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 September 30, 1997

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
                  September 30, 1997 and December 31,
                  1996.                                                  3

                  Statement of Income and Expenses and 
                  Partners' Capital for the Three and Nine
                  Months  ended  September  30, 1997 and 
                  for the period from August 9, 1996 
                  (commencement   of  trading operations)
                  to September 30, 1996.                                 4

                  Notes to Financial Statements                        5 - 9

       Item 2.    Management's Discussion and Analysis
                  of Financial Condition and Results of
                  Operations                                          10 - 11

PART II - Other Information                                              12



                                        2


<PAGE>

                                     PART I

                          Item 1. Financial Statements


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



                                                      SEPTEMBER 30, DECEMBER 31,
                                                           1997         1996
                                                       ------------  -----------
ASSETS:
                                                       (Unaudited)

Equity in commodity futures trading account:
  Cash and cash equivalents                            $ 8,146,882   $ 9,941,903
  Net unrealized appreciation
   on open futures contracts                               606,024       241,456
  Zero Coupons, $19,556,000 and $20,100,000
   principal amount in 1997 and 1996, repectively,
   due November 15, 2003 at market value
   (amortized cost $13,273,244 and $13,012,176
    in 1997 and 1996, respectively)                     13,544,681    13,093,140
                                                       -----------   -----------

                                                        22,297,587    23,276,499
 Receivable from SB on sale of
   Zero Coupons                                            177,257            --
                                                       -----------   -----------

                                                       $22,474,844   $23,276,499
                                                       ===========   ===========



LIABILITIES AND PARTNERS' CAPITAL:


Liabilities:

 Accrued expenses:
  Commissions                                          $    71,957   $    74,500
  Management fees                                           32,736        33,970
  Incentive fees                                                --       421,541
  Due to Smith Barney                                      177,963       449,877
  Other                                                     28,370        39,050
  Redemptions payable                                      288,689
                                                       -----------   -----------
                                                           599,715     1,018,938
                                                       -----------   -----------
Partners' Capital:

General Partner, 203 Unit
  equivalents outstanding  in 1997 and 1996                227,074       224,790
Limited Partners, 19,353 and 19,897
  Units of Limited Partnership Interest
  outstanding in 1997 and 1996, respectively            21,648,055    22,032,771
                                                       -----------   -----------

                                                        21,875,129    22,257,561
                                                       -----------   -----------

                                                       $22,474,844   $23,276,499
                                                       ===========   ===========
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>


                                                                              PERIOD FROM
                                                                            AUGUST 9, 1996
                                                       THREE-MONTHS          (COMMENCEMENT OF       NINE-MONTHS
                                                           ENDED            TRADING OPERATIONS)        ENDED
                                                       SEPTEMBER 30,       TO SEPTEMBER 30,        SEPTEMBER 30,
                                                           1997                  1996                   1997

                                                      ----------------    --------------------    -----------------
<S>                                                           <C>                  <C>                    <C>      
Income:
  Net gains (losses) on trading of
   commodity interests:
  Realized (losses) on closed positions                    $ (382,602)             $ (918,870)            $ 39,578
  Change in unrealized gains/losses on
   open positions                                             288,368               1,223,871              364,568
                                                      ----------------    --------------------    -----------------

                                                              (94,234)                305,001              404,146

Less, brokerage commissions and clearing
  fees ($4,847, $2,459 and $11,666, respectively)            (242,201)               (110,991)            (722,871)
                                                      ----------------    --------------------    -----------------


  Net realized and unrealized gains (losses)                 (336,435)                194,010             (318,725)
  Gain on sale of Zero Coupons                                  3,431                                           14
  Unrealized appreciation (depreciation) 
   on Zero Coupons                                            317,996                (200,543)             190,473
  Interest income                                             301,060                 152,666              898,278
                                                      ----------------    --------------------    -----------------

                                                              286,052                 146,133              770,040

                                                      ----------------    --------------------    -----------------

Expenses:
  Management fees                                              99,525                  46,580              303,910
  Other                                                        13,600                  21,371               41,271
  Incentive fees                                                    -                  22,339              190,380
                                                      ----------------    --------------------    -----------------
                                                              113,125                  90,290              535,561

                                                      ----------------    --------------------    -----------------

  Net income                                                  172,927                  55,843              234,479

Proceeds from offering - Limited Partners                                          19,897,000
                         General Partner                                              203,000
Offering and organization expense                                                    (650,000)
Redemptions                                                  (288,689)                                    (616,911)

                                                      ----------------    --------------------    -----------------

  Net Increase (decrease) in Partners' capital               (115,762)             19,505,843             (382,432)

Partners' capital, beginning of period                     21,990,891                       -           22,257,561

                                                      ----------------    --------------------    -----------------

Partners' capital, end of period                         $ 21,875,129            $ 19,505,843         $ 21,875,129

                                                      ================    ====================    =================
Net Asset Value per Unit
  (19,556 and 20,100 Units outstanding at
  September 30, 1997 and 1996, respectively)               $ 1,118.59                $ 970.44           $ 1,118.59

                                                      ================    ====================    =================
Net income per Unit of Limited Partnership
   Interest and General Partnership Unit equivalent            $ 8.61                  $ 2.78              $ 11.25

                                                      ================    ====================    =================

Redemption Net Asset Value per Unit                        $ 1,127.69              $ 1,001.03           $ 1,127.69

                                                      ================    ====================    =================

</TABLE>

See Notes to Financial Statements.
                                                    4



<PAGE>



               SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II
                  NOTES TO STATEMENT OF FINANCIAL CONDITION
                              September 30, 1997
                                 (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  interest  payments  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, 19,897 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. Smith Barney Inc. ("SB"), an affiliate of
the General Partner,  acts as commodity broker for the Partnership.  All trading
decisions  are  currently  being  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 September 30, 1997 and the results of its  operations for the three
and nine months ended September 30, 1997. 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,
1996.

       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 nine  months  ended
September  30,  1997 and for the period  from  August 9, 1996  (commencement  of
trading operations, to September 30, 1996 were as follows:

                                                     PERIOD FROM
                                                    AUGUST 9, 1996
                                                    (COMMENCEMENT
                                      THREE-MONTHS    OF TRADING    NINE-MONTHS
                                          ENDED     OPERATIONS) TO     ENDED
                                      SEPTEMBER 30,  SEPTEMBER 30, SEPTEMBER 30,
                                           1997           1996           1997

Net realized and unrealized
 gains (losses)                         $  (16.98)     $    9.65      $  (16.46)
Realized and unrealized
 gains (losses) on Zero
 Coupons                                    16.22          (9.98)          9.81
Interest income                             15.20           7.60          45.00
Expenses                                    (5.71)         (4.49)        (26.76)
Other                                       (0.12)             0          (0.34)
                                        ---------      ---------      ---------

Increase for period                          8.61           2.78          11.25

Net Asset Value per Unit,
 beginning of period                     1,109.98         967.66       1,107.34
                                        ---------      ---------      ---------

Net Asset Value per Unit,
 end of period                          $1,118.59      $  970.44      $1,118.59
                                        =========      =========      =========

Redemption Net Asset
 Value per Unit*                        $1,127.69      $1,001.03      $1,127.69
                                        =========      =========      =========


* For the purpose of a redemption,  any accrued  liability for  reimbursement of
offering and  organization  expenses will not reduce  redemption net asset value
per unit.

3. Offering and Organization Costs:

      Offering and  organization  expenses of $560,000  relating to the issuance
and marketing of Units offered were initially paid by SB. The accrued  liability
for  reimbursement  of offering and  organization  expenses  will not reduce Net
Asset Value per Unit for any purpose (other than financial reporting), including
calculation

                                      6

<PAGE>



of advisory  and  brokerage  fees and the  redemption  value of Units.  Interest
earned by the  Partnership  will be used to  reimburse  SB for the  offering and
organization  expenses of the Partnership plus interest at the prime rate quoted
by the  Chase  Manhattan  Bank  until  such  time as  such  expenses  are  fully
reimbursed.  As of September 30, 1997,  the  Partnership  has  reimbursed SB for
$382,037 of offering and organization expenses and $34,531 of interest.

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.

        The  Customer  Agreement  between  the  Partnership  and  SB  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,  at  September  30, 1997 was $606,024 and the average fair value during
the nine months ended  September  30, 1997,  based on monthly  calculation,  was
$718,759.

5.    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
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

                                      7

<PAGE>



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 SB.

        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  September  30,  1997,  the  notional or
contractual  amounts of the Partnership's  commitment to purchase and sell these
instruments was $113,974,807 and $33,461,540,  respectively,  as detailed below.
All of these instruments mature within one year of September 30, 1997.  However,
due to the nature of the  Partnership's  business,  these instruments may not be
held to maturity.  At September  30, 1997,  the fair value of the  Partnership's
derivatives, including options thereon, was $606,024, as detailed below.

                                    NOTIONAL OR CONTRACTUAL
                                      AMOUNT OF COMMITMENTS
                                  TO PURCHASE      TO SELL           FAIR VALUE

Currencies
 - OTC Contracts                 $ 11,519,030     $15,435,479         $(20,116)
Energy                              4,439,487               0           70,073
Interest Rates U.S.                12,505,219               0            7,406
Interest Rates Non-U.S.            78,257,382      14,927,474          426,554
Grains                              1,538,412               0          (33,720)
Livestock                             571,830               0           (8,190)
Softs                               1,260,248         835,215           (9,874)
Metals                              3,883,199         200,571          105,383
Indices                                     0       2,062,801           68,508
                                  ------------    ------------        --------

Totals                           $113,974,807     $33,461,540         $606,024
                                 =============    ============        ========

                                          8

<PAGE>



6.  Pending Merger:

         On September 24, 1997,  Travelers Group Inc.  ("Travelers") and Salomon
Inc  ("Salomon")  announced  an agreement  and plan of merger  pursuant to which
Salomon will become a wholly  owned  subsidiary  of  Travelers  and Smith Barney
Holdings  Inc., the parent company of Smith Barney Inc. and Smith Barney Futures
Management  Inc.,  will be merged into  Salomon  forming  Salomon  Smith  Barney
Holdings Inc. The transaction is expected to be completed by year-end 1997.


                                       9

<PAGE>






                                    PART I

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

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 third
quarter of 1997.

      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  nine  months  ended  September  30,  1997,  Partnership  capital
decreased 1.7% from  $22,257,561 to $21,875,129.  This decrease was attributable
to the  redemption  of 544 Units  resulting in an outflow of $616,911  which was
partially  offset by net income from  operations of $234,479 for the nine months
ended September 30, 1997.

Results of Operations

      During the  Partnership's  third quarter of 1997,  the net asset value per
Unit  increased 0.8% from $1,109.98 to $1,118.59 as compared to the period ended
September  30, 1996 in which the net asset value per unit  increased  0.3%.  The
Partnership  experienced a net trading loss before  commissions  and expenses in
the third quarter of 1997 of $94,234.  Losses were  recognized in the trading of
commodity futures in currencies,  energy products,  grains, U.S. interest rates,
softs and  livestock  and were  partially  offset by gains in  metals,  non-U.S.
interest  rates and  indices.  The  Partnership  experienced  a net trading gain
before  commissions  and  expenses  in the period  ended  September  30, 1996 of
$305,001.  Gains were  recognized in the trading of commodity  futures in energy
products,  interest  rates,  and  metals  and were  partially  offset  by losses
recognized in agricultural  products,  currencies,  and indices. The Partnership
commenced  trading  operations on August 9, 1996, and, as a result,  comparative
information for the period ending September 30, 1996 is not reflective of a full
three months.

                                      10

<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  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 Treasury bill rate  determined  weekly by SB based
on the average  non-competitive yield on 3-month U.S. Treasury bills maturing in
30 days. Interest income for the three months ended September 30, 1997 increased
by $148,394 as compared to the period ended September 30, 1996.

      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.  Commissions and clearing fees for the three months ended September
30, 1997  increased  by $131,210 as compared to the period ended  September  30,
1996.

      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 for the three months ended September 30, 1997
increased by $52,945 as compared to the period ended September 30, 1996.

      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.  Incentive fees of $0 and $190,380 were earned
for the three and nine  months  ended  September  30,  1997.  Incentive  fees of
$22,339 were earned in the period ended September 30, 1996.



                                      11

<PAGE>



                           PART II OTHER INFORMATION

Item 1.  Legal Proceedings - None

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



                                      12

<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:    11/12/97

       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:    11/12/97


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

Date:    11/12/97



                                      13

<PAGE>