pursuant  to  the  terms  of the  Management  Agreements  (the  "Management
Agreements"),  the  Partnership  is  obligated  to pay  Willowbridge  a  monthly
management  fee  equal  to 1/6 of 1% (2%  per  year)  of  month-end  Net  Assets
allocated  to it and to pay Winton a monthly  management  fee equal to 1/8 of 1%
(1.5% per year) of the  month-end  Net Assets  allocated to it. The  Partnership
pays each Advisor an incentive fee payable quarterly equal to 20% of New Trading
Profits  earned  by it  for  the  Partnership  (as  defined  in  the  Management
Agreements).
     The Customer Agreement provides that the Partnership will pay SSB a monthly
brokerage  fee equal to 7/12 of 1% of  month-end  Net  Assets  allocated  to the
Advisors  (7% per year) in lieu of brokerage  commissions  on a per trade basis.
SSB pays a portion of its brokerage fees to its financial  consultants  who have
sold Units and who are  registered  as  associated  persons  with the  Commodity
Futures  Trading  Commission  (the "CFTC").  The  Partnership  pays for National
Futures  Association  ("NFA") fees, exchange and clearing fees, give-up and user
fees and floor brokerage  fees.  Brokerage fees will be paid for the life of the
Partnership,  although the rate at which such fees are paid may be changed.  The
Customer  Agreement  between the  Partnership  and SSB gives the Partnership the
legal right to net unrealized gains and losses.
     In addition,  SSB pays the Partnership interest on 80% of the average daily
equity  maintained  in cash in its  account  during  each month at a 30-day U.S.
Treasury bill rate determined weekly by SSB based on the average non-competitive
yield on 3-month U.S.  Treasury bills maturing in 30 days from the date on which
such weekly rate is determined.


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<PAGE>

     In the  unlikely  event that the  Partnership  is required to meet a margin
call  in  excess  of the  cash  balance  in its  trading  accounts,  SSBHI  will
contribute up to an amount equal to the maturity  value of the Zero Coupons held
by the Partnership at the time of such call to the capital of the Partnership to
permit it to meet its  margin  obligations  in excess of its cash  balance.  The
guarantee can only be invoked once. After the guarantee is invoked, trading will
cease and the  General  Partner  will  either wait until the end of the month in
which the Zero Coupons come due (November  2003) (the "First  Payment  Date") or
will  distribute  cash and Zero  Coupons to the  limited  partners.  The General
Partner  will provide a copy of SSBHI's  annual  report as filed with the SEC to
any limited partner requesting it.
     (b)  Financial  information  about  industry  segments.  The  Partnership's
business  consists  of  only  one  segment,  speculative  trading  of  commodity
interests.  The Partnership  does not engage in sales of goods or services.  The
Partnership's  net income from operations for the years ended December 31, 2002,
2001, 2000, 1999 and 1998 is set forth under "Item 6. Selected  Financial Data."
Partnership capital as of December 31, 2002, was $14,773,054.
     (c)  Narrative description of business.
          See  Paragraphs (a) and (b) above.
         (i)  through (xii) - Not applicable.
         (xiii) - The Partnership has no employees.
     (d)  Financial Information About Geographic Areas. The Partnership does not


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<PAGE>

          engage in sales of goods or services or own any long lived assets, and
          therefore this item is not applicable.
Item 2.  Properties.
         ----------
     The Partnership  does not own or lease any properties.  The General Partner
operates out of facilities provided by its affiliate, SSB.
Item 3.  Legal Proceedings.
         -----------------
     This section  describes  the major pending  legal  proceedings,  other than
ordinary routine litigation  incidental to the business,  to which Salomon Smith
Barney Holdings Inc. ("SSBHI") or its subsidiaries is a party or to which any of
their  property is  subject.  There are no material  legal  proceedings  pending
against the Partnership or the General Partner.
     Salomon  Smith  Barney  Inc.  ("SSB")  is a New York  corporation  with its
principal place of business at 388 Greenwich St., New York, New York 10013.  SSB
is registered as a broker-dealer and futures  commission  merchant ("FCM"),  and
provides futures  brokerage and clearing  services for  institutional and retail
participants  in the  futures  markets.  SSB and  its  affiliates  also  provide
investment banking and other financial services for clients worldwide.
     There have been no  administrative,  civil or criminal actions pending,  on
appeal or concluded  against SSB or any of its individual  principals within the
past five years that  management  believes  may have a material  impact on SSB's
ability to act as an FCM. In the ordinary course of its business, SSB is a party
to various claims and regulatory  inquiries.  Proceedings  deemed to be material


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<PAGE>

for  purposes  of  Commodity  Futures  Trading  Commission  ("CFTC")  disclosure
requirements are:
     In December  1996, a complaint  seeking  unspecified  monetary  damages was
filed by Orange County,  California against numerous brokerage firms,  including
SSB, in the U.S. Bankruptcy Court for the Central District of California (County
of Orange et al. v. Bear  Stearns & Co. Inc.  et al.).  The  complaint  alleged,
among other things,  that the brokerage  firms  recommended  and sold unsuitable
securities to Orange County. SSB and the remaining  brokerage firms settled with
Orange County in mid 1999. SSB paid $1,333,333 to settle this matter.
     In June  1998,  complaints  were filed in the U.S.  District  Court for the
Eastern District of Louisiana in two actions (Board of  Liquidations,  City Debt
of the City of New  Orleans v. Smith  Barney  Inc.  et ano.  and The City of New
Orleans v. Smith Barney Inc. et ano.),  in which the City of New Orleans seeks a
determination that Smith Barney Inc. and another underwriter will be responsible
for any  damages  that the City may  incur in the  event  the  Internal  Revenue
Service  denies tax exempt  status to the City's  General  Obligation  Refunding
Bonds Series 1991. The complaints were subsequently  amended.  SSB has asked the
court to dismiss the amended complaints.  The court denied the motion but stayed
the case. Subsequently, the City withdrew its lawsuit.
     In November 1998, a class action  complaint was filed in the U.S.  District
Court for the Middle  District  of Florida  (Dwight  Brock as Clerk for  Collier
County v. Merrill  Lynch,  et al.).  The complaint  alleged that,  pursuant to a


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<PAGE>

nationwide  conspiracy,  17  broker-dealer  defendants,  including SSB,  charged
excessive  mark-ups in connection with advanced  refunding  transactions.  Among
other relief,  plaintiffs sought compensatory and punitive damages,  restitution
and/or  rescission of the  transactions  and  disgorgement of alleged  excessive
profits.  In October 1999, the plaintiff  filed a second amended  complaint.  In
November  1999,  SSB moved to dismiss the amended  complaint.  In May 2001,  the
parties reached and the court preliminarily approved a tentative settlement. SSB
paid  $1,063,457 to settle this matter and in September 2001, the court approved
the settlement.
     In  connection  with the  Louisiana  and Florida  matters,  the IRS and SEC
conducted an industry-wide investigation into the pricing of Treasury securities
in  advanced  refunding  transactions.  In April  2000,  SSB and  several  other
broker-dealers  entered into a settlement with the IRS and the SEC.  Thereafter,
the plaintiffs filed voluntary discontinuances.
     In December  1998,  SSB was one of 28 market  making  firms that  reached a
settlement  with the SEC in the matter  titled In the  Matter of Certain  Market
Making  Activities on NASDAQ.  As part of the  settlement  of that matter,  SSB,
without admitting or denying the factual  allegations,  agreed to an order which
required that it: (i) cease and desist from committing or causing any violations
of Sections  15(c)(1)  and (2) of the  Securities  Exchange  Act of 1934 and SEC
Rules  15c1-2,  15c2-7  and  17a-3  thereunder,   (ii)  pay  penalties  totaling
approximately  $760,000 and (iii) submit  certain  policies and procedures to an
independent consultant for review.
     In March 1999, a complaint seeking in excess of $250 million was filed by a
hedge fund and its  investment  advisor  against SSB in the Supreme Court of the


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<PAGE>

State of New York,  County of New York (MKP Master  Fund,  LDC et al. v. Salomon
Smith Barney Inc.).  The complaint  included  allegations  that, while acting as
prime broker for the hedge fund,  SSB breached its  contracts  with  plaintiffs,
misused their monies and engaged in tortious  conduct,  including  breaching its
fiduciary  duties.  SSB asked the court to dismiss  the  complaint  in full.  In
October  1999,  the court  dismissed  the tort claims,  including  the breach of
fiduciary  duty claims.  The court allowed the breach of contract and conversion
claims  to  stand.   In  December   1999,  SSB  filed  an  answer  and  asserted
counterclaims  against the investment advisor. In response to plaintiff's motion
to strike out the counterclaims,  in January 2000, SSB amended its counterclaims
against  the  investment  advisor  to  seek  indemnification  and  contribution.
Plaintiffs  moved to strike SSB's  amended  counterclaims  in February  2000. In
September   2000,  the  court  denied   plaintiffs'   motion  to  dismiss  SSB's
counterclaims  based on  indemnification  and contribution.  In August 2002, SSB
filed a motion for summary judgment.
     In April 2002,  numerous class action complaints were filed against Solomon
Smith  Barney  and other  investment  banks in the U.S.  District  Court for the
Southern District of New York alleging  violations of certain federal securities
laws  (including  Section 11 of the  Securities Act of 1933 and Section 10(b) of
the  Securities  Exchange Act of 1934) with respect to the  allocation of shares
for certain initial public  offerings and related  aftermarket  transactions and
damage to investors  caused by allegedly  biased research  analyst  reports.  On


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<PAGE>

February 19, 2003, the court issued an opinion denying the defendants' motion to
dismiss. Also pending in the Southern District of New York against SSB and other
investment banks are several alleged class actions which have been  consolidated
into a single  class action  alleging  violations  of certain  federal and state
antitrust  laws in connection  with the  allocation of shares in initial  public
offerings  underwritten  by such parties.  The  defendants in these actions have
moved to dismiss the  consolidated  amended  complaint but the court has not yet
rendered a decision on those motions.
     In April 2002,  Citigroup  and, in one case,  SSB were named as  defendants
along with, among others,  commercial and/or  investment banks,  certain current
and former Enron officers and directors,  lawyers and accountants in two alleged
consolidated  class action complaints that were filed in the U.S. District Court
for the Southern  District of Texas  seeking  unspecified  damages.  One action,
brought on behalf of individuals who purchased Enron securities  (Newby,  et al.
v.  Enron  Corp.,  et al.),  alleges  violations  of  Sections  11 and 15 of the
Securities Act of 1933 and Sections  10(b) and 20(a) of the Securities  Exchange
Act of 1934 and the other action,  brought on behalf of current and former Enron
employees  (Tittle,  et al. v. Enron Corp., et al.), alleges violations of ERISA
and RICO, as well as negligence and civil conspiracy.  On May 8, 2002, Citigroup
and SSB filed  motions to dismiss the  complaints.  On December  19,  2002,  the
motions to dismiss the Newby  complaint  were denied.  The motion to dismiss the
complaint in Tittle remains pending.
     Since April 2002,  SSB and  several  other  broker  dealers  have  received


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<PAGE>

subpoenas  and/or  requests  for  information  from  various   governmental  and
self-regulatory agencies and Congressional  committees,  including the NASD Inc.
which has raised  issues about SSB's  internal  e-mail  retention  practices and
research  on Winstar  Communications,  Inc.  With  respect to  Winstar,  SSB has
entered into a settlement  agreement.  SSB agreed to pay a penalty in the amount
of $5 million and did not admit to any  wrongdoing.  With  respect to other such
matters,  on December 20, 2002,  Citigroup and a number of other  broker/dealers
reached a  settlement-in-principle  with the SEC,  the NASD  Inc.,  the New York
Stock  Exchange (the "NYSE") and the Attorney  General of New York of all issues
raised   in  their   research,   initial   public   offerings   allocation   and
spinning-related  inquiries.  In addition,  with respect to issues raised by the
NASD,  the NYSE and the SEC  about  SSB's  and  other  firms'  e-mail  retention
practices,  SSB and several other  broker/dealers and the NASD, the NYSE and the
SEC entered into a settlement  agreement in December  2002.  SSB agreed to pay a
penalty in the amount of $1.65  million and did not admit to any  allegation  of
wrongdoing.
     Since May 2002, Citigroup,  SSB and certain principals,  executive officers
and current and former  employees  have been named as  defendants in a number of
alleged  class  action  complaints  filed in the  U.S.  District  Court  for the
Southern District of New York by purchasers of various securities  alleging they
violated federal  securities law, including Sections 10 and 20 of the Securities
Exchange Act of 1934 by issuing  research  reports without  reasonable basis and
failing  to  disclose   conflicts  of  interest  in  connection  with  published
investment research,  including Global Crossing,  WorldCom, Inc., AT&T, Winstar,


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<PAGE>

Rhythm Net Connections,  Level 3  Communications,  MetroMedia Fiber Network,  XO
Communications  and  Williams  Communications  Group  Inc.  Nearly  all of these
actions are pending  before a single  judge in the U.S.  District  Court for the
Southern  District  of New York  for  coordinated  proceedings.  The  court  has
consolidated  these actions into nine separate  categories  corresponding to the
companies named above.
     Additional  actions have been filed  against  Citigroup  and certain of its
affiliates,  including  SSB, and certain of their current and former  directors,
officers and employees, along with other parties,  including: (1) three putative
class actions filed in state courts and federal  courts on behalf of persons who
maintained accounts with SSB asserting,  among other things,  common law claims,
claims under state  statutes,  and claims under the  Investment  Advisers Act of
1940,  for  allegedly  failing  to provide  objective  and  unbiased  investment
research and investment management,  seeking, among other things, return of fees
and  commissions;  (2)  approximately  fifteen  actions filed in different state
courts by  individuals  asserting,  among  other  claims,  common law claims and
claims under state  securities  laws,  for allegedly  issuing  research  reports
without  a  reasonable  basis  in fact and for  allegedly  failing  to  disclose
conflicts of interest with  companies in connection  with  published  investment
research,  including Global Crossing and WorldCom,  Inc.; (3) approximately five
actions  filed in different  state  courts by pension and other funds  asserting
common law claims and  statutory  claims under,  among other  things,  state and
federal  securities  laws,  for allegedly  issuing  research  reports  without a
reasonable  basis in fact and for  allegedly  failing to disclose  conflicts  of


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<PAGE>

interest  with  companies in  connection  with  published  investment  research,
including WorldCom,  Inc. and Qwest  Communications  International Inc.; and (4)
more than two hundred  arbitrations  asserting  common law claims and  statutory
claims  under,  among other  things,  state and  federal  securities  laws,  for
allegedly  issuing  research  reports without a reasonable basis in fact and for
allegedly failing to disclose conflicts of interest with companies in connection
with published investment research.
     In July 2002,  Citigroup,  SSB and various of its affiliates and certain of
their officers and other employees were named as defendants,  along with,  among
others,  commercial and/or  investment  banks,  certain current and former Enron
officers and directors, lawyers and accountants in an alleged class action filed
in the U.S.  District  Court for the Southern  District of New York on behalf of
purchasers  of the Yosemite  Notes and Enron  Credit-Linked  Notes,  among other
securities (Hudson Soft Co., Ltd v. Credit Suisse First Boston  Corporation,  et
al.). The complaint  alleges  violations of RICO and of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and seeks unspecified damages.
     Additional  actions have been filed  against  Citigroup  and certain of its
affiliates, including SSB, along with other parties, including (i) three actions
brought in state courts by state pension  plans for alleged  violations of state
securities  law and common law fraud and  unjust  enrichment;  (ii) an action by
banks that  participated  in two Enron  revolving  credit  facilities,  alleging
fraud,  gross  negligence  and  breach  of  implied  duties in  connection  with
defendants'  administration  of a credit  facility  with Enron;  (iii) an action


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<PAGE>

brought by several funds in connection with secondary  market purchases of Enron
Corp. debt securities  alleging  violations of federal securities law, including
Section  11  of  the   Securities   Act  of  1933,  and  claims  for  fraud  and
misrepresentation;  (iv) a series of  alleged  class  actions by  purchasers  of
NewPower  Holdings common stock alleging  violations of federal  securities law,
including  Section 11 of the  Securities  Act of 1933 and  Section  10(b) of the
Securities  Exchange Act of 1934; (v) an action brought by two investment  funds
in connection with purchases of Enron-related  securities for alleged violations
of state securities and unfair competition  statutes;  (vi) an action brought by
several  investment  funds and fund owners in connection with purchases of notes
of the Osprey I and Osprey II Trusts for alleged  violation of state and federal
securities  laws  and  claims  for  common  law  fraud,   misrepresentation  and
conspiracy;  (vii) an action brought by several investment funds and fund owners
in connection  with  purchases of notes of the Osprey I and Osprey II Trusts for
alleged  violation  of  state  and  federal  securities  laws and  state  unfair
competition laws and claims for common law fraud and  misrepresentation;  (viii)
an action  brought by the Attorney  General of  Connecticut  in connection  with
various  commercial and investment  banking services  provided to Enron;  (ix) a
putative  class action  brought by clients of SSB in  connection  with  research
reports  concerning Enron,  alleging breach of contract;  (x) actions brought by
several  investment  funds in  connection  with  the  purchase  of notes  and/or
certificates of the Osprey Trusts, the Marlin Trust, and the Marlin Water trust,


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as well as the  purchase of other Enron or  Enron-related  securities,  alleging
violation of state and federal  securities laws, and common law civil conspiracy
and fraud;  (xi) an action brought by a retirement  and health  benefits plan in
connection  with the  purchase of certain  Enron  notes,  alleging  violation of
federal  securities law,  including Section 11 of the Securities Act of 1933, as
amended,  violations of state securities and unfair  competition law, and common
law fraud and  breach of  fiduciary  duty;  and (xii) an action  brought  by two
broker/dealers  in  connection  with the  purchase  of certain  notes,  alleging
violation of federal and state securities laws. Several of these cases have been
consolidated  with the Newby action and stayed  pending the Court's  decision on
the pending motions of certain defendants to dismiss Newby.
     Additionally,  Citigroup and certain of its affiliates, including SSB, have
provided   substantial   information  to,  and  have  entered  into  substantive
discussions  with, the Securities and Exchange  Commission  regarding certain of
their  transactions with Enron and a transaction with Dynegy Inc.  Citigroup and
certain of its  affiliates,  including  SSB,  also have  received  subpoenas and
requests for information from various other regulatory and governmental agencies
and Congressional  committees, as well as from the Special Examiner in the Enron
bankruptcy, regarding certain transactions and business relationships with Enron
and  its  affiliates.   Citigroup  and  such  affiliates,   including  SSB,  are
cooperating fully with all such requests.


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<PAGE>

     Citigroup  and SSB are involved in a number of lawsuits  arising out of the
underwriting  of debt  securities  of  WorldCom,  Inc.  These  lawsuits  include
putative class actions filed in July 2002 by alleged purchasers of WorldCom debt
securities in the United States District Court for the Southern  District of New
York (Above  Paradise  Investments  Ltd. V.  Worldcom,  Inc., et al.;  Municipal
Police Employees Retirement System Of Louisiana V. Worldcom,  Inc., et al.), and
in the United States  District  Court for the Southern  District of  Mississippi
(Longacre  Master Fund V. Worldcom,  Inc., et al.).  These putative class action
complaints assert violations of federal  securities law,  including  Sections 11
and 12 of the Securities Act of 1933, as amended,  and seek unspecified  damages
from the underwriters.
     On October 11, 2002,  the Above  Paradise and  Municipal  Police  Employees
lawsuits filed in the United States District Court for the Southern  District of
New York were  superseded by the filing of a consolidated  putative class action
complaint in the United States  District Court for the Southern  District of New
York  (In  Re  Worldcom,  Inc.  Securities  Litigation).   In  the  consolidated
complaint,  in addition to the claims of violations by the  underwriters  of the
federal  securities law,  including  Sections 11 and 12 of the Securities Act of
1933,  as amended,  the  plaintiffs  allege  violations  of Section 10(b) of the
Securities  Exchange  Act of  1934,  as  amended,  and  Rule  10b-5  promulgated
thereunder,  by SSB arising out of alleged conflicts of interest of SSB and Jack
Grubman.  The plaintiffs continue to seek unspecified  compensatory  damages. In
addition to the consolidated  class action  complaint,  the Southern District of


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Mississippi  class  action  has  been  transferred  by  the  Judicial  Panel  on
MultiDistrict  Litigation to the Southern  District of New York for  centralized
pre-trial proceedings with other WorldCom-related actions.
     In addition to the several putative class actions that have been commenced,
certain  individual  actions have been filed in various federal and state courts
against  Citigroup and SSB, along with other parties,  concerning  WorldCom debt
securities  including individual state court actions brought by approximately 18
pension  funds  and  other  institutional   investors  in  connection  with  the
underwriting of debt securities of WorldCom alleging violations of Section 11 of
the Securities Act of 1933, as amended,  and, in one case, violations of various
state  securities  laws and common law fraud.  Most of these  actions  have been
removed to federal court and have been  transferred to the Southern  District of
New York for  centralized  pre-trial  proceedings  with  other  WorldCom-related
actions.
     A putative  class action on behalf of  participants  in  WorldCom's  401(k)
salary savings plan and those  WorldCom  benefit plans covered by ERISA alleging
violations of ERISA and common law fraud  (Emanuele V. Worldcom,  Inc., Et Al.),
which was  commenced  in the United  States  District  Court for the District of
Columbia,  also has been  transferred  by the  Judicial  Panel on  MultiDistrict
Litigation  to the  Southern  District  of New  York for  centralized  pre-trial
proceedings with other  WorldCom-related  actions.  In December 2002, the claims
against SSB and the other underwriters were dismissed without prejudice.


                                       17
<PAGE>

     On or about January 27, 2003,  lead  plaintiff in a  consolidated  putative
class action in the United States  District Court for the District of New Jersey
(In Re  AT&T  Corporation  Securities  Litgation)  sought  leave  to  amend  its
complaint on behalf of purchasers of AT&T common stock asserting claims against,
among others, AT&T Corporation,  to add as named defendants  Citigroup,  SSB and
certain executive  officers and current and former  employees,  asserting claims
under federal  securities laws for allegedly  issuing research reports without a
reasonable  basis in fact and for  allegedly  failing to disclose  conflicts  of
interest with AT&T in connection with published investment research.
     On or about January 28, 2003,  lead  plaintiff in a  consolidated  putative
class action in the United States  District  Court for the Southern  District of
New  York  (In  Re  Global  Crossing,   Ltd.  Securities   Litigation)  filed  a
consolidated  complaint  on behalf of  purchasers  of the  securities  of Global
Crossing  and  its  subsidiaries,  which  names  as  defendants,  among  others,
Citigroup,  SSB and certain executive officers and current and former employees,
asserting  claims under federal  securities laws for allegedly  issuing research
reports without a reasonable basis in fact and for allegedly failing to disclose
conflicts  of  interest  with  Global  Crossing  in  connection  with  published
investment research.
     SSBHI  and  various  subsidiaries  have also been  named as  defendants  in
various  matters  incident  to and typical of the  businesses  in which they are
engaged. These include numerous civil actions, arbitration proceedings and other
matters in which SSBHI's broker-dealer  subsidiaries have been named, arising in


                                       18
<PAGE>

the  normal  course of  business  out of  activities  as a broker  and dealer in
securities,  as an  underwriter  of  securities,  as  an  investment  banker  or
otherwise.  In the  opinion  of  SSBHI's  management,  none of these  actions is
expected  to have a  material  adverse  effect  on the  results  of  operations,
consolidated financial condition or liquidity of SSBHI and its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders.
     There were no matters  submitted to the security  holders for a vote during
the last fiscal year covered by this report.
                                     PART II
Item 5. Market for Registrant's Common Equity and Related Security Holder
        Matters.
        (a)Market  Information.  The Partnership has issued  no stock. There  is
           no public market for the Units of Limited Partnership Interest.
        (b)Holders.  The number of  holders of Units of Limited  Partnership
           Interest as of December 31, 2002 was 724.
        (c)Distribution.  The  Partnership did not declare a distribution in
           2002 or 2001.
        (d)Use of Proceeds. There were no additional sales in the years ended
           December 31, 2002, 2001 and 2000.


                                       19
<PAGE>

Item 6.  Selected  Financial  Data.  Net realized and  unrealized  trading gains
(losses),  interest  income,  net income  (loss) and increase  (decrease) in Net
Asset Value per Unit for the years ended December 31, 2002, 2001, 2000, 1999 and
1998 and total assets at December 31, 2002, 2001, 2000, 1999 and 1998 were as
follows:
<TABLE>
<CAPTION>
                                           2002           2001              2000          1999           1998
<S>                                        <C>            <C>               <C>             <C>           <C>
Net realized and unrealized
trading gains (losses) net
of brokerage commissions
and clearing fees of $507,847,
$649,493, $624,556, $934,444, and
 $914,741, respectively             $  1,110,854    $   (164,612)   $    203,233    $ (1,722,069)   $  2,010,123

Realized and unrealized
 appreciation (depreciation)
 on Zero Coupons                        (204,198)        279,052         471,530      (1,058,378)        644,098

Interest income                          672,978         814,370         970,693       1,106,132       1,126,341
                                    ------------    ------------    ------------    ------------    ------------
                                    $  1,579,634    $    928,810    $  1,645,456    $ (1,674,315)   $  3,780,562
                                    ============    ============    ============    ============    ============

Net income (loss)                   $  1,345,768    $    698,088    $  1,420,294    $ (2,130,054)   $  3,174,331
                                    ============    ============    ============    ============    ============

Increase(decrease) in Net
 Asset Value per Unit               $     134.97    $      58.43    $     119.81    $    (133.74)   $     186.29
                                    ============    ============    ============    ============    ============

Total assets                        $ 15,276,846    $ 15,909,719    $ 17,471,747    $ 19,486,036    $ 23,386,690
                                    ============    ============    ============    ============    ============
</TABLE>


                                       20
<PAGE>


Item 7. Management's  Discussion and Analysis of Financial Condition and Results
     of Operations.
     (a)  Liquidity.  The  Partnership  does  not  engage  in  sales of goods or
services.  Its only  assets  are its  equity in its  commodity  futures  trading
account,   consisting  of  cash,  Zero  Coupons,  net  unrealized   appreciation
(depreciation) on open futures contracts and interest receivable. Because of the
low margin deposits  normally  required in commodity  trading,  relatively small
price  movements  may  result in  substantial  losses to the  Partnership.  Such
substantial  losses could lead to a material decrease in liquidity.  To minimize
this risk, the Partnership follows certain policies including:
     (1)  Partnership  funds are invested only in commodity  interests which are
traded in sufficient volume to permit,  in the opinion of the Advisors,  ease of
taking and liquidating positions.
     (2) No Advisor will initiate additional  positions in any commodity if such
additional  positions  would result in aggregate  positions for all  commodities
requiring as margin more than 66-2/3% of the  Partnership's  assets allocated to
the Advisor.
     (3) The Partnership will not employ the trading technique commonly known as
"pyramiding",  in which the  speculator  uses  unrealized  profits  on  existing
positions as margin for the purchase or sale of additional positions in the same
or related commodities.
     (4)  The  Partnership  will  not  utilize   borrowings   except  short-term
borrowings if the Partnership takes delivery of any cash commodities.


                                       21
<PAGE>

     (5) The Advisors may, from time to time, employ trading  strategies such as
spreads  or  straddles  on  behalf  of the  Partnership.  The term  "spread"  or
"straddle"   describes  a  commodity  futures  trading  strategy  involving  the
simultaneous buying and selling of contracts on the same commodity but involving
different  delivery  dates or markets and in which the trader  expects to earn a
profit from a widening or narrowing of the difference  between the prices of the
two contracts.
     (6) The Partnership  will not permit the churning of its commodity  trading
accounts.
     (7) The  Partnership  may cease trading and  liquidate  all open  positions
prior to its dissolution if its Net Assets  (excluding assets maintained in Zero
Coupons) decrease to 10% of those assets on the day trading commenced  (adjusted
for redemptions).
     The Partnership is party to financial  instruments with  off-balance  sheet
risk,  including  derivative  financial  instruments  and  derivative  commodity
instruments,  in the normal course of its business.  These financial instruments
may  include  forwards,  futures  and  options,  whose  value is  based  upon an
underlying  asset,  index,  or reference  rate, and generally  represent  future
commitments to exchange  currencies or cash flows,  or to purchase or sell other
financial  instruments  at specified  terms at specified  future dates.  Each of
these  instruments  is subject to various risks similar to those relating to the
underlying financial  instruments  including market and credit risk. The General
Partner monitors and controls the  Partnership's  risk exposure on a daily basis
through financial, credit and risk management monitoring systems and accordingly


                                       22
<PAGE>

believes that it has effective procedures for evaluating and limiting the credit
and  market  risks to which the  Partnership  is  subject.  (See  also  "Item 8.
Financial  Statements  and  Supplementary  Data."  for  further  information  on
financial instrument risk included in the notes to financial statements.)
     Other than the risks inherent in commodity  trading,  the Partnership knows
of no trends, demands, commitments, events or uncertainties which will result in
or  which  are  reasonably  likely  to  result  in the  Partnership's  liquidity
increasing or decreasing in any material way. The Limited Partnership  Agreement
provides that the  Partnership  will cease trading  operations and liquidate all
open positions upon the first to occur of the following:  (i) December 31, 2015;
(ii)  at the end of the  month  in  which  the  Zero  Coupons  purchased  by the
Partnership  come due  (November 15, 2003),  unless the General  Partner  elects
otherwise; (iii) the vote to dissolve the Partnership by limited partners owning
more than 50% of the Units; (iv) assignment by the General Partner of all of its
interest in the  Partnership  or  withdrawal,  removal,  bankruptcy or any other
event that causes the General Partner to cease to be a general partner under the
Partnership  Act unless the Partnership is continued as described in the Limited
Partnership  Agreement;  (v) the  Partnership  is required to register under the
Investment  Company  Act  of  1940  and  the  General  Partner  determines  that
dissolution  is  therefore  in the  Partnership's  best  interest;  or (vi)  the
occurrence  of any event which shall make it unlawful  for the  existence of the


                                       23
<PAGE>

Partnership to be continued.

     (b) Capital resources. (i) The Partnership has made no material commitments
for capital expenditures as of the end of the fiscal period.
     (ii) The Partnership's capital will consist of the capital contributions of
the partners as  increased or decreased by gains or losses on commodity  futures
trading and Zero Coupon appreciation or depreciation,  and by expenses, interest
income,  redemptions  of Units and  distributions  of profits,  if any. Gains or
losses on commodity trading cannot be predicted. Market moves in commodities are
dependent upon  fundamental  and technical  factors which the Partnership may or
may not be able to identify.  Partnership  expenses will consist of, among other
things,  commissions,  management  fees and incentive  fees.  The level of these
expenses is dependent  upon the level of trading gains or losses and the ability
of the  Advisors  to  identify  and take  advantage  of price  movements  in the
commodity  markets,   in  addition  to  the  level  of  Net  Assets  maintained.
Furthermore,  the Partnership  will receive no payment on its Zero Coupons until
their due date.  However,  the  Partnership  will  accrue  interest  on the Zero
Coupons and Limited  Partners  will be required to report as interest  income on
their U.S. tax returns in each year their pro-rata share of the accrued interest
on the Zero  Coupons  even  though no  interest  will be paid prior to their due
date.  The amount of interest  income  payable by SSB is dependent upon interest
rates over which the Partnership has no control.


                                       24
<PAGE>

     No forecast can be made as to the level of redemptions in any given period.
A limited  partner may cause all of his Units to be redeemed by the  Partnership
at the net asset value thereof as of the last day of a quarter (the  "Redemption
Date") on ten days' written notice to the General Partner. Redemption fees equal
to 2% of  redemption  net asset value per Unit  redeemed  will be charged to any
limited  partner who redeems  his Units on the first,  second or third  possible
redemption  dates and 1% on the  fourth  and fifth  possible  redemption  dates,
respectively.  Thereafter, no redemption fee will be charged. For the year ended
December 31, 2002, 1,376 Units were redeemed totaling  $1,988,236.  For the year
ended December 31, 2001, 1,334 Units were redeemed totaling $1,856,545.  For the
year ended December 31, 2000, 3,049 Units were redeemed totaling $3,693,417.
     For each Unit redeemed the Partnership liquidates $1,000 (principal amount)
of Zero Coupons and will continue to liquidate $1,000 (principal amount) of Zero
Coupons per Unit redeemed. These liquidations will be at market value which will
be less than the amount payable on their due date. Moreover, it is possible that
the market value of the Zero Coupon  could be less than its purchase  price plus
the original issue discount amortized to date.
     (c) Results of  operations.  For the year ended  December 31, 2002, the Net
Asset Value per Unit increased  9.6% from  $1,406.78 to $1,541.75.  For the year
ended  December  31,  2001,  the Net Asset  Value per Unit  increased  4.3% from
$1,348.35 to  $1,406.78.  For the year ended  December  31, 2000,  the Net Asset


                                       25
<PAGE>

Value per Unit increased 9.8% from $1,228.54 to $1,348.35.
     The  Partnership   experienced  net  trading  gains  of  $1,618,701  before
commissions  and  expenses in 2002.  Gains were  attributable  to the trading of
commodity futures in currencies,  grains,  U.S. and non-U.S.  interest rates and
livestock  and  offset by losses  in  energy,  metals,  softs and  indices.  The
Partnership  experienced  unrealized  depreciation  of $277,765 on Zero  Coupons
during 2002 and a gain on the sale of Zero coupons of $73,567 during 2002.
     The  Partnership   experienced  net  trading  gains  of  $484,881,   before
commissions and expenses in 2001. Gains were  attributable to trading in energy,
grains, softs and U.S. and non-U.S.  interest rates products offset by losses in
currencies,   livestock,   metals  and  indices.  The  Partnership   experienced
unrealized  appreciation  of $215,895 on Zero Coupons  during 2001 and a gain on
the sale of Zero Coupons of $63,157 during 2001.
     The   Partnership   experienced   net  trading  gains  of  $827,789  before
commissions  and  expenses in 2000.  Gains were  primarily  attributable  to the
trading  in  currencies,  energy,  U.S.  and  non-U.S.  interest  rates and were
partially  offset  by  losses  recognized  in  the  trading  of  grains,  softs,
livestock,   metals  and  indices.   The  Partnership   experienced   unrealized
appreciation  of $446,478 on Zero Coupons  during 2000 and a gain on the sale of
Zero Coupons of $25,052 during 2000.
     Commodity markets are highly volatile.  Broad price  fluctuations and rapid
inflation  increase the risks involved in commodity  trading,  but also increase
the possibility of profit.  The profitability of the Partnership  depends on the


                                       26
<PAGE>

existence  of major  price  trends and the  ability of the  Advisors to identify
those price  trends  correctly.  Price  trends are  influenced  by,  among other
things,  changing  supply  and  demand  relationships,   weather,  governmental,
agricultural,   commercial  and  trade  programs  and  policies,   national  and
international  political and economic  events and changes in interest  rates. To
the extent that market trends exist and the Advisors are able to identify  them,
the Partnership expects to increase capital through operations.
(d)  Operational Risk
     The Partnership is directly  exposed to market risk and credit risk,  which
arise in the normal course of its business activities. Slightly less direct, but
of critical  importance,  are risks  pertaining to  operational  and back office
support.  This is particularly  the case in a rapidly  changing and increasingly
global environment with increasing  transaction  volumes and an expansion in the
number and complexity of products in the marketplace.
Such risks include:
Operational/Settlement  Risk - the risk of financial  and  opportunity  loss and
legal liability attributable to operational problems, such as inaccurate pricing
of transactions,  untimely trade execution,  clearance and/or settlement, or the
inability to process large volumes of  transactions.  The Partnership is subject
to increased  risks with respect to its trading  activities  in emerging  market
securities,  where clearance,  settlement, and custodial risks are often greater
than in more established markets.


                                       27
<PAGE>

Technological Risk - the risk of loss attributable to technological  limitations
or hardware failure that constrain the Partnership's ability to gather, process,
and communicate information efficiently and securely,  without interruption,  to
customers,  among units  within the  Partnership,  and in the markets  where the
Partnership   participates.
Legal/Documentation  Risk - the risk of loss attributable to deficiencies in the
documentation  of  transactions  (such  as  trade  confirmations)  and  customer
relationships  (such as master  netting  agreements)  or errors  that  result in
noncompliance with applicable legal and regulatory requirements.
Financial  Control  Risk - the  risk  of loss  attributable  to  limitations  in
financial  systems and controls.  Strong  financial  systems and controls ensure
that assets are safeguarded,  that  transactions are executed in accordance with
management's   authorization,   and  that  financial   information  utilized  by
management and  communicated to external  parties,  including the  Partnership's
unitholder, creditors, and regulators, is free of material errors.
(e)  Critical Accounting Policies
     The General Partner believes that the accounting policies that will be most
critical to the  Partnership's  financial  condition  and results of  operations
relate to the  valuation  of the  Partnership's  positions.  The majority of the
Partnership's positions will be exchange-traded futures contracts, which will be
valued daily at settlement prices published by the exchanges. If applicable, the


                                       28
<PAGE>

Partnership's spot and forward foreign currency contracts will also be valued at
published daily  settlement  prices or at dealers'  quotes.  The General Partner
expects that under normal  circumstances  substantially all of the Partnership's
assets will be valued by objective measures and without difficulty.

Item 7A.Quantitative and Qualitative Disclosures About Market Risk Introduction
     The  Partnership  is a speculative  commodity  pool.  The market  sensitive
instruments held by it are acquired for speculative trading purposes, and all or
substantially all of the Partnership's assets are subject to the risk of trading
loss. Unlike an operating company,  the risk of market sensitive  instruments is
integral, not incidental, to the Partnership's main line of business.
     Market movements result in frequent changes in the fair market value of the
Partnership's open positions and,  consequently,  in its earnings and cash flow.
The  Partnership's  market  risk is  influenced  by a wide  variety of  factors,
including the level and volatility of interest  rates,  exchange  rates,  equity
price  levels,  the market value of financial  instruments  and  contracts,  the
diversification results among the Partnership's open positions and the liquidity
of the markets in which it trades.
     The  Partnership  rapidly  acquires  and  liquidates  both  long and  short
positions in a wide range of different markets. Consequently, it is not possible


                                       29
<PAGE>

to predict how a particular future market scenario will affect performance,  and
the Partnership's  past performance is not necessarily  indicative of its future
results.
     Value at Risk is a measure  of the  maximum  amount  which the  Partnership
could  reasonably  be expected to lose in a given market  sector.  However,  the
inherent uncertainty of the Partnership's speculative trading and the recurrence
in the markets  traded by the  Partnership  of market  movements  far  exceeding
expectations could result in actual trading or non-trading losses far beyond the
indicated Value at Risk or the Partnership's  experience to date (i.e., "risk of
ruin").  In  light  of the  foregoing  as well as the  risks  and  uncertainties
intrinsic to all future projections, the inclusion of the quantification in this
section should not be considered to constitute  any assurance or  representation
that the  Partnership's  losses in any market sector will be limited to Value at
Risk or by the Partnership's attempts to manage its market risk.

Quantifying the Partnership's Trading Value at Risk
     The following  quantitative  disclosures regarding the Partnership's market
risk exposures contain  "forward-looking  statements"  within the meaning of the
safe harbor from civil  liability  provided for such  statements  by the Private
Securities  Litigation  Reform  Act of 1995  (set  forth in  Section  27A of the
Securities Act of 1933 and Section 21E of the Securities  Exchange Act of 1934).
All  quantitative  disclosures in this section are deemed to be  forward-looking
statements  for purposes of the safe harbor except for  statements of historical
fact (such as the terms of  particular  contracts  and the number of market risk


                                       30
<PAGE>

sensitive instruments held during or at the end of the reporting period).
     The Partnership's risk exposure in the various market sectors traded by the
Advisors is quantified below in terms of Value at Risk. Due to the Partnership's
mark-to-market  accounting, any loss in the fair value of the Partnership's open
positions  is directly  reflected  in the  Partnership's  earnings  (realized or
unrealized).
     Exchange  maintenance margin requirements have been used by the Partnership
as the measure of its Value at Risk.  Maintenance margin requirements are set by
exchanges  to equal or exceed  the  maximum  losses  reasonably  expected  to be
incurred  in the fair value of any given  contract  in  95%-99%  of any  one-day
intervals.  The  maintenance  margin  levels  are  established  by  dealers  and
exchanges  using  historical  price  studies as well as an assessment of current
market  volatility  (including the implied  volatility of the options on a given
futures contract) and economic fundamentals to provide a probabilistic  estimate
of the maximum expected near-term one-day price fluctuation.  Maintenance margin
has been used rather than the more generally  available initial margin,  because
initial margin  includes a credit risk component  which is not relevant to Value
at Risk.
     In the case of market sensitive  instruments  which are not exchange traded
(almost  exclusively  currencies  in the case of the  Partnership),  the  margin
requirements  for the  equivalent  futures  positions have been used as Value at
Risk. In those rare cases in which a futures-equivalent margin is not available,


                                       31
<PAGE>

dealers' margins have been used.
     The fair value of the Partnership's  futures and forward positions does not
have any optionality component. However, certain of the Advisors trade commodity
options. The Value at Risk associated with options is reflected in the following
table as the margin requirement  attributable to the instrument  underlying each
option.  Where this instrument is a futures  contract,  the futures margin,  and
where  this  instrument  is  a  physical   commodity,   the   futures-equivalent
maintenance  margin has been used.  This  calculation is conservative in that it
assumes  that the fair value of an option will decline by the same amount as the
fair value of the underlying  instrument,  whereas,  in fact, the fair values of
the options traded by the  Partnership in almost all cases fluctuate to a lesser
extent than those of the underlying instruments.
     In quantifying the Partnership's  Value at Risk, 100% positive  correlation
in the different  positions  held in each market risk category has been assumed.
Consequently,  the margin  requirements  applicable to the open  contracts  have
simply been added to determine each trading category's  aggregate Value at Risk.
The  diversification  effects  resulting  from the fact  that the  Partnership's
positions  are  rarely,  if  ever,  100%  positively  correlated  have  not been
reflected.


                                       32
<PAGE>


The  Partnership's Trading Value at Risk in Different Market Sectors
     The following table indicates the trading Value at Risk associated with the
Partnership's  open positions by market category as of December 31, 2002 and the
highest and lowest value at any point during the year. All open position trading
risk exposures of the Partnership  have been included in calculating the figures
set forth below. As of December 31, 2002, the Partnership's total capitalization
was $14,773,054.
                                December 31, 2002
<TABLE>
<CAPTION>
                                                                       Year to Date
                                              % of Total            High        Low
Market Sector                Value at Risk    Capitalization   Value at Risk   Value at Risk
--------------------------------------------------------------------------------------------
<S>                                 <C>            <C>                <C>           <C>
Currencies
 - Exchange Traded Contracts   $  147,337          1.00%         $  224,158   $   92,299
Energy                            283,200          1.92%            402,800       19,500
Grains                             42,198          0.29%            131,903       21,133
Interest rates U.S                135,000          0.91%            153,200        7,200
Interest rates Non-U.S            458,263          3.09%            464,720      114,068
Livestock                          12,100          0.08%             30,150        5,569
Metals
 - Exchange Traded Contracts       51,000          0.35%            137,600       14,200
 - OTC Contracts                   14,325          0.10%             84,825       14,325
Softs                              40,175          0.27%            115,357       24,481
Indices                            91,175          0.62%            336,090       (9,146)
Lumber                              5,000          0.03%             10,000        1,100
                               ----------     ----------
Total                          $1,279,773          8.66%
                               ==========     ==========
</TABLE>


                                       33
<PAGE>



As of December 31, 2001, the Partnership's total capitalization was $15,415,522.

                               December 31, 2001
<TABLE>
<CAPTION>
                                                                         Year to Date
                                               % of Total           High           Low
Market Sector                Value at Risk    Capitalization   Value at Risk   Value at Risk
--------------------------------------------------------------------------------------------
<S>                                <C>              <C>              <C>           <C>
Currencies
 - Exchange Traded Contracts   $  152,825           0.99%        $  214,971   $  117,565
Energy                            147,600           0.96%           284,100       28,220
Grains                            108,893           0.71%           138,012       27,097
Interest rates U.S                 23,425           0.15%           213,500        6,300
Interest rates Non-U.S            197,971           1.28%           860,350      181,465
Livestock                          19,680           0.13%            82,640        6,237
Metals
Exchange Traded Contracts          84,800           0.55%           122,400       38,900
OTC Contracts                      25,100           0.16%            86,200       10,350
Softs                              60,978           0.40%           131,867       47,686
Indices                           204,231           1.32%           280,568          975
Lumber                              1,300           0.01%             7,900          950
                               ----------      ---------
Total                          $1,026,803           6.66%
                               ==========      ==========
</TABLE>


                                       34
<PAGE>


Material Limitations on Value at Risk as an Assessment of Market Risk
---------------------------------------------------------------------
     The face value of the market sector  instruments held by the Partnership is
typically  many times the  applicable  maintenance  margin  requirement  (margin
requirements  generally range between 2% and 15% of contract face value) as well
as many  times the  capitalization  of the  Partnership.  The  magnitude  of the
Partnership's  open  positions  creates a "risk of ruin" not typically  found in
most other investment  vehicles.  Because of the size of its positions,  certain
market  conditions -- unusual,  but historically  recurring from time to time --
could cause the  Partnership to incur severe losses over a short period of time.
The  foregoing  Value at Risk  table -- as well as the past  performance  of the
Partnership -- give no indication of this "risk of ruin."
Non-Trading Risk
     The Partnership  has  non-trading  market risk on its foreign cash balances
not needed for margin.  However, these balances (as well as any market risk they
represent) are immaterial.
     Materiality  as  used  in  this  section,   "Qualitative  and  Quantitative
Disclosures About Market Risk," is based on an assessment of reasonably possible
market movements and the potential losses caused by such movements,  taking into
account the leverage,  optionality and multiplier  features of the Partnership's
market sensitive instruments.


                                       35
<PAGE>

Qualitative Disclosures Regarding Primary Trading Risk Exposures
     The following  qualitative  disclosures  regarding the Partnership's market
risk  exposures  - except  for (i)  those  disclosures  that are  statements  of
historical fact and (ii) the  descriptions  of how the  Partnership  manages its
primary market risk exposures - constitute forward-looking statements within the
meaning of Section 27A of the  Securities  Act and Section 21E of the Securities
Exchange Act. The  Partnership's  primary  market risk  exposures as well as the
strategies  used and to be used by the  General  Partner  and the  Advisors  for
managing such exposures are subject to numerous uncertainties, contingencies and
risks, any one of which could cause the actual results of the Partnership's risk
controls to differ materially from the objectives of such strategies. Government
interventions,  defaults and expropriations,  illiquid markets, the emergence of
dominant fundamental factors,  political upheavals,  changes in historical price
relationships,  an influx of new market  participants,  increased regulation and
many  other  factors  could  result in  material  losses as well as in  material
changes to the risk exposures and the management  strategies of the Partnership.
There can be no assurance that the Partnership's  current market exposure and/or
risk  management  strategies  will  not  change  materially  or  that  any  such
strategies will be effective in either the short- or long- term.  Investors must
be  prepared  to  lose  all or  substantially  all of  their  investment  in the
Partnership.


                                       36
<PAGE>

    The following were the primary trading risk exposures of the Partnership as
of December 31, 2002, by market sector.
     Interest Rates.  Interest rate risk is the principal market exposure of the
Partnership.  Interest rate movements  directly  affect the price of the futures
positions  held by the  Partnership  and indirectly the value of its stock index
and  currency  positions.  Interest  rate  movements  in one  country as well as
relative  interest  rate  movements  between  countries  materially  impact  the
Partnership's profitability. The Partnership's primary interest rate exposure is
to interest rate  fluctuations in the United States and the other G-7 countries.
However,  the Partnership also takes futures positions on the government debt of
smaller nations -- e.g.,  Australia.  The General Partner  anticipates  that G-7
interest rates will remain the primary market  exposure of the  Partnership  for
the foreseeable future.
     Currencies.  The  Partnership's  currency  exposure  is  to  exchange  rate
fluctuations,  primarily  fluctuations  which  disrupt  the  historical  pricing
relationships   between   different   currencies  and  currency   pairs.   These
fluctuations  are  influenced  by interest rate changes as well as political and
general  economic  conditions.  The General Partner does not anticipate that the
risk profile of the Partnership's  currency sector will change  significantly in
the future.  The currency  trading Value at Risk figure includes  foreign margin
amounts  converted into U.S.  dollars with an incremental  adjustment to reflect
the exchange rate risk inherent to the  dollar-based  Partnership  in expressing


                                       37
<PAGE>

Value at Risk in a functional currency other than dollars.
     Stock Indices. The Partnership's primary equity exposure is to equity price
risk in the G-7 countries. The stock index futures traded by the Partnership are
limited to futures on broadly  based  indices.  As of  December  31,  2002,  the
Partnership's  primary exposures were in the S&P 500, Financial Times (England),
and CAC40 (France) stock indices.  The General Partner  anticipates  little,  if
any, trading in non-G-7 stock indices.  The Partnership is primarily  exposed to
the risk of adverse price trends or static  markets in the major U.S.,  European
and Japanese  indices.  (Static markets would not cause major market changes but
would make it difficult  for the  Partnership  to avoid being  "whipsawed"  into
numerous small losses.)
     Metals. The Partnership's  primary metal market exposure is to fluctuations
in the price of gold and silver. Although certain of the Advisors will from time
to time trade base  metals such as  aluminum,  zinc and  copper,  the  principal
market  exposures  of the  Partnership  have  consistently  been in the precious
metals,  gold and silver.  The General Partner  anticipates that gold and silver
will remain the primary metals market exposure for the Partnership.
     Softs. The Partnership's  primary  commodities  exposure is to agricultural
price  movements  which  are often  directly  affected  by severe or  unexpected
weather  conditions.   Coffee,   cocoa,  cotton  and  sugar  accounted  for  the
substantial  bulk of the  Partnership's  commodity  exposure as of December  31,
2002.


                                       38
<PAGE>


     Energy. The Partnership's  primary energy market exposure is to gas and oil
price movements, often resulting from political developments in the Middle East.
Oil prices can be volatile and substantial  profits and losses have been and are
expected to continue to be experienced in this market.
Qualitative Disclosures Regarding Non-Trading Risk Exposure
     The following were the only  non-trading  risk exposures of the Partnership
as of December 31, 2002.
     Foreign  Currency  Balances.  The  Partnership's  primary foreign  currency
balances are in Japanese yen, Australian dollar, British pounds and Euro dollar.
The  Advisor  regularly  converts  foreign  currency  balances  to dollars in an
attempt to control the Partnership's non-trading risk.
     Securities Positions. The Partnership's only market exposure in instruments
held other than for trading is in its  securitites  portfolio.  The  Partnership
maintains  a portion  of its  assets in  principal  amounts  stripped  from U.S.
Treasury Bonds under the Treasury's  STRIPS  program.  Violent  fluctuations  in
prevailing  interest rates could cause immaterial  mark-to-market  losses on the
Partnership's securities.
Qualitative Disclosures Regarding Means of Managing Risk Exposure
     The General Partner monitors and controls the  Partnership's  risk exposure
on a daily  basis  through  financial,  credit  and risk  management  monitoring
systems and accordingly believes that it has effective procedures for evaluating


                                       39
<PAGE>

and limiting the credit and market risks to which the Partnership is subject.
     The  General  Partner  monitors  the  Partnership's   performance  and  the
concentration of its open positions,  and consults with the Advisors  concerning
the Partnership's overall risk profile. If the General Partner felt it necessary
to do so, the General Partner could require certain of the Advisors to close out
individual  positions as well as enter certain positions traded on behalf of the
Partnership. However, any such intervention would be a highly unusual event. The
General  Partner  primarily  relies on the Advisors'  own risk control  policies
while maintaining a general  supervisory  overview of the  Partnership's  market
risk exposures.
     Each Advisor applies its own risk management  policies to its trading.  The
Advisors often follow  diversification  guidelines,  margin limits and stop loss
points to exit a  position.  The  Advisors'  research of risk  management  often
suggests ongoing modifications to their trading programs.
     As part of the General  Partner's  risk  management,  the  General  Partner
periodically  meets with the Advisors to discuss  their risk  management  and to
look for any material  changes to the  Advisors'  portfolio  balance and trading
techniques.  The  Advisors  are  required to notify the  General  Partner of any
material changes to their programs.
     In the  unlikely  event that the  Partnership  is required to meet a margin
call  in  excess  of the  cash  balance  in its  trading  accounts,  SSBHI  will
contribute up to an amount equal to the maturity  value of the Zero Coupons held


                                       40
<PAGE>

by the Partnership at the time of such call to the capital of the Partnership to
permit it to meet its margin obligations in excess of its cash balance.


                                       41
<PAGE>




Item 8.    Financial Statements and Supplementary Data.
           --------------------------------------------

                SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II
                          INDEX TO FINANCIAL STATEMENTS


                                                                         Page
                                                                        Number

                        Oath or Affirmation.                              F-2

                        Reports of Independent Accountants.            F-3 - F-4

                        Financial Statements:
                        Statements of Financial Condition at
                        December 31, 2002 and 2001.                       F-5

                        Condensed Schedules of Investments at
                        December 31, 2002 and 2001.                    F-6 - F-7

                        Statements of Income and Expenses for
                        the years ended December 31, 2002, 2001
                        and 2000.                                         F-8

                        Statements of Partners' Capital for
                        the years ended December 31, 2002, 2001
                        and 2000.                                         F-9

                        Notes to Financial Statements.                 F-10-F-13

                        Selected unaudited quarterly financial
                        data.                                            F-14



                                      F-1


<PAGE>





                           To The Limited Partners of
                           Smith Barney Principal PLUS
                              Futures Fund L.P. II

To the best of the  knowledge  and belief of the  undersigned,  the  information
contained herein is accurate and complete.






By:  Daniel R. McAuliffe, Jr.
     Chief Financial Officer and Director
     Smith Barney Futures Management LLC
     General Partner, Smith Barney Principal PLUS
     Futures Fund L.P. II

Smith Barney Futures Management LLC
388 Greenwich Street
7th Floor
New York, N.Y.  10013
212-723-5424




                                      F-2
<PAGE>

                         Report of Independent Auditors

To the Partners of
   Smith Barney Principal PLUS Futures Fund L.P. II:

     We have audited the accompanying  statement of financial condition of Smith
     Barney Principal PLUS Futures Fund L.P. II (the Partnership), including the
     condensed schedule of investments, as of December 31, 2002, and the related
     statements of income and expenses,  and partners' capital for the year then
     ended.   These  financial   statements  are  the   responsibility   of  the
     Partnership's  management.  Our  responsibility is to express an opinion on
     these financial  statements based on our audit. The financial statements of
     the  Partnership  as of December 31, 2001 and for the years ended  December
     31,  2001 and 2000  were  audited  by other  auditors  whose  report  dated
     February 28, 2002 expressed an unqualified opinion on those statements.

     We conducted our audit in  accordance  with  auditing  standards  generally
     accepted in the United States of America.  Those standards  require that we
     plan and perform the audit to obtain reasonable assurance about whether the
     financial statements are free of material  misstatement.  An audit includes
     examining, on a test basis, evidence supporting the amounts and disclosures
     in  the  financial  statements.   An  audit  also  includes  assessing  the
     accounting principles used and significant estimates made by management, as
     well as evaluating the overall financial statement presentation. We believe
     that our audit provides a reasonable basis for our opinion.

     In our opinion,  the financial statements referred to above present fairly,
     in all material respects,  the financial position of Smith Barney Principal
     PLUS Futures  Fund L.P. II as of December 31, 2002,  and the results of its
     operations and changes in its partners' capital for the year then ended, in
     conformity  with  accounting  principles  generally  accepted in the United
     States of America.

KPMG
New York, New York
March 7, 2003



                                      F-3
<PAGE>

                        Report of Independent Accountants

To the Partners of
   Smith Barney Principal PLUS Futures Fund L.P. II:

     In  our  opinion,  the  accompanying   statement  of  financial  condition,
     including the condensed schedule of investments, and the related statements
     of income and expenses  and of partners'  capital  present  fairly,  in all
     material  respects,  the financial  position of Smith Barney Principal PLUS
     Futures  Fund  L.P.  II at  December  31,  2001,  and  the  results  of its
     operations for each of the two years in the period ended December 31, 2001,
     in conformity with accounting  principles  generally accepted in the United
     States of America. These financial statements are the responsibility of the
     management  of the General  Partner;  our  responsibility  is to express an
     opinion on these financial statements based on our audits. We conducted our
     audits of these financial  statements in accordance with auditing standards
     generally  accepted in the United States of America,  which require that we
     plan and perform the audit to obtain reasonable assurance about whether the
     financial statements are free of material  misstatement.  An audit includes
     examining, on a test basis, evidence supporting the amounts and disclosures
     in the financial  statements,  assessing the accounting principles used and
     significant  estimates made by the management of the General  Partner,  and
     evaluating the overall financial  statement  presentation.  We believe that
     our audits provide a reasonable basis for our opinion.



PricewaterhouseCoopers LLP
New York, New York
February 28, 2002





                                      F-4
<PAGE>


                           Smith Barney Principal PLUS
                              Futures Fund L.P. II
                        Statements of Financial Condition
                           December 31, 2002 and 2001

<TABLE>
<CAPTION>

                                                                                     2002          2001
<S>                                                                                   <C>           <C>
Assets:
Equity in commodity futures trading account:
   Cash (restricted $1,511,921 and $1,243,463 in 2002 and 2001,
    respectively) (Note 3c)                                                      $ 4,723,318   $ 4,793,430
   Net unrealized appreciation on open positions *                                   791,065       421,121
   U.S. Treasury zero coupon bonds, $9,582,000 and $10,958,000
   principal amount in 2002 and 2001, respectively, due
   November 15, 2003, at market value (amortized cost $9,129,904
   and $9,777,282 in 2002 and 2001, respectively)                                  9,492,408    10,417,551
                                                                                 -----------   -----------
                                                                                  15,006,791    15,632,102
   Receivable from SSB on sale of U.S. Treasury zero coupon bonds                    265,993       271,528
   Interest receivable                                                                 4,062         6,089
                                                                                 -----------   -----------
                                                                                 $15,276,846   $15,909,719
                                                                                 -----------   -----------
Liabilities and Partners' Capital:
Liabilities:
  Accrued expenses:
   Commissions (Note 3c)                                                         $    41,725   $    41,148
   Management fees (Note 3b)                                                           7,696         7,190
   Professional fees                                                                  35,632        38,545
   Other                                                                               4,008         4,975
  Redemptions payable (Note 5)                                                       414,731       402,339
                                                                                 -----------   -----------
                                                                                     503,792       494,197
                                                                                 -----------   -----------
Partners' capital (Notes 1 and 5):
  General Partner, 203 Unit equivalents outstanding in 2002 and 2001                 312,975       285,576
  Limited Partners, 9,379 and 10,755 Units of Limited Partnership
   Interest outstanding in 2002 and 2001, respectively                            14,460,079    15,129,946
                                                                                 -----------   -----------
                                                                                  14,773,054    15,415,522
                                                                                 -----------   -----------
                                                                                 $15,276,846   $15,909,719
                                                                                 -----------   -----------

</TABLE>


* Forward contracts included in this balance are presented gross in the
accompanying Condensed Schedule of Investments.
See accompanying notes to financial statements.



                                      F-5
<PAGE>

                           Smith Barney Principal PLUS
                              Futures Fund L.P. II
                        Condensed Schedule of Investments
                                December 31, 2002
<TABLE>
<CAPTION>
<S>                                        <C>                                                     <C>
Sector                                Contract                                                  Fair Value
=============                         ======================                                   ===========
Currencies                            Futures contracts purchased 0.93%                           $137,773
                                      Futures contracts sold (0.02)%                                (3,989)
                                                                                                ----------
  Total Currencies 0.91%                                                                           133,784
                                                                                                ----------

Total Energy 0.88%                    Futures contracts purchased 0.88%                            129,580
                                                                                                ----------

Grains                                Futures contracts purchased (0.04)%                           (6,827)
                                      Futures contracts sold 0.19%                                  28,729
                                                                                                ----------
  Total Grains 0.15%                                                                                21,902
                                                                                                ----------

Interest Rates Non-U.S.               Futures contracts purchased 2.37%                            350,884
                                      Futures contracts sold (0.00)% *                                (105)
                                                                                                ----------
  Total Interest Rates Non-U.S. 2.37%                                                              350,779
                                                                                                ----------

Total Interest Rates U.S 0.73%        Futures contracts purchased 0.73%                            108,163
                                                                                                ----------

Total Livestock 0.01%                 Futures contracts purchased 0.01%                              1,915
                                                                                                ----------

Metals                                Futures contracts purchased 0.40%                             60,155
                                      Futures contracts sold (0.00)% *                                 (13)
                                                                                                ----------
                                      Total Futures contracts 0. 40%                                60,142

                                      Unrealized appreciation on forward contracts  0.15%           22,508
                                      Unrealized depreciation on forward contracts (0.33)%         (49,713)
                                                                                                ----------
                                      Total forward contracts (0.18)%                              (27,205)
                                                                                                ----------
  Total Metals 0.22%                                                                                32,937
                                                                                                ----------

Total Lumber (0.00)% *                Futures contracts sold (0.00)% *                                 (77)
                                                                                                ----------

Softs                                 Futures contracts purchased 0.06%                              9,244
                                      Futures contracts sold 0.07%                                  10,511
                                                                                                ----------
  Total Softs 0.13%                                                                                 19,755
                                                                                                ----------

Indices                               Futures contracts purchased (0.05)%                           (7,659)
                                      Futures contracts sold (0.00)% *                                 (14)
                                                                                                 ----------
  Total Indices (0.05)%                                                                             (7,673)
                                                                                                 ----------

Total Fair Value of Futures
and Forwards positions 5.35%                                                                        791,065

Total U.S. Treasury zero coupon       U.S. Treasury zero coupon bonds, $9,582,000
bonds 64.25%                          principal amount 11/15/2003 (amortized cost $9,129,904)     9,492,408
                                                                                                 ----------
Total Investments 69.60%                                                                        $10,283,473
                                                                                                ===========
                                                      Investments              % of Investments
         Country Composition                            at Value                   at Value
        ----------------------------------           -------------------------- ----------------
        Australia                                              $51,831                     0.50%
        Canada                                                  32,019                     0.31
        Germany                                                 99,406                     0.97
        Japan                                                   12,906                     0.13
        Spain                                                    2,320                     0.02
        United Kingdom                                         153,079                     1.49
        United States                                        9,931,912                    96.58
                                                           -------------------- -------------------
                                                           $10,283,473                   100.00%
                                                           ==================== ===================
</TABLE>
Percentages are based on Partners' capital unless otherwise indicated
* Due to rounding.
See accompanying notes to financial statements.


                                      F-6
<PAGE>

                           Smith Barney Principal PLUS
                              Futures Fund L.P. II
                        Condensed Schedule of Investments
                                December 31, 2001
<TABLE>
<CAPTION>
<S>                                  <C>                                                            <C>
Sector                              Contract                                                     Fair Value
=============                       ============                                                ===========
Currencies                          Futures contracts purchased 0.40%                               $62,698
                                    Futures contracts sold 1.16%                                    178,335
                                                                                                 ----------
  Total Currencies 1.56%                                                                            241,033
                                                                                                 ----------

Energy                              Futures contracts purchased (0.07)%                             (10,025)
                                    Futures contracts sold 0.07%                                     10,410
                                                                                                 ----------
  Total Energy 0.00%                                                                                    385
                                                                                                 ----------

Grains                              Futures contracts purchased 0.00% *                              (1,000)
                                    Futures contracts sold 0.61%                                     94,757
                                                                                                 ----------
  Total Grains 0.61%                                                                                 93,757
                                                                                                 ----------

Interest Rates Non-U.S.             Futures contracts purchased (0.11)%                             (17,938)
                                    Futures contracts sold 0.34%                                     52,742
                                                                                                 ----------
  Total Interest Rates Non-U.S. 0.23%                                                                34,804
                                                                                                 ----------

Interest Rates                      Futures contracts purchased 0.03%                                 5,790
                                    Futures contracts sold (0.01)%                                   (2,613)
                                                                                                 ----------
  Total Interest Rates U.S. 0.02%                                                                     3,177
                                                                                                 ----------

Livestock                           Futures contracts purchased 0.08%                                12,920
                                    Futures contracts sold (0.04)%                                   (6,880)
                                                                                                 ----------
  Total Livestock 0.04%                                                                               6,040
                                                                                                 ----------

Metals                              Futures contracts purchased 0.03%                                 5,560
                                    Futures contracts sold (0.19)%                                  (29,501)
                                                                                                 ----------
  Total Metals (0.16)%                                                                              (23,941)
                                                                                                 ----------

Total Lumber (0.01)%               Futures contracts sold (0.01)%                                    (1,661)
                                                                                                 ----------

Softs                              Futures contracts purchased 0.13%                                 20,397
                                   Futures contracts sold 0.03%                                       4,593
                                                                                                 ----------
  Total Softs 0.16%                                                                                  24,990
                                                                                                 ----------

Total Indices 0.28%                Futures contracts purchased 0.28%                                 42,537
                                                                                                 ----------

Total Fair Value 2.73%                                                                              421,121
                                                                                                 ----------
Total U.S. Treasury zero           U.S. Treasury zero coupon bonds, $10,958,000
coupon bonds 67.58%                principal amount 11/15/2003 (amortized cost $9,777,282)       10,417,551
                                                                                                 ----------
Total Investments 70.31%                                                                        $10,838,672
                                                                                                ===========
                                                         Investments              % of Investments
        Country Composition                                 at Value                   at Value
        ----------------------------------           -------------------------- --------------------------
        Australia                                               $7,645                     0.07%
        Canada                                                   8,263                     0.08
        France                                                   6,113                     0.05
        Germany                                                 33,361                     0.31
        Hong Kong                                                  910                     0.01
        Japan                                                   (1,881)                   (0.02)
        Singapore                                              (11,076)                   (0.10)
        United Kingdom                                         (53,418)                   (0.49)
        United States                                       10,848,756                   100.09
                                                           -------------------- -------------------
                                                           $10,838,672                   100.00%
                                                           ==================== ===================
</TABLE>

Percentages are based on Partners' capital unless otherwise indicated
* Due to rounding.
 See accompanying notes to financial statements.

                                      F-7
<PAGE>

                           Smith Barney Principal PLUS
                              Futures Fund L.P. II
                        Statements of Income and Expenses
              for the years ended December 31, 2002, 2001 and 2000
<TABLE>
<CAPTION>
                                                                  2002            2001           2000
<S>                                                                 <C>            <C>            <C>
Income:
  Net gains on trading of commodity interests:
   Realized gains (losses) on closed positions and foreign
    exchange                                                  $ 1,248,757    $ 1,322,544    $  (117,327)
   Change in unrealized gains (losses) on open positions          369,944       (837,663)       945,116
                                                              -----------    -----------    -----------
                                                                1,618,701        484,881        827,789

  Gains on sale of U.S. Treasury zero coupon bonds                 73,567         63,157         25,052
  Unrealized appreciation (depreciation) on U.S. Treasury
   zero coupon bonds                                             (277,765)       215,895        446,478
  Interest income (Notes 2c and 3c)                               672,978        814,370        970,693
                                                              -----------    -----------    -----------
                                                                2,087,481      1,578,303      2,270,012
                                                              -----------    -----------    -----------
Expenses:
  Brokerage commissions including clearing fees of $29,068,
   $43,765 and $38,519, respectively (Note 3c)                    507,847        649,493        624,556
  Management fees (Note 3b)                                        79,497         96,142        178,204
  Incentive fees (Note 3b)                                        111,632         80,345           --
  Professional fees                                                37,126         44,052         41,096
  Other expenses                                                    5,611         10,183          5,862
                                                              -----------    -----------    -----------
                                                                  741,713        880,215        849,718
                                                              -----------    -----------    -----------
Net income (loss)                                             $ 1,345,768    $   698,088    $ 1,420,294
                                                              -----------    -----------    -----------
Net income (loss) per Unit of Limited Partnership Interest
  and General Partner Unit equivalent (Notes 1 and 6)         $    134.97    $     58.43    $    119.81
                                                              -----------    -----------    -----------

</TABLE>

See accompanying notes to financial statements.


                                     F-8
<PAGE>


                           Smith Barney Principal PLUS
                              Futures Fund L.P. II
                         Statements of Partners' Capital
              for the years ended December 31, 2002, 2001 and 2000

<TABLE>
<CAPTION>

                                                                Limited          General
                                                                Partners        Partner        Total
<S>                                                             <C>               <C>            <C>
Partners' capital at December 31, 1999                      $ 18,597,708    $    249,394   $ 18,847,102
Net income                                                     1,395,973          24,321      1,420,294
Redemption of 3,049 Units of Limited Partnership Interest     (3,693,417)           --       (3,693,417)
                                                            ------------    ------------   ------------
Partners' capital at December 31, 2000                        16,300,264         273,715     16,573,979
Net income                                                       686,227          11,861        698,088
Redemption of 1,334 Units of Limited Partnership Interest     (1,856,545)           --       (1,856,545)
                                                            ------------    ------------   ------------
Partners' capital at December 31, 2001                        15,129,946         285,576     15,415,522
Net income                                                     1,318,369          27,399      1,345,768
Redemption of 1,376 Units of Limited Partnership Interest     (1,988,236)           --       (1,988,236)
                                                            ------------    ------------   ------------
Partners' capital at December 31, 2002                      $ 14,460,079    $    312,975   $ 14,773,054
                                                            ------------    ------------   ------------

</TABLE>
See accompanying notes to financial statements.



                                      F-9
<PAGE>


                           Smith Barney Principal PLUS
                              Futures Fund L.P. II
                          Notes to Financial Statements

1.  Partnership Organization:
     Smith Barney Principal PLUS Futures Fund L.P. II (the  "Partnership")  is a
     limited  partnership  which was  organized  on November  16, 1995 under the
     partnership  laws of the State of New York. The Partnership  engages in the
     speculative  trading of a  diversified  portfolio of  commodity  interests,
     including futures contracts,  options and forward contracts.  The commodity
     interests  that are traded by the  Partnership  are  volatile and involve a
     high degree of market risk. The Partnership  will maintain a portion of its
     assets in principal  amounts  stripped from U.S.  Treasury  Bonds under the
     Treasury's STRIPS program which payments are due approximately  seven years
     from the date trading  commenced  ("Zero  Coupons").  The  Partnership  was
     authorized to sell 60,000 Units during the initial  offering  period of the
     Partnership.

     Smith  Barney  Futures  Management  LLC acts as the  general  partner  (the
     "General Partner") of the Partnership.  The Partnership's  commodity broker
     is Salomon  Smith Barney Inc.  ("SSB").  SSB is an affiliate of the General
     Partner.  The  General  Partner  is wholly  owned by Salomon  Smith  Barney
     Holdings Inc. ("SSBHI"),  which is the sole owner of SSB. SSBHI is a wholly
     owned subsidiary of Citigroup Inc.

     The  General  Partner  and each  limited  partner  share in the profits and
     losses of the  Partnership  in  proportion  to the  amount  of  partnership
     interest  owned by each except that no limited  partner shall be liable for
     obligations  of  the   Partnership  in  excess  of  their  initial  capital
     contribution and profits, if any, net of distributions.

     The Partnership  will be liquidated (see Note 9) upon the first to occur of
     the following: December 31, 2015; at the end of the month in which the Zero
     Coupons purchased come due (November,  2003) ("First Payment Date"), unless
     the General Partner elects otherwise,  or under certain other circumstances
     as defined in the Limited  Partnership  Agreement.  The General Partner, in
     its sole  discretion,  may elect not to terminate the Partnership as of the
     First  Payment  Date.  In the  event  that the  General  Partner  elects to
     continue the  Partnership,  each limited partner shall have the opportunity
     to redeem all or some of their Units.

2.  Accounting Policies:

     a. All commodity interests (including  derivative financial instruments and
     derivative  commodity  instruments)  are used  for  trading  purposes.  The
     commodity  interests  are  recorded  on trade date and open  contracts  are
     recorded in the statement of financial  condition at fair value on the last
     business day of the year, which represents market value for those commodity
     interests for which market quotations are readily available. Investments in
     commodity  interests  denominated in foreign currencies are translated into
     U.S.  dollars at the exchange rates  prevailing on the last business day of
     the year.  Realized gains (losses) and changes in unrealized gains (losses)
     on open  positions  are  recognized  in the period in which the contract is
     closed or the  changes  occur and are  included  in net gains  (losses)  on
     trading of commodity interests.

     b.  Income  taxes have not been  provided as each  partner is  individually
     liable for the taxes,  if any, on their share of the  Partnership's  income
     and expenses.

     c. The original issue discount on the Zero Coupons is being  amortized over
     their life using the interest method and is included in interest income.

     d. Zero  Coupons are recorded in the  statement  of financial  condition at
     fair value.  Realized gain (loss) on the sale of Zero Coupons is determined
     on the amortized cost basis of the Zero Coupons at the time of sale.

     e. The  preparation of financial  statements in conformity  with accounting
     principles  generally  accepted  in the United  States of America  requires
     management  to make  estimates  and  assumptions  that affect the  reported
     amounts of assets and  liabilities,  disclosure  of  contingent  assets and
     liabilities  at the  date of the  financial  statements  and  the  reported
     amounts of  revenues  and  expenses  during the  reporting  period.  Actual
     results could differ from these estimates.

     f.  Certain  prior  period  amounts  have been  reclassified  to conform to
     current year presentation.


                                     F-10
<PAGE>

3.  Agreements:
     a. Limited  Partnership  Agreement:  The General  Partner  administers  the
     business and affairs of the  Partnership  including  selecting  one or more
     advisors to make trading decisions for the Partnership.

     b.  Management   Agreements:   The  General  Partner,   on  behalf  of  the
     Partnership,  has entered into  Management  Agreements  with Winton Capital
     Management  ("Winton") and  Willowbridge  Associates Inc.  ("Willowbridge")
     (the "Advisors"),  which provides that the Advisors have sole discretion in
     determining  the investment of the assets of the  Partnership  allocated to
     each Advisor by the General  Partner.  As  compensation  for services,  the
     Partnership is obligated to pay  Willowbridge  a monthly  management fee of
     1/6 of 1% (2% per year) of  month-end  Net Assets  allocated  to it and pay
     Winton a monthly  management  fee of 1/8 of 1% (1.5% per year) of month-end
     Net Assets  allocated  to it.  Month-end  Net  Assets,  for the  purpose of
     calculating  management  fees are Net  Assets,  as defined  in the  Limited
     Partnership  Agreement  (excluding the fair value of the U.S. Treasury zero
     coupon bonds),  prior to the reduction of redemptions  and incentive  fees.
     The  Partnership  will  also pay each  Advisor  an  incentive  fee  payable
     quarterly equal to 20% of New Trading Profits, as defined in the Management
     Agreements.

     c.  Customer  Agreement:  The  Partnership  has  entered  into  a  Customer
     Agreement  which  provides  that the  Partnership  will  pay SSB a  monthly
     brokerage fee equal to 7/12 of 1% of 135% of month-end Net Assets allocated
     to the  Advisors (7% per year) in lieu of  brokerage  commissions  on a per
     trade  basis.   Month-end  Net  Assets,  for  the  purpose  of  calculating
     commissions  are  Net  Assets,  as  defined  in  the  Limited   Partnership
     Agreement,  (excluding  the fair  value of the U.S.  Treasury  zero  coupon
     bonds),  prior to the reduction of all  liabilities of the  Partnership.  A
     portion of this fee is paid to  employees of SSB who have sold Units of the
     Partnership.  This fee does not include exchange,  clearing, user, give-up,
     floor brokerage and National  Futures  Association fees which will be borne
     by the Partnership.  All of the  Partnership's  assets are deposited in the
     Partnership's  account at SSB. The Partnership maintains a portion of these
     assets in Zero  Coupons and a portion in cash.  The  Partnership's  cash is
     deposited by SSB in segregated  bank  accounts,  to the extent  required by
     Commodity Futures Trading Commission regulations.  At December 31, 2002 and
     2001,  the amount of cash held for margin  requirements  was $1,511,921 and
     $1,243,463,  respectively.  SSB will pay the Partnership interest on 80% of
     the average  daily  equity  maintained  in cash in its account  during each
     month at a 30-day U.S. Treasury bill rate determined weekly by SSB based on
     the average noncompetitive yield on 3-month U.S. Treasury bills maturing in
     30 days from the date on which such weekly rate is determined. The Customer
     Agreement  between the  Partnership and SSB gives the Partnership the legal
     right to net  unrealized  gains and losses.  The Customer  Agreement may be
     terminated by either party.

4.  Trading Activities:
     The  Partnership  was formed for the  purpose  of  trading  contracts  in a
     variety of commodity interests,  including derivative financial instruments
     and  derivative  commodity  instruments.  The results of the  Partnership's
     trading  activities are shown in the statement of income and expenses.  All
     of the commodity  interests  owned by the  Partnership are held for trading
     purposes.  The average fair value during the years ended  December 31, 2002
     and 2001,  based on a  monthly  calculation,  was  $529,374  and  $568,840,
     respectively.

5.  Distributions and Redemptions:
     Distributions  of profits,  if any, will be made at the sole  discretion of
     the General Partner.  On 10 days' notice to the General Partner,  a limited
     partner  may  require  the  Partnership  to  redeem  their  Units  at their
     Redemption Net Asset Value as of the last day of a quarter. Redemption fees
     equal to 2% of Redemption Net Asset Value per Unit redeemed will be charged
     to any  limited  partner who  redeems  their Units on the first,  second or


                                     F-11
<PAGE>

     third  possible  redemption  date,  and 1% on the fourth and fifth possible
     redemption dates. Thereafter, no redemption fee will be charged. There were
     no redemption fees charged during 2002, 2001 and 2000.

6.  Financial Highlights:
     Changes in the net asset  value per Unit of  Partnership  interest  for the
     years ended December 31, 2002, 2001 and 2000 were as follows:

<TABLE>
<CAPTION>

                                                             2002          2001        2000
<S>                                                          <C>           <C>          <C>
Net realized and unrealized gains (losses) *          $     112.32 $     (15.04)$      31.16
Realized and unrealized appreciation (depreciation)
 on Zero Coupons                                            (19.66)       23.63        35.19
Interest income                                              65.12        69.18        69.15
Expenses **                                                 (22.81)      (19.34)      (15.69)
                                                         ---------    ---------    ---------
Increase for year                                           134.97        58.43       119.81
Net asset value per Unit, beginning of year               1,406.78     1,348.35     1,228.54
                                                         ---------    ---------    ---------
Net asset value per Unit, end of year                 $   1,541.75 $   1,406.78 $   1,348.35
                                                         ---------    ---------    ---------

</TABLE>

       * Includes brokerage commissions
      ** Excludes brokerage commissions
<TABLE>
<CAPTION>
<S>                                                  <C>      <C>
Ratios to average net assets:
 Net investment income before incentive fee ***      0.3%    0.1%
 Incentive fees                                     (0.8)%  (0.5)%
                                                    ----     ---
 Net investment loss after incentive fees           (0.5)%  (0.4)%
                                                    ----     ---

 Net income before incentive fees ****              10.0%    4.8%
 Incentive fees ****                                (0.8)%  (0.5)%
                                                    ----     ---
 Net income after incentive fees ****                9.2%    4.3%
                                                    ----     ---

 Operating expenses                                  4.3%    4.9%
 Incentive fees                                      0.8%    0.5%
                                                    ----     ---
 Total expenses                                      5.1%    5.4%
                                                    ----     ---


Total return:
 Total return before incentive fees                 10.4%    4.8%
 Incentive fees                                     (0.8)%  (0.5)%
                                                    ----     ---
 Total return after incentive fees                   9.6%    4.3%
                                                    ----     ---

</TABLE>

     *** Interest income less total expenses (exclusive of incentive fees)
     **** Supplemental information not required

     The above ratios may vary for individual  investors  based on the timing of
     capital transactions during the year.


7.  Guarantee:
     In the  unlikely  event that the  Partnership  is required to meet a margin
     call in excess of the cash  balance  in its  trading  accounts,  SSBHI will
     contribute up to an amount equal to the maturity  value of the Zero Coupons
     held by the  Partnership  at the time of such  call to the  capital  of the
     Partnership  to permit it to meet its margin  obligations  in excess of its
     cash balance.  The guarantee can only be invoked once.  After the guarantee
     is invoked,  trading  will cease and the General  Partner  will either wait
     until the First  Payment Date or will  distribute  cash and Zero Coupons to
     the limited partners.


                                      F-12
<PAGE>

8.  Financial Instrument Risks:
     In the normal course of its business the  Partnership is party to financial
     instruments with off-balance  sheet risk,  including  derivative  financial
     instruments   and  derivative   commodity   instruments.   These  financial
     instruments  may include  forwards,  futures and options,  whose values are
     based upon an underlying  asset,  index,  or reference  rate, and generally
     represent  future  commitments  to exchange  currencies  or cash flows,  to
     purchase or sell other financial instruments at specific terms at specified
     future dates, or, in the case of derivative commodity instruments,  to have
     a reasonable  possibility to be settled in cash,  through physical delivery
     or with another financial instrument. These instruments may be traded on an
     exchange or  over-the-counter  ("OTC").  Exchange  traded  instruments  are
     standardized  and  include  futures  and  certain  option  contracts.   OTC
     contracts are negotiated between  contracting  parties and include forwards
     and certain options.  Each of these instruments is subject to various risks
     similar to those related to the underlying financial  instruments including
     market and credit risk. In general, the risks associated with OTC contracts
     are greater than those associated with exchange traded instruments  because
     of the greater risk of default by the counterparty to an OTC contract.

     Market  risk is the  potential  for  changes in the value of the  financial
     instruments  traded by the  Partnership  due to market  changes,  including
     interest and foreign  exchange rate movements and fluctuations in commodity
     or security prices.  Market risk is directly impacted by the volatility and
     liquidity in the markets in which the related underlying assets are traded.

     Credit risk is the possibility  that a loss may occur due to the failure of
     a counterparty to perform according to the terms of a contract. Credit risk
     with respect to exchange  traded  instruments is reduced to the extent that
     an  exchange  or  clearing  organization  acts  as a  counterparty  to  the
     transactions.  The Partnership's  risk of loss in the event of counterparty
     default is typically limited to the amounts  recognized in the statement of
     financial condition and not represented by the contract or notional amounts
     of the instruments.  The Partnership has credit risk and concentration risk
     because the sole  counterparty or broker with respect to the  Partnership's
     assets is SSB.

     The General Partner monitors and controls the  Partnership's  risk exposure
     on a daily basis through financial,  credit and risk management  monitoring
     systems,  and  accordingly  believes that it has effective  procedures  for
     evaluating   and  limiting  the  credit  and  market  risks  to  which  the
     Partnership is subject.  These monitoring systems allow the General Partner
     to  statistically   analyze  actual  trading  results  with  risk  adjusted
     performance  indicators and correlation  statistics.  In addition,  on-line
     monitoring  systems  provide  account  analysis  of futures,  forwards  and
     options   positions  by  sector,   margin   requirements,   gain  and  loss
     transactions and collateral positions.

     The majority of these  instruments  mature  within one year of December 31,
     2002.  However,  due to the  nature of the  Partnership's  business,  these
     instruments may not be held to maturity.

9.   Liquidation of Partnership:
     In accordance with the Limited Partnership Agreement,  the Partnership will
     terminate  operations  on November  15,  2003,  the month in which the U.S.
     Treasury zero coupon bonds mature.



                                      F-13
<PAGE>

Selected  unaudited  quarterly  financial  data for the years ended December 31,
2002 and December 31, 2001 is summarized below:

<TABLE>
<CAPTION>
<S>                                       <C>                  <C>                 <C>              <C>
                                     For the period      For the period       For the period    For the period
                                  from October 1, 2002  from July 1, 2002     April 1, 2002 to  January 1, 2002
                                  to December 31, 2002  to September 30, 2002  June 30, 2002   to March 31, 2002

     Net realized and unrealized
    trading gains (losses) net of
   brokerage commissions and clearing
   fees including interest income            $1,740         $1,392,731              $648,989         $(463,826)

          Net Income (loss)                $(27,274)        $1,268,874              $597,426         $(493,258)

       Increase (decrease) in Net Asset      $(2.77)           $125.71                $57.04           $(45.01)
                Value per Unit

                                     For the period      For the period       For the period    For the period
                                  from October 1, 2001  from July 1, 2001     April 1, 2001 to  January 1, 2001
                                  to December 31, 2001  to September 30, 2001  June 30, 2001   to March 31, 2001
         Net realized and unrealized
         trading gains (losses) net of
      brokerage commissions and clearing
       fees including interest income     $(166,918)          $763,482             $(731,826)       $1,064,072

               Net Income (loss)          $(203,794)          $727,077             $(769,309)         $944,114

       Increase (decrease) in Net Asset     $(18.13)            $63.57               $(63.82)           $76.81
                Value per Unit

</TABLE>


                                      F-14

<PAGE>


Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
     Financial Disclosure.
     PricewaterhouseCoopers  LLP was  previously  the principal  accountant  for
Partnership.  On July 9, 2002,  that firm was dismissed as principal  accountant
and KPMG LLP was  engaged  as  principal  accountant.  The  decision  to  change
accountants was approved by the general partner of the Partnership.
     In  connection  with the audits of the two fiscal years ended  December 31,
2001,   and   through   July  9,  2002,   there  were  no   disagreements   with
PricewaterhouseCoopers  LLP on any matter of accounting principles or practices,
financial  statement  disclosure,   or  auditing  scope  or  procedures,   which
disagreements  if not resolved to their  satisfaction  would have caused them to
make  reference  thereto in their reports on the financial  statements  for such
years.
     The audit reports of PricewaterhouseCoopers LLP on the financial statements
of the  Partnership as of and for the years ended December 31, 2001 and 2000 did
not  contain  any  adverse  opinion  or  disclaimer  of  opinion,  nor were they
qualified or modified as to uncertainty, audit scope, or accounting principle.
                                    PART III
Item 10.    Directors and Executive Officers of the Registrant.
            ---------------------------------------------------
     The Partnership has no officers or directors and its affairs are managed by
its General Partner,  Smith Barney Futures Management LLC. Investment  decisions
are made by the Advisors.


                                       42
<PAGE>


Item 11.    Executive Compensation.
            ----------------------
     The  Partnership  has no directors or officers.  Its affairs are managed by
Smith Barney Futures  Management LLC, its General Partner.  SSB, an affiliate of
the General  Partner,  is the commodity  broker for the Partnership and receives
brokerage  commissions for such services, as described under "Item 1. Business."
Brokerage  commissions  and clearing  fees of $507,847  were earned for the year
ended  December  31, 2002.  Management  fees and  incentive  fees of $79,497 and
$111,632,  respectively  were earned by the Advisors for the year ended December
31, 2002.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
         --------------------------------------------------------------
     (a). Security ownership of certain beneficial owners. The Partnership knows
          of  no  person  who  beneficially  owns  more  than  5% of  the  Units
          outstanding.
     (b). Security  ownership  of  management.  Under the  terms of the  Limited
          Partnership  Agreement,  the Partnership's  affairs are managed by the
          General Partner. The General Partner owns Units of general partnership
          interest  equivalent  to  203  (2.1%)  Units  of  Limited  Partnership
          Interest as of December 31, 2002.
     (c). Changes in control. None.
                       ------------------
Item 13.  Certain Relationships and Related Transactions.
          ----------------------------------------------
     Salomon Smith Barney Inc. and Smith Barney Futures  Management LLC would be
considered  promoters for purposes of Item 404(d) of Regulation  S-K. The nature
and the amounts of compensation  each promoter will receive from the Partnership


                                       43
<PAGE>

are set forth under  "Item 1.  Business.",  "Item 8.  Financial  Statements  and
Supplementary Data." and "Item 11. Executive Compensation."
Item 14. Control and Procedures
     Based on their  evaluation  of the  Partnership's  disclosure  controls and
procedures  as of a date within 90 days of the filing of this report,  the Chief
Executive  Officer and Chief Financial Officer have concluded that such controls
and procedures are effective.
     There were no significant changes in the Partnership's internal controls or
in other factors that could significantly affect such controls subsequent to the
date of their evaluation.
                                     PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
     (a) (1) Financial Statements:

               Statements of Financial  Condition at December 31, 2002 and 2001.
               Statements  of Income and Expenses  for the years ended  December
               31, 2002, 2001 and 2000.

               Statements of Partners'  Capital for the years ended December 31,
               2002, 2001 and 2000.

          (2)  Financial  Statement  Schedules:  Financial Data Schedule for the
               year ended December 31, 2002.

          (3)  Exhibits:

          3.1  - Limited  Partnership  Agreement  (filed as  Exhibit  3.1 to the
               Registration  Statement  on Form  S-1  (File  No.  33-80723)  and
               incorporated herein by reference).


                                       44
<PAGE>

          3.2  - Certificate of Limited  Partnership of the Partnership as filed
               in the office of the  Secretary of State of the State of New York
               (filed as Exhibit 3.2 to the  Registration  Statement on Form S-1
               (File No. 33-80723) and incorporated herein by reference).
          10.1 - Customer  Agreement  between the  Partnership  and Smith Barney
               Shearson  Inc.  (filed  as  Exhibit  10.1  to  the   Registration
               Statement on Form S-1 (File No. 33-80723) and incorporated herein
               by reference).
          10.3 - Escrow  Instructions  relating to escrow of subscription  funds
               (filed as Exhibit 10.3 to the Registration  Statement on Form S-1
               (File No. 33-80723) and incorporated herein by reference).
          10.5 - Management Agreement among the Partnership, the General Partner
               and John W. Henry & Company, Inc. (JWH) (filed as Exhibit 10.5 to
               the  Registration  Statement on Form S-1 (File No.  33-80723) and
               incorporated herein by reference).
          10.6 - Management Agreement among the Partnership, the General Partner
               and  Willowbridge  Associates  Inc. (filed as Exhibit 10.6 to the
               Registration  Statement  on Form  S-1  (File  No.  33-80723)  and
               incorporated herein by reference).


                                       45
<PAGE>

          10.7 - Letters  extending  Management  Agreements with John W. Henry &
               Company,  Inc.  and  Willowbridge   Associates  Inc.  (previously
               filed).
          10.8 -  Letter  from  the  General  Partner   terminating   Management
               Agreement with John W. Henry & Company Inc. (previously filed).
          10.9 - Management Agreement among the Partnership, the General Partner
               and Winton Capital Management (previously filed).
          10.10- Letter  extending the Management  Agreement  with  Willowbridge
               Inc. (previously filed).
          10.11- Letters  extending  Management  Agreements  with Winton Capital
               Management and Willowbridge  Associates Inc. for 2001 (previously
               filed).
          10.12- Letters  extending  Management  Agreements  with Winton Capital
               Management  and  Willowbridge  Associates  Inc.  for 2002  (filed
               herein)
          99.1 Certificate of Chief Executive Officer.
          99.2 Certificate of Chief Financial Officer.
          (b)      Reports on 8-K: None Filed.


                                       46
<PAGE>


     Supplemental  Information  To Be Furnished  With Reports Filed  Pursuant To
Section 15(d) Of The Act by  Registrants  Which Have Not  Registered  Securities
Pursuant To Section 12 Of the Act.




Annual  Report to Limited  Partners

No proxy  material  has been sent to Limited Partners.


                                       47
<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant has duly caused this annual report on Form 10-K to
be signed on its behalf by the undersigned,  thereunto duly  authorized,  in the
City of New York and State of New York on the 27th day of March 2003.

SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II


By:       Smith Barney Futures Management LLC
          (General Partner)



By        /s/  David J. Vogel
          -------------------------------------
          David J. Vogel, President & Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this annual
report  on Form  10-K has been  signed  below by the  following  persons  in the
capacities and on the date indicated.



/s/ David J. Vogel                                          /s/ Shelley Ullman
------------------------------                     -----------------------------
David J. Vogel                                                     Director
Director, Principal Executive
Officer and President



/s/ Maureen O'Toole                                          /s/ Steve J. Keltz
--------------------------                         -----------------------------
Maureen O'Toole                                           Secretary and Director
Director



/s/ Daniel R. McAuliffe, Jr.
------------------------------                                -
Daniel R. McAuliffe, Jr.
Chief Financial Officer and
Director


                                       48
<PAGE>


                                  CERTIFICATION


I, David J. Vogel, certify that:

     1.   I have  reviewed  this  annual  report  on Form  10-K of Smith  Barney
          Principal Plus Futures Fund L.P. II;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial condition and results of operations of
          the  registrant  as of, and for, the periods  presented in this annual
          report;

     4.   The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation,  to the registrant's  auditors and the


                                       49
<PAGE>

          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The registrant's other certifying officer and I have indicated in this
          annual  report  whether  or not  there  were  significant  changes  in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date: March 27, 2003
                                                     /s/ David J. Vogel
                                                         -----------------------
                                                         David J. Vogel
                                                         Chief Executive Officer


                                       50
<PAGE>

                                  CERTIFICATION


I, Daniel R. McAuliffe, Jr., certify that:
     1.   I have  reviewed  this  annual  report  on Form  10-K of Smith  Barney
          Principal Plus Futures Fund L.P. II;

     2.   Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report;

     3.   Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial condition and results of operations of
          the  registrant  as of, and for, the periods  presented in this annual
          report;

     4.   The registrant's  other  certifying  officer and I are responsible for
          establishing  and maintaining  disclosure  controls and procedures (as
          defined in Exchange  Act Rules  13a-14 and 15d-14) for the  registrant
          and we have:

          a.   designed such  disclosure  controls and procedures to ensure that
               material  information  relating to the registrant,  including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual report is being prepared;

          b.   evaluated  the  effectiveness  of  the  registrant's   disclosure
               controls and  procedures as of a date within 90 days prior to the
               filing date of this annual report (the "Evaluation Date"); and

          c.   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness of the disclosure  controls and procedures based on
               our evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officer and I have disclosed,  based
          on our most recent  evaluation,  to the registrant's  auditors and the


                                       51
<PAGE>

          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing the equivalent function):

          a.   all  significant  deficiencies  in the  design  or  operation  of
               internal  controls which could adversely  affect the registrant's
               ability to record,  process,  summarize and report financial data
               and have  identified for the  registrant's  auditors any material
               weaknesses in internal controls; and

          b.   any fraud,  whether or not material,  that involves management or
               other employees who have a significant  role in the  registrant's
               internal controls; and

     6.   The registrant's other certifying officer and I have indicated in this
          annual  report  whether  or not  there  were  significant  changes  in
          internal controls or in other factors that could significantly  affect
          internal   controls   subsequent  to  the  date  of  our  most  recent
          evaluation,   including   any   corrective   actions  with  regard  to
          significant deficiencies and material weaknesses.

Date: March 27, 2003
                                                    /s/ Daaniel R. McAuliffe, Jr
                                                        -----------------------
                                                        Daniel R. McAuliffe, Jr.
                                                        Chief Financial Officer



                                       52
<PAGE>

CIK>                                               0001005335
NAME>                          Smith Barney Principal PLUS Futures Fund L.P. II

PERIOD-TYPE>                                       12-MONTHS
FISCAL-YEAR-END>                                   DEC-31-2002
PERIOD-START>                                      JAN-01-2002
PERIOD-END>                                        DEC-31-2002
CASH>                                                       4,723,318
SECURITIES>                                                10,283,473
RECEIVABLES>                                                  270,055
ALLOWANCES>                                                         0
INVENTORY>                                                          0
CURRENT-ASSETS>                                            15,276,846
PP&E>                                                               0
DEPRECIATION>                                                       0
TOTAL-ASSETS>                                              15,276,846
CURRENT-LIABILITIES>                                          503,792
BONDS>                                                              0
PREFERRED-MANDATORY>                                                0
PREFERRED>                                                          0
COMMON>                                                             0
OTHER-SE>                                                  14,773,054
TOTAL-LIABILITY-AND-EQUITY>                                15,276,846
SALES>                                                              0
TOTAL-REVENUES>                                             2,087,481
CGS>                                                                0
TOTAL-COSTS>                                                        0
OTHER-EXPENSES>                                               741,713
LOSS-PROVISION>                                                     0
INTEREST-EXPENSE>                                                   0
INCOME-PRETAX>                                              1,345,768
INCOME-TAX>                                                         0
INCOME-CONTINUING>                                                  0
DISCONTINUED>                                                       0
EXTRAORDINARY>                                                      0
CHANGES>                                                            0
NET-INCOME>                                                 1,345,768
EPS-PRIMARY>                                                   134.97
EPS-DILUTED>                                                        0