1

                                  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 fiscal year ended December 31, 1998

                         Commission File Number 0-28336

                   SMITH BARNEY MID-WEST FUTURES FUND L.P. II
             (Exact name of registrant as specified in its charter)

                         New York                      13-3772374 
              (State or other jurisdiction of      (I.R.S. Employer
               incorporation or organization)      Identification No.)

                    c/o Smith Barney Futures Management Inc.
                           390 Greenwich St. - 1st Fl.
                            New York, New York 10013
              (Address and Zip Code of principal executive offices)

          (212) 723-5424 (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: None



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] 

As of February  28,1999  Limited  Partnership  Units with an aggregate  value of
$1,691.57 were outstanding and held by non-affiliates.


                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>


                                     PART I

Item 1. Business.

     (a) General  development of business.  Smith Barney  Mid-West  Futures Fund
L.P. II, (the "Partnership") is a limited partnership  organized on June 3, 1994
under the partnership  laws of the State of New York. The Partnership  commenced
trading  operations  on  September  1,  1994.  The  Partnership  engages  in the
speculative trading of a diversified  portfolio of commodity interests including
futures  contracts,  options and  forward  contracts.  Between  July 7, 1994 and
August 31, 1994, 9,421 Units of Limited Partnership Interest ("Units") were sold
at $1,000 per Unit. The proceeds of the initial  offering were held in an escrow
account  until  September  1, 1994,  at which time they were  turned over to the
Partnership  for trading.  Sales and  redemptions  of Units and general  partner
contributions  and redemptions for the years ending December 31, 1998, 1997, and
1996 are reported in the Statement of Partners'  Capital on page F-6 under "Item
8. Financial Statements and Supplementary Data."
     The  Partnership  will  be  liquidated  upon  the  first  to  occur  of the
following:  December 31, 2014;  if the Net Asset Value per Unit falls below $350
as of the end of business on any business day or upon the earlier  occurrence of
certain other  circumstances set forth in the Limited  Partnership  Agreement of
the Partnership (the "Limited  Partnership  Agreement").  Partnership Units were
being continuously offered monthly during the continuous offering period through
April 1997. The  Partnership  was authorized to sell 75,000 Units.

                                       2
<PAGE>

     Smith  Barney Futures Management  Inc.  acts as the  general  partner  (the
"General  Partner") of the Partnership.  On September 1, 1998, the Partnership's
commodity  broker,  Smith  Barney  Inc.,  merged with  Salomon  Brothers Inc and
changed its name to 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.  ("SSBH"),  which is the sole owner of SSB.  On October 8, 1998,
Travelers Group Inc. merged with Citicorp Inc. and changed its name to Citigroup
Inc. SSBH is a wholly owned subsidiary of Citigroup Inc.
     The  Partnership's  trading of futures  contracts  on  commodities  is done
primarily on United States commodity exchanges and foreign commodity  exchanges.
It engages in such trading through a commodity brokerage account maintained with
SSB.
     Under the  Limited  Partnership  Agreement,  the  General  Partner has sole
responsibility  for  the  administration  of the  business  and  affairs  of the
Partnership,  but  may  delegate  trading  discretion  to  one or  more  trading
advisors.  The  General  Partner  administers  the  business  and affairs of the
Partnership  including  selecting one or more advisors to make trading decisions
for the  Partnership.  The  Partnership  pays  the  General  Partner  a  monthly
administrative  fee in return for its services to the Partnership  equal to 1/12
of 1% (1% per year) of month-end Net Assets of the Partnership.  This fee may be
increased or decreased at the discretion of the General Partner.

                                      3
<PAGE>

     The  General   Partner  has  entered  into  a  management   agreement  (the
"Management  Agreement")  with John W. Henry & Company Inc. (the  AAdvisor@) who
will make all commodity  trading  decisions for the Partnership.  The Advisor is
not affiliated  with the General  Partner or SSB. The Advisor is not responsible
for the organization or operation of the  Partnership.
     Pursuant  to the terms of the  Management  Agreement,  the  Partnership  is
obligated to pay the Advisor a monthly management fee equal to 1/3 of 1% (4% per
year) of Net Assets  allocated  to the Advisor as of the end of the month and an
incentive fee payable quarterly of 15% of New Trading Profits (as defined in the
Management Agreement) of the Partnership.
     The  Customer  Agreement  between the  Partnership  and SSB (the  "Customer
Agreement") provides that the Partnership pays SSB a monthly brokerage fee equal
to 1/2 of  1% of  month-end Net Assets  (6%  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. The Partnership pays for National
Futures  Association  ("NFA") fees, exchange and clearing fees, give-up and user
fees and floor  brokerage fees. The Customer  Agreement  between the Partnership
and SSB  gives  the  Partnership  the legal  right to net  unrealized  gains and
losses.  Brokerage fees will be paid for the life of the  Partnership,  although
the rate at which such fees are paid may be changed.

                                       4
<PAGE>

     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  non-competitive  yield
on 3 month U.S.  Treasury  bills maturing in 30 days from the date in which such
weekly rate is  determined.  The Customer  Agreement may be terminated by either
party.
     (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, 1998,
1997, 1996, and 1995 are set forth under "Item 6. Selected  Financial Data." The
Partnership capital as of December 31, 1998 was $94,174,439.
    (c)  Narrative  description of business.  
         See Paragraphs (a) and (b) above. 
        (i) through (x) - Not applicable.
        (xi) through (xii) - Not applicable.
        (xiii) -The Partnership has no employees.
    (d) Financial  Information About Foreign and Domestic Operations and
Export Sales. The Partnership does not engage in sales of goods or services, 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.

                                       5
<PAGE>

    Item 3. Legal Proceedings.  
        There are no material legal proceedings  pending against the Partnership
or the General Partner.
        This section describes the major legal proceedings,  other than ordinary
routine litigation incidental to the business, to which SSBH, the parent company
of this General Partner or its  subsidiaries is a party or to which any of their
property is subject.
        In  September  1992,  Harris  Trust and  Savings  Bank (as  trustee  for
Ameritech  Pension  Trust  ("APT"),  Ameritech  Corporation,  and an  officer of
Ameritech filed suit against Salomon  Brothers Inc. ("SBI") and Salomon Brothers
Realty Corporation ("SBRC") in the U.S. District Court for the Northern District
of Illinois  (Harris Trust Savings Bank, not  individually but solely as trustee
for the Ameritech Pension Trust,  Ameritech Corporation and John A. Edwardson v.
Salomon  Brothers Inc and Salomon  Brothers  Realty  Corp.).  The second amended
complaint  alleges that three purchases by APT from defendants of  participation
interests  in net cash flow or resale  proceeds  of three  portfolios  of motels
owned by Motels of America, Inc. ("MOA"), as well as a fourth purchase by APT of
a similar participation  interest with respect to a portfolio of motels owned by
Best Inns, Inc. ("Best"),  violated the Employee  Retirement Income Security Act
("ERISA"),  and that the purchase of the  participation  interests for the third
MOA portfolio and for the Best portfolio  violated the Racketeer  Influenced and
Corrupt   Organization  Act  ("RICO")  and  state  law.  SBI  had  acquired  the
participation interests in transactions in which it purchased as principal


                                       6
<PAGE>

mortgage notes issued by MOA and Best to finance  purchases of motel portfolios;
95% of three such  interests  and 100% of one such interest were sold to APT for
purchase prices  aggregating  approximately  $20.9 million.  Plaintiffs'  second
amended complaint seeks (a) judgment on the ERISA claims for the purchase prices
of  the  four  participation   interests   (approximately  $20.9  million),  for
rescission and for  disgorgement  of profits,  as well as other relief,  and (b)
judgment on the claims  brought  under RICO and state law in the amount of $12.3
million,  with  damages  trebled to $37 million on the RICO claims and  punitive
damages  in excess of $37  million on certain of the state law claims as well as
other  relief.  The court  dismissed  the RICO,  breach of contract,  and unjust
enrichment  claims.  The court also found that  defendants did not qualify as an
ERISA  fiduciary and dismissed the claims based on that  allegation.  Defendants
moved for summary  judgment on the sole remaining  claim. The motion was denied,
and defendants  appealed to the U.S.  Court of Appeals for the Seventh  Circuit.
Defendants are awaiting a decision.
     Both the Department of Labor and the Internal  Revenue Service have advised
SBI that they were or are reviewing the  transactions in which APT acquired such
participation  interests.  With respect to the Internal  Revenue Service review,
SSBH,  SBI and SBRC have  consented to extensions of time for the  assessment of
excise taxes that may be claimed to be due with respect to the  transactions for
the years 1987,  1988 and 1989. In August 1996,  the IRS sent SSBH, SBI and SBRC
what appeared to be draft "30-day  letters" with respect to the transactions and
SSBH,  SBI and SBRC were given an  opportunity  to  comment  on whether  the IRS
should issue  30-day  letters,  which would  actually  commence  the  assessment
process.  In October 1996,  SSBH,  SBI and SBRC  submitted a memorandum  setting
forth  reasons why the IRS should not issue  30-day  letters with respect to the
transactions.

                                       7
<PAGE>

     In December  1996, a complaint  seeking  unspecified  monetary  damages was
filed by Orange County,  California against numerous brokerage firms,  including
Smith  Barney,  in the  U.S.  Bankruptcy  Court  for  the  Central  District  of
California  (County  of  Orange  et al. v.  Bear  Stearns  & Co.  Inc.  et al.).
Plaintiff alleges,  among other things, that defendants  recommended and sold to
plaintiff  unsuitable  securities  and that such  transactions  were outside the
scope of  plaintiff's  statutory and  constitutional  authority  (ultra  vires).
Defendants'  motion for summary  judgment  was granted with respect to the ultra
vires  claims in  February  1999.  The court  allowed  the  filing of an amended
complaint asserting claims based on alleged breaches of fiduciary duty.
     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
declaratory  judgment  that  Smith  Barney  Inc.  and  another  underwriter  are
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  Company  filed a  motion  to  dismiss  the
complaints in September 1998, and the complaints were subsequently  amended. The
Company has filed a motion to dismiss the amended complaints.

                                       8
<PAGE>

     In November  1998,  a purported  class  action  complaint  was filed in the
United States District Court for the Middle District of Florida (Dwight Brock as
Clerk for Collier County v. Merrill Lynch, et al.). The complaint  alleges that,
pursuant to a nationwide conspiracy, 17 broker-dealer defendants, including SSB,
charged excessive mark-ups in connection with advanced  refunding  transactions.
The Company intends to contest this complaint vigorously.
 Environmental  Matters
     In July 1996, the City and County of Denver ("Denver") enacted an ordinance
imposing  a  substantial  fee on any  radioactive  waste or  radium-contaminated
material  disposed  of in the  City of  Denver.  Under  this  ordinance,  Denver
assessed a subsidiary  of Salomon,  the S.W.  Shattuck  Chemical  Company,  Inc.
("Shattuck"),  $9.35 million for certain disposal already carried out.  Shattuck
sued to enjoin  imposition  of the fee on  constitutional  grounds.  The  United
States  also sued,  seeking to enjoin  imposition  of the fee on  constitutional
grounds.  Denver  counterclaimed  and moved to add SSBH as a defendant  for past
costs.  These cases have been  consolidated  before the U.S.  District  Court in
Colorado, which granted Shattuck's motion for a preliminary injunction enjoining
Denver from enforcing the ordinance  during the pendency of the litigation.  The
parties have reached a  settlement. 

                                       9
<PAGE>

     The Company 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 the  Company's  broker-dealer  subsidiaries  have been  named,
arising in 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 the Company's management,  none of these actions
is  expected to have a material  adverse  effect on the  consolidated  financial
condition of the Company 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.


                                       10
<PAGE>

     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  Partnership Interest
            as of December 31, 1998 was 981. 
        (c) Distribution. The Partnership did not declare a distribution in 1998
            or 1997.

                                       11

<PAGE>


     Item  6.  Selected  Financial  Data.  The  Partnership   commenced  trading
operations on September 1, 1994. Realized and unrealized trading gains, interest
income,  net income and increase in net asset value per Unit for the years ended
December 31, 1998,  1997,  1996,  1995 and 1994 and total assets at December 31,
1998, 1997, 1996, 1995 and 1994 were as follows:

<TABLE>
<CAPTION>
                                 1998          1997            1996            1995              1994
<S>                                <C>             <C>            <C>           <C>             <C>

Realized and unrealized
 trading gains
 net of brokerage
 commissions and clearing
 fees of $5,793,730,
 $5,672,628, $3,306,404,
 $1,842,402 and $283,703,
 respectively               $  4,233,828   $ 13,762,069   $ 16,597,447   $  8,020,122    $ (1,112,429)

Interest income                3,300,032      3,513,989      1,920,850      1,234,647         170,526

                            $  7,533,860   $ 17,276,058   $ 18,518,297   $  9,254,769    $   (941,913)

Net Income                  $  2,107,683   $ 11,255,193   $ 13,746,736   $  6,875,816    $ (1,325,660)

Increase in net asset
 value per Unit
                            $      54.16   $     196.20   $     319.87   $     293.49    $     (75.43)

Total assets                $ 96,893,196   $103,999,164   $ 71,647,148   $ 39,439,974    $ 18,543,431

</TABLE>


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<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 commodity futures trading account,  consisting
of cash, net unrealized  appreciation  (depreciation) on open futures contracts,
commodity options, if applicable,  and interest  receivable.  Because of the low
margin deposits normally required in commodity futures 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 futures  contracts  which are
traded in sufficient  volume to permit,  in the opinion of the Advisor,  ease of
taking and liquidating positions.
     (2) The Partnership  diversifies  its positions among various  commodities.
The Advisor does not initiate  additional  positions  in any  commodity  for the
Partnership if such additional positions would result in aggregate positions for
all  commodities  requiring  a margin of more than  66-2/3% of net assets of the
Partnership managed by the Advisor.
     (3) The Partnership may occasionally accept delivery of a commodity. Unless
such  delivery is disposed of promptly  by  retendering  the  warehouse  receipt
representing  the  delivery to the  appropriate  clearing  house,  the  physical
commodity position is fully hedged.

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<PAGE>

     (4) The Partnership does not employ the trading technique commonly known as
"pyramiding",  in which the  speculator  uses  unrealized  profits  on  existing
positions  as margin for the  purchases or sale of  additional  positions in the
same or related commodities.
     (5)  The  Partnership  does  not  utilize   borrowings   except  short-term
borrowings if the Partnership takes delivery of any cash commodities.
     (6) The Advisor 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 futures  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 contracts.
     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  risk  exposure on a daily basis

                                       14
<PAGE>

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.  (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  futures  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 General  Partner may, at its
discretion,  cause the Partnership to cease trading operations and liquidate all
open  positions  under certain  circumstances  including a decrease in Net Asset
Value per Unit to less than $350 as of the  close of  business  on any  business
day.
     (b) Capital resources. (i) The Partnership has made no material commitments
for capital expenditures.
     (ii) The Partnership's capital consists of the capital contributions of the
partners as  increased  or  decreased  by gains or losses on  commodity  futures
trading and by expenses, interest income, redemptions of Units and distributions
of profits,  if any.  Gains or losses on  commodity  futures  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

                                       15
<PAGE>

upon the level of  trading  gains or losses and the  ability  of the  Advisor to
identify and take  advantage of price  movements in the  commodity  markets,  in
addition  to the level of Net  Assets  maintained.  In  addition,  the amount of
interest  income  payable by SSB is dependent upon interest rates over which the
Partnership  has no control. 
     The  Partnership  ceased to offer Units  effective April 1997. For the year
ended  December 31,  1997,  there were  additional  sales of  17,098.7004  Units
totaling  $26,633,900  and  contributions  by the General  Partner  representing
156.0603 Unit  equivalents  totaling  $243,000.  For the year ended December 31,
1996, the Partnership sold 17,430.8344 Units resulting in aggregate  proceeds to
the Partnership of $22,142,769 and General Partner  contributions of $164,000 to
the Partnership representing 130.1478 Unit equivalents.
     No forecast can be made as to the level of redemptions in any given period.
For the year ended December 31, 1998,  5,763.4832  Units were redeemed  totaling
$9,250,318. For the year ended December 31, 1997, 3,338.4562 Units were redeemed
totaling $5,266,488. For the year ended December 31, 1996, 4,968.4779 Units were
redeemed totaling $6,478,043.
     Units of Limited Partnership Interest were sold to persons and entities who
are accredited  investors as that term is defined in rule 501(a) of Regulation D
as well as to those persons who are not accredited investors but who have either
a net worth (exclusive of home,  furnishings and automobile) either individually
or jointly with the investor's  spouse of at least three times his investment in
the Partnership  (the minimum  investment for which was $25,000) or gross income
for the two previous  years and  projected  gross income for the current  fiscal
year of not less than three times his  investment  in the  Partnership  for each
year.  

                                       16
<PAGE>

     (c) Results of  Operations.  For the year ended  December  31, 1998 the Net
Asset Value Per Unit increased  3.1% from  $1,734.13 to $1,788.29.  For the year
ended  December  31,  1997,  the Net Asset Value per Unit  increased  12.8% from
$1,537.93 to $1,734.13. For the year ended December 31, 1996 the Net Asset Value
Per Unit increased 26.3% from $1,218.06 to $1,537.93
     The  Partnership  experienced  net  trading  gains  of  $10,027,558  before
commissions  and  expenses  for the year ended  December  31,  1998.  Gains were
primarily  attributable to the trading of U.S. and non-U.S.interest rate futures
contracts.  These gains were partially  offset by losses  incurred while trading
metals, currencies and indices.
     The  Partnership  experienced  net  trading  gains  of  $19,434,697  before
commissions  and  expenses  for the year ended  December  31,  1997.  Gains were
primarily   attributable  to  the  trading  of  commodity   futures  in  metals,
currencies, indices and U.S. and non-U.S. interest rate futures contracts.
     The  Partnership  experienced  net  trading  gains  of  $19,903,851  before
commissions and expenses for the year ended December 31, 1996.  These gains were
primarily attributable to the trading of currency,  precious metals and U.S. and
non-U.S.  interest rate futures contracts.  These gains were partially offset by
losses incurred in the trading of indices.

                                       17
<PAGE>

    Commodity futures 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  existence  of major  price  trends  and the  ability  of the  Advisor 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 Advisor is able to identify  them,
the Partnership expects to increase capital through operations.
     (d) Operational Risk 
     The Company 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 Company 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.  

                                       18
<PAGE>


Technological Risk - the risk of loss attributable to technological  limitations
or hardware failure that constrain the Company's ability to gather, process, and
communicate  information  efficiently and securely,  without interruption,  with
customers,  among units within the Company, and in the markets where the Company
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  Company's
stockholder, creditors, and regulators, is free of material errors.
 Risk of Computer System Failure (Year 2000 Issue)
     The Year 2000 issue is the result of existing  computers in many businesses
using only two digits to identify a year in the date field.  These computers and
programs,  often  referred to as  "information  technology,"  were  designed and
developed without  considering the impact of the upcoming change in the century.
If not  corrected,  many computer  applications  could fail or create  erroneous
results at the Year 2000.  Such systems and processes are dependent on correctly
identifying dates in the next century.

                                       19
<PAGE>

     The General Partner  administers  the business of the  Partnership  through
various  systems and  processes  maintained  by SSBH and SSB. In  addition,  the
operation of the Partnership is dependent on the capability of the Partnership's
Advisor,  the brokers and exchanges through which the Advisor trades,  and other
third  parties to prepare  adequately  for the Year 2000 impact on their systems
and processes.  The Partnership itself has no systems or information  technology
applications  relevant to its  operations.  The General  Partner,  SSB, SSBH and
their parent  organization  Citigroup  Inc.  have  undertaken  a  comprehensive,
firm-wide  evaluation of both internal and external  systems (systems related to
third parties) to determine the specific modifications needed to prepare for the
year  2000.  The  combined  Year  2000  program  in  SSB  is  expected  to  cost
approximately  $140  million  over the four years from 1996  through  1999,  and
involve over 450 people at the peak staffing level.  SSB expects to complete all
compliance and  certification  work by June 1999. At this time, over 95% of SSBH
systems have completed the correction process and are Year 2000 compliant.  Over
73% of the systems have completed  certification  testing. The Year 2000 project
at SSBH remains on schedule.
     The systems and components  supporting the General Partner's  business that
require  remediation  have been identified and  modifications  have been made to
bring them into Year 2000 compliance.  Testing of these systems was completed in
the fourth quarter of 1998. Final testing and  certification  are expected to be
completed by the end of the first quarter of 1999.

                                       20
<PAGE>

     This  expenditure  and the General  Partner's  resources  dedicated  to the
preparation  for Year  2000 do not and will not have a  material  impact  on the
operation or results of the Partnership.
     The General Partner has requested and received  statements from the Advisor
that it has undertaken its own evaluation and remediation  plans to identify any
of its computer systems that are Year 2000 vulnerable. The Advisor has confirmed
it is taking immediate actions to remedy those systems as necessary. The General
Partner will continue to inquire into and to confirm the Advisor's readiness for
Year 2000.
     The most likely and most  significant  risk to the  Partnership  associated
with the lack of Year 2000  readiness  is the failure of outside  organizations,
including the commodities exchanges, clearing organizations,  or regulators with
which the  Partnership  interacts to resolve  their Year 2000 issues in a timely
manner.  This risk could  involve the  inability to  determine  the value of the
Partnership  at some  point  in time  and  would  make  effecting  purchases  or
redemptions  of Units in the  Partnership  infeasible  until such  valuation was
determinable.
     SSB has successfully  participated in industry-wide testing including:  The
Streetwide Beta Testing organized by the Securities Industry  Association (SIA),
a government securities clearing test with the Federal Reserve Bank of New York,
The  Depository  Trust Company,  and The Bank of New York, and Futures  Industry
Association  participants  test.  SSBH is also  participating  in the streetwide
testing which commenced in March 1999.

                                       21
<PAGE>

     It is possible  that  problems  may occur that would  require  some time to
repair. Moreover, it is possible that problems will occur outside SSBH for which
SSBH could  experience  a  secondary  effect.  Consequently,  SSBH is  preparing
comprehensive,  written  contingency plans so that alternative  procedures and a
framework for critical decisions are defined before any potential crisis occurs.
     The goal of Year 2000 contingency planning is a set of alternate procedures
to be used in the event of a critical  system failure or a failure by a supplier
or  counterparty.  Planning work was completed in December  1998, and testing of
alternative procedures will be conducted in the first half of 1999.
European  Economic and Monetary Union 
European  Economic and  Monetary  Union  ("EMU") is an historic  event in Europe
involving the unification of currency in eleven major countries. The new unified
currency,  called the Euro,  is expected  to compete on a global  scale with the
U.S.  Dollar and the Japanese Yen.  Introduction of the Euro began on January 1,
1999, when the European  Central Bank assumed control of the monetary policy for
participating nations.  Exchange rates between the participating  countries were
fixed and the Euro is  available  for  electronic  payments.  Also on January 1,
1999,  various  issuers  re-denominated  their  securities and  harmonized  bond
payment  conventions.  A three-year  transition period began on January 1, 1999,
after which Euro notes and coins will be issued by the European Central Bank and
national currencies will be phased out.

                                       22
<PAGE>

     The Company completed a successful conversion to the Euro and has commenced
trading and settlement in the new currency with no major exceptions.
     As the  preceding  risks are  largely  interrelated,  so are the  Company's
actions to mitigate and manage them. The Company's Chief Administrative  Officer
is  responsible  for,  among other things,  oversight of global  operations  and
technology.  An  essential  element in  mitigating  the risks noted above is the
optimization  of information  technology and the ability to manage and implement
change.  To be an effective  competitor in an  information-driven  business of a
global nature  requires the  development  of global  systems and databases  that
ensure increased and more timely access to reliable data.
     (e) New  Accounting  Pronouncements 
     In June 1998,  the Financial  Accounting  Standards  Board issued SFAS 133,
Accounting for Derivative  Instruments and Hedging Activities ("SFAS 133"). SFAS
133  requires  that an entity  recognize  all  derivatives  in the  statement of
financial  condition and measure those  instruments  at fair value.  SFAS 133 is
effective for fiscal year beginning  after June 15, 1999 SFAS 133 is expected to
have no material  impact on the financial  statements of the  Partnership as all
commodity interests are recorded at fair value, with changes therein reported in
the statement of income and expenses

                                       23
<PAGE>


Item 7A.  Quantitative   and   Qualitative   Disclosures   About   Market   Risk
     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 effects 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
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.

                                       24
<PAGE>

     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
included 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
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
Advisor 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).

                                       25
<PAGE>

     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,
dealers' margins have been used.
     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

                                       26
<PAGE>

reflected.  
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, 1998.  All
open position  trading risk exposures of the  Partnership  have been included in
calculating  the  figures  set  forth  below.  As  of  December  31,  1998,  the
Partnership's total capitalization was $94,174,439.

<TABLE>
<CAPTION>
<S>                             <C>         <C>    

                      December 31, 1998

                                        % of Total
Market Sector         Value at Risk    Capitalization


Currencies               $1,088,100      1.16%
Interest Rate U.S.        1,395,500      1.48%
Interest Rate Non-U.S     5,916,186      6.28%
Metals                      208,000      0.22%

Total                    $8,607,786      9.14%
</TABLE>

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  margin  requirement  (margin  requirements
generally  range  between  2% and 15% of  contract  face  value)  as well as 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."

                                       27
<PAGE>

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.
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

                                       28
<PAGE>

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.
     The following were the primary trading risk exposures of the Partnership as
of December 31, 1998, 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. The changes in interest rates which have the most effect
on the  Partnership are changes in long-term,  as opposed to short-term,  rates.
Consequently,  even a material  change in  short-term  rates  would have  little
effect on the Partnership were the medium- to long-term rates to remain steady.

                                       29
<PAGE>

     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 Partnership's  major exposures have typically
been in the dollar/yen,  dollar/mark  and  dollar/pound  positions.  The General
Partner does not anticipate that the risk profile of the Partnership's  currency
sector will change significantly in the future, although it is difficult at this
point to predict  the effect of the  introduction  of the Euro on the  Advisors'
currency trading strategies.  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  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
by law limited to futures on broadly  based  indices.  Although the  Partnership
does trade  stock  indices  such as the  Financial  Times  (England)  and Nikkei
(Japan),  at December 31, 1998. The Partnership  held no open positions in these
instruments.  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.)

                                       30
<PAGE>

     Metals. The Partnership's  primary metal market exposure is to fluctuations
in the price of gold and silver.  Although  the  Advisor  will from time to time
trade base  metals  such as  aluminum,  copper  and tin,  the  principal  market
exposures of the Partnership have consistently been in the precious metals, gold
and silver. The Advisor's gold trading has been increasingly  limited due to the
long-lasting and mainly non-volatile  decline in the price of gold over the last
10-15 years. However, silver prices have remained volatile over this period, and
the  Advisor  has from time to time  taken  substantial  positions  as they have
perceived market  opportunities to develop. The General Partner anticipates that
gold  and  silver  will  remain  the  primary  metals  market  exposure  for the
Partnership.  
Qualitative  Disclosures  Regarding  Non-Trading Risk Exposure 
     The following were the only  non-trading  risk exposures of the Partnership
as of December 31, 1998. 
     Foreign  Currency  Balances.  The  Partnership's  primary foreign  currency
balances are in Japanese yen,  German marks,  British  pounds and French francs.
The  Advisor  regularly  converts  foreign  currency  balances  to dollars in an
attempt to control the Partnership's non-trading risk.

                                       31
<PAGE>

     Qualitative  Disclosures  Regarding  Means of Managing  Risk  Exposure 
     The  General  Partner  monitors  the  Partnership's   performance  and  the
concentration  of its open positions,  and consults with the Advisor  concerning
the Partnership's overall risk profile. If the General Partner felt it necessary
to do so, the General  Partner could require the Advisor to close out individual
positions  as well as  enter  programs  traded  on  behalf  of the  Partnership.
However,  any such  intervention  would be a highly unusual  event.  The General
Partner  primarily  relies on the  Advisor's  own risk  control  policies  while
maintaining  a general  supervisory  overview of the  Partnership's  market risk
exposures.
     The Advisor  applies its own risk management  policies to its trading.  The
Advisor often follows  diversification  guidelines,  margin limits and stop loss
points to exit a  position.  The  Advisor's  research of risk  management  often
suggests ongoing modifications to its trading programs.
     As part of the General  Partner's  risk  management,  the  General  Partner
periodically  meets with the Advisor to discuss its risk  management and to look
for  any  material  changes  to the  Advisor's  portfolio  balance  and  trading
techniques.  The  Advisor  is  required  to notify  the  General  Partner of any
material changes to its programs.

                                       32
<PAGE>


Item 8. Financial Statements and Supplementary Data 




                       SMITH BARNEY MID-WEST FUTURES FUND L.P. II
                              INDEX TO FINANCIAL STATEMENTS


                                                                       Page
                                                                      Number


          Oath or Affirmation                                           F-2

          Report of Independent Accountants                             F-3

          Financial Statements:
          Statement of Financial Condition at
          December 31, 1998 and 1997                                    F-4

          Statement of Income and Expenses for
          the years ended December 31, 1998, 1997
          and 1996                                                      F-5

          Statement of Partners' Capital for the
          years ended December 31, 1998, 1997 and
          1996                                                          F-6

          Notes to Financial Statements                               F-7 - F-11


















                                          F-1
                                       Continued

<PAGE>
                             To The Limited Partners of
                     Smith Barney Mid-West 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 A. Dantuono, Chief Financial Officer
     Smith Barney Futures Management Inc.
     General Partner, Smith Barney Mid-West
       Futures Fund L.P. II



390 Greenwich Street
1st Floor
New York, N.Y. 10013
212-723-5424



                                      F-2

<PAGE>




                   Report of Independent Accountants

To the Partners of
   Smith Barney Mid-West Futures Fund L.P. II:

In our  opinion,  the  accompanying  statement of  financial  condition  and the
related  statements  of income and  expenses and of  partners'  capital  present
fairly,  in all  material  respects,  the  financial  position  of Smith  Barney
Mid-West  Futures Fund L.P. II at December 31, 1998 and 1997, and the results of
its  operations  for each of the three years in the period  ended  December  31,
1998,  in  conformity  with  generally  accepted  accounting  principles.  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  generally  accepted  auditing  standards  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 the opinion expressed above.



                                                     PricewaterhouseCoopers LLP

New York, New York
February 26, 1999
                                   F-3

<PAGE>


                   Smith Barney Mid-West Futures Fund L.P. II
                        Statement of Financial Condition
                           December 31, 1998 and 1997

<TABLE>
<CAPTION>

                                                           1998            1997
<S>                                                    <C>              <C>  
Assets:
Equity in commodity futures
    trading account:
   Cash (Note 3c)                                  $ 87,033,493     $ 98,812,037
   Net unrealized appreciation
    on open futures contracts                         9,603,763        4,837,350
                                                   ------------     ------------
                                                     96,637,256      103,649,387
Interest receivable                                     255,940          349,777
                                                   ------------     ------------
                                                   $ 96,893,196     $103,999,164
                                                   ============     ============


Liabilities and Partners' Capital:
Liabilities:
  Accrued expenses:
   Commissions                                     $    484,466     $    519,996
   Management fees                                      321,183          344,931
   Administrative fees                                   80,296           86,233
   Incentive fees                                          --          1,062,363
   Other                                                 53,822           47,822
  Redemptions payable (Note 5)                        1,778,990          620,745
                                                   ------------     ------------
                                                      2,718,757        2,682,090
                                                   ------------     ------------
Partners' capital (Notes 1, 5, and 6):
  General Partner, 608.9156 Unit
   equivalents outstanding
   in 1998 and 1997                                   1,088,918        1,055,939
  Limited Partners, 52,052.8275 and
   57,816.3107 Units of Limited
   Partnership Interest outstanding
   in 1998 and 1997, respectively                    93,085,521      100,261,135
                                                   ------------     ------------
                                                     94,174,439      101,317,074
                                                   ------------     ------------
                                                   $ 96,893,196     $103,999,164
                                                   ============     ============
</TABLE>



See notes to financial statements.

                                  F-4
<PAGE>


                   Smith Barney Mid-West Futures Fund L.P. II
                        Statement of Income and Expenses
                               for the years ended
                        December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                   1998            1997            1996
<S>                                               <C>              <C>             <C> 

Income:
  Net gains on trading of
    commodity interests:
   Realized gains on closed positions      $  5,261,145    $ 15,951,212    $ 20,005,044
   Change in unrealized gains/ losses 
    on open positions                         4,766,413       3,483,485        (101,193)
                                           ------------    ------------    ------------
                                             10,027,558      19,434,697      19,903,851
  Less, Brokerage commissions
   including clearing
   fees of $73,613, $71,533,
  and $49,253, respectively (Note 3c)        (5,793,730)     (5,672,628)     (3,306,404)
                                           ------------    ------------    ------------
  Net realized and unrealized gains           4,233,828      13,762,069      16,597,447
  Interest income (Note 3c)                   3,300,032       3,513,989       1,920,850
                                           ------------    ------------    ------------
                                              7,533,860      17,276,058      18,518,297
                                           ------------    ------------    ------------
Expenses:
  Management fees (Note 3b)                   3,611,428       3,633,607       2,112,274
  Administrative fees (Note 3a)                 902,857         908,156         528,068
  Incentive fees (Note 3b)                      832,948       1,390,262       1,988,611
  Other expenses                                 78,944          88,840         142,608
                                           ------------    ------------    ------------
                                              5,426,177       6,020,865       4,771,561
                                           ------------    ------------    ------------
Net income                                 $  2,107,683    $ 11,255,193    $ 13,746,736
                                           ============    ============    ============

Net income per Unit
   of Limited Partnership
  Interest and General Partner
  Unit equivalent (Notes 1 and 6)          $      54.16    $     196.20    $     319.87
                                           ============    ============    ============

</TABLE>

                                                   

See notes to financial statements.
                                                   F-5

<PAGE>


                   Smith Barney Mid-West Futures Fund L.P. II
                         Statement of Partners' Capital
                               for the years ended
                        December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                 Limited          General                
                                                Partners         Partners           Total
<S>                                               <C>              <C>               <C> 
Partners' capital at
  December 31, 1995                        $  38,482,930    $     393,077   $  38,876,007
Net income                                    13,607,353          139,383      13,746,736
Sale of 17,430.8344 Units of
  Limited Partnership Interest
  and General Partner's contribution
  representing 130.1478 Unit equivalents      22,142,769          164,000      22,306,769
Redemption of 4,968.4779 Units of
  Limited Partnership Interest                (6,478,043)            --        (6,478,043)
                                           -------------    -------------   -------------
Partners' capital at December 31, 1996        67,755,009          696,460      68,451,469
Net income                                    11,138,714          116,479      11,255,193
Sale of 17,098.7004 Units of
  Limited Partnership Interest
  and General Partner's contribution
  representing 156.0603 Unit equivalents      26,633,900          243,000      26,876,900
Redemption of 3,338.4562 Units of
  Limited Partnership Interest                (5,266,488)            --        (5,266,488)
                                           -------------    -------------   -------------
Partners' capital at December 31, 1997       100,261,135        1,055,939     101,317,074
Net income                                     2,074,704           32,979       2,107,683
Redemption of 5,763.4832 Units of
  Limited Partnership Interest                (9,250,318)            --        (9,250,318)
                                           -------------    -------------   -------------
Partners' capital at December 31, 1998     $  93,085,521    $   1,088,918   $  94,174,439
                                           =============    =============   =============


</TABLE>

See notes to financial statements.

                                        F-6
<PAGE>


                   Smith Barney Mid-West Futures Fund L.P. II

                          Notes to Financial Statements

1.  Partnership Organization:

    Smith Barney Mid-West Futures Fund L.P. II (the  "Partnership") is a limited
    partnership  which was organized on June 3, 1994 under the partnership  laws
    of  the  State  of New  York  to  engage  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.
    Partnership  Units  were  being  continuously  offered  monthly  during  the
    continuous  offering  period  through April 30, 1997.  The  Partnership  was
    authorized to sell 75,000 Units.

    Smith Barney Futures   Management  Inc.  acts as the  general  partner  (the
    "General   Partner")   of  the  Partnership.   On  September  1,  1998,  the
    Partnership's   commodity  broker,  Smith Barney  Inc.,  merged with Salomon
    Brothers Inc and  changed its name to 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. ("SSBH"), which is the sole owner of
    SSB. On October  8, 1998, Travelers Group Inc. merged with Citicorp Inc. and
    changed its  name to Citigroup  Inc.  SSBH 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 his initial capital  contribution  and profits,
    if any, net of distributions.

    The Partnership will be liquidated upon the first to occur of the following:
    December 31, 2014; when the net asset value of a Unit decreases to less than
    $350 as of the close of business on any business day; or under certain other
    circumstances as defined in the Limited Partnership Agreement.

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 values on commodity  interests 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 his share of the  Partnership's  income
       and expenses.

    c. The  preparation  of financial  statements in conformity  with  generally
       accepted accounting  principles requires management to make estimates and
       assumptions that affect the reported amounts of 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.

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.  The  Partnership  will pay the  General
       Partner a monthly  administrative  fee in return for its  services to the
       Partnership  equal to 1/12 of 1% (1% per year) of month-end Net Assets of
       the Partnership. This fee may be increased or decreased at the discretion
       of the General Partner.
                                  F-7
<PAGE>

    b. Management Agreement:

       The  Management  Agreement  that the  General  Partner,  on behalf of the
       Partnership,  entered  into with the  advisor  (John W.  Henry & Company,
       Inc.) (the  "Advisor"),  provides that the Advisor has sole discretion in
       determining the investment of the assets of the Partnership  allocated to
       the Advisor by the General  Partner.  As compensation  for services,  the
       Partnership  is obligated to pay the Advisor a monthly  management fee of
       1/3 of 1% (4% per year) of  month-end  Net Assets  managed by the Advisor
       and an incentive fee, payable quarterly,  equal to 15% of the New Trading
       Profits, as defined, of the Partnership.

    c. Customer Agreement

       The  Partnership  has entered into a Customer  Agreement with SSB whereby
       SSB provides services which include, among other things, the execution of
       transactions  for the  Partnership's  account in  accordance  with orders
       placed by the  Advisor.  The  Partnership  is  obligated to pay a monthly
       brokerage  fee to SSB equal to 1/2 of 1 % of month-end Net Assets (6% per
       year) in lieu of brokerage commissions on a per trade basis. 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,  floor
       brokerage,  user,  give-up  and  NFA  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's cash is deposited by SSB
       in segregated bank accounts to the extent  required by Commodity  Futures
       Trading Commission regulations. At December 31, 1998 and 1997, the amount
       of cash held for margin  requirements  was  $9,169,011  and  $11,857,674,
       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  Treasury  bill  rate  determined  weekly  by  SSB  based  on  the
       non-competitive  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
    activity are shown in the statement of income and expenses.

    All of the commodity interests owned by the Partnership are held for trading
    purposes.  The fair value of these commodity  interests,  including  options
    thereon,  if  applicable,  at December 31, 1998 and 1997 was  $9,603,763 and
    $4,837,350,  respectively.  The  average  fair  value  during the years then
    ended,  based on a  monthly  calculation,  was  $5,751,592  and  $5,283,180,
    respectively.

5.  Distributions and Redemptions:

    Distributions of profits, if any, will be made at the sole discretion of the
    General  Partner;  however,  a limited partner may redeem all or some of his
    Units  (minimum ten Units) at the Net Asset Value thereof as of the last day
    of any month  beginning  with the first  full  month  ending at least  three
    months after trading commences on fifteen days written notice to the General
    Partner,  provided  that no  redemption  may result in the  limited  partner
    holding fewer than ten Units after such redemption is effected.
                                 F-8
<PAGE>

6.  Net Asset Value Per Unit:

    Changes  in the net asset  value per Unit of  Partnership  interest  for the
    years ended December 31, 1998, 1997 and 1996 were as follows:


<TABLE>
<CAPTION>


                                            1998         1997         1996
<S>                                          <C>          <C>          <C>
   
Net realized and unrealized gains   $      92.61 $     239.91 $     387.25
Interest income                            58.57        61.39        48.07
Expenses                                  (97.02)     (105.10)     (115.45)
                                       ---------    ---------    ---------
Increase for year                          54.16       196.20       319.87
Net asset value per Unit,
beginning of year                       1,734.13     1,537.93     1,218.06
                                       ---------    ---------    ---------
Net asset value per Unit,
end of year                         $   1,788.29 $   1,734.13 $   1,537.93
                                       =========    =========    =========

</TABLE>


7.  Financial Instrument Risks:

    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, 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 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 concentration risk because the sole
    counterparty or broker with respect to the Partnership's assets is SSB.


                                   F-9
<PAGE>




    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 notional or contractual amounts of these instruments, while not recorded
    in the  financial  statements,  reflect  the  extent  of  the  Partnership's
    involvement in these instruments.

    At  December  31,  1998,  the  notional  or   contractual   amounts  of  the
    Partnership's   commitment  to  purchase  and  sell  these  instruments  was
    $586,519,983 and $601,838,838, respectively, as detailed below. All of these
    instruments mature within one year of December 31, 1998. However, due to the
    nature of the Partnership's  business,  these instruments may not be held to
    maturity.  At  December  31,  1998,  the  fair  value  of the  Partnership's
    derivatives,  including options thereon, if applicable,  was $9,603,763,  as
    detailed below.


<TABLE>
<CAPTION>

                                December 31, 1998
                              Notional or Contractual
                              Amount of Commitments
          
<S>                            <C>           <C>              <C> 

                         To Purchase        To Sell     Fair Value
Currencies
  -OTC Contracts        $ 49,170,952   $ 15,254,946   $    507,509
Interest Rate U.S.        92,333,813    104,166,375       (699,138)
Interest Rate Non-U.S    445,015,218    474,903,517      9,800,592
Metals                          --        7,514,000         (5,200)
                        ------------   ------------   ------------
                        $586,519,983   $601,838,838   $  9,603,763
                        ============   ============   ============

                                                     
</TABLE>



                                           F-10
<PAGE>



  At December 31, 1997, the notional or contractual amounts of the Partnership's
  commitment  to  purchase  and sell  these  instruments  was  $439,703,147  and
  $674,462,459,   respectively,   and  the  fair  value  of  the   Partnership's
  derivatives,  including  options thereon,  if applicable,  was $4,837,350,  as
  detailed below.

                                December 31, 1997
                             Notional or Contractual
                              Amount of Commitments
                                                   
                          To Purchase        To Sell     Fair Value
Currencies
  -OTC Contracts         $112,161,137   $214,988,952   $   (476,904)
Interest Rate U.S.         93,164,750           --          740,813
Interest Rate Non-U.S     222,477,455    410,908,324        268,873
Metals                     11,899,805     39,967,590      3,603,175
Indices                          --        8,597,593        701,393
                         ------------   ------------   ------------
                         $439,703,147   $674,462,459   $  4,837,350
                         ============   ============   ============



8.  New Accounting Pronouncements:

    In June 1998,  the  Financial  Accounting  Standards  Board issued SFAS 133,
    Accounting for Derivative  Instruments and Hedging  Activities ("SFAS 133").
    SFAS 133 requires that an entity  recognize all derivatives in the statement
    of financial condition and measure those instruments at fair value. SFAS 133
    is effective  for fiscal years  beginning  after June 15, 1999.  SFAS 133 is
    expected  to have no  material  impact on the  financial  statements  of the
    Partnership  as all  commodity  interests  are recorded at fair value,  with
    changes therein reported in the statement of income and expenses.


                                    F-11



<PAGE>

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
     Financial  Disclosure. 
     During the last two fiscal  years and any  subsequent  interim  period,  no
independent  accountant who was engaged as the principal accountant to audit the
Partnership's financial statements has resigned or was dismissed.
                                    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 Inc. Investment  decisions
are made by John W. Henry & Company, Inc. (the "Advisor").
     Item 11.  Executive  Compensation.  
     The  Partnership  has no directors or officers.  Its affairs are managed by
Smith Barney  Futures  Management  Inc.,  its General  Partner,  which  receives
compensation  for its services,  as set forth under "Item 1.  Business." 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."  During the year ended December 31, 1998, SSB earned $5,793,730 in
brokerage  commissions  and clearing  fees.  The Advisor  earned  $3,611,428  in
management  fees and  $832,948 in incentive  fees during  1998.  During the year
ended December 31, 1998, the General Partner earned  $902,857 in  administrative
fees.

                                       33
<PAGE>


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 608.9156  (1.2%) Units of partnership  interest as of December 31,
1998.
     (c).Changes  in  control.   None.  
Item  13.  Certain   Relationships   and  Related Transactions.
     Smith  Barney  Inc.  and Smith  Barney  Futures  Management  Inc.  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
are set forth under "Item 1. Business." and "Item 11. Executive Compensation."
                             PART IV 
Item 14. Exhibits,  Financial Statement  Schedules,  and Reports  on Form 8-K.
  
     (a)  (1)   Financial   Statements:   
                Statement  of  Financial  Condition at 
                December 31, 1998 and 1997. 
                Statement of Income and Expenses for the years ended  
                December 31, 1998,  1997 and 1996
                Statement of Partners'  Capital for the years ended December 31,
                1998, 1997 and 1996.

                                       34
<PAGE>

          (2)  Financial Statement  Schedules:  Financial Data Schedule for year
               ended December 31, 1998.

          (3)  Exhibits:  

          3.1 - Certificate of Limited  Partnership  (previously filed).

          3.2  - Limited Partnership Agreement (previously filed).

          10.1 - Management Agreement among the Partnership, the General Partner
                 and John W. Henry  &  Company,  Inc.  (previously  filed).  

          10.2 - Customer Agreement between Registrant and Smith Barney Shearson
               Inc. (previously filed).

          10.3 - Form of Subscription Agreement (previously filed).

          10.4 - Letter dated February 16, 1995 from General  Partner to John W.
               Henry & Co.,  Inc.  extending  Management  Agreement  (previously
               filed).

          10.5 - Letter dated  January 25, 1996 from General  Partner to John W.
               Henry & Co., Inc. extending Management Agreement to June 30, 1996
               (previously filed).

                                       35
<PAGE>

          10.6 - Letters  extending  Management  Agreements with John W. Henry &
               Company,  Inc.  for 1996 and 1997  (filed as Exhibit  10.6 to the
               Form  10-K  for the  fiscal  year  ended  December  31,  1997 and
               incorporated herein by reference).

          10.7.Letter  from  General  Partner  to  John  W.  Henry  & Co.,  Inc.
               extending  Management  Agreement for 1998.  (filed  herein).  

          (b)  Report on Form 8-K: None Filed

                                       36

<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

                                       37
<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 Registration Statement
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 24th day of March 1999.


SMITH BARNEY MID-WEST FUTURES FUND L.P. II


By:       Smith Barney Futures Management Inc.
          (General Partner)



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


     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
Registration  Statement  has been signed below by the  following  persons in the
capacities and on the date indicated.


/s/     David J. Vogel                            /s/     Jack H. Lehman III    
David J. Vogel,                                   Jack H. Lehman III
Director, Principal Executive                     Chairman and Director
Officer and President



/s/      Michael Schaefer                         /s/    Daniel A. Dantuono     
Michael Schaefer                                  Daniel A. Dantuono
Director                                          Treasurer, Chief Financial
                                                  Officer and Director



/s/ Daniel R. McAuliffe, Jr.                       /s/   Steve J. Keltz         
Daniel R. McAuliffe, Jr.                           Steve J. Keltz
Director                                           Secretary and Director




/s/   Shelley Ullman          
Shelley Ullman
Director
                                       38