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, 1996

Commission File Number 33-80723


               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


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               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, 1996.                                    3

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

                  Notes to Financial Statements                        5 - 8

       Item 2.    Management's Discussion and Analysis
                  of Financial Condition and Results of
                  Operations                                           9 - 10


PART II - Other Information                                              11




                                      2

<PAGE>
                                     PART I

                          Item 1. Financial Statements


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





                                                                   SEPTEMBER 30,
                                                                       1996
                                                                   -------------
ASSETS
                                                                   (Unaudited)

Equity in commodity futures trading account:
  Cash and cash equivalents                                          $ 6,422,439
  Net unrealized appreciation
   on open futures contracts                                           1,223,871
  Zero Coupons, $20,100,000
   principal amount in 1996
   due November 15, 2003 at market value
   (amortized cost $12,805,655)                                       12,605,112
                                                                     -----------

                                                                     $20,251,422
                                                                     ===========


LIABILITIES AND PARTNERS' CAPITAL


Liabilities:

 Accrued expenses:
  Management fees                                                    $    27,303
  Commissions                                                             59,701
  Incentive fees                                                          22,339
  Due to Smith Barney                                                    614,864
  Other                                                                   21,372
                                                                     -----------
                                                                         745,579
                                                                     -----------
Partners' Capital

General Partner, 203 Unit
  equivalents outstanding in 1996                                        196,999
Limited Partners, 19,897
  Units of Limited Partnership
  Interest outstanding in 1996                                        19,308,844
                                                                     -----------

                                                                      19,505,843
                                                                     -----------

                                                                     $20,251,422
                                                                     ===========
See Notes to Financial Statements 
                                       3

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


                                                                PERIOD FROM
                                                              AUGUST 9, 1996
                                                             (COMMENCEMENT OF
                                                            TRADING OPERATIONS)
                                                              TO SEPTEMBER 30,
                                                                   1996
                                                               ------------

Income:
  Net gains (losses) on trading of
   commodity interests:
  Realized (losses) on closed positions                        $   (918,870)
  Change in unrealized gains on
   open positions                                                 1,223,871
                                                               ------------

                                                                    305,001

Less, brokerage commissions and clearing
  fees ($2,459)                                                    (110,991)
                                                               ------------


  Net realized and unrealized gains                                 194,010

  Unrealized depreciation on Zero Coupons                          (200,543)
  Interest income                                                   152,666
                                                               ------------

                                                                    146,133
                                                               ------------


Expenses:
  Management fees                                                    46,580
  Other                                                              21,371
  Incentive fees                                                     22,339
                                                               ------------
                                                                     90,290
                                                               ------------


  Net income                                                         55,843
                                                               ------------



  Net increase in Partners' capital                                  55,843

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


Partners' capital, end of period                               $ 19,505,843
                                                               ============

Net Asset Value per Unit
  (20,100 Units outstanding at
  September 30, 1996)                                          $     970.44
                                                               ============

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


Redemption Net Asset Value per Unit                            $   1,001.03
                                                               ============
See Notes to Financial Statements.

                                        4


<PAGE>


               SMITH BARNEY PRINCIPAL PLUS FUTURES FUND L.P. II
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1996
                                   (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 commodity interests, including
forward contracts on foreign currencies, commodity options and commodity futures
contracts,  including  futures  contracts on U.S.  Treasuries  and certain other
financial  instruments,  foreign  currencies  and stock  indices.  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 will be made for the Partnership by John W. Henry & Company,  Inc. and
Willowbrige 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, 1996 and the results of its operations for the period
from August 9, 1996  (commencement  of operations) to September 30, 1996.  These
financial statements present the results of an interim period 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
financial statement included in the Registration Statement.

     Due to the nature of commodity  trading,  the results of operations for the
interim period 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  period  from  August 9, 1996
(commencement of trading operations) to September 30, 1996 were as follows:

                                              PERIOD FROM
                                             AUGUST 9, 1996
                                            (COMMENCEMENT OF
                                           TRADING OPERATIONS)
                                             TO SEPTEMBER 30,
                                                   1996

Net realized and unrealized gains               $    9.65
Realized and unrealized losses
 on Zero Coupons                                    (9.98)
Interest Income                                      7.60
Expenses                                            (4.49)
                                                ----------

Increase for period                                  2.78

Net asset value per Unit,
 beginning of period                               967.66

Net asset value per Unit,
 end of period                                  $  970.44
                                                =========

Redemption net asset
 value per Unit *                               $1,001.03
                                                =========

* 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  estimated at $650,000  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  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 until
such time as such expenses are fully  reimbursed.  As of September 30, 1996, the
Partnership had reimbursed SB for $35,136 of offering and organization expenses.

                                      6

<PAGE>




4. Trading Activities:

     The  Partnership  was formed for the  purpose  of  trading  contracts  in a
variety of commodity interests,  including derivative financial  instruments and
derivative  commodity  instruments.  The  results of the  Partnership's  trading
activities are shown in the statement of income and expenses.

     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, 1996 was $1,223,871 and the average fair value during
the period from August 9, 1996  (commencement  of  operations)  to September 30,
1996, based on monthly calculation, was $629,221.

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 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

                                      7

<PAGE>



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,  1996,  the  notional or
contractual  amounts of the Partnership's  commitment to purchase and sell these
instruments was $142,225,229 and $35,787,242,  respectively,  as detailed below.
All of these instruments mature within one year of September 30, 1996.  However,
due to the nature of the  Partnership's  business,  these instruments may not be
held to maturity.  At September 30, 1996,  the  Partnership  had net  unrealized
trading gains of $1,223,871, as detailed below.

                                      NOTIONAL OR CONTRACTUAL          NET
                                       AMOUNT OF COMMITMENTS        UNREALIZED
                                    TO PURCHASE      TO SELL        GAIN/(LOSS)
                                    -----------      -------        -----------

Currencies
- Exchange Traded Contracts          $  2,569,000   $  4,319,263   $     28,113
- OTC Contracts                        17,344,555     20,708,566        (40,367)
Energy                                  4,168,250              0        609,421
Interest Rates-US                       2,499,694      2,453,094        (59,213)
Interest Rates-Non US                 108,018,994              0        880,882
Grains                                  2,552,458      1,095,865         16,988
Livestock                               1,069,390              0        (37,790)
Softs                                   2,858,138      1,321,089       (273,773)
Metals                                          0      5,889,365         99,677
Indices                                 1,144,750              0            (67)
                                     ------------   ------------   ------------

Total                                $142,225,229   $ 35,787,242   $  1,223,871
                                     ============   ============   ============



                                          8

<PAGE>



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 deposits  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 in the period ended
September 30, 1996.

     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.


Results of Operations

     During the period  from  August 9, 1996  (commencement  of  operations)  to
September 30, 1996,  the  Partnership's  net asset value per Unit  increased .3%
from $967.66 to $970.44.  The Partnership  experienced a net trading gain before
commissions  and expenses in the third  quarter of 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.

     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.



                                      9

<PAGE>



     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.

     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.

     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.

                                      10

<PAGE>



                            PART II OTHER INFORMATION


Item 1.      Legal Proceedings - None

Item 2.      Changes in Securities - 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



                                      11


<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:    11/11/96

     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:    11/11/96


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

Date:    11/11/96



                                      12

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