FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                 (X) QUARTERLY REPORT UNDER SECTION 13 or 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

               OR ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the Quarter ended June 30, 1999

Commission File Number 0-22489


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


      New York                            13-3862967
 (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)



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

<PAGE>




                SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II
                                    FORM 10-Q
                                      INDEX

                                                              Page
                                                             Number

PART I - Financial Information:

 Item 1. Financial Statements:
         Statement of Financial Condition
         at June 30, 1999 (unaudited)
         and December 31, 1998.                                3

         Statement of Income and Expenses
         and Partners' Capital for the three
         and six months ended June 30, 1999
         and 1998 (unaudited).                                 4

         Notes to Financial Statements
         (unaudited)                                         5 - 9

 Item 2. Management's Discussion and Analysis
         of Financial Condition and Results of
         Operations                                         10 - 13

 Item 3. Quantitative and Qualitative Disclosures
         of Market Risk                                    14 - 15

PART II - Other Information                                   16



<PAGE>

                                     PART I

                          Item 1. Financial Statements


                 SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P.II
                        STATEMENT OF FINANCIAL CONDITION



                                                      June 30,      December 31,
                                                      1999             1998
                                                     ----------    -----------
                                                    (Unaudited)
ASSETS:
Equity in commodity futures trading account:
  Cash                                               $ 8,594,209   $ 8,835,664
  Net unrealized appreciation
   on open futures contracts                           1,538,476       903,705
  Zero Coupons, $16,045,000 and $16,838,000
   principal amount in 1999 and 1998, repectively,
   due November 15, 2003 at market value
   (amortized cost $12,184,183 and $12,384,517
    in 1999 and 1998, respectively)                   12,485,417    13,446,490
                                                     -----------   -----------

                                                      22,618,102    23,185,859
 Receivable from SSB on sale of
   Zero Coupons                                          279,000       174,309
 Interest income                                          26,344        26,522

                                                     ===========   ===========
                                                     $22,923,446   $23,386,690
                                                     ===========   ===========


LIABILITIES AND PARTNERS' CAPITAL:


Liabilities:

 Accrued expenses:
  Commissions                                        $    80,160   $    77,866
  Management fees                                         35,850        35,086
  Incentive fees                                          20,500             0
  Other                                                   34,371        37,245
  Redemptions payable                                    497,937       298,339
                                                     -----------   -----------
                                                         668,818       448,536
Partners' Capital:

General Partner, 203 Unit
  equivalents outstanding  in 1999 and 1998              281,563       276,543
Limited Partners, 15,842 and 16,635
  Units of Limited Partnership Interest
  outstanding in 1999 and 1998, respectively          21,973,065    22,661,611
                                                     -----------   -----------

                                                      22,254,628    22,938,154
                                                     -----------   -----------

                                                     $22,923,446   $23,386,690
                                                     ===========   ===========


See Notes to Financial Statements.
                             3



<PAGE>

                 SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P.II
             STATEMENT OF INCOME AND EXPENSES AND PARTNERS' CAPITAL
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                              THREE MONTHS ENDED            SIX MONTHS ENDED
                                                                  JUNE 30,                         JUNE 30,
                                                        --------------------------------------------------------------
                                                              1999            1998          1999           1998
                                                        -------------    ------------   ------------   ---------------
<S>                                                           <C>             <C>            <C>              <C>
Income:
  Net gains (losses) on trading of commodity
   futures:
  Realized gains (losses) on closed positions            $    860,211    $   (510,974)   $    675,090    $   (315,775)
  Change in unrealized gains/losses on open
   positions                                                  908,234        (541,000)        634,771        (695,254)
                                                         ------------    ------------    ------------    ------------
                                                            1,768,445      (1,051,974)      1,309,861      (1,011,029)
Less, brokerage commissions including clearing fees of
  $6,808, $6,318, $13,173 and $11,269, respectively          (247,640)       (206,704)       (489,522)       (441,426)
                                                         ------------    ------------    ------------    ------------
  Net realized and unrealized gains (losses)                1,520,805      (1,258,678)        820,339      (1,452,455)
  Gain on sale of Zero Coupons                                  6,384          30,220          23,631          50,109
  Unrealized appreciation (depreciation)
  on Zero Coupons                                            (368,022)         96,819        (760,739)        103,077
  Interest income                                             276,451         277,977         551,480         578,060
                                                         ------------    ------------    ------------    ------------

                                                            1,435,618        (853,662)        634,711        (721,209)
                                                         ------------    ------------    ------------    ------------

Expenses:
  Management fees                                             103,020          86,369         202,060         184,799
  Other                                                        14,263          16,436          30,111          34,921
  Incentive fees                                               20,500            --            20,500               0
                                                         ------------    ------------    ------------    ------------
                                                              137,783         102,805         252,671         219,720
                                                         ------------    ------------    ------------    ------------
  Net income (loss)                                         1,297,835        (956,467)        382,040        (940,929)
  Redemptions                                                (497,937)     (1,061,311)     (1,065,566)     (1,960,394)
                                                         ------------    ------------    ------------    ------------
  Net increase (decrease) in Partners' capital                799,898      (2,017,778)       (683,526)     (2,901,323)
Partners' capital, beginning of period                     21,454,730      21,422,659      22,938,154      22,306,204
                                                         ------------    ------------    ------------    ------------
Partners' capital, end of period                         $ 22,254,628    $ 19,404,881    $ 22,254,628    $ 19,404,881
                                                         ------------    ------------    ------------    ------------
Net asset value per Unit
  (16,045 and 17,260 Units outstanding
  at June 30, 1999 and 1998, respectively)               $   1,387.01    $   1,124.27    $   1,387.01    $   1,124.27
                                                         ------------    ------------    ------------    ------------
Net gain (loss) per Unit of Limited Partnership
  Interest and General Partner Unit equivalent           $      79.11    $     (52.54)   $      24.73    $     (51.72)
                                                         ------------    ------------    ------------    ------------
</TABLE>


See Notes To Financial Statements.
                                        4


<PAGE>


                SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II
                          NOTES TO FINANCIAL STATEMENTS
                                  June 30, 1999
                                   (UNAUDITED)

1.  General

     Smith Barney  Principal Plus Futures Fund L.P. II (the  "Partnership")  was
formed  under  the laws of the  State  of New York on  November  16,  1995.  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 maintains 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").

     Between April 3, 1996 (commencement of offering period) and August 8,
1996, 19,896 Units of limited partnership interest were sold at $1,000 per unit.
The  proceeds of the  offering  were held in an escrow  account  until August 9,
1996, at which time they were turned over to the Partnership for trading.

     Smith  Barney  Futures  Management  Inc.  acts as the general  partner (the
"General  Partner") of the  Partnership.  The  Parnership'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.
("SSBH"),  which is the sole owner of SSB. SSBH is a wholly owned  subsidiary of
Citigroup  Inc. All trading  decisions are made for the  Partnership  by John W.
Henry & Company,  Inc.  and  Willowbridge  Associates  Inc.  (collectively,  the
"Advisors").

     The accompanying  financial statements are unaudited but, in the opinion of
management,  include  all  adjustments,  consisting  only  of  normal  recurring
adjustments,  necessary for a fair presentation of the  Partnership's  financial
condition at June 30, 1999 and the results of its  operations  for the three and
six months ended June 30, 1999 and 1998. These financial  statements present the
results of interim periods and do not include all disclosures  normally provided
in annual financial statements.  It is suggested that these financial statements
be read in conjunction with the  Partnership's  annual report on Form 10-K filed
with the  Securities  and Exchange  Commission  for the year ended  December 31,
1998.

     Due to the nature of commodity trading, the results of operations for
the interim periods presented should not be considered indicative of the results
that may be expected for the entire year.

                                   5
<PAGE>


                SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


2. Net Asset Value Per Unit:

Changes in net asset value per Unit for the three and six months  ended June 30,
1999 and 1998 were as follows:

<TABLE>
<CAPTION>

                                      THREE-MONTHS ENDED         SIX-MONTHS ENDED
                                          JUNE  30,                  JUNE 30,
                                        1999        1998         1999        1998
                                    ----------------------    --------------------
<S>                                      <C>        <C>            <C>        <C>
Net realized and unrealized
 gains (losses)                 $      92.71 $     (69.14)$      51.11 $     (79.36)
Realized and unrealized gains
 (losses) on Zero Coupons             (22.05)        6.98       (44.34)        8.36
Interest income                        16.85        15.27        33.18        31.09
Expenses                               (8.40)       (5.65)      (15.22)      (11.81)
                                    ---------    ---------    ---------    ---------

Increase (decrease) for
 period                                79.11       (52.54)       24.73       (51.72)

Net Asset Value per Unit,
  beginning of period               1,307.90     1,176.81     1,362.28     1,175.99
                                   ---------    ---------    ---------    ---------

Net Asset Value per Unit,
  end of period                 $   1,387.01 $   1,124.27 $   1,387.01 $   1,124.27
                                   =========    =========    =========    =========
</TABLE>


3. 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.

         The  Customer  Agreement  between  the  Partnership  and SSB  gives the
Partnership the legal right to net unrealized gains and losses.

         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 June 30, 1999 and December 31, 1998 was $1,538,476
and $903,705, respectively, and the average fair value during the six and twelve
months then ended based on monthly  calculation,  was  $1,111,531  and $982,632,
respectively.
                              6

<PAGE>


4. Financial Instrument Risk:

         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, 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 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.
                                   7

<PAGE>

         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  June  30,  1999,  the  notional  or  contractual   amounts  of  the
Partnership's  commitment to purchase and sell these instruments was $11,613,422
and  $197,171,656,  respectively,  as detailed below.  All of these  instruments
mature  within  one year of June 30,  1999.  However,  due to the  nature of the
Partnership's  business,  these instruments may not be held to maturity. At June
30, 1999, the fair value of the  Partnership's  derivatives,  including  options
thereon, if applicable, was $1,538,476, as detailed below.

                                   JUNE 30, 1999
                                 NOTIONAL OR CONTRACTUAL
                                 AMOUNT OF COMMITMENTS
                               TO PURCHASE      TO SELL       FAIR VALUE
Currencies
- Exchange Traded Contracts   $  1,365,000   $ 14,554,000   $     65,700
- OTC Contracts                    130,125     12,592,964        138,307
Energy                           4,747,898           --          269,994
Grains                             142,000        789,144          4,531
Interest Rates U.S.                   --       45,405,445        160,283
Interest Rates Non U.S.               --      119,141,453        635,205
Livestock                          522,240        448,400         75,860
Metals                           1,913,420      3,526,865        153,320
Softs                              789,354        713,385          8,938
Indices                          2,003,385           --           26,338
                              ------------   ------------   ------------

Totals                        $ 11,613,422   $197,171,656   $  1,538,476
                              ============   ============   ============

                                   8

<PAGE>


         At December 31, 1998, the Partnership's commitment to purchase and sell
these instruments was $57,847,242 and $52,605,224,  respectively,  and, the fair
value  of  the  Partnership's   derivatives,   including  options  thereon,   if
applicable, was $903,705, as detailed below.

                                  DECEMBER 31, 1998
                                 NOTIONAL OR CONTRACTUAL
                                  AMOUNT OF COMMITMENTS
                               TO PURCHASE      TO SELL    FAIR VALUE

Currencies
 - Exchange Traded Contracts   $   558,900   $   552,600   $    (6,300)
 - OTC Contracts                 3,487,638     1,291,020        24,255
Energy                                --         812,280        27,010
Grains                                --         810,535        27,312
Interest Rates U.S.              7,605,156     8,066,963       (65,138)
Interest Rates Non U.S.         44,897,799    38,932,518       818,733
Metals                             379,338     1,396,540        33,623
Softs                              918,411       742,768        44,210
                               -----------   -----------   -----------

Total                          $57,847,242   $52,605,224   $   903,705
                               ===========   ===========   ===========

                                   9
<PAGE>


                                    PART I

Item 2.        Management's Discussion and Analysis  of Financial  Condition and
               Results of Operations.

Liquidity and Capital Resources

         The Partnership  does not engage in the sale of goods or services.  Its
only assets are its equity in its commodity futures trading account,  consisting
of  cash  and  cash  equivalents,  Zero  Coupons,  net  unrealized  appreciation
(depreciation)  on open  futures and forward  contracts,  commodity  options and
interest  receivable.  Because of the low margin  deposit  normally  required in
commodity  futures  trading,  relatively  small  price  movements  may result in
substantial losses to the Partnership.  While substantial losses could lead to a
substantial  decrease in  liquidity  no such losses  occurred  during the second
quarter of 1999.

         The  Partnership's  capital  consists  of  capital  contributions,   as
increased or decreased by gains or losses on commodity  futures trading and Zero
Coupons,  expenses,  interest income,  redemptions of Units and distributions of
profits, if any.

         For the six months ended June 30, 1999,  Partnership  capital decreased
3.0% from  $22,938,154 to  $22,254,628.  This decrease was  attributable  to the
redemption of 793 Units totalling $1,065,566 partially offset by a net gain from
operations  of  $382,040  for  the  six  months  ended  June  30,  1999.  Future
redemptions  can  impact  the  amount  of funds  available  for  investments  in
commodity contract positions in subsequent periods.

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.

                  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  Advisors,  the brokers and  exchanges  through which the Advisors
trade, 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.

                              10
<PAGE>


                  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 has involved over 450 people.  As of June
30, 1999, SSB has completed all compliance and certification work.

                  The systems and components  supporting  the General  Partner's
business that require  remediation  have been brought into Year 2000 compliance.
Final testing and certification was completed as of June 30, 1999.

                  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 received  statements from the Advisors
that they have completed their Year 2000 remediation program.

                  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.  The  firm  also
participated in the streetwide testing that was conducted from March through May
1999.

                  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 has
prepared comprehensive, written contingency plans so that alternative procedures
and a framework for critical  decisions are defined before any potential  crisis
occurs.
                              11

<PAGE>

                  The  goal  of  year  2000  contingency  planning  is a set  of
alternate  procedures to be used in the event of a critical  system failure by a
supplier of  counterparty.  Planning  work was  completed in January  1999,  and
testing of  alternative  procedures  will be  completed  in the third and fourth
quarter of 1999.

Results of Operations

         During the  Partnership's  second  quarter of 1999, the net asset value
per unit increased 6.0% from $1,307.90 to $1,387.01 as compared to a decrease of
4.5% in the second  quarter of 1998. The  Partnership  experienced a net trading
gain before brokerage commissions and related fees in the second quarter of 1999
of  $1,768,445.  Gains were primarily  attributable  to the trading of commodity
futures in currencies,  energy,  U.S. and non-U.S.  interest  rates,  livestock,
indices and metals and were partially offset by losses  recognized in trading of
grains  and  softs.  The  Partnership  experienced  a net  trading  loss  before
brokerage  commissions  and  related  fees  in the  second  quarter  of  1998 of
$1,051,974. These losses were primarily attributable to the trading of commodity
futures in currencies, energy, grains, U.S. and non-U.S. interest rates, indices
and metals and were partially offset by gains in softs.

         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  Advisors  to
identify  correctly  those price trends.  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.

         Interest Income on 80% of the Partnership's  daily equity maintained in
cash was earned at the 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.   Interest  income  decreased  by  $1,526  and  $26,580,
respectively,  for the three and six months  ended June 30,  1999 as compared to
the corresponding  periods in 1998. The decrease in interest income is primarily
due to the effect of net redemptions on the  Partnership's  equity maintained in
cash during 1999.

         Brokerage commissions are calculated on the adjusted net asset value on
the  last  day of each  month  and  are  affected  by  trading  performance  and
redemptions.  Accordingly, they must be compared in relation to the fluctuations


                              12
<PAGE>

in the monthly net asset value. Brokerage commissions and fees for the three and
six months ended June 30, 1999  increased by $40,936 and $48,096,  respectively,
as compared to the corresponding periods in 1998.

         Management fees are calculated as a percentage of the Partnership's net
asset value as of the end of each month and are affected by trading  performance
and redemptions. Management fees increased by $16,651 and $17,261, respectively,
as compared to the corresponding periods in 1998.

         Incentive fees are based on the new trading  profits  generated by each
Advisor as defined in the  advisory  agreements  between  the  Partnership,  the
General  Partner and each  Advisor.  Trading  performance  for the three and six
months ended June 30, 1999 resulted in incentive fees of $20,500.  There were no
incentive fees earned for the three and six months ended June 30, 1998.

                                   13

<PAGE>


  Item 3.Quantitative and Qualitative Disclosures of 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.

           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.

                              14

<PAGE>


         The following table indicates the trading Value at Risk associated with
the  Partnership's  open  positions by market  category as of June 30, 1999. All
open position  trading risk exposures of the  Partnership  have been included in
calculating the figures set forth below. As of June 30, 1999, the  Partnership's
total  capitalization was $22,254,628.  There has been no material change in the
trading Value at Risk information  previously disclosed in the Form 10-K for the
year ended December 31, 1998.


                        June 30, 1999
                                        % of Total
Market Sector           Value at Risk  Capitalization

Currencies                $  392,726      1.77%
Energy                       308,000      1.38%
Grains                        34,700      0.16%
Interest rates U.S.          258,900      1.16%
Interest rates Non-U.S       717,179      3.22%
Livestock                     20,800      0.09%
Metals                       154,500      0.70%
Softs                         85,366      0.38%
Indices                      144,046      0.65%
                          ----------       ----

Total                     $2,116,217      9.51%
                          ==========      ====

                              15


<PAGE>


                            PART II OTHER INFORMATION

Item 1.   Legal Proceedings

               For  information  concerning  a purported  class  action  against
          numerous  broker-dealers  including  Salomon  Smith  Barney,  see  the
          description that appears in the sixth paragraph under the caption Item
          3. "Legal  Proceedings"  on Form 10-K for the year ending December 31,
          1998. SSBH has filed a motion to dismiss the amended complaint

Item 2.  Changes in Securities and Use of Proceeds - None

Item 3.  Defaults Upon Senior Securities - None

Item 4.  Submission of Matters to a Vote of Security Holders - None

Item 5.  Other Information - None

Item 6.  (a) Exhibits - None

         (b) Reports on Form 8-K - None

                                   16

<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 report to
be signed on its behalf by the undersigned, thereunto duly authorized.
SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II


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


By:   /s/ David J. Vogel, President
          David J. Vogel, President

Date:  8/13/99

           Pursuant to the requirements of the Securities  Exchange Act of 1934,
this  report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.
By:   Smith Barney Futures Management Inc.
           (General Partner)


By:   /s/ David J. Vogel, President
          David J. Vogel, President


Date:  8/13/99


By     /s/ Daniel A. Dantuono
           Daniel A. Dantuono
           Chief Financial Officer and
           Director

Date:  8/13/99

                         17