HUTTON INVESTORS FUTURES FUND L P II - 10-K Annual Report

Back to GetFilings.com

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the year ended December 31, 2002

Commission File Number 0-16526
-------

HUTTON INVESTORS FUTURES FUND L.P. II
-------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

Delaware 13-3406160
---------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

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

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

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

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

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

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

Indicated by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Acts).
Yes No X
---- -----

Limited Partnership Units with an aggregate value of $17,815,847 were
outstanding and held by non-affiliates as of the last business day of the
registrants most recently completed second fiscal quarter.

As of February 28, 2003, 2,350.0950 Limited Partnership Units were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
None

PART I

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

(a) General development of business. Hutton Investors Futures Fund L.P. II
(the "Partnership") is a limited partnership organized on March 31, 1987, under
the Delaware Revised Uniform Limited Partnership Act and commenced trading on
July 24, 1987. The Partnership engages in speculative trading of commodity
futures contracts and other commodity interests, including futures contracts on
United States Treasury bills and other financial instruments, foreign currencies
and stock indices. Redemptions of Units of Limited Partnership Interest in the
Partnership ("Units") for the years ended December 31, 2002, 2001 and 2000 are
reported in the Statement of Partners' Capital on page F-6 under "Item 8.
Financial Statements and Supplementary Data."
The general partner has agreed to make capital contributions, if necessary,
so that its general partnership interest will be equal to the greater of (i) an
amount to entitle it to 1% of each material item of Partnership income, loss,
deduction or credit and (ii) the greater of (a) 1% of the partners'
contributions to the Partnership or (b) $25,000. The Partnership will be
liquidated upon the first of the following to occur: December 31, 2013; the net
asset value per Unit falls below $400 as of the close of any business day; or
under certain circumstances as defined in the Limited Partnership Agreement of
the Partnership (the "Limited Partnership Agreement").
Smith Barney Futures Management LLC acts as the general partner (the
"General Partner") of the Partnership. The Partnership's commodity broker is

2

Salomon Smith Barney Inc. ("SSB"). SSB is an affiliate of the General Partner.
The General Partner is wholly owned by Salomon Smith Barney Holdings Inc.
("SSBHI"), which is the sole owner of SSB. SSBHI is a wholly owned subsidiary of
Citigroup Inc.
The Partnership trades futures, forwards and options contracts, if
applicable, on commodities on United States of America and foreign commodity
exchanges through a commodity brokerage account maintained with SSB.
Under the Limited Partnership Agreement of the Partnership (the "Limited
Partnership Agreement"), the General Partner has sole responsibility for the
management of the business and affairs of the Partnership, but may delegate
trading discretion to one or more trading advisors.
As of December 31, 2002, the General Partner has entered into advisory
agreements (the "Management Agreements") with TrendLogic Associates Inc. and
with John W. Henry & Company, Inc. (collectively, the "Advisors"). The
Management Agreements provide that the Advisors will have sole discretion in
determining the investment of the assets of the Partnership but that the
Advisors will have no authority to select the commodity broker through whom
transactions will be executed.
The Management Agreements can be terminated by the General Partner at any
time for any reason whatsoever. The Advisors may terminate the Management
Agreements for any reason upon 30 days' notice to the General Partner. The
Advisors may also terminate the Agreements if the trading policies of the
Partnership are changed in a manner that the Advisor reasonably believes will

3

adversely affect the performance of its trading strategies.
Pursuant to the terms of the Management Agreements, the Partnership will
pay each Advisor an incentive fee, payable quarterly, equal to 20% of each
Advisor's New Trading Profits (as defined in the Management Agreements).
Under the terms of a customer agreement between the Partnership and SSB,
(the "Customer Agreement") the Partnership is obligated to pay commodity
brokerage commissions at $50 per round-turn futures transaction and $25 per
option transaction (inclusive of National Futures Association ("NFA"), floor
brokerage, exchange and clearing fees). The Customer Agreement between the
Partnership and SSB gives the Partnership the legal right to net unrealized
gains and losses. Through April 30, 2000 the General Partner (through SSB)
invested approximately eighty percent (80%) of the Partnership's assets in
interest bearing U.S. Treasury obligations (primarily U.S. Treasury Bills).
Effective May 1, 2000, SSB has agreed to pay the Partnership interest on 80% of
the average daily equity maintained in cash in its account during each month at
the rate of the average non-competitive yield of 13 week U.S. Treasury Bills as
determined at the weekly auctions thereof during the month.
(b) Financial information about industry segments. The Partnership's
business consists of only one segment, speculative trading of commodity
interests. The Partnership does not engage in sales of goods or services. The
Partnership's net income (loss) from operations for the years ended December 31,

4

2002, 2001, 2000, 1999 and 1998 are set forth under "Item 6. Selected Financial
Data." The Partnership's capital at December 31, 2002, was $19,486,774.
(c) Narrative description of business.
See Paragraphs (a) and (b) above.
(i) through (xii) - Not applicable.
(xiii) - The Partnership has no employees.
(d) Financial Information About Geographic Areas. The Partnership does not
engage in sales of goods or services or own any long lived assets, and therefore
this item is not applicable.
Item 2. Properties.
----------
The Partnership does not own or lease any properties. The General Partner
operates out of facilities provided by its affiliate, SSB.
Item 3. Legal Proceedings.
-----------------
This section describes the major pending legal proceedings, other than
ordinary routine litigation incidental to the business, to which Salomon Smith
Barney Holdings Inc. ("SSBHI") or its subsidiaries is a party or to which any of
their property is subject. There are no material legal proceedings pending
against the Partnership or the General Partner.
Salomon Smith Barney Inc. ("SSB") is a New York corporation with its
principal place of business at 388 Greenwich St., New York, New York 10013. SSB
is registered as a broker-dealer and futures commission merchant ("FCM"), and
provides futures brokerage and clearing services for institutional and retail
participants in the futures markets. SSB and its affiliates also provide

5

investment banking and other financial services for clients worldwide.
There have been no administrative, civil or criminal actions pending, on
appeal or concluded against SSB or any of its individual principals within the
past five years that management believes may have a material impact on SSB's
ability to act as an FCM. In the ordinary course of its business, SSB is a party
to various claims and regulatory inquiries. Proceedings deemed to be material
for purposes of Commodity Futures Trading Commission ("CFTC") disclosure
requirements are:
In December 1996, a complaint seeking unspecified monetary damages was
filed by Orange County, California against numerous brokerage firms, including
SSB, in the U.S. Bankruptcy Court for the Central District of California (County
of Orange et al. v. Bear Stearns & Co. Inc. et al.). The complaint alleged,
among other things, that the brokerage firms recommended and sold unsuitable
securities to Orange County. SSB and the remaining brokerage firms settled with
Orange County in mid 1999. SSB paid $1,333,333 to settle this matter.
In June 1998, complaints were filed in the U.S. District Court for the
Eastern District of Louisiana in two actions (Board of Liquidations, City Debt
of the City of New Orleans v. Smith Barney Inc. et ano. and The City of New
Orleans v. Smith Barney Inc. et ano.), in which the City of New Orleans seeks a
determination that Smith Barney Inc. and another underwriter will be responsible
for any damages that the City may incur in the event the Internal Revenue
Service denies tax exempt status to the City's General Obligation Refunding

6

Bonds Series 1991. The complaints were subsequently amended. SSB has asked the
court to dismiss the amended complaints. The court denied the motion but stayed
the case. Subsequently, the City withdrew its lawsuit.
In November 1998, a class action complaint was filed in the U.S. District
Court for the Middle District of Florida (Dwight Brock as Clerk for Collier
County v. Merrill Lynch, et al.). The complaint alleged that, pursuant to a
nationwide conspiracy, 17 broker-dealer defendants, including SSB, charged
excessive mark-ups in connection with advanced refunding transactions. Among
other relief, plaintiffs sought compensatory and punitive damages, restitution
and/or rescission of the transactions and disgorgement of alleged excessive
profits. In October 1999, the plaintiff filed a second amended complaint. In
November 1999, SSB moved to dismiss the amended complaint. In May 2001, the
parties reached and the court preliminarily approved a tentative settlement. SSB
paid $1,063,457 to settle this matter and in September 2001, the court approved
the settlement.
In connection with the Louisiana and Florida matters, the IRS and SEC
conducted an industry-wide investigation into the pricing of Treasury securities
in advanced refunding transactions. In April 2000, SSB and several other
broker-dealers entered into a settlement with the IRS and the SEC. Thereafter,
the plaintiffs filed voluntary discontinuances.
In December 1998, SSB was one of 28 market making firms that reached a
settlement with the SEC in the matter titled In the Matter of Certain Market

7

Making Activities on NASDAQ. As part of the settlement of that matter, SSB,
without admitting or denying the factual allegations, agreed to an order which
required that it: (i) cease and desist from committing or causing any violations
of Sections 15(c)(1) and (2) of the Securities Exchange Act of 1934 and SEC
Rules 15c1-2, 15c2-7 and 17a-3 thereunder, (ii) pay penalties totaling
approximately $760,000 and (iii) submit certain policies and procedures to an
independent consultant for review.
In March 1999, a complaint seeking in excess of $250 million was filed by a
hedge fund and its investment advisor against SSB in the Supreme Court of the
State of New York, County of New York (MKP Master Fund, LDC et al. v. Salomon
Smith Barney Inc.). The complaint included allegations that, while acting as
prime broker for the hedge fund, SSB breached its contracts with plaintiffs,
misused their monies and engaged in tortious conduct, including breaching its
fiduciary duties. SSB asked the court to dismiss the complaint in full. In
October 1999, the court dismissed the tort claims, including the breach of
fiduciary duty claims. The court allowed the breach of contract and conversion
claims to stand. In December 1999, SSB filed an answer and asserted
counterclaims against the investment advisor. In response to plaintiff's motion
to strike out the counterclaims, in January 2000, SSB amended its counterclaims
against the investment advisor to seek indemnification and contribution.
Plaintiffs moved to strike SSB's amended counterclaims in February 2000. In
September 2000, the court denied plaintiffs' motion to dismiss SSB's
counterclaims based on indemnification and contribution. In August 2002, SSB
filed a motion for summary judgment.

8

In April 2002, numerous class action complaints were filed against Salomon
Smith Barney and other investment banks in the U.S. District Court for the
Southern District of New York alleging violations of certain federal securities
laws (including Section 11 of the Securities Act of 1933 and Section 10(b) of
the Securities Exchange Act of 1934) with respect to the allocation of shares
for certain initial public offerings and related aftermarket transactions and
damage to investors caused by allegedly biased research analyst reports. On
February 19, 2003, the court issued an opinion denying the defendants' motion to
dismiss. Also pending in the Southern District of New York against SSB and other
investment banks are several alleged class actions which have been consolidated
into a single class action alleging violations of certain federal and state
antitrust laws in connection with the allocation of shares in initial public
offerings underwritten by such parties. The defendants in these actions have
moved to dismiss the consolidated amended complaint but the court has not yet
rendered a decision on those motions.
In April 2002, Citigroup and, in one case, SSB were named as defendants
along with, among others, commercial and/or investment banks, certain current
and former Enron officers and directors, lawyers and accountants in two alleged
consolidated class action complaints that were filed in the U.S. District Court
for the Southern District of Texas seeking unspecified damages. One action,
brought on behalf of individuals who purchased Enron securities (Newby, et al.
v. Enron Corp., et al.), alleges violations of Sections 11 and 15 of the
Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange

9

Act of 1934 and the other action, brought on behalf of current and former Enron
employees (Tittle, et al. v. Enron Corp., et al.), alleges violations of ERISA
and RICO, as well as negligence and civil conspiracy. On May 8, 2002, Citigroup
and SSB filed motions to dismiss the complaints. On December 19, 2002, the
motions to dismiss the Newby complaint were denied. The motion to dismiss the
complaint in Tittle remains pending.
Since April 2002, SSB and several other broker dealers have received
subpoenas and/or requests for information from various governmental and
self-regulatory agencies and Congressional committees, including the NASD Inc.
which has raised issues about SSB's internal e-mail retention practices and
research on Winstar Communications, Inc. With respect to Winstar, SSB has
entered into a settlement agreement. SSB agreed to pay a penalty in the amount
of $5 million and did not admit to any wrongdoing. With respect to other such
matters, on December 20, 2002, Citigroup and a number of other broker/dealers
reached a settlement-in-principle with the SEC, the NASD Inc., the New York
Stock Exchange (the "NYSE") and the Attorney General of New York of all issues
raised in their research, initial public offerings allocation and
spinning-related inquiries. In addition, with respect to issues raised by the
NASD, the NYSE and the SEC about SSB's and other firms' e-mail retention
practices, SSB and several other broker/dealers and the NASD, the NYSE and the
SEC entered into a settlement agreement in December 2002. SSB agreed to pay a
penalty in the amount of $1.65 million and did not admit to any allegation of
wrongdoing.

10

Since May 2002, Citigroup, SSB and certain principals, executive officers
and current and former employees have been named as defendants in a number of
alleged class action complaints filed in the U.S. District Court for the
Southern District of New York by purchasers of various securities alleging they
violated federal securities law, including Sections 10 and 20 of the Securities
Exchange Act of 1934 by issuing research reports without reasonable basis and
failing to disclose conflicts of interest in connection with published
investment research, including Global Crossing, WorldCom, Inc., AT&T, Winstar,
Rhythm Net Connections, Level 3 Communications, MetroMedia Fiber Network, XO
Communications and Williams Communications Group Inc. Nearly all of these
actions are pending before a single judge in the U.S. District Court for the
Southern District of New York for coordinated proceedings. The court has
consolidated these actions into nine separate categories corresponding to the
companies named above.
Additional actions have been filed against Citigroup and certain of its
affiliates, including SSB, and certain of their current and former directors,
officers and employees, along with other parties, including: (1) three putative
class actions filed in state courts and federal courts on behalf of persons who
maintained accounts with SSB asserting, among other things, common law claims,
claims under state statutes, and claims under the Investment Advisers Act of
1940, for allegedly failing to provide objective and unbiased investment
research and investment management, seeking, among other things, return of fees
and commissions; (2) approximately fifteen actions filed in different state
courts by individuals asserting, among other claims, common law claims and

11

claims under state securities laws, for allegedly issuing research reports
without a reasonable basis in fact and for allegedly failing to disclose
conflicts of interest with companies in connection with published investment
research, including Global Crossing and WorldCom, Inc.; (3) approximately five
actions filed in different state courts by pension and other funds asserting
common law claims and statutory claims under, among other things, state and
federal securities laws, for allegedly issuing research reports without a
reasonable basis in fact and for allegedly failing to disclose conflicts of
interest with companies in connection with published investment research,
including WorldCom, Inc. and Qwest Communications International Inc.; and (4)
more than two hundred arbitrations asserting common law claims and statutory
claims under, among other things, state and federal securities laws, for
allegedly issuing research reports without a reasonable basis in fact and for
allegedly failing to disclose conflicts of interest with companies in connection
with published investment research.
In July 2002, Citigroup, SSB and various of its affiliates and certain of
their officers and other employees were named as defendants, along with, among
others, commercial and/or investment banks, certain current and former Enron
officers and directors, lawyers and accountants in an alleged class action filed
in the U.S. District Court for the Southern District of New York on behalf of
purchasers of the Yosemite Notes and Enron Credit-Linked Notes, among other
securities (Hudson Soft Co., Ltd v. Credit Suisse First Boston Corporation, et

12

al.). The complaint alleges violations of RICO and of Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934 and seeks unspecified damages.
Additional actions have been filed against Citigroup and certain of its
affiliates, including SSB, along with other parties, including (i) three actions
brought in state courts by state pension plans for alleged violations of state
securities law and common law fraud and unjust enrichment; (ii) an action by
banks that participated in two Enron revolving credit facilities, alleging
fraud, gross negligence and breach of implied duties in connection with
defendants' administration of a credit facility with Enron; (iii) an action
brought by several funds in connection with secondary market purchases of Enron
Corp. debt securities alleging violations of federal securities law, including
Section 11 of the Securities Act of 1933, and claims for fraud and
misrepresentation; (iv) a series of alleged class actions by purchasers of
NewPower Holdings common stock alleging violations of federal securities law,
including Section 11 of the Securities Act of 1933 and Section 10(b) of the
Securities Exchange Act of 1934; (v) an action brought by two investment funds
in connection with purchases of Enron-related securities for alleged violations
of state securities and unfair competition statutes; (vi) an action brought by
several investment funds and fund owners in connection with purchases of notes

13

of the Osprey I and Osprey II Trusts for alleged violation of state and federal
securities laws and claims for common law fraud, misrepresentation and
conspiracy; (vii) an action brought by several investment funds and fund owners
in connection with purchases of notes of the Osprey I and Osprey II Trusts for
alleged violation of state and federal securities laws and state unfair
competition laws and claims for common law fraud and misrepresentation; (viii)
an action brought by the Attorney General of Connecticut in connection with
various commercial and investment banking services provided to Enron; (ix) a
putative class action brought by clients of SSB in connection with research
reports concerning Enron, alleging breach of contract; (x) actions brought by
several investment funds in connection with the purchase of notes and/or
certificates of the Osprey Trusts, the Marlin Trust, and the Marlin Water trust,
as well as the purchase of other Enron or Enron-related securities, alleging
violation of state and federal securities laws, and common law civil conspiracy
and fraud; (xi) an action brought by a retirement and health benefits plan in
connection with the purchase of certain Enron notes, alleging violation of
federal securities law, including Section 11 of the Securities Act of 1933, as
amended, violations of state securities and unfair competition law, and common
law fraud and breach of fiduciary duty; and (xii) an action brought by two
broker/dealers in connection with the purchase of certain notes, alleging
violation of federal and state securities laws. Several of these cases have been
consolidated with the Newby action and stayed pending the Court's decision on
the pending motions of certain defendants to dismiss Newby.
Additionally, Citigroup and certain of its affiliates, including SSB, have
provided substantial information to, and have entered into substantive
discussions with, the Securities and Exchange Commission regarding certain of

14

their transactions with Enron and a transaction with Dynegy Inc. Citigroup and
certain of its affiliates, including SSB, also have received subpoenas and
requests for information from various other regulatory and governmental agencies
and Congressional committees, as well as from the Special Examiner in the Enron
bankruptcy, regarding certain transactions and business relationships with Enron
and its affiliates. Citigroup and such affiliates, including SSB, are
cooperating fully with all such requests.
Citigroup and SSB are involved in a number of lawsuits arising out of the
underwriting of debt securities of WorldCom, Inc. These lawsuits include
putative class actions filed in July 2002 by alleged purchasers of WorldCom debt
securities in the United States District Court for the Southern District of New
York (Above Paradise Investments Ltd. V. Worldcom, Inc., et al.; Municipal
Police Employees Retirement System Of Louisiana V. Worldcom, Inc., et al.), and
in the United States District Court for the Southern District of Mississippi
(Longacre Master Fund V. Worldcom, Inc., et al.). These putative class action
complaints assert violations of federal securities law, including Sections 11
and 12 of the Securities Act of 1933, as amended, and seek unspecified damages
from the underwriters.
On October 11, 2002, the Above Paradise and Municipal Police Employees
lawsuits filed in the United States District Court for the Southern District of
New York were superseded by the filing of a consolidated putative class action
complaint in the United States District Court for the Southern District of New
York (In Re Worldcom, Inc. Securities Litigation). In the consolidated

15

complaint, in addition to the claims of violations by the underwriters of the
federal securities law, including Sections 11 and 12 of the Securities Act of
1933, as amended, the plaintiffs allege violations of Section 10(b) of the
Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated
thereunder, by SSB arising out of alleged conflicts of interest of SSB and Jack
Grubman. The plaintiffs continue to seek unspecified compensatory damages. In
addition to the consolidated class action complaint, the Southern District of
Mississippi class action has been transferred by the Judicial Panel on
MultiDistrict Litigation to the Southern District of New York for centralized
pre-trial proceedings with other WorldCom-related actions.
In addition to the several putative class actions that have been commenced,
certain individual actions have been filed in various federal and state courts
against Citigroup and SSB, along with other parties, concerning WorldCom debt
securities including individual state court actions brought by approximately 18
pension funds and other institutional investors in connection with the
underwriting of debt securities of WorldCom alleging violations of Section 11 of
the Securities Act of 1933, as amended, and, in one case, violations of various
state securities laws and common law fraud. Most of these actions have been
removed to federal court and have been transferred to the Southern District of
New York for centralized pre-trial proceedings with other WorldCom-related
actions.
A putative class action on behalf of participants in WorldCom's 401(k)

16

salary savings plan and those WorldCom benefit plans covered by ERISA alleging
violations of ERISA and common law fraud (Emanuele V. Worldcom, Inc., Et Al.),
which was commenced in the United States District Court for the District of
Columbia, also has been transferred by the Judicial Panel on MultiDistrict
Litigation to the Southern District of New York for centralized pre-trial
proceedings with other WorldCom-related actions. In December 2002, the claims
against SSB and the other underwriters were dismissed without prejudice. On or
about January 27, 2003, lead plaintiff in a consolidated putative class action
in the United States District Court for the District of New Jersey (In Re AT&T
Corporation Securities Litgation) sought leave to amend its complaint on behalf
of purchasers of AT&T common stock asserting claims against, among others, AT&T
Corporation, to add as named defendants Citigroup, SSB and certain executive
officers and current and former employees, asserting claims under federal
securities laws for allegedly issuing research reports without a reasonable
basis in fact and for allegedly failing to disclose conflicts of interest with
AT&T in connection with published investment research.
On or about January 28, 2003, lead plaintiff in a consolidated putative
class action in the United States District Court for the Southern District of
New York (In Re Global Crossing, Ltd. Securities Litigation) filed a
consolidated complaint on behalf of purchasers of the securities of Global
Crossing and its subsidiaries, which names as defendants, among others,
Citigroup, SSB and certain executive officers and current and former employees,

17

asserting claims under federal securities laws for allegedly issuing research
reports without a reasonable basis in fact and for allegedly failing to disclose
conflicts of interest with Global Crossing in connection with published
investment research.

SSBHI and various subsidiaries have also been named as defendants in
various matters incident to and typical of the businesses in which they are
engaged. These include numerous civil actions, arbitration proceedings and other
matters in which SSBHI's broker-dealer subsidiaries have been named, arising in
the normal course of business out of activities as a broker and dealer in
securities, as an underwriter of securities, as an investment banker or
otherwise. In the opinion of SSBHI's management, none of these actions is
expected to have a material adverse effect on the results of operations,
consolidated financial condition or liquidity of SSBHI and its subsidiaries.
Item 4. Submission of Matters to a Vote of Security Holders.

There were no matters submitted to the security holders for a vote
during the year ended December 31, 2002.

PART II

Item 5.Market for Registrant's Common Equity and Related Security Holder
Matters.

(a) Market Information. The Partnership has issued no stock. There is no
public market for the Units of Limited Partnership Interest.

(b) Holders. The number of holders of Units of Partnership Interest as of
December 31, 2002 was 263.

18

(c) Distribution. The Partnership did not declare a distribution in 2002
or 2001.
(d) Use of Proceeds. There were no additional sales in the years ended
December 31, 2002, 2001 and 2000.

19

Item 6. Selected Financial Data. Net realized and unrealized trading gains
(losses), interest income, net income (loss), increase (decrease) in Net Asset
Value per Unit for the years ended December 31, 2002, 2001, 2000, 1999 and 1998
and total assets as of December 31, 2002, 2001, 2000, 1999 and 1998 were as
follows:

2002 2001 2000 1999 1998
----------- ------------ ----------- ------------ ------------

Net realized and unrealized
trading gains (losses) net
of brokerage commissions
and clearing fees of $700,652,
$661,355, $731,557, $740,877
and $725,585, respectively $ 5,902,156 $ (49,114) $ 417,740 $ (3,188,507) $ 2,062,231

Interest income 218,809 446,258 699,719 735,148 784,546
------------ ------------ ------------ ------------ ------------

$ 6,120,965 $ 397,144 $ 1,117,459 $ (2,453,359) $ 2,846,777
============ ============ ============ ============ ============

Net income (loss) $ 4,992,978 $ 276,352 $ 1,097,353 $ (2,746,410) $ 2,350,037
============ ============ ============ ============ ============

Increase (decrease)
in Net Asset Value
per Unit $ 1,997.72 $ 88.23 $ 594.95 $ (773.76) $ 644.44
============ ============ ============ ============ ============

Total assets $ 19,778,354 $ 15,777,724 $ 16,864,975 $ 19,553,584 $ 23,279,963
============ ============ ============ ============ ============

20

Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
(1) Liquidity. The Partnership does not engage in sales of goods or
services. The Partnership's only assets are its equity in its commodity futures
trading account, consisting of cash and net unrealized appreciation
(depreciation) on open positions. Because of the low margin deposits normally
required in commodity trading, relatively small price movements may result in
substantial losses to the Partnership. Substantial losses resulting from such
price movements could lead to a material decrease in liquidity. To minimize this
risk, the Partnership follows certain policies including:
(a) Partnership funds are invested only in commodity interests which are
traded in sufficient volume to permit, in the opinion of the Advisors, ease of
taking and liquidating positions.
(b) The Partnership diversifies its positions among various commodities.
The Partnership does not initiate additional positions in a commodity if such
additional positions would result in a net long or short position in such
commodity requiring as margin more than 15% of the net assets of the
Partnership.
(c) The Partnership does not initiate additional positions in any commodity
if such additional positions would result in aggregate positions for all
commodities requiring as margin more than 66 2/3% of the Partnership's net
assets.
(d) The Partnership may occasionally accept delivery of a commodity. Unless
such delivery is disposed of promptly by retendering the warehouse receipt

21

representing the delivery to the appropriate clearing house, the physical
commodity position is fully hedged.
(e) The Partnership does not employ the trading technique commonly known as
"pyramiding," in which the speculator uses unrealized profits on existing
positions as margin for the purchase or sale of additional positions in the same
or related commodities.
(f) The Partnership does not utilize borrowings except short-term
borrowings if the Partnership takes delivery of any cash commodities.
(g) The Advisors may, from time to time, employ trading strategies such as
spreads or straddles on behalf of the Partnership. The term "spread" or
"straddle" describes a commodity futures trading strategy involving the
simultaneous buying and selling of futures contracts on the same commodity but
involving different delivery dates or markets and in which the trader expects to
earn a profit from a widening or narrowing of the difference between the prices
of the two contracts.
The Partnership is party to financial instruments with off-balance sheet
risk, including derivative financial instruments and derivative commodity
instruments, in the normal course of its business. These financial instruments
may include forwards, futures and options, whose value is based upon an
underlying asset, index, or reference rate, and generally represent future
commitments to exchange currencies or cash flows, or to purchase or sell other
financial instruments at specified terms at specified future dates. Each of
these instruments is subject to various risks similar to those relating to the

22

underlying financial instruments including market and credit risk. The General
Partner monitors and controls the Partnership's risk exposure on a daily basis
through financial, credit and risk management monitoring systems and accordingly
believes that it has effective procedures for evaluating and limiting the credit
and market risks to which the Partnership is subject. (See also Item 8.
"Financial Statements and Supplementary Data." for further information on
financial instrument risk included in the notes to financial statements.)
Other than the risks inherent in commodity trading, the Partnership knows
of no trends, demands, commitments, events or uncertainties which will result in
or which are reasonably likely to result in the Partnership's liquidity
increasing or decreasing in any material way. The Limited Partnership Agreement
requires dissolution of the Partnership under certain circumstances as defined
in the Limited Partnership Agreement including, but not limited to, a decrease
in the net asset value of a Unit to less than $500 as of the close of business
on any business day, or a decrease in the aggregate net assets of the
Partnership to less than $1,000,000, or on December 31, 2007.
(2) Capital resources. (a) The Partnership has made no material commitments
for capital expenditures as of the end of the latest fiscal period.
(b) The Partnership's capital consists of the capital contributions of the
Partners as increased or decreased by gains or losses on trading of commodity
interests, expenses, interest income, redemptions of Units and distributions of

23

profits, if any. Gains or losses on commodity trading cannot be predicted.
Market movements in commodities are dependent upon fundamental and technical
factors which the Partnership's Advisors may or may not be able to identify.
Partnership expenses consist of, among other things, commissions and incentive
fees. The level of these expenses is dependent upon the level of trading and the
ability of the Advisors to identify and take advantage of price movements in the
commodity markets, in addition to the level of net assets maintained.
No forecast can be made as to the level of redemptions in any given period.
A limited partner may redeem some or all of his Units at the net asset value
thereof as of the last day of any calendar quarter on 10 business days' notice
to the General Partner. For the year ended December 31, 2002, 144 Units were
redeemed for a total of $1,094,685. For the year ended December 31, 2001,
120.9050 Units were redeemed for a total of $784,312. For the year ended
December 31, 2000, 795 Units were redeemed for a total of $3,854,993.
(3) Results of Operations. For the year ended December 31, 2002, the Net
Asset Value per Unit increased 32.5% from $6,141.80 to $8,139.52. For the year
ended December 31, 2001, the Net Asset Value per Unit increased 1.5% from
$6,053.57 to $6,141.80. For the year ended December 31, 2000, the Net Asset
Value per Unit increased 10.9% from $5,458.62 to $6,053.57.
The Partnership experienced net trading gains of $6,602,808 before
commissions and expenses for the year ended December 31, 2002. Gains were

24

primarily attributable to the trading of commodity futures in currencies,
energy, grains, U.S. and non-U.S. interest rates, livestock and indices and were
partially offset by losses in the trading of softs and metals.
The Partnership experienced net trading gains of $612,241 before
commissions and expenses for the year ended December 31, 2001. Gains were
primarily attributable to the trading of commodity futures in currencies, U.S.
and non-U.S. interest rates, livestock and indices products and were partially
offset by losses realized in energy, metals, softs and grains.
The Partnership experienced net trading gains of $1,149,297 before
commissions and expenses for the year ended December 31, 2000. Gains were
primarily attributable to the trading in currencies, energy products, U.S.
interest rates and indices and were partially offset by losses recognized in the
trading of metals, grains, livestock, non-U.S. interest rates and softs.
Commodity markets are highly volatile. Broad price fluctuations and rapid
inflation increase the risks involved in commodity trading, but also increase
the possibility of profit. The profitability of the Partnership depends on the
existence of major price trends and the ability of the Advisors to identify
those price trends correctly. Price trends are influenced by, among other
things, changing supply and demand relationships, weather, governmental,
agricultural, commercial and trade programs and policies, national and
international political and economic events and changes in interest rates. The
Advisors' technical trading methods do not generally take into account such

25

fundamental factors. To the extent that market trends exist and the Advisors are
able to identify them, the Partnership expects to increase capital through
operations.
(4) Operational Risk
The Partnership is directly exposed to market risk and credit risk, which
arise in the normal course of its business activities. Slightly less direct, but
of critical importance, are risks pertaining to operational and back office
support. This is particularly the case in a rapidly changing and increasingly
global environment with increasing transaction volumes and an expansion in the
number and complexity of products in the marketplace.
Such risks include:
Operational/Settlement Risk - the risk of financial and opportunity loss and
legal liability attributable to operational problems, such as inaccurate pricing
of transactions, untimely trade execution, clearance and/or settlement, or the
inability to process large volumes of transactions. The Partnership is subject
to increased risks with respect to its trading activities in emerging market
securities, where clearance, settlement, and custodial risks are often greater
than in more established markets.
Technological Risk - the risk of loss attributable to technological limitations
or hardware failure that constrain the Partnership's ability to gather, process,
and communicate information efficiently and securely, without interruption, with
customers, among units within the Partnership, and in the markets where the
Partnership participates.
Legal/Documentation Risk - the risk of loss attributable to deficiencies in the

26

documentation of transactions (such as trade confirmations) and customer
relationships (such as master netting agreements) or errors that result in
noncompliance with applicable legal and regulatory requirements.
Financial Control Risk - the risk of loss attributable to limitations in
financial systems and controls. Strong financial systems and controls ensure
that assets are safeguarded, that transactions are executed in accordance with
management's authorization, and that financial information utilized by
management and communicated to external parties, including the Partnership's
unitholders, creditors, and regulators, is free of material errors.
(5) Critical Accounting Policies
The General Partner believes that the accounting policies that will be most
critical to the Partnership's financial condition and results of operations
relate to the valuation of the Partnership's positions. The majority of the
Partnership's positions will be exchange-traded futures contracts, which will be
valued daily at settlement prices published by the exchanges. If applicable, the
Partnership's spot and forward foreign currency contracts will also be valued at
published daily settlement prices or at dealers' quotes. The General Partner
expects that under normal circumstances substantially all of the Partnership's
assets will be valued by objective measures and without difficulty.

27

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

28

in the markets traded by the Partnership of market movements far exceeding
expectations could result in actual trading or non-trading losses far beyond the
indicated Value at Risk or the Partnership's experience to date (i.e., "risk of
ruin"). In light of the foregoing as well as the risks and uncertainties
intrinsic to all future projections, the inclusion of the quantification in this
section should not be considered to constitute any assurance or representation
that the Partnership's losses in any market sector will be limited to Value at
Risk or by the Partnership's attempts to manage its market risk.
Quantifying the Partnership's Trading Value at Risk
The following quantitative disclosures regarding the Partnership's market
risk exposures contain "forward-looking statements" within the meaning of the
safe harbor from civil liability provided for such statements by the Private
Securities Litigation Reform Act of 1995 (set forth in Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).
All quantitative disclosures in this section are deemed to be forward-looking
statements for purposes of the safe harbor except for statements of historical
fact (such as the terms of particular contracts and the number of market risk
sensitive instruments held during or at the end of the reporting period).
The Partnership's risk exposure in the various market sectors traded by the
Advisors is quantified below in terms of Value at Risk. Due to the Partnership's
mark-to-market accounting, any loss in the fair value of the Partnership's open
positions is directly reflected in the Partnership's earnings (realized or
unrealized).

29

Exchange maintenance margin requirements have been used by the Partnership
as the measure of its Value at Risk. Maintenance margin requirements are set by
exchanges to equal or exceed the maximum losses reasonably expected to be
incurred in the fair value of any given contract in 95%-99% of any one-day
intervals. The maintenance margin levels are established by dealers and
exchanges using historical price studies as well as an assessment of current
market volatility (including the implied volatility of the options on a given
futures contract) and economic fundamentals to provide a probabilistic estimate
of the maximum expected near-term one-day price fluctuation. Maintenance margin
has been used rather than the more generally available initial margin, because
initial margin includes a credit risk component which is not relevant to Value
at Risk.
In the case of market sensitive instruments which are not exchange traded
(almost exclusively currencies in the case of the Partnership), the margin
requirements for the equivalent futures positions have been used as Value at
Risk. In those rare cases in which a futures-equivalent margin is not available,
dealers' margins have been used.
The fair value of the Partnership's futures and forward positions does not
have any optionality component. However, certain of the Advisors trade commodity
options. The Value at Risk associated with options is reflected in the following
table as the margin requirement attributable to the instrument underlying each
option. Where this instrument is a futures contract, the futures margin, and
where this instrument is a physical commodity, the futures-equivalent

30

maintenance margin has been used. This calculation is conservative in that it
assumes that the fair value of an option will decline by the same amount as the
fair value of the underlying instrument, whereas, in fact, the fair values of
the options traded by the Partnership in almost all cases fluctuate to a lesser
extent than those of the underlying instruments.
In quantifying the Partnership's Value at Risk, 100% positive correlation
in the different positions held in each market risk category has been assumed.
Consequently, the margin requirements applicable to the open contracts have
simply been added to determine each trading category's aggregate Value at Risk.
The diversification effects resulting from the fact that the Partnership's
positions are rarely, if ever, 100% positively correlated have not been
reflected.

31

The Partnership's Trading Value at Risk in Different Market Sectors
The following table indicates the trading Value at Risk associated with the
Partnership's open positions by market category as of December 31, 2002 and the
highest and lowest value at any point during the year. All open position trading
risk exposures of the Partnership have been included in calculating the figures
set forth below. As of December 31, 2002, the Partnership's total capitalization
was $19,486,774.
December 31, 2002

Year to Date
% of Total High Low
Market Sector Value at Risk Capitalization Value at Risk Value at Risk
- -------------------------------------------------------------------------------------------------

Currencies
- - Exchange Traded Contracts $ 12,008 0.06% $ 13,775 $ 9,145
- - OTC Contracts 912,221 4.69% 1,051,702 303,337
Energy 299,000 1.53% 299,000 24,500
Grains 36,750 0.19% 47,450 20,750
Interest rates U.S. 119,700 0.61% 235,500 57,370
Interest rates Non-U.S 775,144 3.98% 833,947 183,290
Livestock 5,600 0.03% 7,800 3,600
Metals
- - Exchange Traded Contracts 96,000 0.49% 96,000 35,000
- - OTC Contracts 165,500 0.85% 184,850 17,250
Softs 74,718 0.38% 116,180 26,327
Indices 216,683 1.11% 498,415 157,432
---------- ----------
Total $2,713,324 13.92%
========== ==========

32

As of December 31, 2001, the Partnership's total capitalization was $15,588,481.

December 31, 2001

Year to Date
% of Total High Low
Market Sector Value at Risk Capitalization Value at Risk Value at Risk
- -------------------------------------------------------------------------------------------------

Currencies
- - Exchange Traded Contracts $ 11,750 0.08% $ 18,945 $ 7,362
- - OTC Contracts 661,703 4.25% 860,105 253,382
Energy 158,000 1.01% 202,000 21,500
Grains 20,750 0.13% 182,600 18,100
Interest rates U.S. 140,760 0.90% 240,250 72,400
Interest rates Non-U.S 499,289 3.20% 860,747 248,459
Livestock 3,600 0.02% 6,000 3,000
Metals
- - Exchange Traded Contracts 84,000 0.54% 109,000 32,000
- - OTC Contracts 31,250 0.20% 79,950 12,000
Softs 67,952 0.44% 91,428 24,813
Indices 200,723 1.29% 388,963 199,624
---------- ----------
Total $1,879,777 12.06%
========== ==========

33

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

34

historical fact and (ii) the descriptions of how the Partnership manages its
primary market risk exposures - constitute forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act. The Partnership's primary market risk exposures as well as the
strategies used and to be used by the General Partner and the Advisors for
managing such exposures are subject to numerous uncertainties, contingencies and
risks, any one of which could cause the actual results of the Partnership's risk
controls to differ materially from the objectives of such strategies. Government
interventions, defaults and expropriations, illiquid markets, the emergence of
dominant fundamental factors, political upheavals, changes in historical price
relationships, an influx of new market participants, increased regulation and
many other factors could result in material losses as well as in material
changes to the risk exposures and the management strategies of the Partnership.
There can be no assurance that the Partnership's current market exposure and/or
risk management strategies will not change materially or that any such
strategies will be effective in either the short- or long- term. Investors must
be prepared to lose all or substantially all of their investment in the
Partnership.
The following were the primary trading risk exposures of the Partnership as
of December 31, 2002, by market sector.
Interest Rates. Interest rate movements directly affect the price of the
futures positions held by the Partnership and indirectly affect the value of its
stock index and currency positions. Interest rate movements in one country as

35

well as relative interest rate movements between countries materially impact the
Partnership's profitability. The Partnership's primary interest rate exposure is
to interest rate fluctuations in the United States and the other G-7 countries.
However, the Partnership also takes futures positions on the government debt of
smaller nations -- e.g., Australia. The General Partner anticipates that G-7
interest rates will remain the primary market exposure of the Partnership for
the foreseeable future.
Currencies. The Partnership's currency exposure is to exchange rate
fluctuations, primarily fluctuations which disrupt the historical pricing
relationships between different currencies and currency pairs. These
fluctuations are influenced by interest rate changes as well as political and
general economic conditions. The General Partner does not anticipate that the
risk profile of the Partnership's currency sector will change significantly in
the future. The currency trading Value at Risk figure includes foreign margin
amounts converted into U.S. dollars with an incremental adjustment to reflect
the exchange rate risk inherent to the dollar-based Partnership in expressing
Value at Risk in a functional currency other than dollars.
Stock Indices. The Partnership's primary equity exposure is to equity price
risk in the G-7 countries. The stock index futures traded by the Partnership are
limited to futures on broadly based indices. As of December 31, 2002, the
Partnership's primary exposures were in the NASDAQ, EUREX (Germany) and Nikkei
(Japan) stock indices. The General Partner anticipates little, if any, trading

36

in non-G-7 stock indices. The Partnership is primarily exposed to the risk of
adverse price trends or static markets in the major U.S., European and Japanese
indices. (Static markets would not cause major market changes but would make it
difficult for the Partnership to avoid being "whipsawed" into numerous small
losses.)
Metals. The Partnership's primary metal market exposure is to fluctuations
in the price of gold and silver. Although certain of the Advisors will from time
to time trade base metals such as aluminum and copper, the principal market
exposures of the Partnership have consistently been in the precious metals, gold
and silver. The General Partner anticipates that gold and silver will remain the
primary metals market exposure for the Partnership.
Softs. The Partnership's primary commodities exposure is to agricultural
price movements which are often directly affected by severe or unexpected
weather conditions. Coffee, cocoa, cotton and sugar accounted for the
substantial bulk of the Partnership's commodity exposure as of December 31,
2002.
Energy. The Partnership's primary energy market exposure is oil price
movements, often resulting from political developments in the Middle East. Oil
prices can be volatile and substantial profits and losses have been and are
expected to continue to be experienced in this market.
Qualitative Disclosures Regarding Non-Trading Risk Exposure
The following were the only non-trading risk exposures of the Partnership
as of December 31, 2002.

37

Foreign Currency Balances. The Partnership's primary foreign currency
balances are in Japanese yen, Euro dollar and Canadian dollar. The Advisor
regularly converts foreign currency balances to dollars in an attempt to control
the Partnership's non-trading risk.
Qualitative Disclosures Regarding Means of Managing Risk Exposure
- -----------------------------------------------------------------
The General Partner monitors and controls the Partnership's risk exposure
on a daily basis through financial, credit and risk management monitoring
systems and accordingly believes that it has effective procedures for evaluating
and limiting the credit and market risks to which the Partnership is subject.
The General Partner monitors the Partnership's performance and the
concentration of its open positions, and consults with the Advisors concerning
the Partnership's overall risk profile. If the General Partner felt it necessary
to do so, the General Partner could require certain of the Advisors to close out
individual positions as well as enter certain positions traded on behalf of the
Partnership. However, any such intervention would be a highly unusual event. The
General Partner primarily relies on the Advisors' own risk control policies
while maintaining a general supervisory overview of the Partnership's market
risk exposures.
Each Advisor applies its own risk management policies to its trading. The
Advisors often follow diversification guidelines, margin limits and stop loss
points to exit a position. The Advisors' research of risk management often
suggests ongoing modifications to their trading programs.
As part of the General Partner's risk management, the General Partner

38

periodically meets with the Advisors to discuss their risk management and to
look for any material changes to the Advisors' portfolio balance and trading
techniques. The Advisors are required to notify the General Partner of any
material changes to their programs.

39

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

HUTTON INVESTORS FUTURES FUND L.P. II
INDEX TO FINANCIAL STATEMENTS

Page
Number

Oath or Affirmation. F-2

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

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

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

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

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

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

Selected unaudited quarterly financial data. F-14

F-1

To The Limited Partners of
Hutton Investors Futures Fund L.P. II

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

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

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

F-2

Report of Independent Auditors

To the Partners of
Hutton Investors Futures Fund L.P. II:

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

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

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

KPMG LLP
New York, New York
March 7, 2003

F-3

Report of Independent Accountants

To the Partners of
Hutton Investors Futures Fund L.P. II:

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

PricewaterhouseCoopers LLP
New York, New York
February 28, 2002

F-4

Hutton Investors
Futures Fund L.P. II
Statements of Financial Condition
December 31, 2002 and 2001

2002 2001
Assets:
Equity in commodity futures trading account:
Cash (restricted $2,945,807 and $2,038,947 in 2002 and 2001,
respectively) (Note 3b) $17,912,046 $15,100,778
Net unrealized appreciation on open positions * 1,850,754 658,139
----------- -----------
19,762,800 15,758,917
Interest receivable 15,554 18,807
----------- -----------
$19,778,354 $15,777,724
----------- -----------

Liabilities and Partners' Capital:
Liabilities:
Accrued expenses:
Commissions (Note 3b) $ 72,150 $ 80,549
Professional fees 37,521 36,355
Other 2,840 4,779
Redemptions payable (Note 5) 179,069 67,560
----------- -----------
291,580 189,243
----------- -----------
Partners' capital (Notes 1 and 5):
General Partner, 44 Unit equivalents outstanding
in 2002 and 2001 358,139 270,239
Limited Partners 2,350.0950 and 2,494.0950 Units of Limited
Partnership Interest outstanding in 2002 and 2001, respectively 19,128,635 15,318,242
----------- -----------
19,486,774 15,588,481
----------- -----------
$19,778,354 $15,777,724
----------- -----------

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

F-5

Hutton Investors
Futures Fund L.P. II
Condensed Schedule of Investments
December 31, 2002

Sector Number of Contracts Contract Fair Value
- ------ ------------------- -------- ----------
Currencies Unrealized depreciation on forward contracts (2.21)% $(431,679)
Unrealized appreciation on forward contracts 6.14%
EURO 21,400,000 EURO/USD 2.94%, March 19, 2003 573,398
Other 3.20% 623,722
---------
Total forward contracts 3.93% 765,441
---------
Futures contracts sold 0.05% 11,000
Futures contracts purchased 0.14% 26,588
---------
Total futures contracts 0.19% 37,588
---------
Total Currencies 4.12% 803,029
---------

Total Energy 0.75% Futures contracts purchased 0.75% 145,228
---------

Grains Futures contracts sold 0.43% 84,575
Futures contracts purchased (0.03)% (5,385)
---------
Total Grains 0.40% 79,190
---------

Interest Rates Futures contracts sold (0.48)% (92,719)
Futures contracts purchased 0.72% 140,228
---------
Total Interest Rates U.S. 0.24% 47,509
---------

Total Interest Rates Non-U.S. 3.22% Futures contracts purchased 3.22% 627,010
---------

Livestock Futures contracts sold 0.00% * 740
Futures contracts purchased 0.04% 7,240
---------
Total Livestock 0.04% 7,980
---------

Metals Futures contracts sold (0.01)% (1,470)
Futures contracts purchased 1.03% 200,645
---------
Total futures contracts 1.02% 199,175

Unrealized depreciation on forward contracts (0.54)% (106,773)
Unrealized appreciation on forward contracts 0.11% 22,030
---------
Total forward contracts (0.43)% (84,743)
---------
Total Metals 0.59% 114,432
---------

Softs Futures contracts sold 0.02% 3,245
Futures contracts purchased 0.21% 41,050
---------
Total Softs 0.23% 44,295
---------

Indices Futures contracts sold 0.19% 36,488
Futures contracts purchased (0.28)% (54,407)
---------
Total Indices (0.09)% (17,919)
---------

Total Fair Value 9.50% $1,850,754
==========
Investments % of Investments
Country Composition at Fair Value at Fair Value
- ----------------------- -------------------------- ------------------------
Australia $55,016 2.97%
Canada 4,532 0.24
Germany 228,676 12.36
Japan 197,886 10.69
United Kingdom 64,517 3.49
United States 1,300,127 70.25
--------------------- ------------------------
$1,850,754 100.00%
======================= ========================

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

F-6

Hutton Investors
Futures Fund L.P. II
Condensed Schedule of Investments
December 31, 2001

Number of
Sector Contracts Contract Fair Value
Currencies
Over the counter contracts purchased 0.01% $2,048
Over the counter contracts sold 5.04%
JPY 2,526,606,300 JPY/USD 5.37%, March 20, 2002 837,395
Other (0.33)% (52,138)
---------
Total OTC contracts 5.05% 787,305
---------
Futures contracts purchased 0.01% 1,525
Futures contracts sold 0.12% 18,883
---------
Total Exchange Contracts 0.11% 20,408
---------
Total Currencies 5.16% 807,713
---------

Total Energy (0.32)% Futures contracts sold (0.32)% (49,504)
---------
Grains
Futures contracts purchased (0.02)% (4,572)
Futures contracts sold 0.08% 13,150
---------
Total Grains 0.06% 8,578
---------
Interest Rates Non-U.S.
Futures contracts purchased (0.25)% (39,714)
Futures contracts sold 1.13% 176,708
---------
Total Interest Rates Non-U.S. 0.88% 136,994
---------
Interest Rates U.S.
Futures contracts purchased 0.00%* 257
Futures contracts sold (0.03)% (4,313)
---------
Total Interest Rates U.S. (0.03)% (4,056)
---------

Total Livestock (0.03)% Futures contracts sold (0.03)% (4,430)
---------
Metals
Futures contracts purchased (0.46)% (72,168)
Futures contracts sold (1.15)% (179,739)
---------
Total Metals (1.61)% (251,907)
---------
Softs
Futures contracts purchased (0.00)%* (268)
Futures contracts sold 0.01% 1,785
---------
Total Softs 0.01% 1,517
---------
Indices
Futures contracts purchased 0.10% 14,405
Futures contracts sold (0.00)% (1,171)
---------
Total Indices 0.10% 13,234
---------

Total Fair Value 4.22% $658,139
=========

Investments % of Investments
Country Composition at Fair Value at Fair Value
- ---------------------------------- -------------------------- ------------------------
Australia $33,198 5.04%
Canada 9,655 1.47
Germany 182,735 27.77
Japan (58,906) (8.95)
France (4,782) (0.73)
United Kingdom (177,475) (26.97)
United States 673,714 102.37
-------------------------- ------------------------
$658,139 100.00%
========================== ========================

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

F-7

Hutton Investors
Futures Fund L.P. II
Statements of Income and Expenses
for the years ended
December 31, 2002, 2001 and 2000

2002 2001 2000

Income:
Net gains (losses) on trading of
commodity interests:
Realized gains (losses) on closed
positions and foreign currencies $ 5,410,193 $ 2,632,696 $(1,204,791)
Change in unrealized gains
(losses) on open positions 1,192,615 (2,020,455) 2,354,088
----------- ----------- -----------
6,602,808 612,241 1,149,297
Interest income (Note 3b) 218,809 446,258 699,719
----------- ----------- -----------
6,821,617 1,058,499 1,849,016
----------- ----------- -----------
Expenses:
Brokerage commissions including clearing
fees of $17,270, $14,966 and $17,497,
respectively (Note 3b) 700,652 661,355 731,557
Incentive fees (Note 3a) 1,083,961 72,636 --
Professional fees 42,789 42,551 20,106
Other expenses 1,237 5,605 --
----------- ----------- -----------
1,828,639 782,147 751,663
----------- ----------- -----------
Net income (loss) $ 4,992,978 $ 276,352 $ 1,097,353
----------- ----------- -----------
Net income (loss) per Unit of Limited
Partnership Interest and General Partner $ 1,997.72 $ 88.23 $ 594.95
Unit equivalent (Notes 1 and 6) ----------- ----------- -----------

See accompanying notes to financial statements.

F-8

Hutton Investors
Futures Fund L.P. II
Statements of Partners' Capital
for the years ended
December 31, 2002, 2001 and 2000

Limited General
Partners Partner Total

Partners' capital at December 31, 1999 $ 18,613,902 $ 240,179 $ 18,854,081
Net income 1,071,175 26,178 1,097,353
Redemption of 795 Units of
Limited Partnership Interest (3,854,993) -- (3,854,993)
------------ ------------ ------------
Partners' capital at December 31, 2000 15,830,084 266,357 16,096,441
Net income 272,470 3,882 276,352
Redemption of 120.9050 Units of
Limited Partnership Interest (784,312) -- (784,312)
------------ ------------ ------------
Partners' capital at December 31, 2001 15,318,242 270,239 15,588,481
Net income 4,905,078 87,900 4,992,978
Redemption of 144.0000 Units of
Limited Partnership Interest (1,094,685) -- (1,094,685)
------------ ------------ ------------
Partners' capital at December 31, 2002 $ 19,128,635 $ 358,139 $ 19,486,774
------------ ------------ ------------

See accompanying notes to financial statements.

F-9

Hutton Investors
Futures Fund L.P. II
Notes to Financial Statements

1. Partnership Organization:

Hutton Investors Futures Fund L.P. II (the "Partnership") is a limited
partnership which was organized under the partnership laws of the State of
Delaware on March 31, 1987 to engage in the speculative trading of a
diversified portfolio of commodity interests including futures contracts,
options and forward contracts. The commodity interests that are traded by
the Partnership are volatile and involve a high degree of market risk. The
Partnership was authorized to sell 30,000 Units of Limited Partnership
Interest ("Units") during its initial offering period.

Smith Barney Futures Management LLC acts as the general partner (the
"General Partner") of the Partnership. The Partnership's commodity broker
is Salomon Smith Barney Inc. ("SSB"). SSB is an affiliate of the General
Partner. The General Partner is wholly owned by Salomon Smith Barney
Holdings Inc. ("SSBHI"), which is the sole owner of SSB. SSBHI is a wholly
owned subsidiary of Citigroup Inc. The General Partner and each limited
partner share in the profits and losses of the Partnership in proportion to
the amount of partnership interest owned by each except that no limited
partner shall be liable for obligations of the Partnership in excess of
their initial capital contribution and profits, if any, net of
distributions.

The Partnership will be liquidated upon the first to occur of the
following: December 31, 2007; the net asset value of a Unit decreases to
less than $500 per unit; the aggregate net assets of the Partnership
decline to less than $1,000,000; or under certain other circumstances as
defined in the Limited Partnership Agreement.

2. Accounting Policies:

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

b. Commission charges to open and close futures contracts are expensed at
the time the positions are opened.

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

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

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

F-10

3. Agreements:
a. Management Agreements:

The General Partner has Management Agreements with Trendlogic Associates
and John W. Henry & Company, Inc., (the "Advisors"). The Agreements provide
that the Advisors have sole discretion to determine the investment of the
assets of the Partnership, subject to the Partnership's trading policies
set forth in the Partnership's prospectus. Pursuant to each management
agreement, each Advisor is entitled to an incentive fee, payable quarterly,
equal to 20% of the New Trading Profits, as defined in the Management
Agreements, on the assets under such Advisor's management.

b. Customer Agreement:

The Partnership has entered into a Customer Agreement, which has been
assigned to SSB, from a predecessor company, whereby SSB provides services
which include, among other things, the execution of transactions for the
Partnership's account in accordance with orders placed by the Advisors. The
Partnership is obligated to pay brokerage commissions to SSB at $50 per
roundturn futures and forwards transaction and $25 per option transaction
which includes floor brokerage, exchange, clearing and National Futures
Association fees. All of the Partnership's assets are deposited in the
Partnership's account at SSB. The Partnership's cash is deposited by SSB in
segregated bank accounts to the extent required by Commodity Futures
Trading Commission regulations. At December 31, 2002 and 2001, the amount
of cash held for margin requirements was $2,945,807 and $2,038,947,
respectively. Through April 30, 2000, the Customer Agreement provided that
approximately 80% of the Partnership's assets be maintained in interest
bearing U.S. Treasury obligations, including assets to be utilized as
margin for commodities positions. Effective May 1, 2000, SSB has agreed to
pay the Partnership interest on 80% of the average daily equity maintained
in cash in its account during each month at the rate of the average
non-competitive yield of 13 week U.S. Treasury Bills as determined at the
weekly auctions thereof during the month. The Customer Agreement between
the Partnership and SSB gives the Partnership the legal right to net
unrealized gains and losses.

4. Trading Activities:

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

All of the commodity interests owned by the Partnership are held for
trading purposes. The average fair value during the years ended December
31, 2002 and 2001, based on a monthly calculation, was $1,802,674 and
$960,433, respectively.

5. Distributions and Redemptions:

Distributions of profits, if any, will be made at the sole discretion of
the General Partner; however, each limited partner may redeem some or all
of their Units at the net asset value thereof as of the last day of any
calendar quarter on 10 business days' notice to the General Partner,
provided that no redemption may result in the limited partner holding fewer
than three Units after such redemption is effected.

F-11

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

2002 2001 2000

Net realized and unrealized gains (losses) * $ 2,364.24 $ (37.27)$ 380.39
Interest income 88.23 171.40 220.09
Expenses ** (454.75) (45.90) (5.53)
--------- --------- ---------
Increase for year 1,997.72 88.23 594.95
Net asset value per
Unit, beginning of year 6,141.80 6,053.57 5,458.62
--------- --------- ---------
Net asset value per
Unit, end of year $ 8,139.52 $ 6,141.80 $ 6,053.57
--------- --------- ---------

* Includes brokerage commissions
** Excludes brokerage commissions

Ratios to Average Net Assets :
Net investment loss before incentive fees *** (3.0)% (2.6)%
Incentive fees (6.2)% (0.4)%
---- ---
Net investment loss after incentive fees (9.2)% (3.0)%
---- ---

Net income before incentive fees **** 34.9% 2.1%
Incentive fees **** (6.2)% (0.4)%
---- ---
Net income after incentive fees **** 28.7% 1.7%
---- ---

Operating expenses 4.3% 4.4%
Incentive fees 6.2% 0.4%
---- ---
Total expenses 10.5% 4.8%
---- ---
Total return:
Total return before incentive fees 39.9% 1.6%
Incentive fees (7.4)% (0.1)%
---- ---
Total return after incentive fees 32.5% 1.5%
---- ---

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

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

F-12

7. Financial Instrument Risks:

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

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

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

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

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

F-13

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

For the period from For the period from For the period from For the period from
October 1, 2002 to July 1, 2002 to April 1, 2002 to June January 1, 2002 to
December 31, 2002 September 30, 2002 30, 2002 March 31, 2002

Net realized and unrealized
trading gains (losses) net of
brokerage commissions and
clearing fees including interest $(1,820,003) $4,899,491 $4,503,172 $(1,461,695)
income
Net Income (loss) $(1,827,178) $3,931,912 $4,362,267 $(1,474,023)

Increase (decrease) in Net Asset $(754.80) $1,587.04 $1,746.24 $(580.76)
Value per Unit
For the period from For the period from For the period from For the period from
October 1, 2001 to July 1, 2001 to April 1, 2001 to June January 1, 2001 to
December 31, 2001 September 30, 2001 30, 2001 March 31, 2001
Net realized and unrealized
trading gains (losses) net of
brokerage commissions and
clearing fees including interest $(1,144,255) $1,314,922 $ (2,255,594) $2,482,071
income
Net Income (loss) $(1,156,085) $1,302,783 $ (2,267,453) $2,397,107

Increase (decrease) in Net Asset $(453.53) $509.68 $ (869.43) $901.51

F-14

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

40

Item 11. Executive Compensation.
----------------------
The Partnership has no directors or officers. Its affairs are managed by
the General Partner. See "Item 1. Business." SSB is the commodity broker for the
Partnership and receives brokerage commissions for its services at an amount
equal to $50 per round-turn futures transaction and $25 per option transaction
(inclusive of NFA, exchange and clearing fees) as described in "Item 1.
Business." and "Item 8. Financial Statements and Supplementary Data." For the
year ended December 31, 2002, SSB earned $700,652 in brokerage commissions and
clearing fees.
The Advisors manage the Partnership's investments and receive a quarterly
incentive fee, as described under "Item 1. Business." Trading performance for
the year ended December 31, 2002, resulted in an incentive fee of $1,083,961.

Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------

(a). Security ownership of certain beneficial owners. As of March 1, 2003,
one beneficial owner who is neither director nor executive officer owns more
than five percent (5%) of the outstanding Units issued by the Registrant as
follows:

Title Name and Address of Amount and Nature of Percent of
of Class Beneficial Owner Beneficial Ownership Class
- -------- ------------------- -------------------- ----------

Units of Cheryl A. Schwartz 135 Units 5.6%
Limited Fbo R. Schwartz Flint Trust
Partnership P. O. Box 1312
Interest Page, AZ 86040-1312

(b). Security ownership of management. Under the terms of the Limited
Partnership Agreement, the Partnership's affairs are managed by the General

41

Partner. The General Partner owns Units of general partnership interest
equivalent to 44 Units (1.8%) of Limited Partnership Interest as of December 31,
2002.
(c). Changes in control. None.
------------------
Item 13. Certain Relationships and Related Transactions.
----------------------------------------------
Salomon Smith Barney Inc. and Smith Barney Futures Management LLC would be
considered promoters for purposes of Item 404(d) of Regulation S-K. The nature
and the amount of compensation received by SSB and the General Partner from the
Partnership are set forth under "Item 1. Business.", "Item 8. Financial
Statements and Supplementary Data.", Note 3b. and "Item 11. Executive
Compensation."
Item 14. Control and Procedures
Based on their evaluation of the Partnership's disclosure controls and
procedures as of a date within 90 days of the filing of this report, the Chief
Executive Officer and Chief Financial Officer have concluded that such controls
and procedures are effective.
There were no significant changes in the Partnership's internal controls or
in other factors that could significantly affect such controls subsequent to the
date of their evaluation.

42

PART IV
Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
----------------------------------------------------------------
(a) (1) Financial Statements:

Statements of Financial Condition at December 31, 2002 and 2001.

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

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

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

(3) Exhibits:

3. Agreement of Limited Partnership of Hutton Investors Futures
Fund L.P. II (the "Partnership") dated as of March 30, 1987,
as amended and restated as of June 1, 1987).

10.1 Form of Subscription Agreement (incorporated by reference
from Exhibit E to the Prospectus contained in Amendment No.
1 to the Registration Statement on Form S-1 (File
No.33-13485) filed by the Partnership on June 5, 1987).

10.2 Form of Request for Redemption (incorporated by reference
from Exhibit B to the Prospectus contained in Amendment

43

No.1 to the Registration Statement on Form S-1 (File No.
33-13485) filed by the Partnership on June 5, 1987).
10.3 Escrow Agreement dated June 9, 1987, among the
Partnership, Hutton Commodity Management Inc., E.F. Hutton &
Company Inc. and Chemical Bank (previously filed).
10.4 Brokerage Agreement dated as of July 23, 1987, between
the Partnership and E.F. Hutton & Company Inc. (previously
filed).
10.5 Advisory Agreement dated as of March 31, 1987, among
the Partnership, Hutton Commodity Management Inc., Desai &
Company and John W. Henry & Company, Inc. the Partnership, Hutton
Commodity Management Inc., (previously filed).
10.6 Representation Agreement concerning the Registration
Statement and the Prospectus dated as of June 9, 1987, among the
Partnership, Hutton & Company Inc., Cresta Commodity Management
Inc., Desai & Company and John W. Henry & Company, Inc.

44

(previously filed).
10.7 Net Worth Agreement dated as of June 3, 1987, between
Hutton Commodity Management Inc. and the E.F. Hutton Group Inc.
(previously filed).
10.8 Copy of executed Promissory Note dated June 3, 1987,
from The E.F. Hutton Group Inc. to Hutton Commodity Management
Inc. (previously filed).
10.9 Letter amending and extending Management Agreement
dated March 31, 1987 among the Partnership, Hutton Commodity
Management, Inc., John W. Henry & Company, Inc. and Desai &
Company as of September 26, 1989 (previously filed).
10.10 Letter dated August 28, 1990 from the Partnership to
John W. Henry & Company, Inc. extending Management Agreement
(filed as Exhibit k to Form 10-K for the fiscal year ended
December 31, 1990 and incorporated herein by reference).
10.11 Letter dated August 28, 1990 from Partnership to Desai
& Company extending Management Agreement (filed as Exhibit l to
Form 10-K for the fiscal year ended December 31, 1990 and
incorporated herein by reference).
10.12 Letter dated January 17, 1991 from the Partnership to
Desai & Company terminating Management Agreement (filed as

45

Exhibit m to Form 10-K for the fiscal year ended December 31,
1990 and incorporated herein by reference).
10.13 Advisory Agreement dated January 30, 1991 among the
Partnership, the General Partner and TrendLogic Associates, Inc.
(filed as Exhibit n to Form 10-K for the fiscal year ended
December 31, 1990 and incorporated herein by reference).
10.14 Letter dated August 30, 1991 from the General Partner
to John W. Henry & Company, Inc. extending Advisory Agreement
(filed as Exhibit o to Form 10-K for the fiscal year ended
December 31, 1991 and incorporated herein by reference).
10.15 Letter dated August 30, 1991 from the General Partner
to TrendLogic Associates, Inc. extending Advisory Agreement
(filed as Exhibit p to Form 10-K for the fiscal year ended
December 31, 1991).
10.16 Letter dated August 31, 1992 from the General Partner
to John W. Henry & Company, Inc. (filed as Exhibit q to Form 10-K
for the fiscal year ended December 31, 1991).
10.17 Letter dated August 31, 1992 from the General Partner

46

to TrendLogic Associates, Inc. extending Advisory Agreements
(filed as Exhibit r to Form 10-K for the fiscal year ended
December 31, 1992 and incorporated herein by reference).
10.18 Letter dated August 31, 1993 from the General Partner
to John W. Henry & Company, Inc. extending Advisory Agreements
(filed as Exhibit s to Form 10-K for the fiscal year ended
December 31, 1993 and incorporated herein by reference).
10.19 Letter dated August 31, 1993 from the General Partner
to TrendLogic Associates, Inc. (filed as Exhibit t to Form 10-K
for the fiscal year ended December 31, 1993).
10.20 Letter dated February 16, 1995 from the General
Partner to TrendLogic Associates, Inc. extending Advisory
Agreement (filed as Exhibit u to Form 10-K for the fiscal year
ended December 31, 1994).
10.21 Letter dated February 16, 1995 from the General
Partner to John W. Henry & Company, Inc. extending Advisory
Agreement (filed as Exhibit v to Form 10-K for the fiscal year
ended December 31, 1994).

47

10.22 Letter extending Management Agreements with John W.
Henry & Company, Inc. and TrendLogic Associates, Inc. for 1996
and 1997 (previously filed).
10.23 Letters extending Management Agreements with John W.
Henry & Company, Inc. and TrendLogic Associates, Inc. for 1998
(previously filed).
10.24 Letters extending Management Agreements with John W.
Henry & Company, Inc. and TrendLogic Associates, Inc. for 1999
(previously filed).
10.25 Letters extending Management Agreements with John W.
Henry and Company, Inc. and TrendLogic Associates, Inc. for 2000
(previously filed).
10.26 Letters extending Management Agreements with John W.
Henry and Company, Inc. and Trendlogic Associates, Inc. for 2001
(previously filed).
10.27 Letters extending Management Agreements with John W.
Henry and Company, Inc. and TrendLogic Associates, Inc. for 2002
(filed herein).

48

99.1 Certificate of Chief Executive Officer.
99.2 Certificate of Chief Financial Officer.
(b) Report on Form 8-K: None Filed.

49

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

Annual Report to Limited Partners

No proxy material has been sent to Limited Partners.

50

SIGNATURES

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

HUTTON INVESTORS FUTURES FUND L.P.II

By: Smith Barney Futures Management LLC
(General Partner)

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

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

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

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

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

51

CERTIFICATION

I, David J. Vogel, certify that:

1. I have reviewed this annual report on Form 10-K of Hutton Investors Futures
Fund L.P. II;

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

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

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

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

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

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

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

52

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

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

6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 27, 2003
/s/David J. Vogel
-----------------------
David J. Vogel
Chief Executive Officer

53

CERTIFICATION

I, Daniel R. McAuliffe, Jr., certify that:

1. I have reviewed this annual report on Form 10-K of Hutton Investors Futures
Fund L.P. II;

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

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

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

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

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

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

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):

54

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

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

6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 27, 2003
/s/ Daniel R. McAuliffe, Jr.
-----------------------
Daniel R. McAuliffe, Jr.
Chief Financial Officer

55

CIK> 0000812818
NAME> Hutton Investors Futures Fund L.P. II

PERIOD-TYPE> 12-MONTHS
FISCAL-YEAR-END> DEC-31-2002
PERIOD-START> JAN-01-2002
PERIOD-END> DEC-31-2002
CASH> 17,912,046
SECURITIES> 1,850,754
RECEIVABLES> 15,554
ALLOWANCES> 0
INVENTORY> 0
CURRENT-ASSETS> 19,778,354
PP&E> 0
DEPRECIATION> 0
TOTAL-ASSETS> 19,778,354
CURRENT-LIABILITIES> 291,580
BONDS> 0
PREFERRED-MANDATORY> 0
PREFERRED> 0
COMMON> 0
OTHER-SE> 19,486,774
TOTAL-LIABILITY-AND-EQUITY> 19,778,354
SALES> 0
TOTAL-REVENUES> 6,821,617
CGS> 0
TOTAL-COSTS> 0
OTHER-EXPENSES> 1,828,639
LOSS-PROVISION> 0
INTEREST-EXPENSE> 0
INCOME-PRETAX> 4,992,978
INCOME-TAX> 0
INCOME-CONTINUING> 0
DISCONTINUED> 0
EXTRAORDINARY> 0
CHANGES> 0
NET-INCOME> 4,992,978
EPS-PRIMARY> 1,997.72
EPS-DILUTED> 0